Good morning, and welcome to Fabege's presentation for the first half of 2020. On the first picture, I must say, we see one of the most fantastic buildings in our portfolio, the Luma building in Hammarby Sjöstad. Anyway, let's go to page number two. Everyone knows that it has been a very turbulent period, the second quarter and the first half of this year. We have had a good development during the first half, despite the turbulent period. The pandemic has overshadowed most things recently and during the quarter, and has, of course, been challenging for us and our tenants. It has not stopped us from doing business. The net letting was positive by approximately SEK 20 million, and our long-term net asset value, the EPRA NRV per share, came in at SEK 150, a little bit lower than the last quarter.
The EPRA NRV corresponds, as you probably know, to what previously was called EPRA NAV. After that, EPRA changed its definition. But before leaving over or hand over to Åsa and telling a little bit more about the financials, I'd like to tell you what we have done, especially due to the COVID-19 situation. We have continued to have frequent status meetings in the crisis management team and Group Ma nagement, almost every day, meeting for a long time to be updated and to do, if necessary, to make decisions of how to handle the situation. We have focused on the employees' well-being, the support. We have been working from home almost since the beginning of March. But what has been also in focus, of course, is the relationship with the customers and the customers' well-being. If we have a close dialogue, normally it has been even closer during this period.
We are also to try to support the community, the community where we are active in Stockholm and especially our areas. We have, for example, distributed 15,000 or more than 15,000 lunchboxes to hospitals and the City M ission in Stockholm. And we have also tried to help with materials for the field hospitals and on. The list could have been quite long, what we have tried to do support. Now, but please, Åsa, can you tell us a bit more about the figures for the first half of 2020?
Thank you, Stefan. Please turn to page four. During the second quarter, our numbers have also been affected by the pandemic we are living with. We have discounted rent to customers in exposed sectors for the first time, and for the first time since 2009, we are reporting negative value changes in the property portfolio. Rental income decreased slightly to SEK 1.4 billion. This was mainly explained by property divestments, in other words, Pelaren 1 and Trädgården. However, we have also given discounts in accordance with the government's rent support package, totaling SEK 36 million, of which half, in other words, our share of SEK 18 million, reduced rental income in the second quarter. In an identical portfolio, income increased by 4%. Completed projects, high rental rates, and index adjustments contributed positively.
The warm winter with very little snow meant that operating expenses were low during the first quarter, and the surplus ratio for the entire period came in at 74%. Interest expenses were slightly lower than the previous year, mainly due to lower borrowing. The share in earnings from associated companies amounted to -SEK 29 million and mainly related to capital contributions to Arenabolaget during this period. We therefore reported profit from property management of SEK 728 million, which was a small decrease in comparison to the previous years. Before the end of the quarter, approximately 50% of the portfolio was externally valued. The result was mixed. We have several positive value changes relating to properties with improved rental flows and where yield requirements have fallen due to some time lag compared to the market.
On the other hand, lower expectations for rental rates in the future and slightly higher yield requirements generally have resulted in impairments. The average yield requirement in the portfolio increased from 3.89% to 3.90% in the quarter. In the second quarter alone, impairment losses were recognized of about SEK 800 million. These were offset by upward revaluations of around SEK 500 million, which meant an overall impairment during the quarter of minus SEK 304 million, and for the period as a whole, the first half year, this meant a positive change in values of just over SEK 1.5 billion. The deficit value in the derivatives portfolio increased during the period by SEK 292 million. And finally, the tax expense amounted to minus SEK 426 million and mostly related to deferred tax. Now, please turn page. We feel very secure with Fabege's strong balance sheet.
As we usually say, in uncertain times, it's good to have saved something for a rainy day. Reported equity now amounts to SEK 123 per share, and the long-term EPRA NRV value amounts to SEK 150 per share. The equity-asset ratio amounted to 53%, and the loan-to-value came in at 34%. So we are well prepared to meet tougher times. Please turn to page financing. It has been an unusual period with an active capital market early in the year, a complete stop in March, and a gradual recovery during the second quarter. In January, we received the proceeds from the sale of Trädgården, approximately SEK 3.5 billion. Therefore, we had a strong cash position just at the very moment when the capital market was not functioning. On the whole, we are very well prepared today. We have no upcoming refinancings of bank loans before Q4 2021.
A pleasing development during the quarter is that we now have the possibility to arrange green financing through another one of our lenders, which means that all our lenders can now offer green financing, and at the end of the quarter, 91% of our outstanding loans were green. In the previous quarter, the average interest rate increased in the portfolio mainly due to the fact that the fixed rate terms were spread over a smaller amount, a smaller loan portfolio. Now that we have again increased our total loans, the average interest rate has also fallen again to 1.95%, including costs for unutilized credit commitments. Other factors that affected the average interest rate are that the underlying market interest rate has increased, as we have now, of course, exited negative interest rates, and that we have increased our fixed rate term compared to the same period last year.
In early March, we fixed a further SEK 400 million in a 10-year swap at less than 20 points. Since then, we have not entered into any additional fixed rate terms. At the end of the quarter, we had a capital tie-up period of 5.7 years and a fixed rate term of 4.6 years. Unutilized facilities amounted to SEK 4.2 billion. In March, we carried out a buyback of 2.5 million shares for around SEK 300 million in total. We will keep these treasury shares until further notice. Now, please turn to page COVID-19. Before I hand over to Stefan again, just for the sake of clarity, I would like to summarize how Fabege has been affected by the COVID-19. As I stated earlier, several of our tenants have faced a tough time with large falls in revenue.
We have been having a close dialogue with our tenants about Q2 and also about the future. We have granted rent rebates of SEK 36 million in accordance with the government's rent support package, where Fabege will share half the cost. In total, we have about SEK 20 million in outstanding rent receivables relating to Q2, of which the majority relates to granted deferrals. We expect that these will be paid according to the agreements that we have made with the tenants. We have also granted rebates relating to Q3 and Q4 for almost SEK 10 million for continued support to some of our tenants that are still having tough times. I commented on the valuations earlier. In the light of a more cautious view of rental rates and a slightly increased yield requirement, we have written down the value of properties by roughly SEK 800 million.
This was offset by the upward revaluations of around SEK 500 million, which gave a net effect during the quarter of minus SEK 304 million. On the other hand, we are happy that our projects are progressing without delays. We have been able to handle any issues arising along the way in a satisfactory manner. And last but not least, we are confident about our financial situation. With our strong balance sheet, we can take advantage of opportunities and also manage these more challenging times. And now back to Stefan.
Thank you, Åsa. I think it's also important to look at this slide and our largest tenants and the lease terms. As you see, it's stable companies, strong companies with long lease contracts. So on the largest ones, SEB, Telia, ICA, the Swedish Tax Age ncy, and so on, are all not that affected about the situation. Please go to slide nine. We still see strong demand for attractive offices in all of our areas. The discussions of new and potential tenants have been ongoing, and the letting work has continued to be intensive with viewings, competing using drones, and with digital signing of contracts instead of the physical meetings and viewings. Among other things, we have signed an agreement in the inner city with a fast-growing Swedish tech company, Mentimeter, in the property Apotekaren 22 in Stockholm inner city at a good level, and that's the property you see here.
It's a unique property with a long history, good special design, and we are very happy with the level of rent level we got. The rent in the renegotiations increased by about 16%, which I'm very satisfied with. But several renegotiations have been deferred in a mutual agreement with our customers, and we said we'd take them up after the summer instead when we know a little bit more about the situation. But we have not seen any unusual increase in the vacancy rates in our portfolio. The increase in the vacancy rate you can see during the second quarter was essentially due to already predetermined relocations, and it's dominated by LRF's move from the property Glädjen in Kungsholmen in Stockholm. Please next page. During this period and during these last months, we have learned a lot, of course. We have learned to work more digital.
We have learned to work more from home. We have learned to meet digitally and the like and so on and on. There are also many experts out there who express opinions on how the future working methods will look like and how this will affect the office market. We have, of course, been discussing this not only for the last months but for a long time, how will the office market in the future, how will the future offices, how will the next generation of office work. Of course, we have a lot of focus on that. What we do first is to talk with our customers, with our potential and existing tenants, and how they will like to change if they like to change the way they work and the way the office works.
What we think will be a key word is flexibility, so with updated digital solutions, we will have other requirements of the office space, but we also think that anyway, a good location and a flexible office will be a core asset, and we don't think we will do all work from home, but this we could have been discussing for long, and we will come back to this, but what we also learned and what has been very vivid during this period is that we need to meet in order to create a sense of togetherness, and so we also will see that in the future, the office will continue to be a place to create brands, to stimulate creativity, and to build corporate culture and loyalty, so with attractive locations, with flexibility, and a modern offering, we are ensured that we will meet tomorrow's demands in our customers' workplace.
Okay, next slide please. In the transaction market, the year began with a number of large transactions at the new record levels in our market. Since March, it has been much, much calmer. Many actors have been waiting with investment decisions, and processes are taking much longer time. We see a greater uncertainty at present among all investors, both in relation to rental rates and yield requirements. And this is, of course, especially true when talking about commercial office buildings. There are a few transactions, and there is a lot of market, so there's not a lot of market evidence where property values are heading right now. The external valuation companies had adopted a more cautious view of rental rates and yield requirements, which also is reflected in the valuation of our property portfolio.
To obtain a really good benchmark, we have, as Åsa already mentioned, externally valued just over 50% of the portfolio before the end of the quarter. In the first quarter of the year, 40% of the portfolio was externally valued. There was some overlap, but most of the portfolio has, nevertheless, been externally valued after the COVID-19 made its entry. A large part of the properties that were not externally valued were also valued internally based on the new guidelines which we learned and got from Newsec and Cushman & Wakefield. During the quarter, we also had the opportunity to make a supplementary acquisition in Hammarby Sjöstad through the building Påsen 1. You can see the property in the slide directly or close to our recently completed project in Trikåfabriken 9.
In Påsen, we see potential to develop and modernize areas and also to increase the cash flow in a property that is located in a really attractive area and close to our existing holdings. So please go to the next slide, slide number 12 please, about our projects or project portfolio. All our projects are progressing largely according to plan. In those cases where there is a risk of delayed deliveries of materials, for example, we are exploring alternative possibilities. With good preparations and advanced planning, so far, we have been able to start projects and follow schedules. The occupancy rate in the project portfolio is 89%, so I see very little risk in the portfolio. We will invest during this year about SEK 2 billion, as we also previously have communicated. Next slide please. This future project we haven't talked that much about before.
In Arenastaden, the Kairo Block will go out for consultation during Q3. The goal is to have an approved local development plan ready by year-end 2021. This will provide us with approximately 76,000 square meters of offices and 15,000 square meters of residential units. The parts of Dalvägen, which will also be converted to a pedestrian street, will further boost the interior area. So this, I think we will come back to and tell you more about during the next quarters. Please next slide. You have seen this slide before. We see great future development potential in all of our areas. We mentioned on the slide before Arenastaden and the Kairo Block. In Flemingsberg, the municipality approved the comprehensive plan in April, and this was a very important milestone. We have now started to work with the local development plan for the first phase in the area.
COVID-19 has not changed our positive view of Flemingsberg. Quite the opposite. For companies, the flexibility to be able to offer employees modern offices in the northern side of Stockholm, in the city, and also in the southern part of the district will increase going forward instead of decreasing. In Haga Norra, the Bilia facility will be completed during Q1 2021, and then we can begin to demolish the old facilities and start with phase two in the development of that area. So still, there are a lot of potential in our future project portfolio. So with that, I will hand over to our moderator for questions. Thank you.
Thank you. If you do wish to ask a question, please press 01 on your telephone keypad. If you wish to withdraw your question, you may do so by pressing 02 to cancel. There will be a brief pause while questions are being registered. And our first question is from Anders Thun, Green Street Advisors. The floor is yours.
Hi, good morning. First question regarding what was your third quarter 2020 rent collection rate? If you could provide some color around that, that would be helpful.
Yes, up to now, which is Friday last week, we collected around 92% of the rents for Q3 of those which are due for payment because we have also granted monthly payments for some of our tenants. So there will be also some amounts coming in during the quarter. But 8% of what is come due is still outstanding by Friday last week.
Okay, thank you very much. What's the situation in the office sector specifically? Are you seeing any signs of distress in that regard as well, or is it mostly still related to the sectors that were most affected by the COVID epidemic?
Of course, it is affected in some ways, but still, it's too early to say how it will be affected long term. All discussions we have about potential tenants are ongoing. Maybe take a little bit longer time to get the signing. We see some tenants that like to get that have been reducing the staff, for example. They can have some space that they like to find other tenants for. But it's not fair to say it's not affected, but it's affected so far in less than I would have maybe expected it in March because at that time, when everything closed down, when all companies lost a lot of sales, and it's not that much that maybe we worry about, but a little bit too early to say exactly how it will be affected for the future.
But we still see good demand for good flexible locations in areas and spaces in the center of Stockholm, and we see interest for new larger offices in Arenastaden still. So we have still good discussion with that.
Thank you very much. And how does the collection rate for the office sector compare to the average that you talked about, the 92%?
You mean how the 8% outstanding compares to, say, a normal quarter? I think it's.
Specifically, the office sector, what was the collection rate in the office sector for the third quarter?
The office sector is the strongest sector among the tenants in Fabege, I would say. We have some tenants that are hotels and restaurants that have had more problems than offices with the income during this period.
Fair enough. Final question regarding financing. You did a fund issue during the quarter. How would you compare the spread versus pre-COVID spreads on this specific issue?
Yeah, I would say at least 50 basis points higher than before COVID-19.
Okay, thank you very much. That's all from my side.
Next question is from Markus Henriksson, Pareto Securities. The floor is yours.
Thank you. Hi, Åsa and Stefan. A follow-up on the office market. Do you think you can reach your net leasing goal for 2020?
We are still saying, yeah, we will go for that. As I said, the discussions are going on. They are continuing, but of course, it takes longer time for signing, so we're still hopeful. Yes, we are not optimistic, and exactly the figure is, of course, difficult to say, but the big or the large projects we are discussing are moving on.
Many small projects or a few big?
Both, I would say. As you know, we have some larger ones in Solna and even in Flemingsberg for future larger projects, and then, of course, there are smaller discussions. We have discussions on Kungsgatan, for example, where we have some building that we're rebuilding right now and some other, so it's a mix.
All right, thank you. Looking at the investment rate here in 2020 so far and looking to the second half and comparing that to your investment goal, what do you think we should expect here and also for the pipeline for 2021?
We have said that for 2020, we'll be a little bit lower than we and this we said already last year, at the end of last year, that we'll be aiming for about SEK 2 billion this year. The goal is SEK 2.5 billion for project investments per year. We see for the next four years, we have a target for approximately SEK 10 billion. But it can change between the years, so a little bit lower this year, and that was expected, and still about the same for the next four years.
All right. And looking at those SEK 10 billion, do you think it's going to be a ramp-up process, or how do you view the 2021 to 2023, 2024?
It's difficult. Most will start 2022, 2023.
All right. Also, another one on the yield side and how the appraisers are reasoning right now. We have seen from other companies, inflation is one part, but how are they viewing your overall portfolio, and do we see any regional differences in how they are reasoning?
Not really any regional differences because our portfolio is all within five kilometers from the city center. We see that they have lower expectations on inflation going forward. They have also lower expectations on rental levels going forward, and they have increased as an average a little the yield. So I think they are showing a more cautious view on most items that impact the valuation of the properties.
All right, thank you. My last question, if we look at Arenabolaget, Friends Arena, what can we expect for the first second half of 2020 compared with the first half and also into 2021 with a lot of rebounding in sports and concerts, etc.?
I think for the second half of 2020, we can expect more or less the same figures as we have shown during the first half of the year. Most of the events have been postponed. As it looks today, there will be a full event calendar in 2021 if, of course, things improve and we can begin to go and see football matches and go to concerts. So we are hopeful for 2021.
Can we expect a positive figure for 2021 if things go back to normal with the pipeline?
No, I think that's too much to hope. It's still going to be a negative figure, but we hope it will improve.
All right, thank you. Thank you for taking my questions.
If you would like to ask a question, please press 01 on your telephone keypad. We have no further questions at that time. I hand over to you for any final remark.
Okay. If no further questions, I will say thank you for listening. And if you have any other questions, don't hesitate to give us a call, Peter Kangert, Åsa, or myself. So otherwise, have a nice summer and be careful out there. Okay, bye.
Thank you.