Yeah. Good morning, and welcome to this presentation regarding seven new lease agreement with Scandic Hotels in the Nordic. My name is Anders Nissen. I am the CEO of Pandox. With me also I have Liia Nõu, who is the CFO of Pandox, and Anders Berg, our Head of Investor Relation and Communication. The idea behind this call is to quickly present the main effect of this agreement and give you opportunity to ask question. Let us turn to page number two. As you can see, we have signed seven lease agreement in the Nordic with Scandic Hotels, with total of 1,434 rooms. Four hotels is located in Norway, two is in Sweden, and one is in Denmark. This is as normal with Scandic. They are turnover-based or revenue-based lease agreement. This is a 20 years contract period. This agreement also including a three-year step-up clause.
That means that we will gradually have more rent if Pandox sign. At the same time, we also leave the Grand Hotel in Oslo, which has been operate without property ownership, which is not our major business model. This is streamlining of the hotel. This hotel has been undergoing a large renovation under management of Pandox, is now been taking over of Scandic under their Signature Hotel by Scandic. We can also say that as you can see and understand that we strengthen our collaborations with Scandic, which is our largest and most important partner. If we go to the page number three, please. We see several positive effect from this agreement. The first one is, of course, that we prove our strategy is working. These was hotel have been taking over during 2015 and 2016.
They were hotel that the operator didn't fulfill his obligation or couldn't sign a market lease. They were all underperforming. Since that, we had been in need for a lot of active ownership, I must say. Since we have done a lot of investment. We had wider the product range, increased the value for guests. We had changed brands very often and management team or support them. All in all, these hotels now coming back step by step into the market, and the position for each hotel is stronger than ever. Now, the interest for Operator are increasing. It was a good timing for us now to change to long lease agreement. You can say that this proves that our strategy to be active across the value chains worked very, very well. Taking over underperforming hotel, fix them, and then lease them out again.
Of course, that lead me to the second good effect for this, that give us a good growth in rental income and net operating income, of course. The third one is that increased Pandox strategic flexibility that now a lease agreement stands for 84% of Pandox totally value. Let us turn to the next page, to page four, please. There you can see those hotel that we will keep our ownership, but lease out to Scandic. The Lillehammer Hotel is Norway. We have now coming back as one of the leading meeting hotels in Norway and have increased the revenue by 20% over our management. Thon Hotel Sørlandet will be a Scandic, of course. Meetingpoint Hafjell and Thon Hotel Fagernes is example of hotels o n [within] the process of upgrade hotels, and they all have. We see an increasing interest from the market, Prince Philip, the same.
The Hub Hotel was before named as [Mr. Chip ], and is today totally renovated and repositioned to a much chic design, bed and breakfast in the city of [Mr. Chip], and has increased many levels if you look at Tripadvisor. Last, First Hotel Copenhagen, which hotel we have been taking over on the [Scandic]. First couldn't pay their leases and couldn't fulfill their lease agreement. We are taking over the operations to protect our property value. Now, the hotel is ready for lease out again. All in all, you can see these seven hotels with 1,434 rooms has now changed from own operation to lease agreement. With that, I will hand over to our CFO, Liia Nõu.
Thank you, Anders. The financial effects of these agreements are positive for Pandox. We do expect a marginal positive contribution to group net operating income already in 2017. We also foresee a slight increase in total market value of the property portfolio when the hotels are reclassified, which is expected to happen in the second quarter. This is due to lower risk, shared investment, but lower valuation yields. Longer term, we see conditions for good growth in rental income and net operating income as there are step-up clauses in the agreement, and also due to Scandic's broad network. Following the agreement, Property Management share of the total property portfolio will increase from around 78% in the third quarter 2016 to approximately 84% when these are reclassified.
Please note that this includes then also the seven hotels we recently acquired in December, Hilton Grand Place, which we acquired in October, and the reclassification of Urban House Copenhagen, which will take place in the first quarter. At the end of the page, we have included a summary of the effect between the segments based on a pro forma full year 2016 numbers. This is in order for you to get a sense of how the numbers move between lines. For Property Management, there is an increase in rental income and net operating income of SEK 80 million and SEK 75 million respectively. For Operating Activities, there's a decrease in revenue and net operating income of SEK 500 million and SEK 70 million respectively. Thus for the group, total revenue decreases by SEK 420 million and net operating income increases by SEK 5 million approximately. Next page, please.
With that, operator, we are now ready for questions.
Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone and wait for your name to be announced. If you would like to cancel your request, please press the hash key. Star one on your telephone for any questions or comments. Once again, if you would like to ask a question, please press star one on your telephone. Thank you. We appear to have no questions coming in at this time. Please continue.
Well, thank you very much for your interest. Please be reminded that we will present our year-end report on the 16th of February. Till then, thank you and goodbye. Have a good day.