I would like to hand the conference over to our first speaker today, Inés Arellano. Please go ahead, ma'am.
Thank you. Good afternoon, ladies and gentlemen. Welcome, and thank you for joining MERLIN first half 2021 results presentation. First of all, we kindly ask you to guide by disclaimer concerning the presentation. As usual, Ismael Clemente, the CEO, and Miguel Ollero , COO, will walk you through the presentation, and thereafter we will open the floor for Q&A. With no further delay, I pass the floor to Ismael. Thank you.
Thank you, Inés. Good afternoon, everybody. The first half of 2021 has been numerically a relatively uneventful period, very similar to the one of last year. There has been a notorious improvement pattern over the period. With the first quarter delivering around EUR 0.13 free cash flow versus EUR 0.14 on the second, and we expect that growing pattern to continue in the third and the fourth as a couple of big buildings that we had in works will come into operation and will start producing rents. We expect to continue reducing little by little the incentives applied to the shopping center activity. Valuations have come out flat versus December 2020. Offices is likely up +0.4%, and logistics are better with +4%. Those on the positive territory, and then retail -1.5%, and hotels, although anecdotal in our portfolio, significantly down as well.
In shopping centers, the accumulated adjustment, taking into account this and past year, exceeds now 10%, which so far seems relatively commensurate with the behavior we are seeing in net rents after incentives in the reletings that we are conducting so far. That has driven our LTV to 40.5%. It should normalize a little bit towards year-end as we accumulate more cash flow of the period. We have continued actively managing our balance sheet, having issued a EUR 500 million overall bond, with a maturity of nine years that will serve for the repayment of the bond, originally Metrovacesa bond maturing in 2022. We will be saving around 100 basis points starting in the maturity date of the bond. We will probably pay in February.
In terms of operating performance, after a significant decline in occupancy offices, we expect them to start showing some signs of recovery in the second half. In fact, you might remember last year we ended up at 91.1%, having lost in the year 1.7% occupancy. The first quarter was negative with -1.9%. In this second quarter, we have had a further 0.2% adjustment, which basically takes us exactly to the point we signed out to the market as the maximum deterioration in occupancy. We said we expected occupancy to fall this year between 150 and 200 basis points. Those 200 basis points are exactly the point in which we are now. We expect to slightly recover in the third and, more importantly, in the fourth quarter and bounce back to something in the region of between 89.5%-90% at the end of the year.
The lead and activity in the market are clearly improving. This is no wonder. It's simply a reflection of what is happening in the economy. There is employment growth now. The first employments to be created are the most, let's say, unskilled or unspecific ones, but it will follow suit with managerial jobs. One, two, three quarters afterwards, you start immediately picking that up into the occupancy of the portfolio. In logistics, the performance has been very strong, particularly in lease up. It continues to be a market which is very active with lots of people looking for new sheds. Rents are relatively stable, however, and this is a consequence of a chain effect. Online retailers are all in negative territory. They are losing the shares in their activity.
As a consequence, they impose a tremendous, sometimes exaggerated pressure on the logistic operators, and logistic operators, therefore, cannot afford to pay EUR 0.01 extra rent in the facilities they occupy. It's a vicious circle that let's see what type of fruit it bears in the future. Certainly, this is a consequence of what we are seeing in terms of online growth. We have improved significantly the occupancy more than 1.5%, as we commented in the last conference call. It was simply the consequence of a number of contracts that we had done last year on a temporary basis in order to give a hand to our tenants, to our clients, because they were very wrong in their calculations of online activity in 2020, and they desperately needed extra space to store the goods.
We provided help to everybody on a temporary basis, and during the first half we have been regulating that activity and extending the contracts to a normal lease law standard. In shopping centers, the performance and the resiliency of the segment is probably surprising even us. Of course, all of you, but even us because the asset class is performing slightly better than we could have hoped. The re-lease spread has been 5.9. This is not so important because approximately three, 3.5 points of that is contractual step ups. The rest is in and out. The re-tenancy rate of spaces vacated as a consequence of evictions since March 2020 now stands at close to 98%. I know this is mind-boggling for many of you. How can people be interested in retailing in shopping centers? Because they make positive margins in their sales.
We are seeing now a growing pattern of not only small and medium tenants, but also the big name expanding the format of their successful shops in order to capture more sales with positive margin. This is throughout the portfolio. We are seeing that in the portfolio. What we are doing now is a little bit the Tetris of making sure that we move to the evicted shop. We move somebody else, which is contiguous to a shop which is operated by one of the big names, so that the big name can expand the activity into the other shop. Having said all that, probably the most important activity that we have conducted during the half has been making sure that we tackle with enough anticipation the maturity wall that we were facing in 2022.
As you might know, as a consequence of our commercial policy, we provided help to our tenants. We requested in exchange, extending the contracts till 2022. As a consequence of that, we were facing a renewal wall in 2022 in the region of 44% of our contracts. Of course, that was something we should start tackling anticipatively, and this is what we have been doing. There are around 10% volume breaks in which we have confirmation that there will be no break. Plus, there are 11% new contracts that are in final phases of negotiation, draft exchange or similar. We consider out of the 44%, we consider around 21% to be out of risk. As a consequence, the remainder, which is 23%, is more similar, more akin to what is our normal renewal rate in any given year.
We will continue working on the remainder of our renewals for 2022. Regarding value creation activities, it is important to note that Landmark 1, our office building program, is now almost complete. We have delivered fully occupied Castellana 85 and Monumental in Lisbon. The only WIP which continues in place is Plaza Ruiz Picasso in Madrid, which works are basically starting right now. It will be delivered beginning of 2023. Flagship is completed with the deliveries of Porto Pi and El Saler on track with the respective business plans. In terms of Best II and III, we have taken a significant dent into our land bank. We used to have 900,000 sq m. We currently have less than 600 sq m because the activity has been frantic over the past year and a half.
Just in this half, we have delivered a lot of assets, 100% let and have pre-let for constructions that will start now another 90,000 sq m in the period. Given that the pending CapEx is now flattening, then of course, we could always launch a Landmark II or a Flagship Two projects that this is something that we are not necessarily going to be doing right now, because in some cases, as you all know, construction costs have slightly gone up. For things that are going to be in relatively normal cap rates in the sixes, six and a half, that may take a dent on the returns. We are going to flatten significantly our CapEx needs for the immediate future, and we are going to use that CapEx capacity to basically fund our data center program.
This program, as commented in a number of occasions, was originally a byproduct of our logistics effort. In every big logistics development, you always have a corner plot where maneuver for trucks is not ideal, et cetera. We started thinking about alternative uses for those plots, taking into account that normally the places where big logistics parks are located are places highly irrigated by fiber cables and with ample availability of electric power. With that in mind, we started looking at the possibility of developing data centers in there. What started as a niche activity for the company looks like it might become a mainstream source of revenue for the future with outsized returns that exceed even the ones we are getting in our logistics program.
No matter the fact that in logistics, as you all know, the land bank was accumulated in 2016, 2017, 2018, when prices were still reasonable in terms of land acquisition. This is all in terms of introduction. I will pass the floor to Miguel Ollero who will elaborate on the financial results for the semester.
Thank you, Ismael. Good afternoon, everybody. Going back to the financial statements for the first half of the year. Just to highlight that, as Ismael was mentioning, in the first half of the year, the growth range had been growing a little bit with regards to the prior semester in 2020. Just 3.2% to EUR 248.5 million. Mainly driven by the office segment and the shopping center segment. In offices, as we have been commenting, there has been a drop in occupancy in the first semester of the year, 2%. In addition to some assets that we already have had under works during the semester, they have been doing this reduction in rents in the office segment.
In shopping centers, it is more related to the fact that we were selling down three shopping centers last year in the month of February, so they have not been with us anymore, and they have been affecting also rent generation in that side. On the contrary side, you have logistics, which have been increasing the number of rents collected. Now in the semester, they have been growing 11.9% with regards to the prior semester last year. Looking at the net rents, we were at EUR 196.1 million, which represents a margin of close to 79%, very healthy margin in terms of the rent. Going down into the detail level, EUR 178.2 million, also a 72.1% margin, quite in line and even better than the one we were able to get last year in the same period. Finally, in terms of flow through, FFO was EUR 129.2 million.
It is a 52% margin on rent, and it is at a level of EUR 0.0027 per share. As Ismael was commenting, first quarter was EUR 0.13, second quarter has been EUR 0.14, and we are aiming to go up in the second half of the year to achieve the guidance of EUR 0.56 per share for the whole year. In terms of PPS, we were EUR 0.0041 per EUR, which is a big growth with regards to the prior period, close to double. Finally, on the EPRA NTA, we were advancing 0.6% with regards to the one we were publishing at the end of last year, which is at EUR 15.55. Moving forward, in terms of GRI, as we were commenting, the main reason behind is that we have a record-like negative of 2.2%, mainly driven by offices of 2.9%.
Shopping centers was at a level of 2.0, and logistics was positive. This is what we have as the main impact of some deflation in terms of indexation in the Caprabo assets. Not in the previous as a challenge in main part of the net leases portfolio of the company. In terms of occupancy, just to highlight that we think we are bottoming out in terms of reduction of occupancy in the office portfolio. We are at 89.1%. There was a drop of 20 basis points only in the second quarter. As a whole, these are 200 basis points for the whole period. Bottoming out for the next semester. In terms of logistics, as Ismael was pointing out, we were recovering 151 basis points during the quarter, going up to 96.2%.
Also, more important to say, as he was commenting, we are rotating tenants which were on a temporary basis with tenants which are now reaching up on a long-term basis. Shopping centers. Despite the big turmoil that we have been seeing also in the first half of the year, because as you may know, it is not only the restrictions that we have been suffering in different shopping centers all across Spain, decisions taken by the regional authorities. Also, Portugal has been largely affected with dealing with lockdowns. That was not the case last year and it has been this year. Despite that, we have been increasing our occupancy in the quarter up to 93.3%, 42 basis points up. Finally, in offices and other, we are at full occupancy.
Now we are moving into the specific details of the different divisions and Manuel is going to be commenting further.
Thank you, Miguel. Moving to offices, page 10 of the presentation. Well, in the period, as commented before, we have suffered a like-for-like decline in rents. This is mainly due to three effects. The increased vacancy in the period, the negative CPI indexation that we have experienced in the first quarter, relatively flat in the second, and we expect highly positive in the third and the fourth. The out of stock, which mainly Plaza Ruiz Picasso, including the Landmark 1, and then two small buildings in two of our business parks, Ática and Cerro de los Gamos, which we have emptied and have started refurbishment in anticipation of prelets in the future. In Madrid and Barcelona, we have experienced a negative like-for-like. In Lisbon, positive. Lisbon continues to perform very well as a city and as a business hub.
In Madrid, we are now bottoming out in terms of occupancy drop, 87 to 86.8. In Barcelona, we suffered one reduction of space of a French multinational that was canceling two new business lines in Barcelona and vacated part of one of our buildings. Also, we also had an exit in Torre Glòries, which has now been replaced and will revert the occupancy drop in the third and fourth quarters. In Lisbon, very similar with 20 basis points or a little less, 14 basis points, up. Regarding leasing activity, well, the number in the period, no matter how difficult the period has been, remains extremely high compared to all of our peers. Close to 180,000 sq m, which, to the best of my knowledge, almost triples what other people are doing in the market.
We continue to have an industrial dimension and continue to be a very good proxy to what is really happening in the market. We have been capturing a significant chunk of our revisionary potential in the portfolio. The latest appraisal by JLL, CBRE, and Savills point at an 11%. I mean, remember we were 13%, then 12%, now 11% delta on passing rent versus market. We continue successfully capturing that in our new leases and renewals. In Madrid, we signed 110 contracts with some very big names. New contracts with Accenture and Elecnor, and renewals with Técnicas Reunidas and BASF. New contract with Inetum, formerly Informática El Corte Inglés in the A1 corridor in Sanchinarro. In Barcelona, we renewed with Capgemini and Generalitat de Catalunya, but signed new leases with Lacer and Facebook.
In the case of Facebook, it was an extension with a very significant release spread on a reasonable sample of 36 contracts. In Lisbon, the sample was very small, but we achieved a very high release spread in the renewal with Crédit Agricole and the new leases with BPI and S&P. It's been a very active period for the leasing teams in the company. On page 12, you have an idea of what is happening with LOOM, our flex space division. We see the demand for flex space recovering very fast in preparation for the comeback to office, which particularly for the biggest corporations, we believe should happen after the summer.
In Madrid, in our operating facilities, we have achieved an occupancy of 47% now, coming from less than 30% at the trough of the crisis, but the forecast for end of the year could be more in the region of 55%-60%. Certainly it is a very benign, very positive recovering pattern. We are adding new stock mainly in 2022 with three new openings and will be followed by an additional one in 2023 when we open Plaza Ruiz Picasso. In Barcelona, in the operating spaces, we have reached a 61% occupancy coming from, again, 35%-40% at the trough. We will be opening in 2022, very early in 2022, three new spaces in Torre Glòries, Ferreteria, which is 22@, and Plaza Catalunya, 9.
In the case of Torre Glòries, in fact, we have reduced the size of the space because we needed one extra floor for one of the demands we have from the ordinary clients. In logistics, page 14 of the presentation. We have continued delivering a very good performance, both organic, 1% up in like-for-like, despite negative indexation in the first quarter and the increased vacancy that we suffered in the first four months of the year till we started recovering occupancy in April with a number of leases we signed. Also inorganically, we have seen very significant activity. In Madrid, occupancy has gone up by 260 basis points. Very significant activity. In Barcelona, it's gone down by 150 basis. On the verge of being recovered. It's simply the end-of-period effect. In other locations, we are absolutely flat.
The activity that you can see on page number 15, the sample is significant with 11 contracts, big contracts, and almost 200,000 sq m transacted with a release spread of 3.3%, which is notable for logistics. The tenants continue to be first rate. Most salient transaction in the period was the delivery of the national distribution hub of Carrefour, which was a turnkey. Also important has been the leases, two leases signed with 4PX, which is one of the two free operators that operate logistics for Alibaba. This is a case in which, of course, we are also the landlords of Alibaba in Madrid, and we have started capturing synergies and signing with the operators that they have for their logistics activity. Very important, as you all know, we started an en bloc speculative development in Lisbon that was in the middle of construction during the pandemic.
We have prayed a lot because for many months we had 0% occupancy and the works going on. We were investing CapEx and had zero occupancy. Thanks God, towards the end of the construction period, we started receiving interest for that shed, and we are now 85% occupied immediately following the inauguration. We expect to lease the remaining module within by September, maybe October, we should be leasing the remaining module. We will be 100% occupied there. In fact, we have started already the landscaping and pre-charging works in because this is marshland, and we have started pre-charging one extra land plot in order to start another development, which could be pre-let.
We might also embark into some further spec development there because we see that the demand is really intense for that location, which is particularly good as regards serving Lisbon from Vila Franca de Xira. In page number 16, you have the activity in our participated company, CILSA, which is south Barcelona. There has been an outstanding increase in FFO, close to 27% extra FFO, but this has been simply the result of moving into operation. The stock now has been almost maximized with close to 730,000 sq m. The width is now only 8,000. Basically we have finished with the availability of land in south Barcelona, having delivered in the second quarter 96,000 sq m of a state-of-the-art new facility that will serve as the southern European logistic hubs for French retailer Decathlon, which is also our client in shopping centers.
We have basically terminated with the land that we found at the beginning of our activity in this operation. When we took over here, there were close to 400,000 sq m of land undeveloped, which have been since then successfully developed and delivered with a very high level of occupancy. Occupancy in the period has gone from 97.6%-97.0%. Virtually we remain in full occupancy with a flat release spread on 325,000 sq m contracted . As for shopping centers, page 18 of the presentation. As commented, the footfall and tenant sales are recovering. We could easily compare numbers to 2020, but this is absolutely pointless. It would only lead to showing very high growth on every aspect of our operation.
We have decided to take 2019 as the pattern year in which we are going to be comparing our activity going forward, because we believe this was the last unaffected year prior to COVID, and it will serve to determine which part of the damage inflicted to retail has been caused by the pandemic itself, and which part is the growth in sales induced by the pandemic in the online commerce. This will help us to determine what is the new normal, let's say, in retail. The like-for-like decrease has been 2%, has been relatively small, mainly again by negative CPI indexation and slightly lower occupancy in the first quarter that has seen significantly recovered. As compared to 2019, we are - 30%, but this is very interesting because we have seen little by little a growing pattern.
We have dropped at -40%, -45% in some months, particularly concerning at the end of last year, beginning of this. We have seen that this has significantly moved up, and we expect that this upwards movement will continue during the second semester of the year. As commented before on page 19, we render information about the 2022 experience, which we know were a reason for concern for many of the analyst community in the market. As you might remember, we had 42%, then moving to 44% expiry when new people signed the commercial policy. 44% expiry in 2022 versus a normal year in which our experience oscillates between 22% and 28%, normally in the region of 24%, 26%. Those are the expiries we normally have in shopping centers.
In 11% of those 44, we are in advanced negotiation for the early renewal of the lease contracts. In most cases, we are exchanging drafts of addenda. The economic impact, which I know again is of significant concern to many of you, is flat to slightly positive re-spread. You might say, "Okay, that is on the gross rental income line." What about net rental income line? Prior to COVID, we were running at around 4% average incentive in shopping centers. What we have seen in the new contract, in this 11% sample of new contracts, is that we have moved into around 14% incentive. The delta between pre-COVID and post-COVID situation is around 10%. It looks at least commensurate with what we have seen in terms of adjustment of value of shopping centers.
The rolling breaks, as you know, there are one or two big, super important clients that work on a rolling break basis. Those have already redefined their footprint in Spain, and as commented in previous conference calls, we have been left aside. We have been left uncapped. We have sought from them assurance as for the intention they have in the future. What they say basically is that if we have not been included in the redefinition of the footprint in Spain, we can be tranquil as to the fact that there will be no exercise of rolling breaks in our portfolio. In principle, we seem to be out of risk in those contracts as well. The remainder, 23%, is normal tenants with contracts expiring in 2022. We are in an early stage of renewal negotiations. We will provide more color, more info during the year.
Very importantly, because I know this could be a little bit mind-blowing for some people, but out of the 31,610 sq m that we have already vacated as a consequence of basically eviction of zombie population, which by the way remember we informed about considering between 3.5%-3.7% of our shopping center clientele zombie, that level has now been reduced to 2.1%-2.2%. We have been, of course, actively managing and rotating the zombie base of our shopping centers. Out of the 30,600 sq m vacated, 30.875 have been let already. The activity continues to be relatively healthy as mind-blowing as it might look for some external observers. On page 20, you will see that we have actually increased a little bit the occupancy, around 70 basis points, 67. Relet spread has been 5.9%.
As I commented, most part of that relet spread is explained by contractual step-ups. Anyway, it's been a relatively active period which, once added to the very active period we also had on the second half of last year, has delivered the results we were commenting. I will pass the floor to Miguel for a comment on valuation and debt position.
Thank you, Ismael. Regarding valuation, as commented at the very beginning, it has been flattish in this first half of the year, slightly up 0.5%, and mainly driven there by office and logistics. Office 0.4%, and logistics 4%. Continues to be the asset class that is performing better than any other one, not only in the company but also in the market. This increase in logistics implies also 16 basis points yield compression, as well as in offices, there is 3 basis points of yield compression as well. Offices continues to be an asset class very demanded by investors. We keep monitoring the market, and the market continues to be bullish. Some transactions are happening, always reaching record deals or NAV deals at 4% or even below. With regards to commercial, it was a slight gap of 1%, and then in terms of shopping center was 1.5% down.
As Ismael was commenting, we have had this year a valuation reduction. We are right now at a 10% area of countdown of valuation for the shopping centers of the company. Moving forward, with regards to the net position of the company, the main action during the year has been completing a nine-year EUR 500 million bond. It was during this year. This is for the replacement or repayment of the bond maturing May next year. We have been reducing the cost of this bond with regard to the prior that was our five-year bond by 100 basis points. That was outstanding execution. Will be also helping us to further reduce the average cost of the debt while enhancing or enlarging the maturity profile of the company from the net position. Our average cost today, all-in, is 2.06%. On a stock basis, it's 176%.
Our average maturity is close to six years. From the rating standpoint, we got confirmation from S&P and Moody's of the current rating of the company with a BBB stable and Baa2 negative from the two rating agencies. We are thinking that we'll be improving over time as we see that not only the company performance, but also the behavior of the economy in Spain and Portugal will be improving in the following 12 to 18 months. From a net standpoint, again, this is on page 26 of the presentation. We are giving you a report on how we are collecting the rent when invoicing every single month.
As you can see in offices and logistics, there is no news or as it is in the case of MERLIN Properties, because in office we are only 0.2% of rents uncollected, which are mainly related to one tenant that is in eviction process, and we will be receiving in the following months. Logistics, as I said, 0%, a full collection. This is full collection. In shopping centers, we have been reducing with regards to the prior reporting. It is at 3.2%. Consequently, we should say that collection rent of rents is coming now to standardized. In principle, we are going to be stopping reporting for the following quarters unless something is changing. We see that this has been now in a stabilized situation, and we should stop reporting.
We should highlight that for the first half of the year, EUR 19.6 million have been the cost of the first stage of the commercial policy put in place for this semester. It is well behind prior year, 29% below. Totally in line with the guidance we were providing in the previous year that we were already telling you now that it should be at EUR 19.6 million for the first half of the year. Bang on with the prediction. We are moving on in the following sections, and that Ismael will be covering, starting by sustainability.
Thank you, Miguel. In terms of sustainability, we have been asked by a number of you in the analyst community, but also in the investor base, to start including a little section about sustainability. We have decided to include a first picture in terms of what we have been doing in the certification program, because that one is also coming to an end. In future presentations, we will comment about, for example, the solar photovoltaic program, which is, we believe, is one of the most interesting things we are doing and very interlinked with the future activity in data centers. In terms of energy certification, what started as a white sheet of paper in 2016, taking the 2015 numbers, we only had 4% of our offices being certified, zero shopping and zero logistics.
We have now achieved what I believe is a quite outstanding result. It has, for example, moved Spain for two consecutive years to the leadership in LEED building certification in Europe, and position number six, number eight globally. Given the relative small size of the country, that is very remarkable. What has been lying behind that is the big size of our portfolio. We have been, little by little, certifying close to 1.1 million sq m of offices. We have been solving for nothing but Silver in LEED and nothing but Gold in BREEAM. We have 2% pass. This has been extremely useful exercise for us because as you know, every time you certify a building, you have to be turning the need list. Together with the need list, you have the CapEx associated with moving that need list into done status.
Certainly, that certification has helped us to make a self-introspection exercise and improve the hardware quality of our buildings. I'm not sure we are capturing that in rents, frankly speaking, but certainly we are capturing that in liquidity of the buildings and probably sense of loyalty by clients, because more and more people now need to be in buildings which have a minimum certification. In logistics, well, we moved from actually a blank sheet of paper again in 2015 to having certified close to 1.2 million sq m. In BREEAM, we have some passes here, but most of our stock, 85% of our stock is Good or Very Good. In LEED, we have 12% Silver, but 88% is either Gold or Platinum. In shopping centers, we have now certified most of our portfolio. I think we are just missing one shopping center we have in co-ownership.
We have an 11% pass, but the rest is Good, Very Good, or Excellent, which is close to 90% of our shopping center base. We have also tried to standardize the company with what we see on an international basis, and the IR department working with the engineers of the company have been trying to position ourselves in GRESB, where we got a Very Good score of 78%. It's not that easy to obtain certain rates when you operate also shopping centers and logistic sheds. Likewise, in CDP, we got a B. In NTA, we have been obtaining Gold since 2017. Now we are embarked in a very ambitious program of ISO certification, which again, from an operating standpoint, is also giving us very interesting guidance as to how operational, how useful the buildings are.
We conducted a specific certification in the COVID with Spanish certification of AENOR. We developed together with the Spanish Association for Offices, and now are applying throughout all of our portfolio the ISO certification of technical perfection of buildings. We have 24 assets already certified and have an extensive pipeline of 65 extra office buildings representing close to 800,000 sq meters. Our intention is to pass the ISO certification through all of our buildings to determine whether they are A, B, C, or D. Also act accordingly in order to improve to the maximum possible their performances in that certification. As commented, we will continue informing about sustainability capsules in future presentations. Let's move into value creation, page 31 and following in the presentation. We have made no new investments in the period.
We have carried out divestment for EUR 109 million, with a premium to gross asset value of 3.4%. Besides the logistics disposal in the first quarter and one BBVA branch we also sold in the first quarter. In the second quarter, we have sold two supermarkets out of the Caprabo sale and leaseback portfolio. We have sold one office building in Madrid for residential reconversion to a value added fund. Besides that, we have also sold our stake in Aedas Homes to a private investor. Together with the divestments we expect for the second half of the year, currently we are matching perfectly sources and uses in terms of divestments and CapEx, and we will continue to match sources and uses toward end of the year. In fact, slightly skewed towards more sources than uses.
We said at the beginning of the year that our target was to divest between EUR 150 million and EUR 200 million in 2021. We believe the final number is going to be towards the upper end of that range, and will therefore more than exceed our CapEx needs. On page 32, you see two buildings that have been delivered during the quarter, Castellana 85 and Monumental in Lisbon. I think we have touched base on those two in other presentations, so there is no need to make more emphasis on those. Simply to say that they are now operating to the satisfaction of their respective clients. On page 33, you will see that the Landmark program is now coming to an end. It is almost completed, with only Plaza Ruiz Picasso pending.
The figures you see at the bottom of the page, including the deal and cost, are now real figures, no longer forecast. On page 34, we comment on the Best II and III programs. As commented before, we have delivered a 96,000 sq m shed to Decathlon in Barcelona. We have also inaugurated and let the Lisbon Park in Vila Franca de Xira. More importantly, we have let the pending shed we have in Cabanillas 1, number J or letter J, to DSV, a Norwegian operator of logistics, close to 45,000 sq m total size of the compound. Very important for us, we have also moved from priority three to priority one and have started. We have just opened the Cabanillas Park 2 with the pre-let to Logista of a 47,000 sq m shed, plus the option for another 47,000.
That park enjoys 210,000, more or less, sq m of GLA. Close to half of that could eventually be pre-let to one very important operator in Spain, which would certainly open for good the rest of the park for new users. Little by little, we are moving that park into first line of rent production as well. On page 35, you have what remains of Best II, which is basically Cabanillas 1 having let the J. We are just pending H, and I think it's going to be gone in the second half of the year. In Cabanillas Park 2, as commented, we have simply now opened the development with an anchor client and expect to continue delivering product in the coming years. As for Best III, in Sevilla Park, we have now pre-let all the let.
Everything that comes into operation will come into operation fully let. In Lisbon Park, as commented, we have reached a pre-letting of 85% in the speculative shed we built there, but hope to be 100% by year-end. Again, as commented before, that deal and cost and the total numbers you see at the bottom of the page are more real now than forecast. Flagship on page 37, simply to say that both El Saler in Valencia, Ciudad de la Justicia, Ciencià Campoté have been delivered and are now working to the satisfaction of all of our clients with very significant market attention and very significant activity. On page 38, you will see that Flagship plan is now behind us.
Water under the bridge at a 7% deal and cost, taking into account that in some cases there was a defensive component in those CapExes, I believe has been a very remarkable achievement for and a good test of the quality of our asset management, construction, and leasing teams. Let's move into the digital infrastructure plan. Pending finding a better name, we will call it Plan Mega. As commented before, that initially was conceived more as a by-product of our logistic activity. However, we have been liking more and more that segment of activity as we knew better what we have in our hands and as our engineers move deeper into what existed in Spain, what were the prospects for the market, and what could be our role in providing our clients with data storage together with storage of goods as we are doing in our logistic activity.
Basically, well, on the first bullet point, the move to cloud computing, everything, you are perfectly familiar with that, there is no need in explaining. For those of you that might or might not know, what is important to know is that the location of the Iberian Peninsula is fantastic in terms of strategic importance because it is the landing site for most of the cable that comes from North and South America, plus some other projects that link North and South America with the U.K. and mainland Europe, plus the extension of those cables into Africa. Project MAREA, which was funded by Facebook and Microsoft, was completed in 2017, connects Europe with the U.S. and enters the European region through the Basque Country in Spain. This is why we have placed one specific data campus right next to where it lands.
EllaLink is a project that connects Europe with South America and enters European territory through Sines in Portugal, moves on into Madrid, split into part of it goes to Africa and part of it moves into European mainland through Barcelona. Grace Hopper should be completed in 2022 by Google, this one is connecting, again, the U.S. and Europe, and project to Africa, which leaves European territory through Cadiz in Spain, is connecting Europe and Africa. Looking at our logistics portfolio and looking at our existing plots and analyzing them with the perspective of presence of abundant power supply, including substations and availability of fiber cable, we decided to move forward with four locations that were vetted by our U.S. technology partner, Edged. Those locations basically are in Madrid, Barcelona, and two big locations for data campuses in Lisbon and the Basque Country.
We are spending significant time and effort now on this program. We will start with a technology demonstrator that will immediately thereafter roll over into what we call Phase 1, in which we will move to around 70 MW . This program could add another 150, or we could triple the capacity of that program in the future through a specific turnkey development in our data campuses with specific clients. We will comment on the development timeline and the returns later on during the presentation. On page 41, we explain the fundamentals of our joint venture with Edged. Edged is a subsidiary of Endeavour. Endeavour is a company of U.S. origin that used to be associated with a company that was sold in the U.S. called Aligned, and has now moved into operations in Europe with us.
In the framework of that partnership, we will fund and own the assets in the PropCo, and there will be an operating company in which we will act in the venture with Edged. There will be a right to call that participation with the liquidation of a certain earn-out to our technology provider based on the success and results of the program. What we like about Edged is that after doing some extensive research of the market, they bring to the table proven expertise of many years of data center construction and operation. They also brought to the table what we consider, particularly for the features of the Spanish and Portuguese geography, the most innovative technology available in the market because it's not only very efficient, I mean very efficient, but also is highly sustainable.
Efficiency can be measured in the 1.15 ratio of power utilization effectiveness compared to 1.46 in Europe and 1.69 globally, measured with the Uptime Institute metrics. Sustainability is attested by the fact that they have developed a system which uses net zero water for cooling of the facilities, and the facilities also work 100% with renewable energy, which is also the reason why in anticipation we launched a roof and ground-mounted PV installation within MERLIN that we call Project Sun, no wonder. On page 42, you will have details of two of the first locations. One is the former headquarters of Amper Defensa in Getafe, Madrid, with a total GLA of 22,500 sq m and a maximum capacity of 20 MW.
This one now is fully demolished and the land has been completely flattened. We are just waiting for the obtaining of the municipal license from the municipality of Getafe in order to start construction. We are also doing the accumulation of most of the power, software, and materials needed for the construction of the data center. The other one is in Parc Logístic Zona Franca, in the office component of Parc Logístic Zona Franca in Barcelona, with a total GLA of 22,100 sq m and a capacity, in principle, in the region of 16 MW. Those two developments are going to be started en blank. I will explain in the following page what this means for the company.
We are going to start construction of those two as part of our technology demonstration to the market, because this is a market in which there is a lot of noise, there is a lot of chatter, but very few people is really developing product. We, of course, want to take advantage of that and move relatively fast and move first in order to make sure that we put our money where we put our mouth. The characteristics of those two plots are very easy and very understandable for people familiar with the data center business. They sit in locations with very low latency because they sit in very close proximity to two big cities and the corresponding infrastructures. They are also highly interconnected in terms of fiber and/or cable. We have researched that with the corresponding tools of Edged and are very impressed.
I mean, they are very impressed about the interconnectability of those two plots. They are also very close to power supply, in terms of network grid substations, together with the PV energy that we can supply from our roof and ground-mounted photovoltaic installations. On page 43, you have sketches of two data campuses we are planning to develop in Álava, in the Basque Country, and in Lisbon, in Vila Franca de Xira. Those are strategically fit for very large cloud players. They can move from 22-100 MW or more in the case of Álava, and from 24-100 MW or more in the case of Vila Franca de Xira in Lisbon. Very deeply interconnected with the fact that they sit right next to the landing station of the subsea cables coming from the other side of the pond.
On page 44, we provide some color on the timeline for development of this project and the returns that we expect. We expect to start works in 2022. In the phase 1, we will, as commented, develop Madrid and Barcelona. If you look at the bottom of the page, that means building 44,000 sq m for only 12 MW because we are not filling up, we are not bringing those two facilities to the maximum. We are simply building the container, and we are also starting, or we are building the first module that can be let to the market. The CapEx is EUR 147 million. That excludes land cost because land cost sits within our belly, within our balance sheet, and it's not very significant, by the way. And gross rental income is expected to be in the region of EUR 14 million.
The yield on cost in this case is a little substandard as compared to the rest of the program, but this is simply a reason of building a little bit of overcapacity, because we build the whole container with only the first module of racks and ports. On phase 2, once we have demonstrated to the market that the technology works, we will move into the expansion of that program. That can go in phases up to 2026, but could also be significantly accelerated in case of need, because once you have built the two facilities and you have built the first building in Bilbao and Lisbon, you can really run faster in case of need. The new square meterage that needs to be built in Bilbao and Barcelona will be in the region of 32,000 sq m.
The megawatts that can be installed, including filling up on the capacity of Madrid and Barcelona, plus starting in Lisbon and the Basque country, could be 58 MW, with a CapEx of EUR 428 million and new rent in the region of EUR 59 million for us. Phase 3 will be developed on demand and consist basically in filling up the maximum capacity installed in the Basque country and Lisbon. That could add another 150 MW of capacity to the program. With all that into consideration, we are obtaining low double-digit yield on cost in the region of 11.2%, which is more competitive than the one we are normally obtaining in logistics development. In very plain language terms, that means that selling any given non-core office building at 4.5% and reinvesting in here with one third of the divestiture proceeds, you fund equivalent rent in data centers.
As you can imagine, this is highly accretive for shareholders while reducing or continuing to work in the reduction of the total leverage of the company measured as LTV. This is what we will continue to do over the coming years, making sure that we match sources and uses in terms of non-core to development of data centers now that the mean of our CapEx program linked to Landmark, Flagship and Best II and III is now fading down. Only Best II and III are up and running. As a wrap up, as for closing remarks on page 47, we see that the COVID-19 impact on our business is easing a little bit.
In the absence of new restrictions imposed by the pandemic, and we fear of course new restrictions like you do, particularly in Portugal, which has been relatively anti-business and every time there is a new surge in contagions, the immediate measure is closing the shopping centers like in Catalonia or Valencia, although that has proven to not result in lower contagion rates, but for some reason they do that. In the absence of new restrictions imposed by the pandemic, we believe that incentives will continue reducing towards year-end. This together with the two buildings that are significant ones that have now moved into operation, will help our FFO and collection rates are now meaningless. This is why we are convinced that we are going to meet or very slightly exceed our FFO indication of EUR 0.56 for the year.
Taking into account also that in reality that EUR 0.56 compared to last year will be more like EUR 0.58 because there are EUR 0.02 this year of staff compensation that need to be added back. Last year there was no staff compensation or very little. This year there will be about EUR 0.02 of staff compensation. After a challenging first half, we see that the occupancy is starting to bottom out in our offices, and while we believe we should be at the lower end of the indication provided to the market in the full year 2020 results. That was going down between 150-200 basis points compared to the 91.1 we closed 2020 at. We expect to be in the lower end of that range or slightly better towards the end of 2021, and we are working in that regard. Very good performance in logistics.
Our super high-quality portfolio is clearly paying back. We have been the clear protagonist of the market in this semester with close to 50% of the market activity just attributable to our listing managers. Very positive signs in shopping centers. The retaining rates are extremely good. We have significantly de-risked the 2022 renewal wall. We look through to 2022 with relative confidence. In terms of value creation, as commented before, after many years implementing the plan, Landmark is almost complete. Flagship is complete. The returns, therefore, are now returns achieved, are real, are no longer forecast. Best two and three continue their execution. We need to have 1.1 million sq m of pipeline, of which 330 have already been delivered, 100% let.
180 sq m are now under construction with an 82% degree of pre-let and 590,000 sq m close to 600,000 sq m remain in our belly, in our balance sheet. This is land bank that will be developed strategically in order to suit market needs. We are taking advantage of that flattening of our CapEx requirement. We are launching the digital infrastructure plan to use our logistic blocks to develop and process and store data. We expect returns that will be outside compared to conventional logistics and therefore will be a very significant avenue of value creation for the future together with our logistic greenfield program and some refurbishment, very selective refurbishment of offices that we might do in order to capture reversionary potential. This is all for today.
Thanks for attending MERLIN first half 2021 presentation, conference call, and we now open the mic for Q&A, and we are at your disposal.
Yes. Operator, could you please open the line for Q&A? Thank you.
Thank you. As a reminder, to ask question, you need to press star 1 on your telephone, and to withdraw your question, please press the pound key. Once again, please press star one for question. Your first question comes from the line of Jaap Kuin from Kempen. Please go ahead. Your line is open.
Hi. Good afternoon. Thanks. Yeah. Thanks a lot on the elaboration on data centers. Very much appreciate that. Just for clarification, in terms of the construction process and the ownership of the asset, will you construct yourself, and what part of the asset will you own? For example, will you also own the fit-outs? That's my first question.
That one is very easy, Jaap. Yes, out of what we consider the three steps of ownership of a data center, first one is simply the envelope, the container. The second one is all the equipment, everything, including refrigeration, heat extraction, racks and vaults, and base seismic security. We will also construct and operate all that. We will only be relinquishing, taking any protagonism on the third step, which is servers and cloud consultancy and infrastructure, because we want to be neutral in terms of operators. We will be compatible with all possible operators serving all clients in our data centers.
Okay, great. That's very clear. Because I think in terms of the split, obviously, of construction cost in what you normally have a few EUR 100 per sq m, and the bulk of the investment will go towards the equipment. Is there any sense you could give us on what the cost per, or I'm not sure how you calculate it, probably not per square meter, but per something else? Can you clarify what kind of the unit cost of such equipment is?
I will give you very, I would say ballpark figures. The cost of building just infrastructure is about 4 times the average cost of normal logistics. The cost of everything, once fully equipped, is more than EUR 7,000 per sq m. Yes, as you correctly pointed out, you will be in a little more than between EUR 1,000 and EUR 1,500 for the brick and mortar, let's say, and EUR 7,000 to EUR 7,500 in total. In American terms, EUR 7.5 million per meg.
Yeah. Okay. In terms of Because obviously high yield, but also kind of a write-down requirement on that equipment. What do you see is the lifetime for that equipment?
This is one of the reasons why we are not entering into the server business. We are providing racks and vaults and the rest, but we don't want to enter into the server business because this is not our cup of tea. This is where most of the industrial obsolescence of data centers is concentrated. Look, we don't know what is going to be the technical obsolescence or when technical obsolescence will hit those facilities. What the technicians are telling us is that they could be fit for around 20 years.
Okay. Thanks. That's very helpful. Just a few other questions. I think Prologis stated that, for example, for other countries in Europe, construction cost inflation, lack of steel has lengthened construction times for logistics by basically doubling it from 8 to 16 months. Could you comment on the situation in Spain? The last question will be on the office that you sold. Can you comment on the price versus book? Thanks.
Okay. In terms of construction cost, we are witnessing a surge in construction cost like everywhere else in Europe. We will not rush into making a Landmark II or a Flagship II because when you are getting logistic returns, you can easily absorb a surge in construction cost. You are a little bit tighter on returns because you are developing prime product. Those increased construction cost might significantly damage your profitability. This is why we are taking a little bit of a breath in our construction activity. We will continue doing so in logistics. I can tell you that steel has almost doubled, so that means an increase in the construction cost of any given shed between 15%-20%, but that is it for the moment.
The concrete, et cetera, will be much more moderate increases in cost. What was the other question? It was at the office.
Yes.
In the office asset that we sold, it was a 5.3% premium to gross asset value.
Thank you. The yield now, could you?
The yield, Jaap, was a little bit meaningless because the building was 50% occupied. It was, let's say, the pro forma yield to full occupancy was in the region of 3.5%.
Okay, great. Thanks for all the answers.
Okay. Thank you. Thanks.
Your next question comes from the line of Pedro Alves from CaixaBank. Please go ahead. Your line is open.
Hi. Good afternoon, everyone. Thank you for the presentation. Two questions. First one, in offices, your Spanish peer highlighted the increasing polarization between CBD and secondary locations, and that when it comes to locations outside the M30, there is less dynamism in terms of take-up and some pressure on rents. My question here is whether you are seeing the same trend, and out of the rent that will have a break option next year, which I think is 17%, how much does it come from assets outside the M30? My second question, in shopping centers. You were able to de-lease close to 50% of leases of May next year. Based on the conversations that you are having with tenants, how much do you expect to be able to de-lease by the end of the year?
Whether the 10% cut in effective rent through higher incentives could be a good reference for the remainder of the portfolio that will be renewed. Thank you very much.
Well, on the first one, which is life beyond the M30. Look, we will not spend any time and thought explaining. We have a recently occupied building that we would count in third quarter, and it was in the A1 corridor. We are working, and that was 5,000 sq m. We have recently let one full building to Netonin, close to 9,000 sq m, and we continue seeing normal activity. As you know, we are not a company based on NAV. We are a company based on cash flow. As such, we don't need to oversell the quality of our buildings. We can be more frank with you in terms of what we do because we continue doing it anyway. There is life in CBD and outside CBD as always was. It depends on whether you believe on the magic kings or not.
We continue having a satisfactory performance outside the M30 with all the corresponding problems. Particularly in terms of traffic, et cetera. As you know the Operación Chamartín works for the north interchange of, let's say, network of highways has already been started. There will be increased traffic problems till the end of 2022. Following that, we believe the whole area will benefit from much better infrastructure. We continue renewing. We have just this year renewed 45,000 sq m, headquarter with Técnicas Reunidas with a flat. I think it was like + 0.5% re-spread. I will comment no further on whether the extra M30 offices are sinking and going to the bottom and being destroyed. I will not continue on that bullshit. The other one, which is what is our perspective for shopping centers in the future.
I think, although the sample is not really big, we think it is sufficient to understand where the market is heading to. The clients with whom we have been renewing or extending are a very good sample of a little bit everything. Small, medium, and big clients within our clientele universe. For the time being, Pedro, and of course I have to be prudent on this, but for the time being, I consider that that Delta of -4 to -14, so that 10% Delta, which you should consider is incentive. That incentive will be removed over time. Of course, you are free to say this will stay and it will not be removed, et cetera. If that was the case, the client would have asked a lower rent in the contract.
They have accepted an incentive that will be removed over time. I have to tell you that this has been better than our expectations. You have heard me in past calls with investors pointing towards something in the region of 20% or -20% new normal in shopping centers. For the moment, what we are seeing is -10%. Of course, I will continue informing in case we see a deterioration of that in the future or whatever. For the moment, that -10% is a good proxy. This is today. This is what is happening as we speak.
Thank you very much.
Once again, if you would like to ask questions, just press star 1. Your next question comes from the line of Florent Laroche-Joubert from Oddo. Please go ahead, your line is open.
Hi. Thank you very much for the presentation. I would have maybe two questions. The first one is on your commercial policy. I understand that there will be no further commercial policy in H2, and we hope that this will be okay. If we make the assumption that we have an increase of, for example, the Delta variant, would you put your commercial policy in place again? That would be my first question. As a result, what could be the impact on the FFO? My second question would be on DCN. Would it be possible maybe to have an update on your discussion with BBVA for buying with your stake within the company? Thank you.
Thank you, Florent. Look, in terms of commercial policy, there is one part of the commercial policy that remains and will remain, which is the fact that we will continue protecting 100% our clients in case they are obliged to close by whatever authority, whether with real authority or not. In some cases, many shopping centers in Spain are being closed by people who have zero authority on the possibility of closing a facility of that size and importance for the economy. Anyway, we are not arguing with the politicians. We will continue protecting our clients in case they are obliged to close. We have made a provision for the second half. I will not disclose the amount, but we have made a provision for that. Outside that, there is no commercial policy being applied as we speak.
Everybody is now paying naked rent, the rent that they agreed with us in whatever time in the past. Till there is a renewal next year or in the following. If you add up numbers, you will see that with the two buildings that have moved from WIP into operation and with zero, let's say, help to our tenants, we should be slightly beating our FFO objective. The reason why we are saying that we are going to try to meet that objective or very slightly beat it is because we remain prudent on whether there could be some further noise in the second part of the year with the Delta variant or with the Delta or with the Echo or the Kappa. There could be other variants of the virus that could come into fruition and eventually screw up completely our projections.
We beg a little bit of comprehension. We have been very accurate so far, even in the middle of 2020 when the whole shit erupted. Sometimes we could be wrong. Particularly for this second half of the year, we are assuming that there are no further restrictions. As we speak right now, we have Lisbon almost closed. They are closing at 2:00 P.M. on the weekend. We need to close the shopping center. Apparently, they are going to reopen on the First of August. In the northeastern autonomous communities in Spain, namely Catalonia and Valencia, for some reason it seems that all the population is public clerks, so they are closing the shopping centers every time they want. We need to continue protecting our tenants there.
In the rest of Spain, activity is now the new normal, and therefore we are not spending money protecting our tenants because our tenants, thanks to God, are now able to protect themselves. In fact, you could look at the OCR numbers and you will see that the OCR is at 12.7. We remain relatively stable in OCR because people is little by little coming back to normality in terms of sales per square meter and attendance to shopping centers is also improving. Well, I beg your pardon if I cannot be super specific and provide you with the numbers we have in our model, because I believe this is sensitive information. Towards the end of the year, we are expecting progressive normalization. If there is a deterioration, we will stand by our word and continue protecting our clients.
Okay, thanks. That's very clear.
As for the other aspects of your question, Florent, with BBVA regarding DCN, there have been no new conversations. We remain subject to arbitration. The arbitration court will appoint the arbitrators, in principle, in September, end of September, and that will take the resolution of the arbitration to February. I consider probably in the region of February, maybe March, there will be a resolution of the arbitration. We need to wait. Of course, there is nothing we can do. We have simply defended our rights, because, of course, the right of acquisition is important for us, is, I would say, a very important feature and one of the reasons why we decided to get into that project. It is true that we can survive without that, but I believe, I am convinced that we are on our own right.
In fact, in the injunction we seeked and obtained from the arbitration court, the injunction ruling was pretty harsh against our counterparty, including the imposition of all cost and expenses to them, including ours. We need to wait. Of course, they are a super mighty institution. They have thousands of people working in every possible department that you can imagine, including security and whether physical or computer or everything. We have to be careful, but we believe we are in our own right, and we'll try to defend it.
Okay. Thank you very much.
Sir, we don't have any question at this moment, and I will pass the call back to Inés.
Okay, thank you very much. Well, thank you all for attending today's presentation. For those of you going on holidays, we hope you have a nice summer break. As always, we will manage your disclosure for any questions that you may have, and we hope to see you soon. Have a nice holiday. Bye-bye. Thank you.
That concludes our conference for today. Thank you for participating. You may now all disconnect.