Good morning. This is Remon Vos speaking, CEO at CTP, with Maarten and Richard speaking later about the 2022 results. To start with, 1.9 million m² of leases signed last year at 6.5% above ERV. We have done better than we thought last year on signing leases at higher rents per square meter. Earnings per share, EUR 0.61 per share, which is 26% more than last year. Dividend of EUR 0.45 per share, which is up 29% year-on-year. We have had a good year last year, 2022. Let me talk to you about our businesses. We like to divide that in three activities. The operator, the part of our business who runs the portfolio, income producing, all the buildings which we have built over the past 22 years, the operator. The developer, building properties.
The energy business is the third part of our business. Let me start with the operator. Quite good. 10.5 million sq m of GLA, gross lettable area, last year with strong like-for-like rental growth of around 4.5%, which means that on a 12-month term we would now collect EUR 590 million, which is 35% up year-on-year. Obviously this rental income creates a strong cash flow with around 94%, 95% occupancy in line with our target. We like to keep some of the units open here and there for new tenants to move in. We have been able to collect 99.7% of all the rent, so no bad debt, no surprises. Very stable long-term tenants. More than 1,000 different companies. Residents, as we call them, in our parks.
Companies involved in a variety of different businesses, multinationals, but also SMEs involved in logistics, e-commerce, manufacturing, R&D. Very diverse and very strong, and a lot of potential among existing tenants to grow with us into new markets, take more space, or to grow in the places where they are active. Now, that is with respect to the operator. We jump to the second activity, the developer. 2022 was a great year, a big year, a busy year with more than 1 million sq m of space delivered and completed at 10.1% yield on cost. The guys at the procurement team, the construction managers, have been busy. We have seen construction costs come down a little bit when the market returns and remained strong. We decided to proceed full speed with our projects at a lower construction cost.
Also that helps us to hit the yield on cost target or maybe even exceed the 10% mark. The rental growth helps us a lot. I mentioned earlier that we've done deals at 6.5% above ERV, and we continue to see that, so do deals at higher rents. We are not done yet with all the construction work because we have another 20.3 million sq m of land bank, mostly land within existing business parks where we have infrastructure and permits to build new property, sometimes for existing clients, but also more and more new clients. We used to do 80% of all our business for existing clients, but now also we have been able to attract new companies to become our tenants, which is important.
In 2023, that means that we target to complete the at least same amount of space as we did in 2022, but likely much more with approximately 1.7 million sq m now under construction, with most of that will be completed in 2023. Being our own general contractor, in-house construction management capacities, this helps us, gives a lot of flexibility, make sure that we can start on site and we decide when to complete, and this is when the demand is there. Very flexible. We can do modifications, adjustments to the properties while building the properties for our clients. At completion, we believe that we're gonna hit 80%, 90% pre-let. Some of the properties are already leased, and we are building them for clients. Others are being built on a speculative basis.
Last but not least, very important part of our business and becoming more important, is the energy business. An update before I hand over to Richard. We have done local distribution networks. That means we own the cables, the transformers in our business parks. Also we have installed solar, rooftop solar plants in the past which have performed quite well. We have decided to make that bigger. Currently we have 38 MW installed and we have just started to add another 100 MW during 2023. That means that CTP will continue to install rooftop solar plants at the parks and properties we own. Adding solar panels on the rooftop, create energy and sell that within the park or onto the public grid.
Sometimes we store energy with batteries and sell it to the tenants when the price is right and when the demand is there. That is what we continue to focus on more. We have appointed people who are very much specialized in the energy business and continued to make that an important part of CTP. Much appreciated by the tenants as well, obviously, we work closely with them together to grow this business and at the same time also, this will help the results of CTP. CTP remains market leader in most of the Central European countries, home market Czech Republic, but also Slovakia, Hungary. Very active at the moment in Poland with many projects under construction where we see a lot of demand. Being at home in Central Europe is a significant advantage.
We've been here for more than 20 years, and we now clearly see signs of companies bringing activity to Central Europe or keeping activity here. Asia and other places no longer the preferred option for many reasons. We call that nearshoring or friendshoring in Europe for Europe, and we see fantastic opportunities there. Going forward, the acquisition of the German portfolio also helps in this respect with German companies where we work in Germany but also have opportunities to work for them in the region of Central Europe where we see labor cost at one-third of what they are in Western European countries, and higher productivity, and a lot of support from local governments.
Last but not least, us, CTP, at home in those markets for so many years and continue to grow market share is just a great opportunity. We look forward very much to the future and with full speed to double the size of the portfolio. Thank you for your attention. I'll hand over to Richard for the numbers and Maarten later on. Thank you very much.
I will now run you through the main financial highlights of 2022. Supported by the positive operational environment, we delivered another set of strong results. On the back of historical low vacancy levels and continued strong tenant demand, we achieved like-for-like rental growth of 4.5%, driven mainly by rent reversion and supported by a small indexation of 1.7% in 2022. As our indexation takes place on the 1st of January, the high inflation that we saw in 2022 will only be reflected in our 2023 like-for-like rental growth. Approximately half of our portfolio is indexed to a consumer price index and the other half has a fixed rate increase. By the end of 2023, we expect around 70% of our contracts to be linked to inflation.
Our net rental income increased significantly to EUR 452 million, up 38.3% year-on-year, while the next 12 months' contracted revenues increased 35% year-on-year to EUR 589 million. That number has now grown by over 70% in the last two years. Company-specific adjusted EPRA earnings increased 42.7% to EUR 265.5 million, and our earnings per share increased to EUR 0.61, outperforming our guidance of EUR 0.60. We have a robust balance sheet and good access to credit markets, as demonstrated by the different pools of capital we tapped into during 2022. At the end of 2022, we had EUR 21.1 billion of liquidity available. Some of our most recent financings included a EUR 175 million, seven-year secured loan facility in December of last year, and a EUR 95 million, seven-year secured loan facility last week, both for all-in cost of around 4.25%.
We have a strong pipeline for additional financing, with over EUR 400 million agreed and to be drawn down over the next weeks. In February, we also increased our RCF to EUR 500 million with a new three-year maturity and two one-year extension options. Our average debt maturity stands at a comfortable 5.7 years. We have a EUR 400 million bond maturing in November of this year. That will be repaid from our available cash reserves. Following this, our next material maturity is not until mid-2025. Thanks to our strong cash-generating portfolio, we have a healthy interest coverage ratio of 4.6 x, while our future forward-looking ICR, assuming annualized income for our deliveries, will come to 5.6 x. Our loan-to-value ratio stood at 45%. This is fully in line with our 40%-45% target range.
We continue to deem that to be appropriate given the higher yielding nature of our portfolio. I'll now hand over to Maarten to give you some more details on revaluations.
The cross asset value of our portfolio came to EUR 11.5 billion, up 35.8% compared to 2021 on the back of development completions, positive revaluations, and acquisitions. Positive revaluation in 2022 amounted to EUR 723.6 million, mainly driven by the deliveries and the investment properties under development, illustrating the strong profitability of our pipeline. The valuations of our standing assets held up well, despite the negative like-for-like revaluation of minus 0.69% in the second half of the year. On a yearly basis, the standing assets saw a positive revaluation of EUR 246.4 million as the estimated rental growth more than offset the yield widening.
2022 saw a yield widening of 39 basis points in the second half, bringing the reversionary yield to 6.8%, mainly driven by the Czech and German portfolios. While other countries like Romania, Serbia, and Hungary saw less yield widening as the yields in those countries were already higher. With larger yield movements in Western European markets, the yield differential between, on one hand, Central and Eastern European, and on other hand, Western European logistics is back to the long-term average. We expect the yield differential to come down further, driven by the higher growth expectations for the Central and Eastern European region. Positive EU growth going forward, combined with continued tenant demand, driven by the secular growth drivers in the Central and Eastern European region, is expected also to further support valuations.
EPRA net tangible assets per share increased from EUR 12.06 as of 31st of December 2021 to EUR 13.81 at 31st of December 2022, representing an increase of 14.5%. The increase is mainly driven by the positive revaluation of EUR 1.59, company specific adjusted earnings per share of EUR 0.61, partly offset by the dividend of EUR 0.37.
Looking ahead, we remain bullish on the outcome for CTP. With increasing cash flow, earnings, and dividends. In the market, we see several tailwinds for logistics demand, particularly in our business smart CEE region. We believe that we are in the best position to benefit from those. Our pipeline remains highly profitable. While most of the demand is from existing tenants, we see an increasing share of new international tenants coming to CT parks. Our in-house skills and our experience allow us to continue to develop at a market-leading double-digit yield on cost. We further consolidate our position as the market leader in the CEE region. We confirm our guidance for 2022 company specific adjusted EPRA earnings per share of EUR 0.72. We plan to stick to our dividend policy of a 70%-80% payout ratio. CTP has the team.
We have the land bank, we have the deep tenant relations, and we have a strong balance sheet. All of these allow us to deliver on our promises and put us on track to reach our goal of a 20 million sq m portfolio and EUR 1 billion of rental income before the end of this decade. Thank you. We now welcome your questions.
Thank you. We have the first question on the phone line from Steven Boumans of ABN AMRO. Your line is now open.
Hi. Good morning, thank you for taking my questions, of course. I have a question on the yield on cost targets. Given that rents are rising, due to inflation and construction costs are declining, why did you not increase the yield on cost targets? A follow-up on that, what is the yield on cost targets for your most important markets, and has that changed materially versus last year?
Thank you, Steve. It's Remon speaking. I hope you hear me well. Thanks for question.
Yep.
Yes. Indeed, we are and obviously will always push for better and higher yield on cost. Yeah, that is true to the outside world. We would communicate 10 as that is what we have been doing, and stick to and like to fulfill that target. Obviously internally, we aim for a bit higher, because you never know, there can also be some and always will be one or the other project which is a bit less than we initially thought for whatever reason. That's how it works.
Yes, internally we target 11 and north of 11 in order to be at 10 or a bit higher than that. With respect to your comments on rental growth, yes, we do see, as I confirmed in the presentation, that we can lease properties at higher rents than we had initially planned. Than we had in our budget. That's point one. That's true. We do see demand, strong demand and in supply in terms of. We have high occupancy rate. With respect to supply, we see less supply. Some of our peers have a bit of a different business model.
They may not have the liquidity in place to continue grow or not if they are traders, have not secured exits and that means that they are not always back on track yet or back in business. That's also why we see here and there a bit less supply, which we benefit from. That obviously also if you look at supply and demand, that would result in rental growth indeed. Point one.
Point two, with respect to construction costs, we do work with more than 700 employees in the different countries on site to make sure that we build the right property, good quality buildings, taking into account all of the ESG requirements, but also built for the future as we are building for ourselves. First is quality, but definitely also look at costs and flexibility. Yes, we've seen construction costs went up significantly last year. There was a bit of a spike. We slowed down here and there, where we could. We do continue now, and construction costs are back at a bit lower rates. I don't think it's gonna be cheap or as low as it was.
The same goes for land, same goes for construction costs, because that's also taking into account inflation and labor cost rise, et cetera. All of what we built in the past, we can't build that again for that same money. Definitely, yes, we work hard in order to keep the construction costs at a reasonable level without doing any compromises on the quality. Most of the projects we develop are being built within existing business parts. There you benefit from the fact that we bought land relatively cheap in the past. And the land is part of a business part where we have already developed infrastructure and utilities, and we connect into what we have built before. That, that is, that is beneficial.
Clear answer, yield on cost on schedule may be a bit better, but, no confirmation and I'm not promising that. There's also no reason for me to comment on that any further other than telling you that we're good on our way. Thank you.
Okay. Clear. Maybe one follow-up. Do you see the yield on cost for the main countries changing, versus year end last year?
That's a very good question as well. Yeah. How do we see that? You heard Maarten about valuation yield and values and this and that. You obviously would put your money in countries where with here and there. It's not so straightforward. It's not black and white. Main countries, to answer your question, Czech Republic, for example, where we are quite active and where we have 105,000 sq m under construction. One of our largest markets. There's a location where we like to work. We have a large organization. We have land. We have a great network. We work with many building material suppliers. In those countries, yes, closer to 11% than to 10% yield on cost. That's one of...
That's our home market. In Romania, similar, but in Romania obviously we have different valuation yields than in Czech. That may decide for us to do a bit more in Czech and a bit less in Romania. Anyway, Romania is a lot of pre-leases there. That obviously is stuff we would build. I would think that throughout the portfolio it's good and on an average we will be, we are heading for north of 10% yield on cost.
Okay. Clear. Thank you.
Thank you. We now have Eleanor Frew with Barclays. Please go ahead when you're ready.
Good morning. Thank you for the presentation. A couple questions from me. On rental growth, I see in your annual report that it says like-for-like rental growth was 4.5% in the Czech Republic. It's our understanding that market rents have grown quite a bit in excess of that. Was there anything limiting you there?
Yeah, maybe Richard Wilkinson. Hi. Thanks, Eleanor. I take that one. No, the 4.5% refers to the whole portfolio, not specifically the Czech Republic. What we saw last year was an acceleration of our ability to rent above ERV. We started the year renting around 6.5%. In Q4, we were renting 12.5% above ERVs. Now where we can push rents, we do.
Do you know what the rental growth number was specifically for the Czech Republic by any chance?
It's both for the group and for Czech Republic, yes. That's the whole portfolio. That includes the significant amount of standing that had a small indexation of around 1.7% in the Czech Republic. The inflation adjustment in 2022 was only small. We're able to capture significantly higher growth rates on specific leases. If you take the average across the whole portfolio, there's a lot where there was no renegotiation, so we didn't get any rent increase.
Thanks. Changing tack a little, what's your current marginal cost of debt, and how is that impacting on your capital allocation decisions and growth objectives?
Marginal cost of debt, at the moment, including the hedging that we have in place, the loan that we closed last week, was seven years. That was around 4.25%.
So now we were somewhere between there and 4.5%. At the moment, it depends on the market and the maturity, but that's about the right level. In terms of our capital allocation considerations, as Remon mentioned earlier, you know, we are able to develop a yield on cost, double digits everywhere. We focus on first of all, mobilizing the land bank that we already own and paid for, because actually then our marginal yield on cost is even higher, 'cause that's already in my... some of those costs are already in our balance sheet. The second thing we do is we focus on markets where we can get a higher revaluation gain, so markets with lower valuation yields.
Thanks. Final one, can you give an update on the Amsterdam City of how's leasing going there?
Yeah, I can take that. It's me speaking again, Remon. On the ALC, quite positive. We, as you remember, as we did announce, building or construction works are being completed in Q2. We think it's gonna be end of April, that's nice and on schedule. In the meantime, we have installed our rooftop solar plant, that is being tested, so far it's good. That's connected and is now in a test phase, positive. With respect to leasing, we have the first tenant move in and they are in operation. I've seen them yesterday in Amsterdam. That's good. You can see that they are, yeah, they are in operation.
In the meantime, we have signed another letter of intent for a next tenant, which we will negotiate the lease with for a move in in May of this year. That's 5,000 sq m , and there is an advanced negotiation with various parties for another 20,000 sq m , which are in, yeah, nothing signed, but in the last phase of negotiations on the lease contracts. I would, yeah, quite positive. I mean, that's what we expected. On one hand, I mean, the market in Amsterdam is such that there's very low vacancy. There, and there's no supply really, so this is one of the few projects.
More importantly, it's a unique project and obviously also priced at a premium product. We also like to make sure that we get the right tenant mix, the right companies in there, companies who fit with the concept of this very sustainable development, which is unique and yeah. That's that we take good time and do the right efforts and considerations to fill that up. It's really positive about the project and all of the interest we are seeing and from the different companies. That's very nice.
We will also plan a tour for those of you interested to come and see that project later in the year. Yeah. It's really something we are very proud of having in our portfolio.
Thank you very much.
Thank you. We now have Pavel Ryska of [J&T Banka] .
Good morning, everybody. First of all, congratulations on the very solid results for 2022. I have two questions. The first one touches the revaluation result. So you said that in the second half of last year, there was some pressure on the standing portfolio and there was a very slight revaluation down. I just want to ask, do you think that based on the current conditions at this point, there is some possibility for further negative revaluation of the standing portfolio in the first half of this year? My second question is about your mention of bonds. You said in the statement that you might consider repurchasing some of the bonds from the market.
Were you referring to a potential tender offer that you would announce for some of your bonds, or would it simply be a repurchase from the market that you wouldn't pre-announce? That's it from my part. Thank you.
So to answer your first question on valuations, of course as you know, the valuations are done by external appraisers, so they are setting the valuations. What we see currently in the market, if we look to the data points that are coming in in terms of transactions, etcetera, we continue to see ERV growth on one hand. On the other hand, indeed, if you look to yield pressure, there might be some more to come in 2023. However, overall, we see healthy market dynamics at this stage
Then we'll have to wait where the appraisers come up with the H1 results. I think generally we would expect as happened more or less to be in the second half of 2022 with the very high level of yields that we have across the portfolio, would expect the ERV growth to offset any yield expansion. The second factor that will support valuations in 2023 is the impact of the indexation at the start of this year, which is not reflected in the year-end valuations.
Regarding your second question on the bonds, that's just a piece of good housekeeping, putting out into the market that is something that we consider, so that if and when that would happen, the market has known that is something that we are considering.
Thank you. We now have Marios Pastou of Société Générale.
Hi. Good morning. Thank you for taking my questions. Just a first one really on the strength of the new leases versus ERV into the fourth quarter of last year. Is this something fairly specific to that particular quarter, or is that fairly indicative of the levels you're seeing as you're coming into the new year? I suppose as a bit of a follow-up, as you push through all of your indexation adjustments at the first of January of this year, has there been any pushbacks from any of your tenants across your portfolio?
I can take this. Thanks for your question. maybe Richard or Maarten will jump in if you have like to add anything. The last question you had with respect to pushbacks from tenants on indexations, not really, no. No. There is obviously always. No. In short, no. Companies and tenants do accept, understand why and where this comes from, and if the contract is what it is, so then, tenants, yeah, accept that, and then we stick to the contract. As I mentioned earlier in my presentation, 99.7% of all the rent which we have charged last year, we have also been able to collect. No bad debt, no issues.
There's not like, things like tenants can't pay or issues like that. No. That's, that's what the market is, and that's what the contract said, says, and that's, that's what the tenants do pay. Richard also explained that some of the contracts have this fixed index clause. There's used to be a fix of at least 1.75% around that number that comes from the past. And later we switched to this open CPI indexation. Richard explained that by end of this year, 70% of all our contracts, I think around that number, will have an called double indexation. But I think what we mean with that is a CPI indexation, which means that we will be able to fully charge all the all the index. This is one.
Second, the need to be reasonable and realistic. Also here and there, you take into account the relationship which we have with all those tenants for so many years, which we do a lot of business with all the time. With most of the growth comes from those clients. DHL, our largest tenant, but also Schenker, DSV, to mention a few logistic service providers. You stick to the contract, yes, you do, but also you do additional business with these companies, and you make sure that it's reasonable and fair and that it works for both our residents, our client, our tenant, as well as for CTP. No pushbacks, no issues, nothing like that. I think this is the maybe the last part of your question.
The first part of your question refers more to rental growth we have seen and is that specifically, does that relate to the fourth quarter or the second half of last year? If I understood well, maybe Richard or Maarten can jump in here to help me answering this question. I would say that we all see that the rents have grown last year. For a long, long time, we have not seen the rental growth in our industry. Really last year we see signs of that and one country maybe more than the other.
Throughout the portfolio, we've seen rental growth, means that tenants are willing to accept higher rents because of construction cost increase, because of other reasons, inflation, indexation, but also I think here and there because lack of supply, lack of stock. In some of the markets where we operate, because we talk a lot about Central Europe, but we are also active in three Western European countries. We don't talk about that a lot, but maybe it's a bit early, maybe the next call and over the next six, 12 months, you will see us more active in those markets. Back to Central Europe. There is obviously a very limited stock. There is not a lot of property available.
Especially compare those countries with Western European countries, you will say that the scarcity there's not enough. That's also one of the reasons Why rents went up a little plus the supply, as I mentioned in my introduction, there's not many, many developers putting good quality property to the market. There's overall a rental growth story. This is not necessarily what we take into account when I do my 10% yield on cost calculation. There's a danger, of course, that you think, "rents will grow, let's be a bit conservative." I rather report that we've done deals better than higher than ERV we had set than the other way around.
Yeah, so I think that's not just last half or second half of last year or last quarter, but I think that's overall has been a trend. That's how I would reply to that.
Yeah. I would add that, you know, that it's something that we expect to. It's not just a point in time for Q4, but it's also something that we would expect to continue into 2023. You know, you have markets with record or close to record occupancy, so record low vacancy. The whole of the Czech market has a vacancy rate of less than 1% at the moment. It's an extremely tight market, and it's one where as Remon mentioned before, supply is becoming more constrained as it's more difficult for some players to develop. We do see that the markets continue to remain tight in terms of vacancy and limited supply.
Demand from tenants continues to be strong, supported by the secular drivers of growth in the industries. If you look at penetration, you know, like square meters per capita at the moment, Western Europe on average is somewhere around 0.8 sq m per capita and Central Europe is around 0.5 sq m per capita. You have substantial structural growth potential together with a limited supply and limited vacancy so that we expect to continue to result in strong rental markets.
Very helpful. Thank you for the additional color. Maybe just as a final question, are you able to give a bit of an update or progress report on operations in Germany?
Actually, thanks for the question. Super excited about Germany. From an operational point of view, we have now three offices, Berlin, Düsseldorf, and Stuttgart, with people on the ground. This is point one. What those people do, obviously, point one, look after the assets which we bought. You remember our transaction, excuse me, last year in buying the portfolio with properties throughout Germany. That's point one. We look at rental growth. We want to increase occupancy. Now that's what we do. Also point two, to look for new opportunities to develop property on land which we bought as the part of acquisition. Yeah, so... We plan to start with a number of projects this year throughout Germany with construction works.
Yeah, so that's, that's very nice. We are looking at hitting our targets for Germany this year, as I said, with respect to the standing rental growth, occupancy increase, more NOI out of that portfolio, as well as initiating and starting new developments. Yeah, I'm very positive about that so far. It. Yeah, last year was the takeover year. This year I hope that we will show more results. From next year onwards, we'll have multiple projects on the way and under construction in Germany.
What is also nice to see is that with the acquisition also we obviously got many new tenants, and with those tenants it's also possible to grow in Germany but also outside of Germany. Many tenants have activities in Central Europe already or are thinking of growing in the region. We see a trend of manufacturing value add type of activities coming back to Europe or stay in Europe. As I mentioned in my introduction, that is also definitely something you see in Germany. So far also very positive about the support we are getting from the different German authorities and cities. Yeah, I am positive about that activity in Germany very much. Austria, obviously much smaller, but still good.
We are building properties in and around Vienna as we speak. That's the focus for the moment. We have currently three sites under construction. We hope to start with a third site later this year also in the Vienna region.
Yeah. Maybe just to add a couple of numbers-
Thank you very much.
Can I just add a couple of numbers to Germany? We underwrote the German acquisition with a rent roll of just under EUR 60 at the end of 2022. That was EUR 65, so it's nearly 10% up. There's a wave of indexation increases also to come across parts of that portfolio in the first part of 2023. you know, we're very happy with the progress that we're able to make in terms of in terms of increasing rental income. The second thing is we will see significant improvement in operational margins as we insource activities in-house. you know, at the moment you have a little bit of a double. We have the outsourcing, we're insourcing.
Through the course of this year, you'll see that margin also start to improve significantly.
Thank you. We now have a webcast question from Barry Sherrill of Nexus CIB. Congrats for a very solid full year 2022 results. Considering the 45% LTV being at the higher end of CTP target range and the small +39 BPS valuation yield outward in H2 2022, do you consider selling assets in 2023? Thank you.
All right. Thanks very much for the question. Yeah, regarding the loan-to-value range, I mean, the loan-to-value is a beautiful thing because it's very easy to understand, but in reality it compares one absolute number, which is the number of loans, to a relative number, which is valuations, which is a multiple of rental income. You have to take the loan-to-value ratio also in context of the valuation yield that is being applied. The reversionary valuation yield of our portfolio at the end of 2022 was 6.9%, which is substantially higher than the yield of any of our peers who have a stronger Western European focus on their portfolio.
I n Western Europe, you have the combination of very high absolute rental levels and a significantly lower yield so there is a less potential for rental growth to offset yield decompression. In Central Europe you have it the other way around. You have significantly higher yields with lower, absolute rental levels, which is why we believe that growth in ERVs would offset any further increase in already elevated yield levels. So as a consequence of that we are very comfortable with our long term value ratio so we don't plan on any disposals or material disposals.
Thank you. We have another question from the webcast from Ernest. From the company, Ernest Caesarea Bernatech saying, "Hi, what is the current pre-let level for the projects planned to be delivered this year versus end nine months 2022 level?
So if you look to the pre-letting that we reported for the deliveries in H1 2023, the pre-letting stands at 46%. That's excluding Poland, where we have a slightly different market strategy and Remon c an speak further on that. So we see good pre-letting across across our markets. And that's that's for the six-month period of delivery. While to answer your question more specifically, but of course, comparing to the nine-month pre-letting, that was for a three-month period. So we basically have three months more included here in the pre-letting. So with that figure staying relatively stable.
That gives us the comfort in terms of construction. As Raymond also indicated, 1.7 million sq m under construction. With the pre-letting, with the tenant demand that we are seeing, both from existing tenants and new tenants, we continue our development activities throughout 2023.
Thank you. We now have Peter Ringbom from Kempen. In the second half of 2022, your land bank did not grow, but remained a staggering 20 M sq m. Is there a reason behind this?
Yeah, Peter, thank you for the question. Yeah, I mean, the focus in 2022 changed from securing and growing the land bank. We had, as you know, we did a significant land bank transaction in Poland in the first half of the year where we secured super attractive plots across 14 locations across Poland. That was the major land bank that we secured in 2022. Other than that, we were doing bolt-on acquisitions primarily in and around our existing parks. Our focus is on now mobilizing the land bank that we already paid for.
We started a significant number of developments during the second half of 2022 that consumed a reasonable portion of our balance sheet, over 1 million sq m of land. We replaced that, we didn't do more than replace that. We have ongoing discussions across the region in terms of continuing to secure land bank. Here we focus particularly on securing land through options. Limiting the commitment of capital up front that we can focus on building on the land that we own at a double-digit yield on cost, meeting the demand of our tenants.
Thank you. We now have Peter K`ummunen from Kempen.
Thanks. I'm also on the line now. I already posed my question. Maybe another question on the Czech Republic. Yesterday, I understood that the market is still going very strong there. Rents are going through the roof. Also land prices are moving up a lot, could you also maybe, I guess, address color on these, the dynamics, in this market?
Hey, thanks, Peter. It's Remon speaking. I'm not sure if I heard the last part of your question. I thought it was about debt, but if it's about the market in the Czech Republic... Was it? Is it?
Yeah. Yeah, it is.
The market. The market is strong. Richard mentioned, yeah, it's, you know, it's our home market. There's a lot of stuff, a lot of projects we have developed over the past, what, 23 years. A lot of clients. Occupancy, I think Richard just mentioned 1% of the whole market, in terms of vacancy, so that means nothing really. No, very good.
That's also why you see some rental growth here and there, although not all of that because we clearly have existing leases with tenants for a lot with long-term contracts, and we stick to that fixed indexation in many of the contracts because obviously most of the fixed index is for Czech because that's where the older contracts are before we introduce the open complete CPI indexation. Anyway, for new projects, yes, indeed, you could probably achieve a 10%, 20% more rent than what is currently being paid.
the challenge is really to get land in the Czech Republic with permits. Yeah, because that somehow is among all the markets where we operate, probably the most challenging and lengthy process of getting permits in the Czech Republic. It doesn't really matter if it's Brno or Prague, it's throughout the country. Maybe a little bit better here and there or easier or quicker, but overall quite complex and time-consuming. If you break it down, Czech Republic, the standing, the portfolio is very good, well-leased. And then, yeah, we see rental growth. If we can do renewals, then great, then we can get much more rent for the same building than we had before.
10, 20% is not an exception. point one. Second, when you talk about new supply and new projects, we are very excited and happy about the Prague North development. We have a park, a business, large site in the north of Prague on the motorway exit where we have previously built and have done developments there, for example, for METRO, Makro and other companies. We had land which we waited for permits and so we have now received permits. So we can go ahead there with another 50,000 sq m , which we do have under construction, and there is more to come. That's gonna be our, yeah, flagship park in Prague, in Prague region.
Other products in Prague are, yeah, fully leased on the east side and on the west side. Brno, I reported on that previously that we had also unlocked or have been able to get a permit there. In Brno, we are building. In Brno there's more to come. It's really a high tech location, with a lot of value adds, microscope producers, Thermo Fisher, but also Hitachi, ABB, Honeywell, Getat, many of those companies. This really turns into a high tech campus, kind of site with, yeah, close cooperation with the University of Brno. No, that's very good. We are really fighting for more land and trying to get more land for us to develop.
It's very much what Richard said. It's not like there's a lot of money for free everywhere. We need to be very careful what we have and how we continue and take into account our loan-to-value ratio. It's about land bank consumption, not about buying more land. The focus is really on utilizing the land, and that is happening while we speak in the Czech Republic very much.
Thanks a lot. That sounds quite promising. There's no more questions.
Thank you. We now have Frédéric Renard of Kepler Cheuvreux. Please go ahead.
Hi, good morning, and thank you for taking my questions. I have three questions actually. First on the LTV which is slightly above 45%. You still have a cost to complete of around EUR 570 million, on which I'm not sure this is all for 2023. This is low versus what you have done in 2021 and 2022. Exclude, I guess, non-acquisition. The question is the capital structure today slowing down your willingness to expand to a 20 million GLA portfolio by the end of the decade? That would be the first question. The second question is on the Amsterdam City app. Was the price already fixed when you buy it? I thought at that moment the price was around 3%.
Should we expect negative revaluation upon deliveries? The final question is on the predicting rate on deliveries, which was at 80% at the end of 2022, which is down from the 96% in Q3, suggesting even below 80% from the asset deliver in Q4. Is it due to a large number of asset deliver or anything else? Thank you.
Yeah, thanks very much for the questions. Yeah, maybe I take a couple of them. The first question in terms of the loan-to-value, does it limit our ability to grow? Not particularly. If you look at our businesses, you know, the biggest business that we have is the investor operator which is a massively cash flow positive business. We generate somewhere between EUR 350 million and EUR 400 million of free cash from that every year, or in 2023. That increases every year as we grow the portfolio. That money is basically religiously reinvested back into development.
As we focus on developing on the land bank that we already paid for, there's quite a high multiplier there in our balance sheet. We're able to keep growing significantly while maintaining our loan-to-value ratio. No, the capital structure does not stop us growing towards our 20 million target GLA by the end of the decade. Regarding the purchase of ALC, no, we didn't buy it at a yield of 3%. We bought it at a yield significantly higher than that. The leasing that we are doing at the moment is at a higher rental level than the rental levels that we underwrote.
No, we do not expect any revaluation issued with that asset.
Richard, may I add something to that?
Yeah, sure.
With the ALC, I think we can announce it. No, I mean, there's nothing new we're gonna say if we mention the purchase price, right?
No.
But maybe an update on the purchase price. We paid initially was EUR 307 million, EUR 307. We added some solar and windmills, more solar and all of that. I think we're now more like EUR 316 million of purchase price with an ERV around EUR 18 million, EUR 18. That would be the total income. When are we gonna achieve that? I think next year, maybe year after, something like that. Not too far away. That is like tenants move in, you have some works to be done. You know, and that's a process of doing different modifications, adjustments to the property here and there.
There will be some temperature controlled, other modifications which is in this type of building. As I said earlier, we need to make sure we get the tenant mix right there. It's very important for us to have the right companies in there. That's what it's gonna be, I think around EUR 17.80 million. ERV is a bit higher and we bought at EUR 3.17 if you would include all of the things we've done.
Thank you, for the comprehensive answer. The last question on the pre-letting.
Yeah, on the pre-letting, the 80% refers only to the Q4 delivery. You know, those numbers on a quarterly basis, you know, it can, you know, it can have a certain degree of volatility in them. You know, generally we are, you know, comfortable with somewhere between 80% and 90% of letting on completion. That translates on a consistent basis into our 95% occupancy across the whole portfolio, which is what we have been maintaining for the last 20+ years as we continue to grow the portfolio. You know, the individual quarter is, you know, rather a statistical effect than anything specific.
Okay. That's very clear. Thank you very much.
Thank you. We now have Bart Gysens of Morgan Stanley. Please go ahead when you're ready, Bart.
Good morning. Historically, you have offered a scrip dividend option. I assume that it's also been a good way for you to retain earnings and control your leverage. Are you gonna continue doing this when the shares are trading below NAV? Or are you gonna incentivize investors to, if they want to reinvest the shares to offer it in cash and let them buy it in the open market? Thank you.
Thank you for the question, Bart. Yeah. Yeah, we will, you know, so, you know, the default dividend for the company will continue to be a scrip dividend with the option for shareholders to take a cash dividend. The last dividend we did, we were trading below NTA. Significant number of the shareholders continued to take the scrip dividends. You know, we would like to hope that as a growth company, investors would see us as a company that should be trading above NTA on a consistent basis, reflecting the fact that we not only have the stability of the existing portfolio, but also the growth potential of the land bank combined with the platform.
Yeah.
Okay, that's clear. As a follow-up to that, your guidance of EUR 0.72 for 2023.
Mm-hmm
Is that on a current share count? Or have you assumed some increase in the share count because of scrip take-up in that?
Financial model assumes a small increase in the share count. It assumes an increase in the share count.
Okay. Thank you.
Thank you. We now have Silvia Durante of Goldman Sachs.
Hi. Good morning. Thanks for taking my question. I just wanted to get back on the topic of the LTV and the leverage. I noticed indeed that you also increased the percentage of the development as of gross asset value. Yeah, the pre-leverage ratio is a bit lower. As a result, the leverage matrix, I'm not only talking about LTV, but also, you know, the net debt to EBITDA, so more cash flow metrics are not in line with the rating agency or in particular Moody's. You could expect some rating pressure. I was wondering, did you discuss with the rating agency about these more acquisitive developments? Do you intend to keep the leverage at this level in the medium term as well?
How committed are you to the investment grade rating, if you expect some rating pressure? Thank you very much.
Thank you for the question. I mean, the loan-to-value, as I mentioned earlier, I think you have to see the loan-to-value also in combination with the significant higher yield that we have for the valuation of our portfolios. If you look at the adjusted net debt to EBITDA, it's below 10, which is comfortably within the ratios for Moody's. If you look at the Moody's quantitative analysis, the only one on which we would not be better rated than our current rating is the backward looking net debt to EBITDA.
If you take the forward, you know, the adjusted net debt to EBITDA as a developer, you know, I have the backward income, but I have the debt for the future developments included in that calculation. You know, the rating, I think our rating is extremely well anchored. Yes, we focus on maintaining our investment grade rating. We have regular conversations with the rating agencies. We don't see any cause for action by them.
Okay. Clear. Thank you very much.
Thank you. We have no further questions on the line, so I'd like to hand it back to the management team.
I would like to thank everyone, very much for their participation and their questions, and look forward to continuing the dialogue and continuing to deliver on our promises. Thank you very much, everyone. Have a great day.