Good day and thank you for standing by. Welcome to Neinor Homes FY 2022 results presentation. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a Q&A session. To ask a question during the session, you'll need to press star one and one on your telephone, and you will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Alternatively, you may submit your question via the webcast. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, José Cravo . Please go ahead.
Hi. Good morning, everyone. My name is José Cravo , and I'm the head of investor relations Neinor Homes. Today, we are going to go through our results of the fiscal year 2022. As usual, we are here with Borja García-Egotxeaga , our CEO, Jordi Argemí, our Deputy CEO and CFO, who'll start the presentation with the key highlights of the year. We will review the operational and financial performance of the business, and we shall finish with the main takeaways. After the presentation, there will be a Q&A session to answer any questions you may have. Now, I'll hand over the presentation to our CEO, Borja García-Egotxeaga .
Thank you, José Cravo. On my first message, I would like to note that 2022 was a challenging year marked by a war, inflation running at double-digit, and an unprecedented tightening of monetary policy worldwide. Even so, we are proud to announce that once again, we have accomplished our targets. Jordi Argemí will give you more details in section three. Since 2019, we have delivered almost 9,000 housing units, and we have been the most profitable player in the Spanish market, generating EUR 500 million EBITDA and more than EUR 350 million net income. In the year 2022, we have also distributed EUR 120 million to shareholders with a dividend yield of 12% yield, one of the highest in the European real estate sector, while we have maintained a conservative loan-to-value of 19%.
My second message is that the fundamentals of the Spanish residential sector remain intact. Later in the presentation, we will explain why Spain today is one of the most attractive residential markets in the world. In 2022, even though we increased prices, our net absorption ratio stood at 5.7%, which is an extremely healthy level. This implies selling a development in only 17 months as on average. This is a clear evidence of how strong demand for new homes is in Spain. The performance in our rental portfolio was even stronger. We have finished the year with a 97% occupancy level and 15% rental growth. Furthermore, we have executed the first two sales of Build-to-Rent asset for EUR 40 million at a premium to December 2022 appraisal. This is rather unique.
In today's market, very few companies sell assets at book value, yet we continue to trade at a significant discount to appraisal. Please follow me to slide number six. Here you have a summary of our operational and financial KPIs after delivering 2,700 units during full year 2022. As of December 2022, between Build to Sell and Build to Rent, we had 8,715 units active and more than 5,000 units under construction or finalized. We started construction in 425 units, and we have another 754 with building permits, where we have delayed the beginning of construction to optimize the design of projects and to protect the margins from cost inflation. Soon, in the coming months, we expect to start the construction of these projects.
Please move to section two, where we will analyze our business performance. As I said in introduction, commercialization environment continues to be very healthy. Despite macro uncertainty and price increases to fully offset cost inflation of 10%-12%, the Q4 was the best of 2022, with almost 600 pre-sales recorded. As of December 2022, circa 80% of pre-sales for 2023 and 30% for 2024 were achieved. For the full year and excluding rental, new pre-sales were recorded at an asking price of EUR 309,000. We expect this figure to keep going up in coming quarters due to a higher pricing in the product mix launched. Furthermore, we delivered almost 1,000 units during the Q4.
The cancellation rate remains at historically low levels, as Neinor Homes clients have a strong equity position and didn't have problems in obtaining mortgages from the Spanish banks. Moving to the next slide on acquisitions. We have always said, Neinor Homes follows a very disciplined strategy, and we have a proven track record in reading and anticipating the investment cycle. We have finished the year 2022 with the second-largest land bank of our history with 15,500 units. During 2022, we concentrated the land acquisitions in regions with a strategic interest for Neinor Homes and targeting IRRs above 20%. Please follow me now to slide number 10. Here, we have a snapshot of our rental portfolio.
As you can see, we have made a significant progress. Today, we have 3,500 units that should generate a stabilized income of more than EUR 40 million per year. 2023 will be a key year for our rental portfolio, as we expect to deliver more than 1,000 units. On slide 11, you can see the financial performance of our yielding portfolio, which continues to be excellent. During 2022, we have seen some rotation in the portfolio with 156 contracts renegotiated. On this, we have been able to increase rents by almost 15% and still finish the year with occupancy levels at 97%, which is remarkable. This performance shows that there is a clear potential to keep increasing rents in our portfolio. Also that there is a very strong demand for brand-new rental homes in Spain.
I hand over the presentation to Jordi Argemí to review Neinor Homes's financial performance.
Thank you. As Borja García-Egotxeaga said, we have accomplished our annual targets. In this slide, I would like to call your attention to the last column that basically summarizes Neinor Homes's financial performance since 2019, when remember, we presented a new business plan and new targets. This performance has four key elements: operational, profitability, leverage, and shareholder remuneration. Starting with operations, you can see that we have delivered almost 9,000 units, which is in line with the guidance we gave in 2019. This, despite there has been a COVID situation, a war, and now a macro situation with a lot of uncertainty. Also, this level of units delivered is the best track record in the sector. Second, regarding profitability. We are the leaders in the sector with more than EUR 500 million EBITDA and EUR 350 million net income.
This means that we have exceeded the guidance given in 2019, that was EUR 460 million-EUR 480 million. Third, we have maintained a prudent approach to the leverage throughout the cycle with the loan-to-value always below 20%. Today, we have a strong cash position of above EUR 200 million and the second biggest land bank in our history of around 15,000 units. Finally, over this four year period, we have distributed EUR 230 million to shareholders in the form of dividends and share buybacks. It is clear that this company has delivered what we promised four years ago, despite all the external turbulences, and we, as management team, are proud of it. Let's move to the next slide, where I will focus on the debt position and strategy.
Over the last 12 months, we have implemented a number of actions to optimize, protect, and also adjust our balance sheet to a scenario of a higher interest rates. One side, we anticipated the Euribor increase, and with the objective to protect the margins in our Build to Sell business, we acquired in August EUR 300 million nominal interest rate caps at 2% until 2026. This hedge basically allowed us to be 100% protected of the Euribor evolution in the coming four years. The other side, we have also executed a leveraged bond buyback in the market and acquired EUR 27 million nominal value at almost 9% yield to maturity. This basically generates or should generate EUR 7 million of financing, financial cost savings.
We have announced this morning a voluntary partial tender offer on our green bond for a maximum of EUR 100 million at a minimum price of 90% nominal value. This decision was driven by the strong cash position of this company at the year-end, and the objective, obviously, to generate additional savings in the financial expenses over the coming years. Depending on the size of this tender, we could save up to EUR 25 million. If you consider these three financial levers already commented, the potential savings for the company could be above EUR 40 million pre-tax, which means EUR 34 million post-tax. This basically means EUR 0.5 per share. I think that there is no doubt that we are also creating value for our shareholders from the financial side.
Finally, in this slide, you can see that in terms of maturity, I would like to note that Neinor Homes doesn't have refinancing risk until 2026, but also that our corporate debt has a fixed interest rate at 4%. I would say we are very well covered. With that said, let's move to the next slide, 15. Now, allow me to spend a couple of minutes in our non-financial performance, where we have a best-in-class performance. During last year, 2022, we have been selected for the second year in a row by Sustainalytics as a developer worldwide with the lowest ESG risk. Let me give you a few examples of the main actions implemented this year. Starting on the environmental side, we continue to be Spanish developer with the highest number of BREEAM certifications.
In total, we have delivered 8,000 units spread over more than 133 developments. In 2022, we have reported our alignment with the European Union Taxonomy and 39% of our revenues and 55% of the CapEx of 2022 deliveries meet this criteria. Also we have taken decisive actions at the social front. In 2022, we have published our first social impact report, and we are one of the very few developers doing this worldwide. With this, I hand back the presentation to Borja García-Egotxeaga.
Thank Jordi Argemí. Before going into conclusions, please let me take a couple of minutes explaining why the residential market in Spain is in a completely different situation versus 2007 and in better shape than most markets. In the appendix, you have charts that illustrate the figures displayed in the table. Firstly, on the supply side and on a per capita basis, Spain is producing 41% less units than the average of Germany, the UK or the US. Secondly, household debt, one of the main problems in Spain during the great financial crisis, has been reduced by more than 30% over the last 15 years, and today is even below Germany. Third, Spain has a very competitive cost of mortgages. It currently sits around 3%, and this is 35% below selected countries.
Fourth, due to the above mentioned reasons, we didn't see a house price rally, and in fact, house prices are still 14% below 2007, versus more than 80% up in other countries. Finally, the Spanish economy is nowhere close to its fullest structural employment levels, and it is expected to grow at 1.5% over the next two years. That is two times faster than other countries under analysis. Now let's go to the last slide. I would like to conclude today's session with the following messages. As I just mentioned, today, the Spanish residential market is one of the safest ones to invest worldwide as it is not expected house prices to come down. It is under supplied, under leveraged, and underpriced. Secondly, on this slide, we provide our outlook for year 2023 for Neinor Homes.
In a nutshell, we expect financials to be broadly similar with 2022. This implies delivery between 2,500 and 3,000 units, and generate an EBITDA that should be in the bottom range of the EUR 140 million-EUR 160 million range. As we did during 2022, we will remain highly disciplined on new acquisitions. I would like to finish by saying that today, taking into consideration recent launches and WIPs, we have more than 9,000 units up for delivery in the coming years, of which 5,600 units are already under construction plus finished product, which should give us a good earnings visibility for the coming years. Now we are ready to take any questions you may have.
Thank you. As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. If you wish to ask a question via the webcast, please type it into the box and click Submit. Thank you. We will now take our first question via the phone lines. Please stand by. This is from the line of Ignacio Domínguez from JB Capital Markets. Please go ahead.
Yes, hello. Thank you for taking my question. I have three. Firstly, what target of Build to Sell deliveries do you use to calculate the sales coverage ratio for 2024 deliveries? Secondly, could you give us any guidance for dividends you plan to distribute in 2023? Finally, what are the land purchase assumptions behind your EUR 300 million-EUR 500 million net debt guidance for 2023? Thank you.
Hello. I try to answer your three questions. Regarding the guidance of Build to Sell for the 2024, which was the first, last sort of day three. That was the first question. It should be around 2,000 units is our guidance. Regarding your second question, you know that we keep the guidance, you know, of 2,500, 3,000 units, and this is the range that we continue showing to the market. We are not gonna change that. Regarding the net debt, it's a huge range, the rationale behind is because it will depend on the land acquisition opportunities that we find in the market. If we don't find relevant good opportunities, you know that we are very disciplined in that sense.
We should be sticking the EUR 300 million net debt. If there is good opportunity, therefore we could have a budget, no, up to EUR 200 million. It would imply automatically to increase the net debt up to EUR 500 million. That's the rationale.
Okay. Thank you.
Thank you. We'll now take our second question from the phone lines. Please stand by. This is from the line of Javier Beldarrain from Bestinver. Please go ahead.
Yes. Hello, good morning, everyone. Thank you for taking my questions. Few questions on my side. The first one on construction starts, according to the difference in units under construction and the presentation, you have started construction on several hundred units in 2023. Can we assume that the construction pace is now back to normalized levels? The second one on commercial activity. Could you give us some color on how pre-sales have evolved during January and February? The final one on the sale of the rental assets, both of these assets are located in the same region. Would you say there is a higher interest in rental assets in there, in that area in comparison versus the rest of Spain? Thank you very much.
Thank you. Good morning. I will start regarding the construction starts. Yes, as you know, the construction cost in, you know, Europe, and also in Spain, increased a lot during the period that went from the summer 2021 until the summer 2022. You know that basically this construction cost did increase because of the weight of materials in the offers. You know that materials has an importance in a normal tender in construction of around 30%-35% of the total budget is due to these materials.
In fact, as you were saying, we had a very big increase referred to some of the materials that we normally use in construction, basically iron and products that have a lot to do with energy, basically bricks, concrete and some other elements that we normally use in the construction. We saw the peak of the cost of energy during the Q2 and Q3 of last year. That still made that the pressure on those costs was very high. Since last summer, we started seeing how prices were relaxing. There were two main reasons for this. One is on energy, and the other one is had to do a lot with the crisis in the residential Chinese sector.
You know that the Chinese sector has a huge weight in the consumption of materials for construction, therefore, this was softening as the year was going by during last year. All in all, what we had during last year was that when we were having the request of new offers, when we were requesting offers to construction companies, we were having the first extra cost of around 20%. To decrease this, we had to take back a lot of projects, to take them back to the office, to start new negotiations with constructions or even trying to sign long-term agreements with some of them to reduce those costs. After that, we've been able during last year to reduce the construction cost up to 10%-12%.
This was something that, in Q4 of last year, we started to see a relaxation of, a reduction in the cost increase of the constructions. Now during the following months, we expect that launching new projects will be much easier, and in that line we are working. Okay. I take the second question and the third one. The second regarding the sales performance on January and February. The numbers has been very solid. We have closed with a solid win, slightly above our BP curve and keeping the net absorption rate, circa 5%. In general terms, leads, visits and sales has performed in the same way we saw in Q4 of last year.
Regarding the rental crystallization, we keep with the various lines of value crystallization with negotiations on with investors in both sides, in individual asset sales and in portfolio programmatic deals. The case that the first two assets that we crystallized were in Malaga has been a causality. We are under negotiations of additional crystallization in assets in Madrid, Valencia and in general in all the regions where we are performing.
We can say that we have seen an increasing appetite during this beginning of the year for these asset classes as we see that the capital value inflation and the rent increases that has been very strong, as you can see in our portfolio, has been at 15% last year, are offsetting the impact and uncertainty on the interest rates. We feel comfortable with the performance on the rental for this year.
Perfect. Thank you very much.
Thank you. Once again, if you would like to ask a question over the phone lines, you can press star one and one on your keypad, or you can also type it into the box on the webcast and click Submit. There are no further questions coming through on the phone lines at the moment.
Okay. Operator, I'll go now to the webcast. We have received a couple of questions. One of them on the announcement of the bond buyback, if we can give some more details.
Well, actually it's what I was saying. I mean, we really believe that the best investment alternative from a cash management perspective is the bond.
We have prepared this up to EUR 100 million, that is kind of 90%. The project, the tender is open for one week, so in one week we will now know the success of this tender. Let's see. For sure that, given that we have more than EUR 200 million, it's the best alternative to optimize the cash.
Thank you, Jordi Argemí. Second question on land acquisitions. Given the amount invested in the year 2022, what can we expect for 2023? Essentially, what is the strategy that the company is following?
Yeah. Well, we keep with our discipline strategy. As we have mentioned, we have a very strong land bank. In that sense, what we are doing is keep analyzing the best opportunities in the market. We are ready, and we are also analyzing the best structures that could arise in the coming months. We will keep active, but disciplined as we have been over the last years.
Okay. A couple more questions here on the webcast. With regards to the delivery mix for the year 2023, how many units are expected on the Build to Rent segment?
Well, you know that the global guidance is between 2,500-3,000 units. I said before, know that the Build to Sell should be close to the 2,000 units. It will depend. You can deduct, no, the Build to Rent guidance depending on the Build to Sell units. Again, it's something that we need to. I mean, there is a lot of months in front of us. We will see, no, at the last part of the year, no, how much will be Build to Sell, Build to Rent. Just consider the guidance and that's it.
On Build to Sell deliveries, if we can give some color on the gross margins for the years 2023 and 2024?
Well, I think that we keep similar, no, to what we have always guided. This should be between 22%-24% gross margin. In any case, what matters is the EBITDA, and the EBITDA is clear, the EUR 140 million-EUR 160 million of guidance. It's true that this year, as you can imagine, we have more pressure than ever, no, because of the EUR increase. Despite we have the hedge and it covers a lot, I mean, we have an impact there. I would be in the lower part of the range, being cautious now. Let's see how we finish the year, but it should be more than the EUR 140 rather than EUR 150, EUR 160.
One question on the rental, on Neinor Homes Rental, if you can give some guidance on the potential or the number of projects to be sold in the year 2023?
Yeah. Well, here, as I was mentioning before, we see an increasing appetite. The amount of crystallization of value is gonna depend on the negotiations and as we did in the, in the last deals, to achieve a very accretive returns in each of our assets. The reality is that the operating market of the Build to Rent, it's improving on a monthly basis, so we are not in a hurry, and we will see during the year and the negotiations how much we can crystallize.
Okay. Thank you, Jordi Argemí . we don't have any