Thank you. Good morning, and welcome to Wallenstam's presentation of the Q2 report for 2016. I'm Susann Linde, CFO and Head of Investor Relations here at Wallenstam. I hope all of you have had a nice summer, and we have a turbulent world with both Brexit and terrorism and other uncertainties and which all affect the financial market. The situation for Wallenstam is that our operations are going well, and we have control over the forecasted risks. Let's start the presentation and move on to page two. Our five-year business plan has come to halfway stage, and I will start to talk about our goal and how we work to create value into our goal. Our goal is to achieve a net asset value growth of on average 10% annually. Let's start how we create this net asset value.
Turning to page three. We think that net asset value is a good measurement to have as a goal in our business plan. The reason is that it measures every element in our operation. I will go through those examples here on this slide and how they create value into our net asset value and our report. Turning to page four. Let's start with our profitable new construction. We have invested SEK 1 billion this first half year in our new construction. Move on to page five. Our strategy is to create our own value growth through our new construction. At the moment, it is very expensive to buy a property. We invest the money in our new construction with a high yield of requirement compared to a bought property.
We require a yield of rate of 6.5% before we start a new construction. This first half year, the new construction gave us around SEK 600 million in value growth, and that's a third of the total amount of value changes this first half year. Now turning to page six. We keep the most of our new construction in our own management. As a direct result of a more efficient property with also higher rents, a surplus of 80%-85% achieves in the new construction. Here on this graph, you can see how much income from property management those new constructions started since 2008 and later has given us.
If you take all our new construction, which we have started since 2003 when we started our first new construction, those new constructions gives us around SEK 60 million in income from property management this first half year. Turning to page seven. One property which came in in our management this quarter, it's the new completed Månspinnaren i Norra Djurgårdsstaden in Stockholm. It's 122 rental apartments, and in this area, there are very high requirements of environment. Also the rents here are higher than compared to other areas. Turning to page eight. Here in this quarter, we have started the third phase in Stallbacken in Mölndal in Gothenburg. It's 82 rental apartments which will remain in our own management.
With this start, we have around 360 apartments here under construction, and we will build around 550 apartments here in this area. Turning to page nine. As you may be aware, we have decided to leave the Helsingborg market after a 30-year presence, but we entered a contract with Willhem to take over all our properties. We still have some building rights, which we will build, and then they are completed, Willhem will take over those properties. Except one property, and you have it here on the slide. It's L17, which we started here during this second quarter. These are 17 terraced houses which we will sell to 17 different buyers, and it will be completed in 2017. Turning to page 10.
In total, we have around 1,700 apartments under construction, and most of them we will keep in our own management, except those properties in Helsingborg and one in Stockholm. You can see Orangeriet in Solberga, which is a co-op project of 170 apartments. Moving on to page 11. The second part of how we create value is our value-creating investments in both new construction as well as in our existing properties, which leads us on to page 12. Firstly, our new construction, which on average gives a surplus value of 30%-40%. The reason is that we require the yield rate of 6.5% before we start the new construction. That's a challenge, and this challenge makes us work as efficiently as we can.
We have to work with every single detail in the new construction to achieve these 6.5%. Next to page 13. We also make value-creating investments in our existing properties. Here in this slide, you have Kungsgatan in Gothenburg, a property which we have refurbished and modernized all the premises here. We work here to create a more vibrant inner city with more shops, smaller shops, and then also a larger offer. This investment gave us high rents and also more lettable area. It's how we work with all our older properties to make them more efficient. Now turning to page 14. To achieve good result as property owners, you need to work with a more efficient property management.
We work with this all the time in different ways. On the following slides, I will give you some examples. Turning to page 15. Our strategy of having the most efficient property management is to work with these things. For example, on this slide, you have to have the right knowledge and also to have the most important specialized expertise in-house, like technical managers and service and maintenance optimizers. It's also very important to have the right partners who manage the properties in the best way. We also make annually update long-term maintenance plans for every single property. We also review all of our contracts and our operating expenses to reduce what we can. Turning to page 16. One way of reducing expenses is our energy-saving projects. It's also beneficial to the environment. Here are two examples.
To the left, you have Rosenlund in Gothenburg, where we have reduced the energy usage by 29%, and that's despite of more tenants, as well as tenants who uses more energy. This is a very successful example. To the right, it's an ongoing project, of Turionhuset in Gårda in Gothenburg, where we do a total facelift of the property. At the same time, we also do investments in energy saving and optimizing the comfort in the property. Turning to page 17. However, it's not only a matter of working with expenses. You also need to have satisfied customers. It's the most important thing. We work hard to have satisfied customers. For example, we won the prize for the best service index increase in the beginning of this year.
It's also important to attract new tenants and create interesting areas around the properties. As a result of our work, we have a vacancy rate of 98% in the total holding, around 5%-6% in the commercials. Turning to page 18. One example of our successful letting, it's in Kopparhuset at the Avenyn here in Gothenburg, where we have fully let the property after a huge refurbishment of the total property. Here we have some exciting new tenants, we hope our further investments here in this area will do the Avenyn like it used to be, attractive for new future tenants to move in. Turning to page 19. Our strategy is to switch older properties, older residential properties into new constructed residential properties to have a more efficient property holding.
We have sold a lot during the last years. It's time to do this switch now. Leads us to page 20. During two first quarters, we have sold properties at the value of SEK 730 million. It's 18% over booked value. Turning to page 21. These things that I have mentioned gives us a growth in our net asset value. On the next page, I will present by how much. Let's turn to page 22. As I mentioned, we are half time in our business plan, two and a half years.
During this 2.5 years, we have created value of SEK 5.5 billion, which gives us an average of 13.4% in value creating creation during these years on average. During this latest 12 rolling 12 months period, we achieved 15%. Now, turning to page 23. Let us focus on our financial information for this half year of 2016, and move on to page 24. To start with the Income from property management, which has increased by 9% compared to last year. The rental income has increased by 2% in our comparable holding and 4% because of our new construction, which are completed and came into our management. The operating expenses are at the same level as the year before, despite the colder weather.
You can say that it's a zero-sum game for our divested properties and our new constructions. Because of higher rents in our new constructions, we get a higher net operating income as well as a higher surplus ratio of 0.5%. The average interest rate for the period is 2.10%, which gave us a lower financial expenses of SEK 17 million. Now, turning to page 25. The income from natural energy management is SEK 43 million lower than last year. The main thing is the reduced wind, which gave us 25% less production compared to last year. That combined with lower and falling energy prices gave us this result. The income from natural energy includes a depreciation amounted to SEK 48 million, which means that the operation gives a positive cash flow.
Last year, we had a lot of cooperative divestments of entire projects. This year, we just have individual apartments to sell. That's the reason why it's a lower operation here in this segment. Move on to realized changes. As I mentioned, we have sold properties at a value of SEK 730 million, which gave us a profit of just over SEK 100 million, and it was 18% over booked value. Turning to page 26. The unrealized changes in properties recognized at a value of SEK 1.6 billion for this first half year, and the third was because of our new constructions. In our other holding, it was around SEK 1 billion, and it's because of both the market situation with a huge demand and higher prices and as well as our work with more efficient management and higher rents.
If you look at the unrealized changes in our financials instruments, it shows a negative result of SEK 366 million. The reason is that the interest rates are falling and which affect our value in our derivatives. This is doesn't affect the cash flow. Turning to page 27. Look at our financial position. The main asset is our investment properties at a value of SEK 34 billion. We have invested SEK 1 billion this first half year. Of this SEK 34 billion, SEK 3 billion is value which are not cash flow because of its the costs in our new construction as well as in land. Turning to page 27. The equity is SEK 700 million more compared to year-end 2015.
This equity, it includes Deficit in derivatives of SEK 1.2 billion, which will gradually come back when the derivatives mature. The interest-bearing liabilities mainly consists of bank loans. It's 75% from bank loans, we have also issued green bonds and commercial papers. Turning to page 29. Let us look at some key ratios and begin with our surplus ratio. It has increased by 5 basis points, the reason why it has increased, it's just because of our new construction, which are very efficient. We also retained our financial strength, both in loan-to-value as well as in equity to asset ratio. Every figure is on the right way. Turning to page 30. It also feels great to see that the liquidity in the share is still increasing.
On average, we have a daily turnover of around SEK 23 million or SEK 24 million and per day. Turning to page 31. I would now like to make a summary of what I have told you now. We are at halftime in our business plan shows an increase of on average 13.4%. Our operations in both new construction and in existing properties are going well. We are well equipped for the future challenges, and we have the risks in mind and think we have a good situation to handle them and a strong financial position. We will keep on creating value in the future. Finally, I will also take the opportunity to of doing some advertising of our coming event.
You can see here on the picture the well-known chef Marcus Samuelsson, which will come to our Umami project in Hallonbergen in Stockholm. He will have a pop-up restaurant there for some days in August, 21st to 22nd August. Now turning to page 32. With this beautiful view of Barnens Ö, which we sponsor to enable more children to join this summer camp in the Stockholm archipelago. I would like to thank you for listening, and I'm now ready to take some questions.
Ladies and gentlemen, if you have a question for the speaker, please press zero one on your telephone keypad. There will be a brief pause while questions are being registered. Our first question comes from Erik Granström from Carnegie. Please go ahead. Your line is open.
Thank you very much. Good morning. I had a couple of questions, if I may. The first one, is related to the number of starts. I believe you started 381 units so far in 2016. I know that your goal is to have somewhere around 1,500, per year, by 2018. Do you still feel that you could reach the 1,500 by 2016, meaning that you will have to ramp the number of starts for the second half?
Good morning. Yes. This Q2 , we have over 100 starts. In this business plan, we will have 7,500 apartments to start, and we believe in that. Yes.
Okay. That means that you think that you can start more than 1,000 units then, during the second half of this year.
Yes. We have this 7,500 as a goal. Not a goal, a guideline.
Okay. All right. My second question then is related to the costs that you have in divesting co-ops. I noticed that the costs were actually a little bit higher than your profits or the revenues for divesting co-ops in the Q2 . I assume that that's related to the fact that you did not divest that many co-ops. Is the cost base in Q2 sort of relevant for every quarter? Should we expect that you do have costs somewhere around SEK 25 million-SEK 30 million per quarter, and then depending upon how you divest, it should be a positive or a negative number?
The reason why it looks like it does is because our co-ops, we recognize the costs when they, what? Appear. Thank you. When they appear. If we have future projects and we have to have some costs before we start a new construction or something, we have to recognize them at day one for maybe it can be for selling. The revenues, the expenses and the revenues, they aren't at the same time because we have to recognize the costs when they appear.
Okay. Does that mean that you expect that these costs will increase in the second half given that you expect more starts to come up, or have you already taken those costs to the increased number of starts?
No. They come when they appear. This isn't how it will look every single quarter.
Okay. My final question.
Okay, thank you.
What?
Did your final question or do you have one more?
No, I have one more question.
Okay. Sorry.
That, that's fine. My final question is related to construction costs.
Yes.
The construction industry in Sweden is obviously running at full cylinders right now. Have you seen any increase in construction costs? It's been a lot of talks among developers that the cost for construction is actually going up and is something that you have noticed at all during the first half of the year and is it something you try to handle? If so, how for your production going forward?
Of course, it's always a challenge and we work with this all the time. Because of our requirement of 6.5%, before we start a new construction, we have to work with this. Like I said, it's a challenge. The challenge is higher now, compared to three years ago, so.
Okay. In that case, that was my final question. Thank you very much.
Yes, 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, Nordea.
Good morning.
Good morning. A couple of questions. Firstly, if you could try to break down the revision to asset values for which stands out on a very high note in this quarter compared with your peers. You talk about higher rents, you talk about lower yields, which we've seen and better surplus ratios. Could you try to break it down a little bit more in which regions and, well, maybe the magnitude of the rental increases?
Yes. Like I said, the market shows huge demand, they pay at a lower yield. We only work, you compared us to our peers, we just work in the most growing cities, Gothenburg and Stockholm, and that's one reason why we shows those value changes. 1/3 of them, you have to keep in mind, is from our new construction, which we are that you can't have to compare with our peers. The rest is both because of efficient management as well as we are in the right markets.
Okay. When you look at your on-ongoing portfolio of construction, which is, well, only almost related to rental apartments, would you say that assuming that you're able to ramp up your production even further in the second half, that the run rate will be very similar in the coming quarters, or do you have a couple of projects which is, well, with very low input value, so to speak?
It's an extremely in demand after our product and, we will start to build whatever we can.
Okay. When you look at the acceleration of your product portfolio going into the second half, would you say that it would be more related to co-ops, compared with the current portfolio mix or will it be very similar with a high degree of rental projects?
No, it will be almost the same. We have also if the market switch to worse prices of in co-ops, we can change it into our rentals instead. It will be almost the same.
Okay. Then I have a couple of questions, if I may. Firstly, on your energy assets, you're talking about 25% less wind. I didn't see that coming. The energy prices have stabilized on a clearly higher level. What's in your assumptions here? You don't expect the wind to sort of recover, or should we expect a slightly higher recurring losses in the quarter to come now from your assets? Please give us some more on that.
Yes, the energy prices assume it's less better now. If you think about the market value from our wind turbines or is it just the recurring income?
I think it's I think the combination is pretty important.
Yes. We have, we do evaluation every year, and we think we have the right value now. In this forecast, we have low energy prices in this market value.
Okay. you haven't taken well, 10%-12% increase since the Q1 in your assumptions.
No.
Okay. Maybe a final question. If you could elaborate a little bit on your buyback strategy. You bought back 1 million shares in the quarter and SEK 1.8 billion in the first half. You now own 10 million shares. Should we expect these shares to be canceled? You maybe also a follow-up. You do say that you think that it's expensive to buy in this market, but isn't that in fact what you're doing while buying back shares at a premium? Thank you.
Yes, we have 10 million in our own now, and it's the board who decides what we will do with the shares. We have 10 million, and we haven't canceled them.
Yeah. Is that the plan or?
We can do whatever. We can cancel them, and we can also use them in business, and yes.
Okay.
It's the board.
We should expect that to continue in the second half then, the buybacks.
Maybe. We buy when we think it's the right time to buy.
Okay. Thank you.
Yes. Thank you.
Our next question comes from the line of Mattias Montgomery from ABG. Please go ahead. Your line is open. Mathias Montgomery, if you are muted, please unmute yourself. Your line is open for your question.
Good morning. I think most of my questions has been asked already. Just one question from my side. How will the increased leasehold fees affect you? That is the tomträttsavgäld.
Of course, it will affect us and as well as the tenants. If we have a higher fee, we have to raise the rents, so it will affect the tenants.
Will that be directly transferred to the tenants, or will it be subject to negotiation with the tenant association?
Yes. We have to do a negotiation. If you want constructors to build, you have to have the right situation for us to have the possibility to build. It's a negotiation.
All right. Thank you.
Thank you.
As there are no further questions registered, I will return the conference back to you, Susann, for closing comments.
Yes. We don't have any questions on the mail either. If that's all, I thank you all and wish you a good, happy ending of the summer. Thank you.