Thank you. Welcome to the presentation of Wihlborgs Q3 2020. It's a challenging time, but definitely with bright spots and there is more light in sight. Our strong fundamentals are resilient, and during this time, we have even been able to strengthen our key figures. That's good. Actually, really good. It comes, of course, with some effort. I'm very proud to be a part of a very well-functioning team with high focus on our customers and not letting the smallest possibility slip away. That's what's behind the fact that we succeed to have a positive net letting also this quarter, even though the quarter has almost only consisted of one active month, September. We often talk about stability, flexibility, and how important it is to be responsive to changes as keys to long-term success. In challenging times, these things are even more important. That's not enough.
We also need grit, that magic force. Wihlborgs has both stability and grit. During the first nine months 2020, we increased our rental income by 5% to SEK 2,323,000,000. The operating surplus increased by 5% to SEK 1,699,000,000, and income from property management increased by 7% to SEK 1,411,000,000. Actually a new record. The surplus rate during Q3 was 74% and 73% for the period. The net result amounts to SEK 1,528,000,000, which corresponds to SEK 1.9.94 per share. Of course, the year has been affected by the corona pandemic, but our way of working has so far seems to be sustainable. We have the possibility to go to work to a bit higher degree than in many other places, and things happen when we can meet.
The volume of contracts signed during the year is lower than last year, but under the circumstances, still at a quite good level, and most important, increasing. Page three. We have, during Q3, signed leases at a value of SEK 49 million, same as Q2, and the net letting was SEK 3 million, SEK 15 million for the period. We haven't signed any specific large deals during this period. It's rather several small ones that make the difference. On the other hand, we have a few single terminations that affect the figures on the negative side. One is a tenant in Lund that finally, after many years of options and discussions, have decided to stay in Lund in the same building, pay a bit higher rent per square meter, pay for refurbishment, but also decrease the area.
We are happy that we now have a longer lease. It still affects the net letting in a negative way this quarter. Public tenants and logistics and production continue with new demands. One example is Kranen 2, where we now in October have signed another 4,400 sq m for public tenants. For example, it's the police education that grows. That's not included in the figures here in the presentation, of course, but I see it as a signal that decisions now are made again. Page four, the net letting in a historical perspective. It's positive figures both in the quarter and in the period. Page seven. No, page five. Seven out of 10 largest tenants are from the governmental sector. That's important in the long-term perspective. The rental income which come from public tenants is up 1%- 23%.
Public tenants are important in our portfolio, but it's worth mentioning again that the wide spread of many sectors in our region is also a strength. Page six. Rental value is now SEK 3,287,000,000 per year. In rental growth like for like, the rental value is up 3.6% to SEK 3,135,000,000 and +2% in the rental income. Vacancy is slightly up, but we perform well in relation to index. Page seven. The occupancy rate has no big changes. 93% for offices in Malmö and Helsingborg. Lower in Lund, 86%, and we will continue to see that picture for some time. We have created this vacancy both in Raffinaderiet and Studentkåren, preparing for large refurbishments and also structural changes in tenant clusters. The operating surplus from offices summarized to SEK 1,896,000,000 and a running yield at 4.9%. Total value SEK 38,307,000,000. Page eight.
We see continuous high demand in logistic and production, even if the vacancy is slightly up this quarter. In total, 91% occupancy, a running yield of 6.5%, and a total value of SEK 7,160,000,000. For the entire property stock, page nine, the occupancy rate is 91%, operating surplus SEK 2,359,000,000, and running yield 5%. Page 10, changes in market value of our properties. We have made acquisitions for SEK 245 million, invested SEK 859 million, sold properties at a value of SEK 110 million, and we have changed the valuation of SEK 422 million. Together with currency translation of DKK 106 million that summarize the property value of SEK 47,041,000,000. Changes in valuation are affected by the agreement to divest 21 properties in the north part of the harbor in Malmö. Page 11. The positive trend of increased value in the portfolio since 2005 continues.
We have a map of our value at page 12, 43% of the value in Malmö, 18% in Copenhagen, 22% in Helsingborg, and 17% in Lund. No changes since the last report. Page 13, a glance of the general situation. The region keeps up the tempo quite well. We have a possibility to keep a healthy space, both as our way to work and at work. That means that we, in a bit higher grade, have the possibility actually to meet. That makes a change. Several tenants have asked for increased areas to be able to keep distance at work, but mostly they can cope by a combination of working from home and at work. The activity is definitely higher now, but still, it's crucial that we act very responsible.
There are, of course, differences between Sweden and Denmark, but the majority of business continue in some kind of new normal way. Over to you, Arvid.
Thank you very much, Ulrika. Moving to slide 14, looking at the income statement for the third quarter isolated. You see that rental income increased by 4% to SEK 775 million. Operating surplus was up also 4% to SEK 574 million, and income from property management amounted to SEK 477 million, up 7%. For an isolated quarter, both operating surplus and income from property management are actually at record levels. We had in the quarter change in property values of SEK 335 million. That figure has been affected partly by the divestment that Ulrika related to earlier, where we sold 21 properties in the Malmö area. We've had a positive effect as we have on the remaining logistics and production portfolio lowered the yield requirements slightly, and we've had a negative effect on valuations of somewhat increased inflation assumptions in the valuation models.
All in all, for the quarter, plus SEK 335 million. Virtually no changes in the value of the derivatives and a profit for the period of SEK 820 million. Excuse me. Moving to slide 15. If you look at the rent collection for Q4, you see that we have as of end September, agreed to rent deferrals of SEK 32 million, and the majority of those will be payable in Q4 and Q1. We have agreed to discounts amounting to a total of SEK 14 million. That is the total number which has been approved during the period Q1 to Q3. When it comes to payments discipline from our tenants, of the rents due end September, 95% has been paid in as of October 20th. That is quite in line with how the past six quarters have looked.
You can note that we have actually a receivable on one of our public tenants of SEK 15 million, which has not been paid for administrative reasons. All in all, payment discipline is quite normal also in this current environment. On slide 16, you can see the details of the balance sheet versus 12 months previously. Investment property value has increased by SEK 1.7 billion. On the other side of the balance sheet, the large effects are that borrowings actually in the same period has decreased by SEK 0.3 billion, while equity has increased by SEK 2.4 billion to SEK 18.7 billion. On slide 17, those numbers translated into key figures show that our equity assets ratio now stands at 38.4%, up from 35.3% 12 months previously. Leverage is at 52.3% and our interest cover ratio, a very strong 6.7 times.
The EPRA NAV per share now stands at SEK 147.63, and adjusted for dividend, that is actually up 17% versus 12 months previously. On slide 18, you can see the historic developments of the EPRA NAV per share, and the increase of 17% is actually the average annual growth that we have shown since 2009. Moving to slide 19, you can see the historic development of our financial ratios, the equity ratio moving gradually upwards now at 38.4, which is basically the highest as it has been. The loan-to-value gradually decreasing, 52.3. The interest coverage ratio increased a lot, as you remember, end 2018, and now is stable at 6.7 times. On slide 20, you see the metric net debt to EBITDA in a historic perspective. We feel that that is a good proxy for the financial stability in the company.
Net debt now stands at 11.1 times EBITDA as of end Q3 2020. On slide 21, you see the sources of financing for us on the loan side, total debt SEK 24.6 billion. A bit less than half bilateral bank loans and about a third from the Danish mortgage loan system. Just over 20% of our external financing comes from the bond market. On slide 22, you see the details of our loan portfolio. The average interest rate now stands at 1.32%. That is excluding costs for unused credit facilities. The average fixed interest period is 3.3 years. The average loan maturity 6.2 years. On slide 23, you see the historic development of the loan maturity and the fixed interest period. The loan maturity continues to be at around six years, where it has been over the past few years.
My last slide is slide 24, which shows our available funds. That is unused credit facilities plus liquid funds as of end September. I think it's worthwhile noting in this still somewhat uncertain environment that over the past few quarters, the average available funds for us has been actually over SEK 3 billion versus a historical average of just over SEK 1.5 billion. I think that is also a sign of the financial stability that we have. With that, I will hand back the word to you, Ulrika.
Thank you. It's time for the chapter acquisitions and divestments. Page 26, we have agreed to sell 21 properties in outer Malmö in North Harbor, Arlöv, and Burlöv. Transaction day is 1st of December. The buyer is Blackstone, and we sell a property value at SEK 1,430,000,000. The total area is 124,000 sq m, and our book value at end June 2020 was SEK 1,079,000,000. A part of the difference is, of course, a portfolio premium, but we also see that this kind of properties have a great interest created by its long-term stable rental flows. Some investments are needed in the area in the future, but a city will always have needs for different kind of workplaces. Page 27. We have also bought Blekinge 5 in Hyllie, Malmö.
We have developed this project together with the municipality of Malmö during a few years, and now we have bought the land.
More about this project later on. page 28. We bought Baldersbuen 5 in Hedehusene, Copenhagen. It's 55,000 sq m land and 6,300 sq m lettable area. It's fully let to DSV Materialudlejning A/S, whom we also have signed a new lease from the 1st of January. Let's go to investments in progress. page 30. We have from January to September invested SEK 859 million in ongoing projects, and it remains SEK 798 million to invest in already made decisions. Overall, the projects continue according to plan without any specific effects from corona. As mentioned in other occasions, we also see it as a contribution to a region that we can continue with our investments, not at least since we use many local suppliers. page 31. Ursula 1 or Prisma is now in its last phase of completion.
We invest SEK 405 million so that, for example, Hetch, SAP 46, Resurs Bank, and KPMG can move in here. We have tenants on all floors and ongoing offers on all remaining areas. We signed a new lease with a law firm last week, but it will take some more time until every square meter is signed. Still a very successful project. Page 32. Next large project in Helsingborg is Terminalen 1, Helsingborg Central Station, a large and very complex project which have worked very well. It's soon to be completed. A few restaurants have signed, and even if times for restaurants are challenging at the moment, nothing can stop this place from being in the very center of Helsingborg with a large number of people connecting here every day. The office spaces are really attractive, and the remaining offers will soon be signed. Page 33.
Musköten 20 is the last large ongoing project in Helsingborg. The tenant has started some work with their installations, and the building is under completion. A top-class premise. Page 34. We are at the first phase of the conversion project at Raffinaderiet 3 in Lund. The old tenants have soon moved out, and we are in full speed with preparation and planning. We invest SEK 140 million in 5,800 sq m modern offices with an industrial touch and the place is attractive, just beside the central station. We calculate the yield on cost to be just above 6%. In an average office project, we expect 6% yield on cost, but here, we can achieve a bit more. Page 35. In Malmö, we are building at Stenåsen 7 for Vasatens WellCare, and this project is also under completion. We have invested SEK 78 million.
We have a 15-year lease and a yield approximately 6.5%. Next slide, page 36. At Sunnanå and 1254, these two projects continue in full speed. One is for Region Skåne, which is a transport hub, and one facility for Veho Bil, which among other things will include a state-of-the-art service center for electric trucks. Investment SEK 96 million plus SEK 58 million and completion Q1 2021. Page 37. As I said last time, the projects in Kranen 2 keep coming, and it's also true today. We have one ongoing project for Region Skåne, where we invest SEK 107 million. Now in October, as I said before, we have signed a new lease for additional 4,400 square meters with an investment of SEK 100 million and completion will start Q3 2021. After this building is fully let to public tenants. A short update on future investments.
Page 39, we continue our planning regarding the project Polisen 7 and Plåtförädlingen 15 in Helsingborg, and Posthornet 1, phase 2, and Ideontorget in Lund. Zoning plan is in place, and with the right tenant, we can start these projects. Design and planning continue, especially focused on Zenit at Ideontorget. Page 40. An update on Hyllie, where we are close to start our next large projects. Pulpeten 5, also named Kvartetten, and Bläckhornet 1, also named Vista. Both at very good location next to the train station. Page 41, Pulpeten 5, with 20,000 square meters gross floor area. Large efficient floors and a good interest from several large tenants. We really like how we have been able to create great efficiency and a warm inner core. The contractor is procured, and building permission expects to be approved shortly.
Depending on the signing process with possible tenants, we can start this project in Q1 2020. Page 42 shows also some pictures from inside of Pulpeten 5. page 43, Bläckhornet 1, the project that now have got the name Vista. Procurement is ongoing, and we are planning to start this first phase with 400 parking spaces and a great sport hub as soon as we can start Pulpeten 5. It's a unique opportunity to offer both good parking and direct access to the train station, and we can do this both for Pulpeten 5 and Bläckhornet 1. Page 44, Nyhamnen, the largest and next development area in Malmö. We have all seen this picture for a long time, and things are moving on, but patience is also a special kind of skill.
Our first opportunity with a new zoning plan is at page 45, Smörkajen, where we at least will be able to produce 10,000 sq m offices in this first project. Nyhamnen in the city center of Malmö has the highest focus in a long-term perspective. Page 46. This is Kranen 2, just at the entrance to the dock and area from Nyhamnen. We have applied for planning permission, but no large steps ahead since last report. Work will continue. Next slide. However, it's gratifying to see that we now also have started more and more plans for projects in Denmark. It's primarily fill-in projects, but quite large ones, and they can contribute to a more mixed urban development. We now have several really interesting tracks that I look forward to be able to tell you more about in the future. Let's summarize. Page 48.
Tenant activity is picking up after the summer, especially September and start of October feels definitely in the right direction. Positive net letting also this quarter. Another record quarter for operating surplus and income from property management. Successful divestment of our logistic production portfolio in Malmö. A lot of work, but also a lot of money. Transforming our remaining portfolio to be even more focused on the sub-markets where we want to be. We also see a continued strong balance sheet and liquidity position. If we look back a half year ago and see into the different kind of possible scenarios we tried to imagine and make plans for, things, in many ways, have so far turned out much better than the absolute majority of these scenarios. The pandemic is not over, but we now know more, and we are much more prepared today.
If we now are careful and don't get carried away forgetting the regulations and that we have a great responsibility for many things, then we can continue like this for as long as it's needed. We have practiced for more than six months. Let's keep up our tempo, be prepared for changes, finding the grit, and just move on. The possibilities will be there, and so will we. Now we are open for questions.
Thank you. If you wish to ask an audio question, you may do so by pressing zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Once again, it's zero one on your phone keypad if you wish to ask. Our first question is from Erik Granström from Carnegie. Please go ahead with your question.
All right, thank you. Good morning, everyone.
Morning, Erik. Are you still there?
Apologies. There may seem to be some disruption on the line. Please hold while I try to contact Erik again.
Absolutely.
Erik, please go ahead with your question.
Okay. Can everyone hear me?
Yes, we can hear you.
All right. There we go. Okay, let's start with some of my questions then. I would like perhaps to start with the divestment of the logistics portfolio. You've always been very keen on stable cash flows. Now you're divesting stable cash flows. What will you do with the money? That's my first question.
We will invest them in even better things, actually. This portfolio has, if you look at it from the outside, it's in a quite focused area, but we think it has spread that we can't really make the best out of this area, actually, in Malmö. We think we can do even better in other areas. We will invest them and continue the growth, of course.
Okay. Does that mean you're primarily invested in acquisitions or in your project portfolio that you talked about today?
I think you can say that our ambition is, of course, to increase our project portfolio. Given the current circumstances, we will have to see how quickly we can fill up the project portfolio. Regarding acquisitions, we continuously look at acquisition opportunities, and that we will continue to do.
You mentioned that you have a number of projects that will be completed now in Q4, and you seem quite optimistic that you will fill up some of the space that's still vacant. You're also completing projects going into next year. Given the divestment, I believe the rental value of that was about SEK 110 million, and you have about 8% vacancy in that. Do you think that you will be able to counter the loss of rental income from the divestment in coming quarters through your projects, or should we expect that rental income on a sequential basis will come down because of the divestment?
Our ambition is definitely to be able to continue to grow rental income.
Okay. Thank you. That's very clear. In terms of the rental market, you mentioned that activity had been slow over the summer and then picked up towards the end and now going into the fall. Could you perhaps explain a little bit more whether or not it's natural you have summer vacations in Q3 or if it's been unnaturally slow because of the pandemic? Also in terms of how do you see the activity picking up now in Q4 in terms of discussions with tenants?
I would say that we have good discussions ongoing now, better than we've seen since February. Definitely. Quite positive on that. What we have seen on the vacancy, we have had some terminations, which have been expected specifically in the logistic areas. When you look at those small numbers in the total, that can affect in some way. Also, for example, the tenant in Lund that I was mentioning, that they leave areas, we have already interest on these areas, and it will take, I think, approximately one and a half or two years until they leave the areas. Of course, we also have challenging areas. In Lund, we have some work to do with the occupancy grade. We continue that work, and we have a plan for that. Of course, it takes some time.
Okay. I also have a question about the valuation of the property portfolio here in Q3. You stated that you've included the divestment and the effect that that had on property values. If I look at the numbers, it seems to me that aside from the deal itself, value changes were actually negative. You mentioned that you've decreased your indexation or inflation expectations, but also decreased yield requirements for logistics. Could you perhaps just go through that a little bit so I get a better understanding as to specifically what happened in Q3?
Of course. You're quite correct that the properties that we sold, we basically bring up the value of that portfolio. The valuation yield of the portfolio that we sell is on quite attractive levels. We are, at the same time, lowering yield requirements for the remaining logistics production portfolio, not at all to the level where we actually sold the portfolio of 21 properties. We do lower the yield requirements in the valuations. That has a positive effect. At the same time, we've changed the inflation assumptions primarily for 2021 downwards, which in the valuation models affects values downwards because of lower assumed rental growth. Would like to stress, though, that is, of course, an effect in the valuation models because that is how the models work. According to IFRS, we are obliged to value each and every property on a quarterly basis.
One by one.
One by one. At the same time, we do not currently see any pressure on rents. The valuation effect is really a change assumption in the model, which has a negative effect on the valuations.
Now we see we're going into Q4 and do a total valuation of the whole property stock with external valuators. We will see how that affects the figures forward.
Looking forward to that then. Thank you very much. Those were my questions this morning.
Thank you.
Our next question comes from Markus Henriksson from Pareto Securities. Please go ahead with your question.
Good morning.
Markus, I presume we should take this in English for the potential international audience.
Sorry
may listen in.
Sorry. Yeah, of course.
Thank you.
I owe you speaking in Swedish to another client. Sorry. The two projects, Ursula and Terminal in Q4 that are completed, I was just thinking about for the retail versus the office share of those properties, which one is it where you have the lowest occupancy for now?
Well, Ursula is basically only offices.
Yes.
it's a very limited-
It's just one-
retail space on the ground floor.
That part is totally let. It's just one part of floor one that isn't signed yet. Otherwise, it's offices all the way.
All right. Thank you. I have a question for investment levels going forward. You state several projects that could potentially start for next year and 2022, but could you fill in a bit more what we could expect in the numbers compared to past years?
We have to bear in mind that 2019 was a record year on investment and not the level that we think that we can achieve each and every year. 2020 has been a good tempo. I expect us to be at approximately the same level also in the future. Of course, we have to adapt to circumstances. There's no exact level on the prognosis.
All right. Last question on acquisitions. Are you also looking into Copenhagen CBD or is it mainly secondary locations as in the past? Are you mainly looking in Copenhagen or mainly in Sweden for now for acquisitions?
We look both in Copenhagen and Sweden. I still think that the CBD area in Copenhagen isn't really the spot where we can do the best performance. I think that we will continue to concentrate our portfolio to the areas where we think that the service and the other things that we can contribute with gives us some extra benefits. We see the best possibilities where we have large areas in the same region. That's what we're looking forward to invest in that more.
All right.
Mainly.
That was all my questions.
Thank you. There appears to be no further questions. I'll hand back to the speakers for any other remarks.
Okay. Thank you for today.
Okay. Excellent. Thank you everybody for listening in.
Bye.
Bye.