Welcome to this presentation for this first half year of 2017. Hope you all have had a nice summer or have a nice summer. Let's move on to page two. We are very proud of this first half year, the business is going as planned, and the result is again better. I will start as always with some highlights from this second quarter. As you all know, we are very active with our urban development project in Sundbyberg, Hallonbergen, with Umami Park. Hopefully, we can continue to work with our work to develop the area around Hallonbergen because we participate in a competition to develop this area. We have now come to the next stage in this competition, so it's just Wallenstam and Balder left.
We also have been allocated land in northeastern part of Stockholm County, Österåker. Österåker is 30 km Northeast of Stockholm. It's 30 minutes by car. It's an expanding attractive place with a population growth trend. The plan is to start around 400 apartments here in two different projects in the middle of next year. Since we completed our first construction in Uppsala this quarter, we have also opened our new Wallenstam office here. It's situated in the center of Uppsala. Something big happened to all of our employees in May. The share price reached SEK 80 for five days, and the synthetic option scheme was redeemed. It does not affect the share at all, but it affects our cash flow. It's just a payment to all of our employees, and I will come back to this later.
Let's turn to page three. This second quarter, we have completed 190 apartments, mostly rental. I will talk about every project and start on next page four. Start with Mid Avenue Valand in the center of Gothenburg on the Avenyn. If you have watched our video presentation today with Hans and I, it was here where we stood and did this presentation. Here on this slide, you can see the rentals to the right with the brick facade, and to the left, the commercials, Mässingshuset with a brass facade. We have built 35 new rentals here and office spaces, and they are mainly let out to the luxury business hotel concept Convendum.
On this slide, you can see the property from the back street to the avenue, Teatergatan, which has been more living since we upgraded this property and the other higher up on the street, Kopparhuset, which we completed two years ago. If you come and visit Gothenburg, this street is worth a visit, I think. Now turn to page five. As I mentioned as a highlight, we have completed our first project in Uppsala, it's the Snickeriet of 137 rentals. It feels good to finally have our first project completed here, we will soon have two more projects completed in this year. Now turning to page six. Move south in Sweden to Helsingborg, where we have completed a small project of 17 terraced houses.
15 of them are handed over to the customer, and the other two are sold, but they are not handed over during this accounting period. Now turning to page seven. It has been a very active quarter regarding started new constructions. We have started around 450 apartments this second quarter, and that's a record. It's in four different projects, and I will talk more about them on next slide, page eight. Start with Umami Park. This is our second phase here in Umami, Hallonbergen, where we have started 75 Co-ops. It's next to our ongoing project of rentals, 147 rentals. The estimated completion is in 2019. It will be very exciting to see how this area will develop to a living and attractive place to live and socializing.
Now turning to page nine. We have also started our third project in Tyresö. It's a nature-rich environment in Tyresö. This is 54 Co-ops, Terrassen Elva. It's a brick facade and a roof terrace with a view over the whole Tyresö. The completion will be in 2019. Now turning to page 10. Close to Terrassen Elva, we have also started 221 rental apartments. They will also be completed in 2019. The apartments are 1 room- 4 rooms. Now turning to page 11. Our last project in Helsingborg is Pålsjö, a project of 96 rental apartments, which will be sold to Willhem when we have completed and have them in our management in one quarter. Willhem will take over the property. It will be completed in 2019.
Turn to page 12. If we summarize now, we have just over 114,000 sq m under construction. It's almost 2,200 apartments. It's a record number for us. You can say that almost 30% of those are Co-ops or properties developed for sale to Willhem. The other 70% is rentals for our own management. Turning to page 13. We don't see risks in our new construction projects. As long as we can keep our cost focus and build as cost-efficient as we do, we don't see risk because there are huge demand for our products in the cities where we construct. We have an own queue with for Stockholm and Uppsala, where we have more than 25,000 registered.
Regarding Co-ops, as I mentioned before, we can switch that into rentals if the Co-op market went down. As long as we can focus on our costs, we don't see any risks. Now turning to page 14. Go on and talk about our satisfying results, and start on page 15. Turn to page 15 and start to talk about our income from property management, which has increased by 12% compared to last year. We have 170 apartments coming into management from our new construction. Because of our cost-efficient way of building, we create this satisfying income from property management. The rental income increased by almost 4% because of our completed new construction. It's not just the new construction that creates value. We also create value in our existing property holding.
Turn to page 16. The letting market is very good. Our residential properties are fully let, we see a strong demand for our commercial premises. We have a low vacancy rate in the commercial premises of 4%. It's very important to work close to our commercial tenants, so we can sell if they want to get a bigger premises or smaller. We also have our properties at the right places and have attractive properties. That's why we have such a low vacancy. Turning to page 17, o ur Net Operating Income increased by 6%. If we start with the rental income, it increased by 5%. It's SEK 40 million. With our property sales, it's a growth of 8%. Half of it is from our new construction.
It's both because of the 170 apartments that we completed, but also the one that we completed last year. We have also successful letting operation, resulted in +SEK 29 million, where the main part comes from the commercial letting, and it's also included the property, the higher property taxation. The operating expenses increased by SEK 4 million. One reason is larger property holding, but also because of higher property taxation. You can see that -SEK 8 million. We also had a warmer climate, which gave us +SEK 3 million. The property taxation, like I said, we invoice our commercial tenants that amount, so we also get higher rental income. In total, and to summarize, half of the increase comes from our new construction, and the other half from our existing properties. Now turning to page 18.
Start with the income from natural energy operation. It's around SEK 30 million better compared to last year. The main reason is that we sold Energy Certificates on forward prices a lot more compared to last year, but also that we had a higher production compared to last year. Before depreciation, we have a result of +SEK 34 million from the energy operation, so it gives us a positive cash flow. When I started my presentation, I mentioned the synthetic option scheme that was redeemed in May. The cost for this quarter is SEK 54 million, but in total, it has the cost for the company is SEK 138 million. We have recognized that successively during those 3.5 years. During this second quarter, we haven't sold any property except.
The development property L17 in Helsingborg, but that selling is recognized on the line combined with Co-ops. Turning to page 19. We recognized unrealized value changes in properties of SEK 1.6 billion. It's on the same level like last year. It's 4.5% value growth in our investment properties. You can see that it's looked like the new construction doesn't have such a high growth like last year, SEK 247 million compared to SEK 688 million. That's because of two things. First, we had a one-off adjustment last year.
The other one is that, like I mentioned before, we have a high proportion of Co-ops and properties developed for sale, and these constructions are under another accounting principle, and we don't recognize the profit or the surface value until the buyer take over the property. On all our other constructions, we take the surface value successively during the building time. We have also written down our wind turbines with SEK 300 million. The main reason for this impairment loss is because of the decreased prices of Energy Certificates. Energy Certificates is the support system for renewable energy. The price has more than halved compared to year-end.
After this, we have a value of SEK 900 million in wind turbines, we have to keep in mind that we are self-sufficient in renewable energy, and we are very proud of that. Now turning to page 20. Our balance sheet has continued to strengthen. Our property value is almost SEK 39 billion. It's SEK 2 billion growth since quarter four of 2016. We have almost SEK 4.5 billion as non-cash flow assets. It's land and ongoing projects, a total SEK 4.5 billion. We have invested just about SEK 900 million this first half year in land and new construction. Now turning to page 21. In total, we have properties at the value of almost SEK 40 billion. In this graph, you can see the proportion between those.
We have 91% are investment properties, 7% are investment properties for ongoing projects, and 2% is Co-ops and development properties for sale. Now turning to page 22. Total equity is SEK 3 billion higher compared to the second quarter 2016, which means that the equity per share is SEK 10 higher. To look at our strong financial position, let's move on to page 23. The equity ratio is 45%, where we have a mission not to have under 30%, so we are way above that. We even have a low LTV of 42%. Our interest bearing liabilities have an interest maturity level of 36 months and an average interest rate of 1.95%. You can see on the graph financing there, during the second quarter, our first bonds expired.
That's why the level of bonds have turned down to 5%. Those bonds had a value of SEK 900 million. We keep on working to have the most efficient financing combined with our business model. Turning to page 24. You all know that we have a goal to have a Net Asset Value growth of at least 10%. This rolling 12-month period, we recognize almost 22% corresponding to SEK 4.3 billion. We have 1.5 years left of this business plan. It looks good, and we are very proud of it. Turning to page 25. Talk a little bit about those proposed tax regulations.
The first of them, I talked a little bit about it, last conference call, and it's regarding property packaging, where the purpose is to tax, the difference between the market value and the tax residual value. The other one, which, we think is worse, is the proposal of the limitation of interest deduction. This is a threat to construction of new rentals. It's already an advantage to build rentals today, and this proposal is not in line with the government's will to build more rentals with a low rent. Hopefully this will not be for real. Now move on to page 26. We are very proud of this first half year, and the business goes in line with, the plan. We have a very successful letting with the best strategic property holding.
We have many interesting and attractive new constructions in front of us. We can continue to create value because of our successful cost-efficient new construction. With those words, I'm ready and ready for some questions. Turning to page 27. I'm ready for some questions now.
Ladies and gentlemen, if you have a question for the speaker, please press zero one on your telephone keypad now. Our first question comes from the line of Tobias Kaj from ABG Sundal Collier. Please go ahead. Your line is open.
Thank you. Congratulations, a very strong set of results. I would like to start to ask regarding production starts. Obviously, it was a very high figure in the second quarter. Can you give some more information about the output for the second half? Do you expect to be able to continue to increase or continue to start new projects and increase the number of units in production?
Hello, Tobias. My answer to that question is that we follow the plan that we set from the beginning. Our business plan is to build 7,500 apartments. We keep on working with that plan.
Okay. Thank you. Second question regarding value uplift. You had a relatively large uplift in the second quarter, and it's mainly related to existing properties. As I understand it, a big part is yield compression. Is it some specific transactions that's a result of this? Or why do we see this relatively large uplift in the quarter?
No, we can say that the market has been strong for a long time, we haven't been so. We could have lowered the yield before, but we think that we want to see a long-term yield. We can see transactions at lower yields than compared to what we have in our valuation today. We think that we have the right valuation at the moment.
Can you indicate how big is the spread between the commercial properties and the rental apartments?
We have 3.23% in residential and 4.91% in the commercials.
Okay. Thank you very much for taking my questions.
Thank you.
Our next question comes from the line of Niclas Höglund from Nordea. Please go ahead. Your line is open.
Yes. Good morning, Niclas Höglund from Nordea. A couple of questions, if I may. Firstly, maybe if we could have some more flavor on the tax proposals. I appreciate that you hope that it won't get passed. What would be the effects on your pay taxes if we were to see those limitations that are outlined in the white paper? Thank you.
Yes. The big effect is that we have to higher the rents to have the possibility to build rentals. No one wants to have higher rents.
Okay. What about the tax proposals? I'm still assuming that the sort of rental levels that we have for in Sweden will be limited.
But-
What?
If we have this interest deduction limitation, the possibility to build rentals will be much, much harder. We did a brochure about this to see the effect for not just for Wallenstam, for the business. It was almost SEK 1,000 for normal three rooms.
Okay. what on the current portfolio, but on the current portfolio, what would be the impact on the property tax proposals?
I can't say that because we don't think that. We focus on to just answer on this proposal about how that affects the new construction of rentals. That's our focus right now.
Okay. Fair enough. We'll come back to that, I guess. On production costs. We're seeing now that the production of both Co-ops and rentals are increasing quite substantially throughout the country. Have you seen any more indications of rising production costs? Would you say that that is a limitation for you currently to keep your return requirements?
It's an advantage all the time. We can keep our costs and that's. It's a hard work and it's. Yes, it like. We have to be very careful and because of, like I said before, that we have those, our property portfolio, our new construction portfolio, we can also get the best contract workers and. We always have to keep the cost control. It's an advantage.
Okay. Then a little follow-up on the Co-op contribution in the quarter. It was slightly negative. It was very strong in the sort of first quarter. Is it more of a timing issue, or would you expect that in now when you've increased your production on the Co-op, that the contribution will be higher?
Why it looks like that is because we have more administrative costs this quarter compared to, the first quarter.
Okay, more SG&A then. That will continue then throughout in, h as that increased because of you also having increased your focus on installs or is it temporary?
You could say that. We, the next, we have those two terrace houses left in L17 as a Co-op. We have the one we sell to Willhem, and next one will be our Co-op in Gothenburg and Stockholm, Vasagatan and Grönskan. Randstad, sorry.
Oh, okay. Okay. Thank you very much.
Thank you.
Ladies and gentlemen, as a reminder, if you have any further questions, please press zero one on your telephone keypad now. As there are no further questions registered, I will hand the call back to the speaker. Please go ahead.
Yes. We got a question from Simen Mortensen, DNB . How do you consider the buffers in yields on apartments increased in swaps in recent months versus increased swaps since recent months? We think that, like I said to Tobias, that we have the right valuation. If we think about what we also when we build a new constructed property, we have a yield of around 6%, and that's quite a good buffer. You had another question. How will you consider the new taxation law proposal might impact your NAV? Will you operationally do anything on the apartment stock? We have the plan of 7,500 apartments, we will give the government an answer on this proposal.
It doesn't matter if we take into account what the proposal says today because maybe nothing will be for real. We come back to that question when we know it will be when it's not just a proposal. I come back here to that question at that time instead. Now I feel ready, and thank you all for listening. Thank you.