business and CEO of Pandox. Please go ahead.
Well, good morning everybody, and welcome to Pandox presentation of Q4 and year-end 2015. Liia and myself will do this presentation. I am on page number four. Introduction, financial review, market and business, then we end up with the Q&A. Over to page number three. Pandox established, as most of you already know, 1995. Today, we are the leading European player in the hotel property market. Year-end, we own 121 hotel properties for a market value for SEK 31.4. 103 of these hotels are leased out to a third party. They are representing 80% of the portfolio value. 18 hotels operate in our own business, and that representing 20% of the Pandox market value.
You can see on the map on the right-hand side, that we are now, this is after the Leonardo acquisition of 18 hotels, that we now have increased to 31% of our income out of Scandinavia, but we are still very much a Scandinavian company and specifically a Swedish company, that 43% of the revenue is coming from. I go for page number four and go then over for the Q4 and year-end. We believe we have a positive fourth quarter despite of SEK 18 million shortfall in operator activity linked to the terrorist attack in Brussels, where the city closed down for 10 days. This positive fourth quarter, coming from a strong hotel market. We will coming back to. We see also a good organic growth from hotel coming back from renovation from this large investment program, as we have been reporting about before.
We have also a good productivity in operator activities. That is important because when hotel are, we are taking over hotel, or we buy hotels with own operations, that is the most important value driver, that we have an efficient business, and we demonstrate that also in Q4. We have on the top of this, a lower financial cost. At Q4, we also reporting an acquisition of 18 hotels in Germany, the Leonardo portfolio. As a sum up of this, 2015, overall, we believe we have a strong year for Pandox with high growth and solid profitability. Based on this, the board of directors has proposed a dividend of SEK 3.8 per share, which representing just over 50% of cash earning and is in line with the financial target. I will move over to Liia. Thank you.
Thank you, Anders. In summary, a good quarter, although affected by the negative Brussels effect due to the tragic events in Paris and Brussels. I am on page five, by the way. Like-for-like growth in revenue and property management increased with 6%, and net operating income for property management with 11%. The corresponding like-for-like growth in net operating income from operating activities was 15%. Cash earnings grew by 21%, including an extra tax cost of SEK 29 million. This is relating to an assessment for arrears by the Swedish Tax Agency. Pandox has appealed the ruling, but we have made a full provision in the books for this. During the period January to December 2015, the investment properties experienced an unrealized portfolio uplift of 6.7%. For operating properties, the increase was 5.7%. The EPRA NAV amounted to SEK 107.71 per share, up SEK 15.6 year-on-year.
The increase in EPRA NAV adjusted for dividend in 2015 was 18%. Turning to page 6, showing a stable growth in both EBITDA and strong cash earnings. EBITDA grew with 12% in the quarter as well as for the full-year, and cash earnings with 29% for the quarter and 21%. Sorry, 21% for the quarter and 29% for the full-year. In total, cash earnings are SEK 1.1 billion for the full-year. Page seven. This is a recap of the announced portfolio changes we have done. This is a timeline from June 2015 to September 2016. The upper part, the brown boxes, they represent the divestments and acquisitions we made and announced during this period. It includes the divestment of Scandic Antwerp, which was done 1st of December 2015. It also included acquisition of the 18 Leonardo Hotels in Germany, which we acquired 31st of December.
It is in the balance sheet, but of course, the earnings will come in 2016. Also the divestment of the eight hotels, which we announced two days ago, of eight smaller hotels in Sweden. The total effect on the property management on a 12 month rolling forward basis of all of these divestments and acquisitions, i.e. the brown boxes on the top. The net effect of that represent that we will increase our revenue with around SEK 185 million, and we expect the NOI, the net operating income, to increase around SEK 180 million due to the net effect of all of this. Cash earnings above SEK 110 million, taking into account interest, taxes in Germany, et cetera.
The lower part of this timeline, the green boxes, they reflect the toolbox that Pandox have in securing value for the properties by being able to operate the hotels ourselves from time to time. The reclassification from property management to operating activities on a 12 month rolling forward estimate, i.e. the effect when all of the reclassification has been done, is that around SEK 75 million in revenue in property management rental income is transforming into around SEK 300 million in net sales in operating activities. The corresponding net operating income in property management, around SEK 65 million, transform into around SEK 75 million of net operating income in operating activities for the first 12 months. We expect this to gradually improve, of course, as we invest and as we work with the hotels. Turning to page 8.
Substantial increase in both revenue and profit for the fourth quarter, as well as for 2015, due to overall good market conditions with renovated hotels gaining market shares and continued productivity improvements and lower financing costs. The lower financing cost, this decrease reflects the lower interest rates but also interest service maturing. Profit before value changes is SEK 236 million in Q4, up 36% versus Q4 2014. The full-year is SEK 1 billion 27, up 32% from 2014. Full-year unrealized value change, SEK 1.4 billion in investment properties, plus the corresponding SEK 322 million in operating properties, which is not reflected in the P&L, but of course in the EPRA P&L calculations. Turning to next page 9. For our segment property management, we see solid rental income and net operating income growth. Like-for-like rental income growth 6%, and net operating income increased with 11% in the quarter.
On the right-hand side, you can see the split of where the regular revenue is coming from. 59% in 2015 is coming from Sweden, 15% Finland, 13% Norway, Denmark 12%, et cetera. Of course, in 2016, this will change slightly due to announcements we made, and especially as we added 18 hotels in Germany. So Germany will take a place on this circle. Turning into page 10. In our segment operating activities, we have a strong progress despite the negative Brussels effect. The net operating income was SEK 104 million, up from SEK 81 million in Q4 2014. The like-for-like decreased when it comes to net income, sorry, in income but in the revenue, but in income it was an increase with 15%. The net operating income margin is 19%, which looks to be quite in line again with last year, 18%, full-year 20%.
But as we said before, the NOI margin adjusted to Grand Hotel Oslo, which reflects a different business model where we are only operator and don't own the hotel, then the NOI margin is 23% versus 18% in Q4 last year. Then again, remembering that we had a difficult quarter in Brussels especially. Turning into page 11, our portfolio. The total property portfolio market value for 31st of December amounted to SEK 31.4 billion. It includes the 18 hotels in Germany, which we acquired for EUR 400 million, corresponding to SEK 3.7 billion. The average valuation yield in investment properties is 5.9%. In Q4, we saw a yield compression, an average yield compression, a little bit more than 10 basis points.
But as we also bought the German portfolio for an average yield around 6.3%, then the total average investment in valuation yield is still at the same level as it was in Q3. As of December 31st, the average valuation yield for operating properties is 7.5%. The uplift in Q4, around 2/3 65%, 70% is due to yield compression, mainly in Sweden, but also in Norway, Denmark, not so much in Finland. 1/3 is due to stronger cash flows. Turning to page 12. Continued solid growth in EPRA NAV and maintained financial flexibility. Our EPRA NAV increased from 2014 from SEK 92.1- SEK 107.7, and adjusted for dividend, it's an 18% increase. The loan-to-value ended the year on 49.5%, a slight increase due to the financing of the acquisition of the Leonardo Hotels, but offset by very strong cash flows from operations.
All in all, in line with our financial targets of 45%-60%. Liquid funds and long-term committed credit facilities. We ended the year with slightly above SEK 1.5 billion. As of mid-January, we established a new five-year revolving credit facility. So the liquid funds and long-term committed credit facilities amount to SEK 2.3 billion as of mid-January 2016, giving some financial flexibility for the future. Page 13. Our gross interest-bearing debt amounts to SEK 15.5 billion, loan-to-value 49.5%. The average interest rate has gone down to 2.8% and will continue to decrease. You see on the right-hand side the maturity profile on our fixed and hedged debt. We expect to continue to see the average rates decreasing as our interest service are maturing. With that, turning to page 14, I will leave the word to Anders again.
Yeah. Ladies and gentlemen, let us sum up the financial section. What we are reporting is a like-for-like growth in Q4 of 12% and 15% in net operating income for property management and operator activities. We are reporting an increase of 29% of cash earning up to SEK 1,130 million. We have done development of the portfolio that we frequently try to increase the quality. This quarter or the last time, what we have done here now is the acquisition of 18 large hotels in Germany, and we also have a planned divestment of selling eight small hotels in properties in Sweden. All this, of course, gives us an increased financial flexibility and lower financial leverage. If you go to page number 15, we are coming back to market.
You can see this is the RevPAR development, where we have compared quarter and year, so you can follow the long and short trend. In the U.S., it is still a stable growth on very good levels, maybe slightly downwards, but still on high numbers. In New York, which is very normally, it is in the top in the hotel business cycle. You see a negative development. This is coming from a very strong Q4 last year, and also that they have had a lot of new capacity coming into the market. The underlying market reporting more than 90% occupancy in the Big Apple, so very strong hotel market in New York. A strong U.S. has a positive effect for Montreal, which drives for a very strong local market together with a favorable US dollar, which increased the demand in the city.
Q4, it is going up to 6% from 5% Q3, so still on high levels. Most of it is on rate, which has a strong impact on the efficiency on the hotel business in Montreal. We have 1,000 rooms in the city center, so that looking very good at the end of 2015. Europe is still strong. If you look at London, it is stable. Let us jump on Brussels. You can see minus 10% in Q4, all linked to this terrorist attack in Paris, which also had a negative spillover effect for Brussels, where the city was closed down for 10 days. Up to the 10th of November, just before this terrorist attack, it was a very good start in November, and the business on the books the rest of the year was strong.
But that, of course, was not materialized because of this threat as the city had. The bookings are more or less back again. We will see some sort of effect on Q1, but the business on the books looks normal again. Berlin. Then you can go over to the Scandinavian capitals, which has had a very strong end of 2015, and continue to have a strong underlying both in growth, both in volume and rate. Specifically nice is to follow Helsinki, where most of you know is that Finland is, well, still in some sort of recession. But Helsinki has now two quarters in a row had a good growth in RevPAR, meaning that those hospitality industry shows demonstrate the strong development in the city despite of a weak local economy.
I go now over to page number 16, and will say some words about the investment we do in existing hotels. This is an important part of Pandox's growth strategy that we always try to find possibility in each hotel and try to, if it's a lease or in own operation, try to develop the hotel and taking market shares, which meaning more revenue, which give us otherwise more rental income or give us a higher result if it's an own operation. This is something that's very important to do all the time, and this is a lot of nitty-gritty, but also some big projects. We had increased that CapEx to SEK 780 million in Q4 from SEK 560 million, I believe. And that is of course positive that we're finding more projects because this in a CapEx normally give something between 8%- 14% return on investment.
Let me give you seven examples. Hilton Helsinki Strand, beautiful hotel located in the city center of Helsinki is now ready. We are reporting that we had done a refurbishment specifically on rooms and the lobby area, and I was there a couple of weeks ago, and I believe it's one of the best hotels in the city, maybe together with Kämp. These are the two international hotels, beautiful lobby area. So that is now done. Quality Hotel Ekoxen and Scandic Värnamo are two Swedish hotels who are undergoing renovation. We try to do it when it's low season, so have been doing a lot now December, January, and February. And we believe that will be ready Q3, both Quality Hotel Ekoxen and Karlstad. The same time estimate for Lillehammer, more than 300 rooms in a beautiful meeting hotel.
And the target there is to bring it up to one of the leading meeting hotels in Norway. I think we are in a good way. I was there last week, and I could see that the renovation is moving in the right direction. So that will be finished at Q3 this year. InterContinental Montreal is a hotel who is located just in the city. What you see there on the picture, you see the hotel, the high-rise building, and on the left-hand side, you see a glass wall, colorful building. That is the big convention center in Montreal. You can see there very much the walking distance is just one minute from the hotel to this convention center. So it's a very strong location. We are building now a new ballroom in the hotel to meet the new demand in the city.
We believe that a ballroom will add more rate into us that will be completed the end of this year. Then we have two now new project announced this quarter. The first is Hotel Berlin, will be now starting a renovation program for all rooms. That is EUR 5-EUR 10 rate on the table if we can add rooms in expectations. I think that we have a rate increase in Hotel Berlin, which give a good return on that investment. Then we have the first project coming out from the Leonardo deal. That was something we also announced during the acquisition, that we have an extension possibility in Leonardo Wolfsburg, which will now add more rooms, 130 rooms and more meeting capacity in the land next to the hotel.
That meaning that we will increase number of rooms, increase more meeting space, which most likely will give a much stronger P&L. We have also signed agreement with Leonardo for a very nice return on Pandox for participate on this investment. To sum up Q4 and also year end, we see a couple of very strong drivers still for the company. The market growth will be on single-digit growth as we had report before, but it's still growth, and we believe with the high-quality portfolio that we have, that we will take at least our market share, which meaning more revenue into Pandox. We have this project pipelines. I just reporting on these seven hotels, but that is much more going on, of course, with smaller projects.
That is a pipeline project which some hotels has coming back at the end of this last year, and some that's coming back at the beginning of this year. That is an ongoing flow of new upcoming hotel, going out for renovation and coming back. That, of course, give us a very strong return. Operations, I report before that the productivity is good, which is important. Liia demonstrate that she can decrease our interest rates cost, which is, of course, good for us. It's a strong potential. Then at the end, we have been talking about opportunistic acquisitions, so maybe we will call it transactions, that our comeback year, we have done a transaction that we acquire 18 large hotel in good, strong markets in Germany, at the same time that we are selling eight small hotels in Sweden in smaller markets.
We think that is as a quality increase of the portfolio. That is all from us in terms of reporting, and we are now leaving it for Q&A.
Thank you very much. As a reminder, if you would like to ask a question today, it is star and one on your telephone and wait for your name to be announced. If you would like to cancel that request, you can press the hash key. So it is star and one to ask a question today. Your first question comes from the line of Fredric Cyon from ABG. Please go ahead.
Good morning, Fredric from ABG. A few questions from my side. Starting off with the divestment. On my numbers, it is around 6% that you are selling it, the initial yield, and you are having a 5.9% for existing property managed portfolio. That sounds quite high, given what you are selling non-core smaller assets for. Do you have a comment on that?
Well, we make external valuations once a year on a rolling basis, 25% each quarter. I can probably agree that it takes some time before the appraisers see the transactions and work that into their yield and expectations. So I would not expect our valuations to be aggressive, the least. That is, I think, the only comment I can say. But the 5.9% which we have, it reflects the external valuations we have with a mixture of all of the countries.
Then a question on the Hafjell and Kristiansand hotels that are now being reclassified. You specified for the total amount of the Hafjell mid, the effect. But are those EBITA neutral?
Those are basically EBITA neutral, yes. I think the biggest uplift when it comes to is, of course, with the Lillehammer, which is a bigger one we are making. We expect eventually these to improve, but these are smaller hotels, but they are basically EBITA neutral for the first part.
I might have misunderstood this, but when I look through the reclassification effect you are mentioning for the year, it looks as though on the operating side, the margin is actually 25%, if you take SEK 75 million divided by SEK 300 million. Suggesting that the reclassification effect has actually boosted margins in 2015. Is that correct?
Yeah, it is a small amount. It is SEK 300 million in overall. But absolutely, you look at the NOI margin, it is around 25% for these six hotels when they are all implemented. Absolutely.
That should be all positive going into 2016, all else being equal, since they are being reclassified during the year.
Well, yes, you can say all hotels we are taking over in some part underperforming, meaning that will always take some time before you can materialize that potential. It normally starts that you need to start with renovation and you need to having a reorganization of making the organization more flexible or whatever, increase the sales force or whatever you do. So you put some cost into the project at the beginning to make sure that you can come out on a higher level. But that normally takes 18 months. So that is what you can expect also in this project.
My comment was that actually the margin in the reclassified hotels was actually higher than the existing.
The margin are improving as we speak, but it is also mixed. If you look at all the hotels we have, they are in different phases. But of course, if you look at, for example, the fantastic hotels we have in Canada, you bought them cheaper, but you have higher taxes, et cetera. So all in all, again, these hotels which we are reclassifying, there will be a marginal positive effect on the NOI margin.
Okay, and then two more questions from my side. You mentioned that Brussels has stabilized during mid-January, but is it still a negative year-over-year effect in Brussels?
You mean in 2016?
Yeah, exactly.
I think what you can expect is that you can see little slower leisure demand in Q1. But I think when you look at Q2, the negative will have gone. You have to also take into consideration, which is important for how you look at the Q1, that we had Easter in Q1 this year, and last year it was on Q2. That means that you have about 8 to 10 less business days in Q1, but you will have that back in Q2. So that will also be something that you need to take into consideration for Q1. But to come back to your question, slightly down in leisure, but in business, in meeting, we are more or less back.
Very clear answer. Last question then on RevPAR trends. We are mid through Q1 now. Has anything changed dramatically in the Nordic market, or are you still seeing a fairly strong market?
No, we are in the same as we had announced already in November last year. We are in the same place that we're talking about, the single-digit growth. We are there, and that's what we see, and that's what we believe it will be.
Thank you. All my questions.
Okay.
Thank you. Your next question comes from the line of Tobias Kaj from Carnegie. Go ahead.
Yes, thank you. I would start to ask you regarding the like-for-like income trend for property management, which was up 10% year-over-year in Q3, but 6% now in Q4. Should we view this as normal volatility between the quarter, or is this a trend that the growth rates are coming down?
I think that the Q3 was a very strong quarter, and Q4 is more, I would say, stable and normal quarter. That's how you can see it.
Okay. Then just in general regarding outlook for further acquisitions or divestments, what do you see in the market? Do you think it's a potential for you to do more acquisitions in the next few quarters?
As you know that we normally don't comment transactions. It's an ongoing, always discussions with different possibilities. I would say, in general, I think that the liquidity in the market will increase 2016. If that means that there will be any opportunity for us, I don't know.
Okay. Thank you. The rest of my questions has already been asked.
Thank you.
Thank you. Your next question comes from Christopher Fremantle. Please go ahead.
Hi, it's Chris Fremantle from Morgan Stanley. I just had a couple of follow-ups on the CapEx piece. Apologies if I didn't quite hear what you said.
Okay.
When you said the SEK 780 million of CapEx, should we expect that to be broadly split between 2016 and 2017, or is there any sort of timing issues there? The second issue was on the yield on that CapEx. I think at IPO, you said that the gross rental yield on the CapEx was pretty similar to your portfolio yield. But I think what you had suggested just now was that the yield on the CapEx was substantially higher than that. Can you just clarify a little bit?
Well, if you look at the investment at the moment now we have SEK 780 million committed investment that we are doing, rolling. That means that we are doing. Most of this is, I would say, will materialize in 2016 and 2017. That is the thing. Then, of course, more project will add in for us later this year and also next year. If this number will go up or down SEK 780 million, we don't know at the moment. We believe it is a quite high number. We maybe think that will come down a bit. Coming to the return, we have said before, and we can only repeat that when you are looking at investments that we should project that we are interested in, that should be at least 8%-9%, and it's normally up more than 10%. Otherwise, we don't do it.
Right. That's just the yield on the CapEx. That's not a yield on the sort of all-in
No
total cost.
No, it is on the specific investment. Yes.
Okay. Yeah.
Yeah. It is going gradually coming in. Some of this have, of course, coming in immediately when you think that we had signed some the new lease agreement. Then you have an effect maybe a little bit direct, and then there is coming a proportion because of we then taking some market shares. Some of it, the agreement will add a return a little bit later. It is not one model, it is many models. But all in all, I think we can see from the SEK 780 million a continuously increase in revenue for Pandox in the next three, four years.
Okay. Thank you.
Thanks.
Thank you. There are currently no further questions coming through. There is another reminder, star and one, if you would like to ask a question today. It would appear that there are no further questions coming through if you wish to continue.
There is one thing I would like to take the opportunity to add, and that is we have a capital market day on the 24th of May, where we will be in Brussels and take a deep dive in our own operations, that you will see what we are doing there with six big hotels that we operate in our own business with different brands in different concepts in Brussels. That will be the 24th of May, starting in the morning. You will see all hotels, you will meet management, and you will also see our revenue center. So I hope all of you have possibility to come to Brussels on the 24th of May. Save the date, it has been sent out, and the program will come later. Thank you very much.
Thank you. That does conclude the conference for today. Thank you all for participating. You may now disconnect.