Welcome to the VGP's conference call. Today's call is being recorded and will be hosted by Mr. Jan van Geet, CEO, Mr. Piet van Geet, CFO, Mr. Martijn Vlutters, Business Development, and Miss Nelleke van Rijsewijk-Visser, IR Manager. Mr. Jan Van Geet, please go ahead.
Good morning, everybody on the call, and welcome to our presentation of our full year results for VGP over 2021. I think you can see our presentation now. I will immediately go to the highlights of last year. last year, we leased out a record 1,350,000 sq m of new lease agreements, which have been signed. that resulted in a record net profit of EUR 650.1 million, a 75% increase year-on-year. We had a very strong business growth across the portfolio. We added also some new countries. as I already said, we signed a renewed rental income of EUR 79.7 million, but which is versus EUR 45.2 million for the year before, a 76% increase.
Of that, more than 74 million was actually incremental. We had a record 1,478,000 sq m under construction at year-end, 1.7x the level of December 2020, which represents 50 buildings and EUR 93.9 million in additional annual rent once fully built and let, of which already approximately EUR 80 million has been signed or 83.8%, which was pre-let as of December 2021. Our landbank itself expanded to almost 11 million sq m, an increase of 42% year on year, which represents on which we can construct almost 5 million, a little bit more than 5 million sq m of future lettable area. Nearly 40% of all of our development projects acquired in 2021 are brownfield sites.
We really acquired some really nice ones. I already talked before in Bilbao about La Naval , the construction site, but we also bought a new land plot in Nuremberg at the end of the year, which is leased to Siemens as an office site, which we're gonna convert in the future into a last mile logistics center. Many others which we have bought over the last year and which are now under option. We delivered a record of 652,000 sq m, which represents 26 projects or EUR 32 million of annualized committed leases, which was virtually fully let. We expect a record delivery this year as the very big projects like Munich, Laatzen, are going to be delivered to our tenants in the course of this year.
It will be substantially more than 1 million sq m to be delivered this year, which will also be virtually fully let. We started operations in France, Serbia, and Greece. In the meantime, in the first weeks of January, we also signed agreements with new country managers for both Sweden and Denmark, and our country manager for Serbia has acquired the first or signed the first land plot also in Croatia. The year-end gearing ratio reduced to 29.8% as we did the capital increase in November, which was very successfully subscribed. I'm going to page 4.
If you look at the ongoing strong financial performance, then we have the total portfolio value increased with almost EUR 2 billion or a 50% growth from 2020 to 2021, and stands now at EUR 5.75 billion, and that's including the joint ventures at 100%. We have a really strong growth in committed annualized rental income. It's almost looks like an e-commerce company, but we grew with 38.3% in rental growth, contracted rental growth, which comes from exceptional demands in the markets. We see a lot, our competitors also did very well, but it's also an expression of the excellent land positions which we have.
You will later on see in the presentation our weighted average lease term, besides the fact that we or despite the fact that we have become all one year older has actually gone up, and the portfolio become older, but the new leases have compensated more than that. The net profit resulting is really supported by strong predominantly pre-let new construction activity and of course, by the continued yield compression. We plan to do a number of closings with Allianz. We already agreed on the first closing, which is due to happen in 14 days, in two weeks from now on the 15th of March.
I can already say with confidence that the pricing which we have agreed there is substantially better than what is in the numbers on the 31st of December of 2021. There is still a significant yield compression in the markets compared to our numbers from the end of the year. We intend to propose to our shareholders meeting the distribution of a gross dividend of EUR 149.6 million or 6.85 EUR per share, as we have a really strong balance sheet. All of our CapEx needs are well covered now. We also issued a bond, as you know, in the beginning of the year. I think the timing for that was really very good. EUR 1 billion, which was substantially oversubscribed.
We aim to propose this distribution of dividends at the shareholder meeting. If you look at our ESG achievements and highlights of VGP in 2021. On the carbon footprint scope one and two reduction, which we've already announced, we are on track to achieve net carbon neutrality by 2025 and a 50% gross reduction by 2030. We now have, for all VGP offices, green energy in place through a PPA contract, which we signed with Scholt Energy, and it's using the energy of one of our own solar installations, which we have on our roofs in Nijmegen. It started on the first of January 2022. We're also looking at the carbon footprint scope three reduction. We are engaging very intensively with tenants on self-consumption of renewable energy.
As energy prices are surging everywhere, it's easier now to promote our on-roof installations, which we are enhancing fast, building out. We aim to align our portfolio's performance with the goals of the Paris Agreement. VGP Renewable Energy, it's got now 74.7 MW peak installed or under construction and around 74.5 MW peak in the pipeline. We aim to multiply our installed capacity by 2x by 2025 to 300 MW peak. On our roofs, we've identified that we can install in total almost 1 GW peak at actually what we have now under ownership. We are supporting our tenants in the switch to green drivetrain technologies. Our green building certification, actually already 54.3% of the portfolio is certified green.
We are aiming for BREEAM Excellent or DGNB Gold for all new builds, which we started up after January 2022. Before it was DGNB Very Good and DGNB Silver and BREEAM Very Good, so we enhanced that also. On the buildings lifecycle management, we have several pilot projects of DGNB Klimapositiv lifecycle certification underway, which has to be done in close cooperation with our tenants because it's also evaluating the energy consumption of the tenant side. EBRD joint research. We are doing a joint research with the EBRD on circular materials. On page six, on governance, we implemented the Principles 319 of the Belgian Code on Corporate Governance by appointing a company secretary, Dirk, which switched to that position. We updated our charter and various policies and guidelines to demonstrate the highest standards of business conduct and integrity.
You can find it back on our website. We are trying to do a lot for diversity and talent management. Our board continues its diversity with 60% female board members. We have a lot of new training and development initiatives which are being implemented, and we conduct also an inaugural annual group employee satisfaction survey, which the first results are coming in now and are very promising. On the VGP Foundation side, we are especially focusing on social welfare and above all, on biodiversity, with 19 environmental, mostly biodiversity related projects, thanks to the cooperation with NABU, five cultural projects and five social projects supported thus far.
We have already made EUR 6 million-EUR 7 million commitments available until 2021, and we have booked a provision inside our result of EUR 5 million to be committed for 2022 once it's approved by our shareholders in our shareholders meeting. On climate change management, we are evaluating our CRREM 2050 pathway analysis for portfolio compliance on a best efforts basis. ESG disclosure, we try to disclose every time more. We're GRI compliant. We have the annual CDP and GRESB submission, and we have an initial Sustainalytics score, and we plan to initiate MSCI ESG and S&P Global CSA score in 2022. On the operational performance, 2021 saw an absolute record in new leasing activity. I founded this company.
I started in 1998, and when we started Horní Počernice, it took us three years to lease it out, and that was our biggest park at the time in the Czech Republic, our first major park. That was after three years' time, EUR 22 million of rental income, which we then sold, and it was a very big transaction in 2010. Well, this year we already have 400 tenants. Our committed annualized leases rose to EUR 256.1 million from EUR 105.2 million. Last year we signed and renewed almost 4x Horní Počernice, EUR 79.7 million in 2021, of which EUR 74.6 million were new incremental leases. I think that speaks for itself that the land bank is really very well positioned.
For sure, if you look at the slides to come, you will see the values have gone up also. The portfolio is growing really fast if you look at page nine. The compounded annual growth rate is around 40% from 2017 until 2021. The joint ventures are really functioning very well. Last year we had only small closings because we were in full expansion mode, but this year we have a lot of closings planned, which should enable us to recycle the capital which we need to fulfill our CapEx needs for the year 2022 and beyond. The investment portfolio has grown to EUR 5.746 billion.
That's including 100% of the joint venture assets, of course, which is up 49.5% or +50% almost. Western Europe represents 76% of our total portfolio as of December 2021, and 75% of our operating EBITDA, including the joint venture's share over the full year 2021. If you look at the investment portfolio breakdown by country, you will see that Germany is 56%, and it's really the absolute majority of our investments. The other countries, if you look at the KPI projections for this year and what they are aiming to sign, they will relatively grow a lot faster now in size. The Germans too, because countries like Spain, Italy, Bratislava in Slovakia, Romania, are also due to grow a lot this year.
If you look at our investment portfolio breakdown by status, then we have EUR 3.64 million as delivered. We have 1.5 billion under construction. A little bit more than half. EUR 1.5 billion under construction. EUR 565 million of development land, which is sitting at acquisition cost roughly on our balance sheet. I go to slide number 11. Our portfolio, and that is the slide which I already talked about. Our portfolio is virtually fully let on a long-term basis. Last year, the lease agreements which came to expiration were immediately replaced by other lease agreements.
We see a very nice growth of rental income, because the new rental contracts which are in place have all higher rental prices than the previous ones. If you look at the occupancy evolution, you see that we are virtually in our own portfolio, we're at 99.3% and in the joint venture's portfolio at 99.4%. Internally, we don't make a difference. It's only the bookkeeping which keep it different. For us as a team, it is one big portfolio. The weighted average lease term of the portfolio, and as already said, despite the fact that we are all one year older, it grew.
The combined weighted average lease term has actually increased year on year from 8.5 to 8.6 years, and that is thanks to the contribution of our own, of course, mostly portfolio, which grew to 10.2 years. We signed a lot of very long leases last year, some 20 years, some 15 years. It's really a reflection of the high degree of tenant investment in our buildings and the excellent locations of our parks. If you look at page 12, we really have a nice blue-chip customer base, and the biggest tenants are Kuehne+Nagel in the first place. It has actually gone down from 19% the year before to 10.9%, thanks to the big growth.
The top ten clients account for 37% now of our total income. They are spread over a lot of lease agreements. Kuehne+Nagel is three lease agreements. Amazon is four. Zalando is two, maybe three. The third one is coming. Rhenus Logistics, it's six lease agreements. DHL Logistics, it's four different buildings, et cetera. It's not always just one building and one tenant. If you look at the tenant portfolio by breakdown by industry segment, we see that e-commerce is continuously growing. We also are doing more and more last-mile logistics. The logistics itself, but we don't have a lot of third-party logistics. It's mostly end users. It forms 38.6%.
A very important one for us, certainly for the land acquisition, is light industrial activities, which still forms one part of our total portfolio. In 2021, we delivered 26 buildings, which represented 652,000 sq m, which was a new record for us. That represents EUR 32 million of rental income through 47 tenant contracts. I'm going through the customers now. EDEKA was in Laatzen and Connox . EDEKA is food and foods retail, and Connox is really e-commerce. MediaMarktSaturn in Göttingen you all know. It's non-food logistics. It's the end user. We delivered the building for Continental in Bratislava, 63,000 sq m. We delivered the building for Paack in Madrid, which is e-commerce related. Rádio Popular in Porto, which is a local retailer.
We delivered to AG Transport in Nijmegen, which is a third-party logistics. ETAP in Olomouc, production. Kuehne+Nagel in Zaragoza, DB Schenker in Brașov, and Jost in Erfurt. A couple of the examples which we have. Jost is also a Dachser. Most of these contracts are also really very long-term with average lease terms. If you look at page 14, then you also see what we have under construction, a couple of buildings out of that. At December 2021, 50 buildings were under construction, representing a record of almost 1.5 million sq m. As I said, 1.7x the level of December 2020. We foresee to roughly start up between 1 and 1.5 million sq m this year.
We will see how well the market goes. It equates to EUR 93.9 million of new lease contracts when everything would be pre-let. As I already said, it was 83.8% pre-let at the end of the year. Western Europe represents 75% of the portfolio under construction, which will change throughout the year as we will see more and more going up in the new countries in which we are active in, including Greece. I think we will talk about our building in Greece maybe at the year end. If you look at the land bank, which is a very important parameter for us because it is the definition of our future growth, of course. We have 6.3 million sq m of development potential embedded in our land bank.
We started the year with 5.5 million sq m last year. We deployed almost 50% of that, 47% to more than 2.5 million sq m in 2021. We acquired 4 million sq m in 2021. We have another 4 million of committed. Our KPI for this year is roughly to acquire, not very far away from 5 million sq m, between 4 million and 5 million sq m. We signed the letters of intent of almost 3 million sq m, so things in which we are doing due diligence, so that the total land bank, the built land bank goes to 13.8 million sq m overall.
If you look at the geographic breakdown, you see that it is fairly equally spread with Germany and the Netherlands having the two biggest positions. Spain is growing very fast, Italy is growing very fast, which is not in the graph here, but it's growing very fast. The total land bank of 11 million sq m equates now to a development potential of 5 million sq m. I'm going to give the word to my brother, Piet, our new CFO, who is going to give you an overview of the financial performance in detail of 2021. Piet, go ahead.
Thank you, Jan. I am on page 17 on the income statement of the VGP Group, and I'll just go from top to bottom once. We had a net rental income increase from EUR 8.3 million to EUR 15.4 million. On a look-through basis, if you look at the major joint ventures, we had EUR 70.7 million, which was a EUR 15.4 million year-over-year growth. We had a joint venture management income increase from EUR 14.7 million- EUR 21.3 million. That actually, the 21.3 million consists of two fees. It's EUR 14 million that we charge for the assets based on the gross asset value of the joint venture portfolios and EUR 7 million in development fee. Both increased well in comparison to last year, and we expect them to increase further on recurring basis in the future.
As my brother already mentioned, we will do additional closings in 2022 and 2023, which should increase this management fee income. A substantial part of our profit contribution of EUR 650 million is obviously the net valuation gains on our investment property, which increased from EUR 366 million- EUR 610.3 million. This is actually part unrealized, part realized. The realized part was on the minor transactions that were done last year. The joint ventures, it contributed about EUR 11 million, and the EUR 600 million is unrealized, and it comes from, one, a yield compression. But on the other half, the large volume of buildings that has started up and being valuated for the first time in 2021.
The administration expenses, they increased from EUR 29 million- EUR 52.1 million. The major part here is obviously, one, the growth of the team, but also the provisions that have been booked for the LTIP incentive program, which amounted to EUR 16 million and take up a large part of the variance between 2020 and 2021. Our share in the net profits from the JVs amounted to EUR 186.7 million. A strong increase versus EUR 63.3 million last year. Also, on the next slide, you will see the operational EBITDA, but obviously the joint ventures also profited from a yield revaluation, which then finally ended up in our P&L in a final contribution of EUR 187 million.
The other expenses, they refer to the provision of the foundation, which my brother explained before and still needs to be rectified, but it's EUR 5 million that has been foreseen now. We end up with an operating profit of EUR 777 million versus EUR 419.4 million last year. We still have the net financial results. On the one hand, we have the financial income of EUR 12.3 million. These are interest on loans that were given to the joint venture companies, and our financial expense amounts to EUR 25 million, which has increased versus last year. Also our debts on the balance sheet have increased.
That results finally in a profit before tax of EUR 764 million and a tax deduction of EUR 114 million, which is mainly a deferred tax liability based on the net valuation gains that have been booked on the portfolio. If you go to the next slide, we can see the income statement by segment, which I was referring to already.
Yeah.
It's the three blocks how we look at the business. It's the investment side, it's the development side, and it's the property and asset management side. Maybe if I start from the right, the property and asset management, that's the joint venture management in fee income, which was EUR 21.3 million, as I explained on the previous slide. For which we have administration expenses of EUR 7 million and a profitable EBITDA contribution of EUR 14.3 million, which increased quite significantly versus 2020. Based on all the closings that we are intending to do in the upcoming periods, we expect this EBITDA to grow further. If you look at the development side, this is really the development of VGP and all the buildings that we are developing before they have been sold or handed over to the joint venture.
There, we have realized a net valuation gain of EUR 593 million , and we have an administration expense of EUR 38.4 million, resulting in an EBITDA of EUR 552 million, an increase versus the EUR 342.5 million last year. The total CapEx spend was also EUR 743 million in 2021, also higher than the previous year, as already explained. On the investment side, VGP has some buildings still on its own balance sheet, which brought a gross rental income of EUR 17.6 or a net rental income of EUR 17.4 million. We have administration expenses of EUR 4.3 million allocated to the investment and split over investment and development.
We have our share in the operating profit of the joint ventures, which is EUR 54.3 million, and this operating profit is excluding the revaluation result in the joint ventures. In this way, we end up with a EUR 67.5 million EBITDA in our investment segment versus 55.5 last year. We also received EUR 21 million distributions from the joint ventures. Partly was dividend, partly was the repayments of loans, but we consider it both as a cash profit distribution. If you go to the next slide, on slide 19, then we have the asset side of our balance sheet, which had a strong increase.
We went from EUR 2.2 billion of total assets to EUR 3.9 billion with a strong growth on the investment properties, as you can see, from EUR 920 million- EUR 1.8 billion. Maybe to be seen a little bit in conjunction with the disposal group held for sale, which went from EUR 102- EUR 501. In total, we have over EUR 2 billion of assets on our balance sheet, of which we have an anticipated closings in the next quarter, which have already been recognized as held for sale among others. The big growth obviously comes from, as I already explained a bit, we had a first-time valuation effect on the strong volume of new buildings that have been started up or are under construction.
This was already approximately EUR 900 million, going from EUR 920 million- EUR 1.8 billion. We had some revaluation effects on existing property that we had already as last year and also remaining constructions that were being completed, as such, increasing the asset value. That in total was EUR 287 million. Then we have some other investment done in land and some new assets for which the down payments have been done by the end of the year still. Our investment in joint ventures increased from 665 to 868. Essentially, that is the profit contribution that we book in our consolidation of EUR 187 million, plus some new investments that we have done in new joint ventures.
Among others, it was one in Spain. There is one in Netherlands still that is ongoing, and there is a new one in Germany, but that had not a real effect yet in 2021. The non-current receivables, they are more or less stable, but there was also a booking from non-current to current of EUR 67 million. Basically, those are receivables, and they are listed there, I think on the slide here, that we have on our joint ventures and where we are financing construction and development. The other non-current assets, it's mainly our IFRS 16 office leases as well as our investments in the renewable energy which have a total balance value of about EUR 26 million at the moment.
It was an investment of EUR 13 million, but there is about EUR 38 million of committed investments in our renewable energy, as my brother already explained. Our trade and other receivables, they also grew, but they are mainly referring to, one, the increased rental income, two, VAT receivables that we have on the construction, and three, the EUR 67 million non-current receivable that we moved to current receivable as we expect to close München this year, one of the joint ventures with Allianz. Our cash ended up almost the same as last year, EUR 222 million. As such, we had total assets of EUR 3.9 billion. If we go to the next slide and have a look at our liabilities side.
Essentially, we have a growth of our shareholders' equity of EUR 1.3 billion-EUR 2.2 billion. What's in between? That is the EUR 300 million of capital increase. That was the profit contribution of EUR 650 million and a dividend payout of EUR 75 million. On our liability side, it's pretty straightforward. We have raised a bond, a green bond, in the first half of 2021 of EUR 600 million. Post-balance sheet, we did another dual tranche bond issue of EUR 1 billion. One has a EUR 500 million with a five-year maturity, and the other EUR 500 million has an eight-year maturity. Our proportionally consolidated loan to value is at 46.2%, coming from above 50% last year, and our gearing is at 29.8% in 2021.
Healthy ratio, I think. I think it's back to my brother.
Yes. Thank you, Piet. On page 22, summary and outlook. We had a very strong financial and operating result over 2021. We really have a very healthy business environment at the moment, despite the uncertainties on the markets. There is a lot of demand and we have done a very nice business performance across the portfolio last year and achieved many new milestones. We have expanded our land bank with some trophy new positions, really nice ones, and we are currently looking into a lot of other new ones, started from Serbia and Greece. We have expanded our joint venture with Allianz last year. We did a fourth one.
We replaced actually the first one, Rheingold, and we are currently negotiating with Allianz also the possibility to make from the 10-year holdings maybe a perpetual one or to at least prolong them for 10 years. We are aiming to pay out a sustainable competitive dividend. The proposal is to pay a dividend of EUR 6.85 per share. If you look, that's really in line with what we have done before. If you compare it to pro rata, the profit which we have made, then it's a logical, I think it's a logical end to what we are aiming at. On the outlook side, we see a lot of client demand and there is really a shortage of supply of grade A logistics.
Some of the markets are really completely dry at the moment. There is nothing to be rented anymore. Prague is at 0.2%. In Italy, the market is at below 2% vacancy at the time. In Spain, it's a bit higher, but it's all very old buildings. In the new buildings in Barcelona, there is really no vacancy at all, nothing. It's also leased out a lot. We also very low vacancies in Germany. In most of the German cities, there is nothing available. There is a very good. The underlying fundamentals are remaining very supportive. We will have a significant capital expenditure, and we anticipate a significant capital expenditure due to predominantly pre-let construction pipeline, which is actually fully covered now by available cash sources.
We spent in 2021 a CapEx of EUR 743 million, which will be considerably higher in 2022. The significant cash balance, which is expected to be recycled from the joint venture closings in 2022, plus the bond we have issued, should be more than enough covering our CapEx expenditures and leave some room for new acquisitions in land plots which come up on the longer- term. I think that what positions us really very strong is of course the land bank, which I always say, but it's also the fact that we have invested so much in our team. We now really have the technological know-how in-house to produce really very peculiar buildings. The tenant demand is getting more and more. The buildings I mean.
The building in itself stays a standardized sheds. But if you look at the inside, robotization, automatization and everything which comes with it, we can deliver it, we can design it without needing the help of a general contractor. It is one of the strong things of VGP. We can do such things more and more international. We are using German teams in Slovakia. We are using Spanish teams all over the group to exchange our knowledge. I think that the fundamentals of our business are really strong. That's also why we are looking with confidence forward. There is of course the inflationary pressure, but at the moment our margins are intact. It is a fact that there is an inflationary pressure, but we see the rental prices have risen also.
The yields remain very low and very stable and, therefore we are looking forward with confidence in the future. It has to be said, all of our rental contracts are indexed to the consumer price indexes. We have already a growth of roughly EUR 4 million through the portfolio of the existing rental agreement this year. Despite the fact that there are some caps inside and there are some void years in the beginning, all of the rental agreements otherwise are really indexed to the inflation. I think that's it for our presentation. We will have some questions now. I would leave the room for our presentation to handle through the first question.
Operator, you can open the line for questions.
Thank you. Ladies and gentlemen, if you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star one to ask a question. We will pause for just a moment to allow everyone an opportunity to signal for questions. Our first question today comes from Pieter Runneboom of Kempen. Please go ahead.
Hi. Thanks for taking my question and congrats with these great results. A couple of questions from my side. The first one is on land prices. According to Prologis, these have almost doubled in the Netherlands and Germany in the past year. Do you also witness this and, what's the impact of this on your development case?
Yeah. The land prices are getting up higher everywhere. It is a trend which we see already over the last five years. Every year, there is a substantial increase in land prices. Now, VGP is working already for a very long time at its land bank. You've seen the numbers of what we have in our portfolio. It's true that when the land price goes up, we always see also a very big increase in the rental price which is related to that region. The less availability in the market, the higher the land price will become. We also pay now substantially more than we did before.
If you look at our numbers, you still see that our margins are relatively intact. Thanks to the compression in yield to the higher rental price, we've been able to mitigate this increase in land price and also the inflation in the construction cost. Okay.
That's very clear.
Yeah.
Another question on indexation. You just mentioned that you can capture inflation and most of it. Typically in Germany we see these hurdles. Could you maybe give some color on that? Do you also have these hurdles in Germany and how much of inflation do you expect to capture there?
Yeah. We have almost no contracts which are saying that it first needs to increase with 10% before you can reach our 30 basis points or 60 basis points. Our caps are mostly around, if we cap it, if it's already capped. In Germany, we do the Verbraucherpreisindex, so it's a German indexation, and that's almost everywhere. The Germans always want the Verbraucherpreisindex. All the other contracts that we have, they are linked to the CPI, the Consumer Price Index, the harmonized EU Consumer Price Index. If we accept the cap, then it's the lowest one which we've ever accepted is 2.5%, and mostly there are 3% or 3.5% caps. There is nothing else in.
The only thing which we now and then do is for the first year or for the first and the second year, we don't index in the longer lease agreements, but after the second year, there is every year a price review. That is 99% of all our lease agreements.
This is fairly clear. Thanks. Those were my questions.
Okay.
Our next question today comes from Sander Bunck of Barclays. Please go ahead.
Hi, team. Good morning, and thanks very much for that. Two questions from my side. The first one is, if you could elaborate a bit further about the potential contribution from the solar panels. I believe you expect some pretty large increase in terms of the revenue stream in the next couple of years. Could you just say, like, how much is that revenue stream today, and how much do you expect that to be, say, in a couple of years out?
Yes. Hi, Sander. It's Martijn here. It's basically ramping up, and obviously, the actual returns are a bit delayed vis-à-vis the investments that we make. If we look at the yields that we agree on the projects, it's similar to the yields that we achieve on our development projects for the warehouses, often even better. If you look at what we have received today, I think it's just over EUR 1 million in terms of cash return that we got, but that is still to grow as more projects become online and start to generate revenues. Is that clear?
Just to confirm, for FY 2021, the contribution was roughly EUR 1 million. Is that.
Yes, I think it was 1.2. As Pete mentioned earlier, the commitments are obviously growing, so I think we have EUR 24 million on balance sheet today. We have committed actually 38, and that amount is I think already closer to EUR 50 million as of to date. We're making investments in solar panels in many of the VGP parks.
Yeah. Our yields.
Okay.
I would say are substantially higher than the yields of our buildings if you look at it. Martijn is a bit prudent. I wouldn't invest in it if it would be the same as in our buildings, in that we have a substantially higher return on our costs than. We have been ramping up a lot of things. Last year, most of what we had was under construction, and it's being installed, so it's gonna contribute already a lot more in this year.
Okay.
Looking forward. A lot on the construction.
Okay.
Yeah.
Can you just based on the EUR 50 million that you're looking to invest alongside the fact that there is a bit of a delay in what you've invested so far, like, where would that EUR 1 million grow to on the stabilized basis?
I think the average is 9%-10% yield on the things. That is where we would.
Yeah.
Be looking at.
Okay. Anywhere between EUR 5 million and EUR 10 million in total?
Yeah. No. Anywhere around EUR 5 million it would be in total on the EUR 50 million base of investment, yeah.
Okay, fine. Okay. Sure. Okay, that's great. Thank you. The other question I had was on kind of your current pipeline. I mean, I think you mentioned in the statement that FY 2022 is gonna be a record year in terms of like how much CapEx you're looking to spend. Can I just check how much of the development profits have already been recognized in FY 2021 in terms of like percentage of CapEx spend, and how much do you from what's currently going on, how much is still to be recognized?
Well, everything which is under construction is of course recognized in 2021 at the value end. It's under IFRS, we have to recognize the value, the profit.
Doesn't want the remaining construction costs.
Yeah. We have around EUR 600 million remaining construction costs on the portfolio, which is under construction today. That is what it is about. The profit on that part has been recognized in our 2021 thing. If there is no more yield compression coming forward, if the yields would remain the same, what would be contributing is everything which we start up in 2022.
Yeah.
which will be more than 1 million sq m, we think. Because we have already a large part of that already committed pre-let which we need to start up. So that would be contributing to it. What is under construction today, the bulk of it is already recognized in our numbers in 2021.
Yeah, I appreciate that. Most of it is recognized, but I believe that always the assumptions around it were relatively conservative. Mainly just checking if they were to complete, is there much left still within the stuff that is under construction today?
Wait and see.
That's very helpful. Thank you very much for that.
We will now take a question from Frédéric Renard of Kepler Cheuvreux. Please go ahead.
Hi there. Good morning. Just for a question on the development and deliveries. What are your assumption regarding how much sq m you would be able to deliver in 2022? You were mentioning maybe starting more than 1 million sq m in 2022. I was wondering to know if you think that you could at least maintain the same level of asset under construction as from 2021 in 2022. Then maybe a question on the land bank. Did I get well that you are targeting to grow the land bank by roughly 5 million this year? This is your KPI.
5 million. Okay. This year, it's always a little bit difficult to pin a fixed number on it because some of the customers which we have, they are constantly changing the scope of what they wanna do in the buildings, and then we have CVOs, contract variation orders, which shift the delivery terms a little bit. We aim to deliver more than 1 million sq m, and that is mainly due because of the fact that we have a lot of big developments up which are under construction which are going to be delivered this year.
Munich is a big one, which is 300,000 sq m to be delivered, or the remaining part of Munich is maybe 250,000 sq m to be delivered. In Laatzen, we have a very big one, which is under construction and where we are going to deliver KraussMaffei . There is a couple of others. It's 1,000,000 sq m is certain, absolutely certain, the minimum. It will be even closer to 1,500,000 sq m, but I can't pinpoint it completely because there are many deliveries planned for November and December, and as I said, it can spill over into 2023.
If we look at the construction, we have at the moment roughly EUR 13 million of new rental agreements in negotiation, for which we have signed LOIs and contract cost reimbursement agreements, which we think that we could finalize. Together with what we have planned to start up, we think that we could maintain the level of buildings under construction throughout 2022, despite the big delivery. Despite the fact that we are going to deliver 1-1.5 million sq m, we expect that at the year-end, we will roughly be at the same size of under construction inside of VGP.
I trust that we will be very close to the same pre-let KPI that we have, which is around 80%. We are at 83.8% at the year end. Looking forward, there is so much demand that we are confident that we are able to maintain that. On the land bank, you also asked, it is our KPI to acquire close to 5 million sq m, which is virtually sitting completely in the pipeline. Again, that is subject to maybe there will be something come in like there came in last year, last minute, the Nuremberg acquisition, which was a very big one.
If everything goes as planned, and again, there can be a delay because it's dependent. You know that we buy all the land subject to the permit. The permitting process is not something which we can completely control. We have time delays for that. It sometimes can be that it shifts to next year. Yes, roughly 5 million sq m is what we would like to acquire. It's across all the countries. As there is more and more countries contributing to it, we also, if we want to keep on growing, and it's very scalable, our business as you see, then it's logical that every year we have to replenish the land bank with every year a little bit bigger number.
Okay. That's clear. Maybe just two questions on the dividend. You massively lifted it. You have the financing capacity obviously to do so. Can we assume that it will be a minimum for 2022 onwards, considering what you just mentioned, that you would be probably able to maintain the same pace of construction activities? In parallel, you have more and more recurring cash flows coming from the GD. Is it fair to assume that it should be higher than EUR 6.85 going forward?
That's a good question. I have no crystal ball. No, you can't assume that. We had an exceptional year. 2021 was really an exceptional year. We have seen it in all the numbers, such an increase. We wanted to keep the dividend in line with our dividend which we did last year. If I look at, we just adapted it to pro rata the profits and pro rata the shareholders which are inside. I cannot promise you that here it will be again the same. It will all be dependent on the market environment, the growth rate of the company, et cetera. This year we are so well financed now and so good on track that.
We are very confident with the new closing of Allianz, which we have just agreed, that we have decided that we could pay out this dividend.
Do I understand well that it could be cut at some point then?
Well, I have no crystal ball. I don't know. I cannot predict the future like you will see, but I'll do my best.
Okay. A last question on EPRA index inclusion and update with EPRA.
On EPRA? I don't know.
Yes.
For me, it's a black box how EPRA thinks. I would say because they say we don't have enough assets in Western Europe. I don't know, 75% of my assets are standing in Western Europe. If I calculate it differently than they do, I think. I calculate the square meters and the rental income which stands in Western Europe. Western Europe I define as Germany, the Netherlands, Spain, Italy, and Portugal, and all the rest is for me Eastern Europe. Still, we can't match our view on where our assets are. I'm sorry. I am totally lost in the EPRA. I hope they will include us at one point, but apparently, yeah, we have a different calculator.
You have no further update on with EPRA from them?
No, we.
Okay.
I don't know. We don't have any update, no.
Okay. Thank you very much, for taking my question. Wish you a very nice day.
Yeah.
We will now take our next question from Vivien Marquet of Degroof Petercam. Please go ahead.
Yes, good morning. Thank you for the presentation. Just follow-up question from me, as most has been answered. On the pipeline, if I understand correctly, you expect to match, I would say, deliveries with new development keeping, I would say, the pipeline construction at the same level. Just wondering from the leases you signed in 2021, especially the strong in H2, is everything already launched into the pipeline or is it still some projects still to be launched after year-end December that is not yet reflected? I assume this will come on top of the EUR 30 million letter of intent that you already signed. Just wondering how much is already fully signed that we can expect to be launched this year.
Well, of what we signed last year, there are a number of buildings which we didn't start up yet, which we are just projecting now and which are built-to-suit, which we have to start up in the course of the first or the second quarter. I can tell you the detail. I think I have it. If you look at the delivery, within one year, at the rental income, within one year, we expect that EUR 50.6 million of the rental income, increased rental income will come inside of the portfolio, inside of this year and will be delivered this year. We'll start generating rental income in this year.
In one, so and then in the next year, another EUR 14.8 million will start up generating income. It doesn't really say whether we already started up yet or no. That's it. Deliveries this year, the bulk of the deliveries will be, which will start income generating from this year on, EUR 56.9 million.
Yes.
We are growing very fast going forward. We already signed EUR 6.6 million, I think, new rental income this year. There is every week now coming new lease agreements or a couple of big ones in the pipeline. I think going forward, there is, we are confident that at the year-end of this year, we will roughly be at the same size of buildings under construction than we have now. What we have now, the bulk of that is going to be completed throughout the year.
Okay. It's clear. Thanks. A second one on Park Munich, just wondering how is it valued now? Is it fair value or will it only be recognized at delivery, meaning that any yield compression during the construction is not yet reflected in the asset value?
No, it is explained in the notes also to our numbers. VGP Park Munich is valued at the sales price, which we agreed with Allianz. There obviously is at the moment, if we would let it value, there would be an incremental value. But we opted because we thought the most fair reflection is as long as we didn't cash it in, the value at which we sold it, that is what or it's worth in our books, that's what is standing in, and we will reevaluate once it is delivered. Normally, for the first time, it will be valued at the year-end of this year.
Okay, perfect. That was all my question.
Yeah.
We have one more question. The question comes from Marios Pastou of RBC. Please go ahead.
Hello, morning. Thanks for the presentation and taking my questions. I only have a couple left to ask. First one, are you still confident in fully passing through build cost inflation in all of your geographies? Or are there some regions where you think it may be a bit tougher? And what can you do to help mitigate cost inflation through the year if it persists or perhaps gets worse? That's my first question.
Yeah, it's a good one. It's a difficult one to answer. I think VGP is the best place to mitigate everything possible. We cannot escape the general trend. Of course, there is an inflation in the prices, and it is substantial, I have to say. We have tried to raise our rental prices and everywhere we are offering, but the market is the market who dictates what the prices are. We can we don't have a monopoly, so it is always you are in a market environment where you need to compete.
If I look over 2021 where we saw a substantial increase already in the construction prices, and I think we've had really the bulk of it. That is already reflected in our numbers at the end of 2021, because all of the buildings which are under construction, normally we purchase it for the very biggest part immediately at the beginning. We know we have a balance sheet which we make on our projects. We split it up in all the components, we buy it in, and then we know also we have binding contracts with all of our contractors, and we know what the price is going to be.
If I look now at my margins going forward, they remain relatively stable. Of course, it's changing from market to market. We are also going in Spain, where we until now worked with general contractors. This year will be the first year where we completely switched to our own construction site, like we do everywhere else. We've been enhancing our team, we've been training them to be able to do that, and we will start splitting up our buildings in all its components and do ourselves also the coordination on site and not through a general contractor anymore. Also in Italy, we're going to do that. The only country actually where we still will be working with general contractors is the Netherlands at the moment.
It's the only one which will remain, the Netherlands and Portugal. That's the only markets which will remain with the general contractor. That's what we try to do to mitigate all of that. Yeah, we'll see going forward. At the moment, what we have inside of the 2021 numbers, it's really all it which is under construction. We also have set what is the CapEx remaining on the building, which we have foreseen, and that is a number of which we are very sure that it is sufficient to build out our buildings. Does that answer your question?
Yeah. No, no, that's very helpful. Thank you. Just one final question I had was, can you give an idea on, roughly how much revenue potential there is in your portfolios at the year-end?
There is almost nothing. It's residual. We have, I think, less than 2% of lease agreements which come to maturity or to expiry in this year, potentially. I think that most of the tenants will use the rights to just prolong, because if they want to go and move in this market to another place, it will always be more expensive than to stay in the existing space. There is almost none.
Okay, thanks.
Okay? Yeah.
There are currently no further questions on the phone lines. I would now like to hand the call back over to your host for any additional remarks.
Maybe there is a question from Wim Lewi from KBC Securities if we could detail the split of the net valuation gain on the development portfolio in compression and development gains. I think the other part of the question is already answered. If you look at it, we have EUR 610 million of net valuation gains in our P&L. The vast majority, well, EUR 11 million of that was realized. You can find that back in our notes later on. The majority of the six hundred remaining is actually development gain. The revaluation gain versus previous years is a minor part of it.
Development gain, you mean a new asset?
Yes.
which have been started up?
We had EUR 900 million approximately of new assets on buildings, then, and there was a development gain of EUR 600 million that has been made. There is one more question we can see here from Green Street. It says, which I would like to answer. Over the medium- term, would you consider expanding the services you offer your tenants beyond the four walls, for example, to include equipment related to storage, moving goods around the warehouse and IT and software solutions? We are already doing it in part today because we are offering everybody green energy. We're trying to enhance that a lot by installing solar panels, and we are doing geothermal solutions for the heating, etc.
Going forward in the future, I think VGP should widen its offer and do offer more services. I'm not sure whether that would have to be racking systems or storage systems because at the moment it's all diverse and diversified and everybody needs something else, and that's not standardized at all. I'm not sure that we should do it today. You can never say no. I think that we are the company which tries to look in the future and tries to evolve with its market, and that if technology changes, we will change, and we will have to. We're very open-minded about it, but it's not a plan for tomorrow.
It's, as I said, you know, the first focus of is energy related, trying to find new solutions for our customers, which is then decentralized and locally produced on the spot. I think that answers the question, I hope at least. There are no more questions as far as we can see. I thank you all for being on the call, and if there is anything else, you can always give us a call to Martijn or Nelleke or me or Piet with whatever you wanna ask. I will be happy to answer your questions in a phone call. Thank you.
This concludes today's call. Thank you for your participation. You may now disconnect.