Good noon, everybody. I will present our 2017 report. We can take the next slide to start with page two. I will start with some important events for this fourth quarter. As you all know, the market is quite turbulent regarding the co-ops. We started in the ninth of October with a press release that we converted our ninth year co-ops in Solberga into rentals. That was not a big issue for us, but it went to be a big issue for the market. Now in December, we decided to convert 290 more apartments because we think that the interest is quite low still. We don't know how the future will look like.
That's maybe the most important thing, and that we can prove that we have a flexible business model which can handle this thing. We also completed a record number of apartments. In this fourth quarter, it was 400 apartments, and for the whole year, it's 800 apartments. In November, we've established an MTN program for SEK 5 billion. Also in November, we issued the first bonds in this program of SEK 1,750 million. Now turn to page three. As I said, it's a record number of completions this year, and we completed in total 800 apartments this year, and 400 of them this last quarter. I want to talk more about those projects on next page four. I start with Uppsala.
We completed three projects here, we also opened our new office here this year. Those 400 are our first investment properties here in Uppsala. We have one ongoing right now and more to start. We have an agreement with the Uppsala Municipality to build 1,000 apartments here, this is just the beginning. In Uppsala, we just build rental apartments. Turn to page five. We go on to Gothenburg and Helsingborg. Up to the left, we have Stallbacken in Mölndal. We have completed three projects here of, in total, 245 apartments, we have two more ongoing projects here. It has been a very nice area. Mölndal, it's close to Gothenburg. Up to the right, it's the Mid Avenue.
It's right on in the city center of Gothenburg on the avenue. On this picture, you see the refurbished office spaces. On the back of this property, it's new rental apartments, 35 new rental apartments. Down to the left, it's Stengläntan. It's in Helsingborg, of 110 apartments. This property will be taken over by Willhem during next year. We will have it under in our own management for some time, then they will take over the property. Now turn to page six. Here on the graph, you can see how our occupation has been during the year. It's an even pace of occupations during the year. But the main part, maybe on the second half of the year, it's 400 there. Now turn to page seven.
We have started as many apartments as we have completed during the year. If you have read Hans comments in the report, you can see that some of the projects we wait to see if the contract prices will be lower. We deferred some construction starts. Some of the starts will be also deferred because of the zoning plan process as the municipality has been delayed, for example, Kallebäck and Älta in Stockholm. We started 800 new apartments this year. If we turn to page eight, I will start with the Stockholm region, where we started in Tyresö Allén, 221 rental apartments and 54 co-op apartments. Now I know that you wonder, co-ops, will you sell it in to co-ops?
The answer is that we don't know, because as you may know, right now, we don't sell any apartments before we have a completed property. When it's completed, we will decide if we will sell it into co-ops or not. Turning to page nine. Umami, it's in Sundbyberg, our second project here in Umami of 75 rental apartments. This is one of the projects that we released in December that we converted into rentals from co-ops. To the right is Tre Vänner in Rosendal, Uppsala. It's our second project here in Rosendal of 141 rental apartments. Turning to page 10. We are in the Gothenburg region. It's in Mölndal. The picture to the left, it's Rödklövern.
It is nine rental apartments, temporary rental apartments in modular housing concepts. To the right, it's the last project in Stallbacken. It's Nivå fem in Mölndal. 109 rental apartments. It's the last one there in Stallbacken. Now we go to page 11. This is not Gothenburg region, but we include it in Gothenburg region. It's in Helsingborg. It's Pålsjö, where we started 96 rental apartments. This is the last project for us here in Helsingborg. This project, Willhem will take over when it's completed, and we have had it in our own management for a while. It will be during 2019. Now go to page 12. I will start with the financial information, we can go to page 13.
It has been a very good year for us in Wallenstam, and you can see that in our income from property management, which has increased by 10% compared to last year. We have an income from property management accounting to SEK 806 million. It's SEK 73 million more compared to last year. I will talk about the NOI on the next page, but I will start in this to tell you a little bit about the admin expenses. You see that it has increased by SEK 17 million, and in total, if we include the energy part and the transaction part, it's an increase by SEK 14 million in total. The reason is because we are 15 more employees, and we also work with GDPR. Maybe we are not the only one who have to work with that.
Also IT security, because it's very important to have secured IT security. The financial expenses are almost at the same level. In total, it's SEK 4 million better compared to last year if we take the energy part into account. That's despite SEK 2 billion more in more interest-bearing liabilities. We have a lower interest average rate to 1.93%. Now turn to page 14. The net operating income increased by 8% compared to last year. I will start to talk about the rental income. The increase in rental income is 9% if we exclude the transactions. As you see on this picture, the main part is from our new construction coming into management.
Like I always say, it's a more efficient property holding with the new construction because the new construction recognize the surplus ratio of almost 85%. We also see that we have a good commercial market, letting market with a low vacancy. We have a vacancy rate of 4%, area vacancy rate of 4% in the commercial part. We also have higher rents in the commercials. In total, it's SEK 94 million up. If we see, look at the operating expenses, we have increase of SEK 5 million in total. The main part is because we have a larger property holding compared to last year. You see that we have new construction with SEK 11 million more expenses. We also have higher maintenance as well.
In total, it's SEK 89 million up compared to last year, and we have a surplus ratio of 74% compared to 73% last year. Turn to page 15. The distribution of the rental income, 43% of the rental income comes from our residential properties, and 57% from the commercials and garage and others. 100% of the residential properties are occupied, and the economic occupancy rate in the commercial part is 94%. Turn to page 16. The income from natural energy has been SEK 20 million better compared to last year. The reason why is because we work with our wind turbines to have them more efficient compared last year. We have a production of 8% better compared to last year, and we also sold more energy certificates compared to last year.
Now the energy certificates are half price compared to last year. I will come back to that later on. The profit from co-ops and development properties amounts to SEK 48 million in total. You can say that the main part is from the selling of Vildvinet to Willhem in the beginning of the year. We have sold four properties. You see the realized changes in value of SEK 6 million. The one that we sold, it was around 50% surplus value in this selling. During the time that we have owned it's value growth in value of almost 5% annually. That's on top of the income from property management annually. Now turn to page 17. The unrealized value changes amounts to SEK 2.6 billion.
If you look at the fourth quarter, it's almost SEK 740 million. Half of it is from the new constructions, and the other part is from our existing properties. The reason is better and why. In total, the half year, we adjusted the yield requirements a bit because of the strong financial markets. The impairment losses on wind turbines, of SEK 200 million this fourth quarter and SEK 500 million in total. The reason is, like I said, on the last picture, is because of the energy certificate prices. It's a volatile market and uncertainty on the market. We value the energy certificates in our value model to zero. That's why we have an impairment loss of wind turbines. Now turning to page 18.
I will try to explain in a short summary, this is just an example how the economical effect of the switch from co-ops into rentals looks like. It's just an example. I will try to explain it. We have a calculated profit as co-op of SEK 70 million. When we convert it into a rental, we have a surplus value as rental of SEK 45 million. Instead of the profit of SEK 70 million, we have a surplus value of SEK 45 million. The difference is SEK 25 million. We will have an annual income from property management of SEK 4 million, which means that in six years we will have a break-even situation. It's in big terms, and it's without present value valuation. It's in a short summary of the situation.
I will emphasize that we have a unique situation because we can do this because we don't sell the apartments until it's completed. We don't need to pay the buyer to change into rentals instead. Now turn to page 19. We have investment properties up to SEK 41 billion, and it's recognized at fair value. We also have our properties on the line development properties and work in progress co-op apartments of 606. This line is recognized at cost. What happened now when we converted the co-ops into rentals is that they change line to the investment properties and are also recognized at fair value instead. On the line development properties, it's including now Vasagatan 33, Stengläntan, Pålsjö, which we will sell to Willhem, and Tyresö Allé.
Now turning to page 20. We invested almost SEK 3 billion last year in our properties. The constructions were the main cost, and also the acquisitions amounted to SEK 640 million. We bought six investment properties and four lands for further new constructions. This will be our future, that we will have an investment program of almost SEK 3 billion annually. Now turning to page 21. 34% of the value is in Stockholm region and 66% in the Gothenburg region. The reason why we have 66% in Gothenburg is because we have the commercial properties there. The average yield in the valuation is 4.7 in the commercials and in residential it's 3.2. The investment property value is SEK 33,100 per square meter on average. Now turning to page 22.
The equity has increased by 9% compared to last year, the interest-bearing liabilities has increased by SEK 2 billion compared to last year. It's SEK 18.7 billion. On next page 23, we will look at the financing. We keep our strong financial position with an equity to asset ratio of 44% and an LTV of 43%. The average interest rate on closing day amounted to 1.88%. We have an interest maturity average of 36 months, and we have a short credit term of around 13 months. If you look at the financing, we have bank loans of 72% of the interest-bearing liabilities. Like I said in the start of this presentation, we have more bonds compared to last year. We issued bonds of SEK 1,750 million.
Now we have bonds amounting to SEK 2.6 billion and also commercial paper of SEK 2.6 billion. In the beginning of this year, we issued SEK 400 more in bonds. Turning to page 24. We have one year left in our business plan, and for the first four years, we have created almost 17% on average in net asset value growth. For this single year, it's around almost, it's 13%. We are very happy for this and very proud of this growth. Turning to page 25. The dividend proposal is SEK 1.80 per share. It's a growth of 6% compared to last year, and a direct yield of almost 2.5% now.
This dividend will be spread over two payment dates and with SEK 0.90 each time. Turning to page 26. Some key ratios. I talked about the most of them before. You can see the surplus ratio compared to last year, it's 1% better. The ICR realized our own [guess] is 4.8 x. In our business plan, we have that we will not be under 2 x. You see our strong financial position is, we have still a financial position which are strong. Turning to page 27.
I would just end with to say that we are very proud of what we have done under 2017, and that we should prove for our flexible business model that we can handle this turbulent market regarding co-ops. This is not a big issue for us because we have organization, and we have a value growth in our rentals. We have also completed a record number of new constructions which you can see in our income from property management, which is increasing for every year. We have our commercial properties in the strong city center of markets, city center in Gothenburg. We see we have a low vacancy and higher rents.
Like I said, this is, we have started our last year in the business plan, and we think bright about the future and are ready to take advantage of the situation out there. Now, we go on to page 28, and I am ready for your questions.
Thank you. Ladies and gentlemen, if you do have a question for the speaker, please press 01 on your telephone keypad now. Our first question comes from the line of Tobias Kaj from ABG Sundal Collier. Please go ahead, Tobias. Your line is open.
Yes. Hello. Good afternoon.
Hello.
I was just wondering, do you already know what the rental revisions for residential will be for 2018? If so, how large are the increases, and how large share are already done?
No, they are not finished.
Okay. Do you know approximately when they will be finished or?
No, I'm sorry. I don't know that.
Okay. My second question is, you started 786 apartments during 2017. Will you keep up with the same level during this year or what can we expect from that? You mentioned earlier that you have waited with some of the construction starts to see if prices will come down for your construction prices. What should we expect there?
Yes. Some of the projects we wait because we think that we can get better prices, and some of the projects we wait for the municipality to have a zoning plan. We have the organization to start. It depends on the many things out there.
Yes. Okay. Thank you. That was my questions.
Yes.
Thank you. Our next question comes from the line of Albin Sandberg from Handelsbanken. Please go ahead. Your line is open.
Yes. Hi there. Follow up also on the starts. I'm thinking if you look back now into Q4, what your plans were once we exited Q3, was it for 0 starts, or could you quantify, you know, the mix between the kind of intentional decision not to start versus the decision by the authorities not coming through? Just a rough estimate.
Yes, I can say, correctly just how many, but some of them we, by ourselves wanted to start, we deferred because we think that we can get better prices. No one of the projects will be gone because we start them, but later on. Because we think that we have an opportunity to have better long-term yield if we wait. In other cases, for example, Kallebäck, we are ready to start, but the zoning can take time.
Yeah. Thank you. Perfect on that example you had on the rental and the co-op. I just want to totally make sure that even though it is an example that you're showing, would you at the end of that rental project and book a kind of valuation uplift of SEK 45? Is that how we should read that?
Yes, in that example.
Yeah.
Yes.
In that example, that is how it is. I mean, it's not going to be a negative-
No, no.
value for you. That is what you're trying to say.
No. That's our risk profile because before we start a co-op, we always have a rental calculation as plan B. Because we don't want to be to have a write down when we switch. This is how we work.
Also just, my final question is just on the statement you said there, Susann, I think you mentioned SEK 3 billion of investments, annually. I mean, how dependent, is that on, you know, you know, the decisions you are taking about maybe waiting for lower construction costs? Would you say that those SEK 3 billion are fairly certain for the next, let's say, two years?
Yes, more or less SEK 3 billion. It can be for maybe one year, but more or less SEK 3 billion.
Okay. Well, thank you very much. Those were my questions.
Yes. Thank you.
Thank you. I remind you that if you do want to ask a question, you will have to press zero one on your telephone keypad. Our next question comes from the line of Niclas Höglund from Nordea. Please go ahead. Your line is open.
Yes, good afternoon. A couple of questions.
Hi.
If I may. Firstly, you're talking about lower costs and opportunities for lower construction costs. Could you give us any indications in what areas are you expecting to sort of gain costs and what are the opportunities there?
We think that now it's on top. We think if the co-op markets go down, there will be less starts, and then it will be lower costs. I can't say how much.
The trigger for you to sort of, when would you expect to sort of, see the impact on lower costs? Or is it during the second half, or are you already today getting indications? What about the timing issues? When will we start seeing it?
No, I don't know. I can't answer that. If I could, I. We wait and see. Yes.
Okay.
Yeah.
And just to follow up, we're seeing that you're not the only one who is converting to rentals, although I guess your business model are more flexible than most of the other developers. Do you see any risk that the higher supply of rental units will put pressure on utilizations and on actual rents in this environment?
It's, the market is a huge demand for the rentals. We don't see a risk, no regarding write-downs or not regarding not letting it out. It's a huge demand for the product.
Okay. Then a follow-up on investments. I mean, you have a very strong balance sheet, even considering SEK 3 billion in investments, your financial position will remain. Do you consider to participate in joint ventures or acquire land in this environment? You've talked about opportunities, could you elaborate on what kind of opportunities you're looking for?
No, it's just balance some opportunities, not with someone else. Maybe we can have a cooperation, but not joint ventures. We like to be by ourselves.
Okay. Just a final question, if I may. We're starting to see where you have increased your capital duration a little bit. You're now giving us a number of 13 month. What are your thoughts on sort of extending the duration of your credit portfolio? What's your thoughts there?
Yes. It has extended because of bonds, but we don't pay to get a longer term, a credit term because we think it's too expensive. We don't see any refinance risk. If we have more bonds, automatically there will be a longer duration.
Okay. Those were my questions. Thank you.
Yes.
Thank you. There are no further questions at this time. I hand back to you, Susann.
Yes, I got one question from Simon at DNB. In our example of the surplus value for development turning from co-ops to rentals, what yields and interest rates are you assuming here? It's our yields. We have 6% in yield requirements, but it will not be 6% in the when we convert it from co-ops to rentals. We have an average yield requirement of 3.2%, but we don't have that in our new construction. I can't say exactly, but between 3.5% and 4.5%. The interest rate, it's 3.5% in our calculations. Will you consider hedging more interest rates given both rising market interest rates and the common financing cap suggested in the new tax law?
We have had some SEK 1.7 billion more swaps during this quarter, we have worked with that. Now we can see a rising market already, we have done this in better times than today. For today, we are fine with the situation. Question three: How you payable tax change with an interest rate cap on taxes? How you payable tax change with an interest rate cap on taxes? It's the low proposal. We have not, I can't answer that because we wait to see. We thought that we should have the proposal today, but probably there will be no proposal today. We wait for the final proposal to come with figures like this.
I have to come back in that question when we know more. We don't have any more questions on the mail. Do you have more? Maybe not. I say goodbye and thank you for listening today, and call me if you have more questions. Thank you.