Welcome to the Wihlborgs Fastigheter Webcast with Teleconference Q1 2022. For the first part of this call, all participants will be in listen-only mode, and afterwards there'll be a question-and-answer session. Today, I am pleased to present Ulrika Hallengren, CEO, and Arvid Liepe, CFO. I'll now hand over to the speakers. Please begin.
Thank you. Welcome to the presentation of Wihlborgs Q1 report 2022, and we will start with some figures. 467, t hat's SEK 467 million, actually our highest income from property management in one quarter ever. That is 12% increase in property management compared to 2021, and that we have achieved without any large transaction supporting that increase. We continue to focus on our strong cash flow. Together with changes in valuation, our total profit from the period is SEK 816 million. 7.3x, t hat's our interest coverage ratio. A really strong figure with not least now when discussions of higher interest rates is all over the place. Strong cash flow being beyond that figure again.
SEK 28 million in positive net letting for the first quarter, also strong figure, but also a very good trend with +5.7% in increased rental income in like-for-like portfolio. We keep up a good tempo in new leases, and the rents continue to grow in a good way. 5.7% is probably also a record. Not scientific at all, but during this period, signed leases was up at 19% higher level than termination, and we have seen that trend for some time now. The grit, the determination, and the commitment from our organization pays off, and we have just started. Now let's get back to some standard presentation mode, a summary of Q1 2022. As mentioned, we see continued strong net letting, and that continues also here in the start of Q2.
No slowdown in sight, at least not for the moment. Increasing rental income and profits and high focus both on income and costs. Rising rents both for new leases and like-for-like investments pays off, and all this gives us a strong balance sheet and a very good interest coverage ratio as mentioned. We have very high resilience to increasing interest rates. Finally, tenant demand supports our project development, one of our favorite activities. Results for the first quarter 2022. Rental income increased by 8% to SEK 795 million. The operating surplus increased 9% to SEK 557 million, and income from property management increased by 12% to SEK 467 million.
The result for the period amounts to SEK 816 million as mentioned, which corresponds to SEK 5.31 per share, and EPRA NRV increased to SEK 107.65. A comparison between rental income in Q1 2022 and Q1 2021. We have seen this picture during the COVID period as well. We have SEK +10 million from divestment. SEK 30 million, acquisitions of course, SEK 30 million from index, SEK 5 million from currency effects, income from canteens in Denmark SEK +5 million, lower vacancy SEK +8 million, and other increase from new leases and higher rents, excluding indexation, SEK +60 million. Now we see that service income from canteens is moving up, but there is still more to do before we see break even. More improvements is to expect.
Net letting, we have signed new leases for SEK 53 million and have a positive net letting for the period of SEK 28 million. A good start of the year, and as we have seen many quarters before, it's in the large number of many growing tenants that builds these figures. Here are some of the new tenants that we have signed during Q1 2022, a mix of different segments and, as usual, a good contribution from all our regions. Here we have the net letting in a historical perspective. 28 positive quarters in a row and only one quarter with a negative number for over 14 years, actually. Letting in light blue and termination in dark. The black line is the net letting.
The number of new leases is 121 this first quarter, and I usually say, there is no guarantee that we will never be below zero, but I see many positive signals further on. Yesterday, we reported a new lease with Nederman in Helsingborg, so Q2 has also started in a very good way. A list of our 10 largest tenants in alphabetical order. They contribute with 21% of our rental income. Rental income from public tenants continues to be high, 24%. I keep mentioning that it's a wide diversity across many sectors in our region that is the strength that brings stability over time. It's almost a mantra for us.
Rental value is now SEK 3.465 billion per year, and rental income SEK 3.168 billion, 7%+, partly as a result of our successful project portfolio. Looking at like-for-like figures, we can see that rental value is up 4.3% and rental income is up 5.7%, a really high level, and again beating our ambition to exceed index by at least one percentage point. Vacancy will improve further during the year when tenants move in. Let us remind us that we, during 2021, had a record high net letting at SEK 150 million, and all those premises are not occupied yet. 7%+ on rental income from the whole property stock is also a positive signal of our growth. A summary of our office portfolio.
The market value is now SEK 41.135 billion, and overall, the occupancy rate is 92%. It's 92% in Malmö, 90% in Helsingborg, 91% in Lund, and 92% in Copenhagen. As I said, these figures will continue to improve when our new tenants move in. It's also a good thing that we have continued positive net letting but still have space to work with. That's a good way how to create value. The operating surplus from offices summarized to SEK 2.023 million and a running yield of 4.9%. Once again, let us remind us that running yield is not the same thing as valuation yield. Maybe you can say that we actually perform better in our portfolio than our appraisers' expectations. The valuation methods, they are calculation models for future vacancy.
In reality, we work with our properties so that the vacancy should decrease rather than increase. When our vacancy increased in the property stock, it's usually because we have bought something with vacancy or emptied a property to create vacancy for development. The demand for logistics and production continues to be high. Occupancy 98% in Malmö, 91% in Helsingborg, and 94% occupancy rate as a whole, with a running yield of 6.3% and a total value of SEK 6.492 billion. For the entire property stock, the occupancy rate is 92%, excluding project and land, and operating surplus of SEK 2.431 billion, which gives us a running yield of 5.1%, excluding project and land. Total value of the portfolio, SEK 50.618 billion.
We can see changes in market value. We started the year with SEK 50.033 b illion in accordance with our external valuation, which once a year values 100% of the stock at the same time. That's in Q4. We have no acquisitions during the first quarter, but we have invested SEK 270 million in our project. We have divested a small piece of land in Helsingborg for SEK 1 million, and changes in valuation amounts to SEK 221 million. The increase in value in Q1 comes from new leases and increased rents, but the largest part comes from a bit higher expectation of inflation during 2022, 2.9% instead of 2.1%, and that affects rent expectations for 2023.
Together with currency translation of SEK 95 million, that summarize a property value of SEK 50,618 million. The value of properties has developed, as you can see on this slide, since 2005. A bit flat 2020 due to the large divestment in the Norra Hamnen in Malmö, but now back on track, and we continue to be ready for further transaction possibilities. At the right price, of course, and at the right location. A catalog of our value add properties in our four cities. 42% of the value in Malmö, 23% in Helsingborg, 17% in Lund, and 18% in Copenhagen. These cities are the main cities in the Öresund region, and together, they create a good mixture of possible development and attractiveness for living, education, and work. Over to you, Arvid, for financials.
Thank you very much, Ulrika, and good morning, everybody. Let's start with talking a bit about the interest rate environment, because that is a topic on everybody's minds these days. I want to highlight a few factors which I think are important to monitor in this environment. First of all, the primary financial risk that we have to manage is access to capital. The current interest rate environment primarily is about the underlying interest rate and the interest rate hedging that we have the possibility to undertake. You shouldn't forget that we also have to monitor the loan margins, what we have to pay to banks or bondholders.
In this environment with increasing inflation expectations, we've seen bank margins remain reasonably stable, while bond margins have actually gone up quite significantly. Lastly, I want to highlight the cash flow generation capacity, because if you generate a good cash flow, that is how you can actually pay your bills. Looking at the graphs on the right-hand side of the slide, you can see our sensitivity to increased market rates. If you look at a 2% increase immediately in STIBOR, that would increase our average interest rate by 0.9%. With such an increase, 2% increase in STIBOR, our interest coverage ratio would still be at a pretty healthy 4.4x .
I think that is worthwhile bearing in mind in this particular point in time where interest rates are volatile. Moving to the income statement, Ulrika has basically been through most of the numbers on the quarterly income statement. What I can mention though on this slide is that due to rising interest rates or rising swap rates, we have a positive value change in our interest rate derivatives portfolio of SEK 340 million. Excuse me. That is, I would claim the highest number ever. Actually we have a positive value on all our interest rate derivatives on the balance sheet currently, which we've never had before.
Pretax profit of just over SEK 1 billion for the quarter, and profit for the period of SEK 816 million. Looking at the balance sheet, you can see that versus 12 months previously, our investment property value has increased by SEK 3.9 billion. At the same time, equity has gone up SEK 2.9 billion, despite us paying SEK 800 million in dividends during that period. Loans in the 12-month period has increased by SEK 0.5 billion. I would claim that we have a healthy growth in equity. Translating the balance sheets into key figures, we have an equity/assets ratio of 43.6%, and an LTV currently standing at 45.8%. As Ulrika mentioned, we've never had an interest coverage ratio as strong as 7.3x before.
The EPRA NRV stands at SEK 177 per share, and that is up 17% adjusted for dividends versus 12 months previously. Against the backdrop of our earnings and our balance sheets, the proposal from the board to today's AGM is a dividend of SEK 6 per share. If that decision is taken, that would mean that we've had 16 years of rising dividends. Looking at the historic development of EPRA NRV, we had a 17% growth in the 12-month period. We also have an average annual growth of 17% since 2009. The financial ratios have actually never been stronger.
You see a five-year historic development here for equity/assets ratio gradually increasing, our LTV gradually decreasing, and our interest coverage ratio being reasonably flat over the past few years, but even a touch stronger over the past couple of quarters. Looking at financial stability, we like the metric net debt to EBITDA. We've seen a strengthening of this metric over the past three-year period roughly, and it now stands at 10.5x . The mix of financing sources has changed slightly, but not much. We still have about half of our loans from bilateral bank agreements with Nordic banks, a bit over a third of the financing in the Danish mortgage loan system, and now 15% of our financing comes from the bond market. Yes.
Summing up the details of our loan portfolio, you can see that our average interest rate now stands at 1.23%. We have an average fixed interest period of 2.8 years and an average loan maturity of 6.3 years. The historic development of the loan maturity and the fixed interest period, you can see in this graph also in a 5-year perspective. I can just say that the interest rate period and the loan maturity profiles they follow the financial risk management policy that we set in place early 2019, as we were quite comfortable working with that financial risk policy risk management policy.
Lastly, I want to show also the available funds, which over the past quarter had remained stable at approximately SEK 2.5 billion, and that is summing up unused credit facilities and liquid funds. With that, I'll hand back the word to you, Ulrika.
Thank you. I know that many of you, most of all, would like to talk interest rates and possible interest rate increase, an important factor in sustainable business of course. Let's also talk about the long-term impact we have on other sustainability areas. Since the last report, another six properties have been approved and classified as Miljöbyggnad. New production at level Gold for offices, Silver, sometimes when we build the logistics and production, and the older stock according to Miljöbyggnad, it's normally at level Silver, which is really good. Our overall goal is that 80% of our Swedish office building areas will be classified at end of 2022, and the prognosis today is that we will at least be very close to that goal, 77%.
We have had a high tempo since the classification method Miljöbyggnad, it was approved in late 2020. We and the whole sector have more improvements to do, not least in Scope 3, the part where we develop, build, and refurbish. Input P15 in Hyllie, one of our largest ongoing projects, we have worked with the certification method called NollCO2, zero carbon dioxide, a method to measure and reduce climate impact for a building's whole life cycle, including the construction phase. We have, in that project, found really good ways of how to choose materials and how to use them. The calculation methods are also improving. Based on our experience from that project, we have decided to also set a goal for the lowest carbon dioxide equivalent per square meters in all our new construction projects. We set this as a new standard for us.
We know that it's possible, that it gives us good results, and now we need to make sure that we use that experience whenever possible. We also want to increase knowledge and conscious decisions about the refurbishment project and the choices we and our customers make there. Therefore, we will now in 2022 test a model where we put a price on carbon dioxide impact so that the calculations will be charged with a cost. This will make it possible to steer investments and decisions towards more sustainable construction methods. We will try this during 2022 and then evaluate the model. Let's go to investments in progress.
We have during Q1 invested SEK 270 million in ongoing projects, and it remains SEK 2.274 billion to invest in approved projects as approved on the twenty-first of March when we had projects for over SEK 2.9 billion ongoing, and this figure is even higher today. Overall, the projects generally meet both schedule and budget forecast despite a troubled world with the war in Ukraine and the high energy prices. This is of course an issue, a hot topic, and we follow it with care, and we are of course ready for action if needed. A quick review of our largest projects. The largest one up to now is for P15 in Hyllie, the project we call Kvartetten.
After we signed the lease with Trygg-Hansa, we have increased the investment to SEK 804 million according to surcharge for VAT. We get cost coverage in higher rent, so the return on investment will remain at 6% but with a larger investment volume. The project includes 16,000 sq m lettable floor area and the highest certification standard with Miljöbyggnad Gold, WELL, and NollCO2. 85% pre-let at moment and completion in Q2 2023. We are also in the starting phase for the next project in Hyllie, Bläckhornet 1, the project we call Vista. We have no other vacancy in the area, and Kvartetten is almost filled up, so the timing for this project is good. The project will include a large mobility hub with 400 parking spaces.
Although the block is right beside the train station, parking is still a very important sales factor. On top of the mobility hub, there will be 16,600 sq m offices and restaurants. Contractor procurement is ongoing, and we estimate completion in Q1 2025, but the mobility hub will probably be ready earlier than that. At Hindbygården 7, we are doing a project for Beckhoff Automation, a state-of-the-art office at a good transportation location in Malmö. Completion in Q3 2022. Raffinaderiet 3 in Lund, we continue with our conversion project right beside the railway station. Rents at new top levels in Lund, over SEK 3,000 per sq m, and also some higher demand than in the early stage. Completion starts in Q4 2022. Investment volume raised to SEK 170 million, and yield on cost, approximately 6%.
5,800 sq m modern offices with an industrial touch, and not least, a very good indicator and a start for the next project right beside this one. That project is Bläckhornet 1, Phase 2, a new-build office at 9,900 sq m in the very city center. We invest SEK 448 million, and completion Q4 2024. Let's go to the area between the research facilities MAX IV and ESS, Science Village. We have started our project space, where Oatly will be the main tenant, with a research and development team. We have more building rights just beside this one. We invest SEK 244 million, and the building will be completed in Q3 2023. A structure where also wood is a part of the picture.
In Helsingborg, we have started a multi-tenant logistics project at Huggerna 13, 40% pre-let until March. We build this project in two phases, and first one expected to be completed in Q2 2023. At Snårskogen 5, also in Helsingborg, we build a factory for Doka, 2,200 sq m, investment SEK 60 million, and completion Q1 2023. A large ongoing portfolio, but let's also mention something about future investment. Yesterday, we announced a new lease with Nederman in Helsingborg, 25,000 sq m at Rausgård 21, signed now in April. We invest SEK 420 million, including land, and completion in Q1 2024. The lease is 20 years. A really long-term investment that also gives a good boost to the surroundings of this building. Here we have four possible projects in our three Swedish cities.
Vetskapen 1 is just beside Kunskapen 1 at Science Village area. We have Ideon Torget, where we can build approximately 16,000 sq m just beside the tram station. Polisen 7, it's offices in the city center of Helsingborg. Nabolag 3 here in Dockan in Malmö, we can offer 8,000 sq m gross floor area. Zoning plans are approved for all these projects, and we can start them when we have the right customer. A few other possibilities from the industrial and logistics segment. Plåtforädlingen 15 and 18, 22,000 sq m in Helsingborg. Grustaget 1, 20,000 sq m, also in Helsingborg. Bilrutan 5 in Helsingborg, in Landskrona. 14,000 sq m logistic right beside the highway between Malmö and Helsingborg. Zoning plan that will allow us to build 20-meter-high building is expected to be approved shortly.
In Sunnanå in Malmö, where we have building rights. We have built there for Region Skåne and WHB, and we can add on 17,000 sq m logistics or production. The planning of Nyhamnen continues, but the municipality still struggles with the overall infrastructure planning. However, we can continue our design and planning for projects in line with ongoing zoning plans. For example, Smörkajen, a design for 30,000 sq m. Kranen 15, just at the entrance to the Dockan area from Nyhamnen. The work with the zoning plan is about to be started, and we can also start the architectural competition. Together with JM and Peab, we also continue our joint venture for new zoning plans in the Dockan area. Workspaces, school, and housing in a good mixture. Västerbro in Lund.
The work with the zoning plan continues, and we can develop approximately 7,000 sq m in this area. Finally, an example of city development in Copenhagen at Ejby Industrivej 41. We continue our plan for new structure, and at this large area, very close to the new tram station, letbanen, we can develop something like 100,000 sq m housing, schools, and workplaces. Let's summarize Q1 once again. Continued strong net letting, increasing rental income and profit, rising rents both for new leases and like-for-like. Our strong balance sheet and super strong interest coverage ratio of 7.3x gives resilience to increasing interest rates. Tenant demand supporting continued project development. By that, we are open for questions.
Thank you. If you wish to ask a question, please dial zero one on your telephone keypads now to enter the queue. Once your name has been announced, you can ask your question. If you find your question is answered before it's your turn to speak, you can dial zero two to cancel. Currently, we have one question in the queue. It's from the line of Markus Henriksson at ABG. Please go ahead. Your line is open.
Thank you, and good morning, Ulrika and Arvid. A few questions from me. First off, the like-for-like rental income growth of 5.7% year-over-year. Do we have any one-offs in that figure? I think you state very, very nicely what's driving the figure, but any one-offs?
No significant one-offs which affect the like-for-like performance comparison.
All right. We start to see a pickup in the service income in Denmark. Do you expect that to increase further in the coming quarters relative to Q1?
Yes, we expect that if nothing else happens. The figures continue to improve.
Mm-hmm. All right. A bit on how you're navigating now for external growth given the current environment. Have you entered the sort of wait and see mode or do you intend to try to be a net buyer, as you said in last quarter?
Net buyer, definitely. Of course, as mentioned, right price and right location is the top priority.
Mm-hmm. Do you see any interesting transactions that were sales in Malmö or any of your other regions currently?
Uhmm. Not any closure has been done that we think that we have missed out or something like that. We see something on the table at the moment that might be interesting.
Mm-hmm. Last question. Could you give us a few rental levels for the net lettings you've done recently in central, say, Helsingborg, Lund, and Malmö? What kind of rents are you aiming , or a re you getting?
I would say that both logistics and production, the rent goes up a bit, especially in the cities. That's, of course, it's hard to predict any exact numbers, but they're going up in a good way. It's interesting to see that we, in all our cities now, signed leases at close to SEK 3,000 per sq m or above that for some leases.
Would that be for projects in Hyllie?
No, not only. We see that both in city center of Lund and Helsingborg and Malmö, actually.
Okay. Okay.
It's not-
Thank you. Those were my questions.
... It's also important to bear in mind that that's not the average yield level for every new signed lease in offices. Right location and the right tenant, so that it's a good level.
That's very clear. Just wanted to get a sense of the kind of top spot rents we see currently. Thank you.
Thank you. Once again, if there are any further questions, please dial zero one on your telephone keypads now. Okay, there seem to be no further questions coming through from the phone lines. I'll hand back to... Oh, and just as I say that, a question has come through. It's from Markus Henriksson at ABG. Please go ahead. Your line is open.
Thank you. Just one extra on the financing situation. You highlighted a lot in the report, but how are you navigating currently? What are the banks saying to you in your current discussions? How is the Danish mortgage system functioning at the moment? You usually have good insight in the financing market. Anything you could give us there would be very helpful.
Certainly. Regarding bilateral bank agreements, I would say that margins are stable or moving slightly upwards. We're talking the order of magnitude of maybe 10 basis points or something over the past say 3 to 4-month period. Access to capital in the Nordic banking system for us is still very good. The banks don't signal any hesitations when it comes to supplying us with additional financing for the event that we would have such needs. The Danish real estate mortgage system continues to function in a good way. We have in one of our relations there seen a slight uptick in margin over the past few months, also in the order of magnitude of 5- 10 basis points.
I think that is worthwhile keeping in mind if you compare it with the volatility in the bond market. The volatility in the bond market, you can find external information on in another way, so I don't really have to put numbers there, I believe. Access to capital is good from the banking system and from the Realkredit system in Denmark. We still have access to capital via the bond market as well, but the market has been quite a lot more volatile.
That's very clear. Many thanks. Thank you. Once again, if there are any further questions, please dial zero one on your telephone keypads now.
We have a question from which has come in via the webcast via mail here. It's regarding if we've seen raised investment costs, cost inflation or scope, and if we can offset such raised costs by higher rents.
Yes. I would say that when we are close to the market, we can follow higher costs for production also with the higher rents. We have to follow that cost increase very closely, and we do that. We see expectations of higher costs, but we haven't. We are secured in our project ongoing, and I think that we have very good discussions also with responsible construction companies today that keeps the costs down. I have no worries, but of course, we pay that question high attention.
Okay. There are no further questions from the phone lines either.
Okay. Thank you, then. If you have any further questions, please come back to us in some other channels, and we try to answer your questions, of course. Thank you for today.
Thank you very much, everybody.