Dear ladies and gentlemen, welcome to the conference call of Aroundtown SA. At our customer's request, this conference may be recorded. As a reminder, all participants will be in a listen-only mode. If any participant has difficulty seeing the conference, please press star key followed by zero on your telephone for operator assistance. May I now hand you over to Mrs. Catherine Peterson, Head of Group Communications, who will lead you through this conference. Please go ahead.
Thanks, and a very good morning to everybody. Thank you for joining us for Aroundtown's full year 2021 results call. I am Catherine Peterson, Head of Group Communications, and with me today are CEO Barak Bar-Hen, CFO Eyal Ben-David, Chief Capital Markets Officer Oschrie Massatschi, Executive Director Frank Roseen, Investor Relations Timothy Wright, and representatives from Grand City Properties. You should have received the company's corporate news, and you can find the financial results also on Aroundtown's website, either on the home section or under financial reports of the investor relations section. For the duration of the call, all participants will be in a listen-only mode. Following our presentation, you will have the opportunity to ask questions. We have already asked you in advance to send us your questions via email, and please continue to send them via email also during this presentation. The email address is info@aroundtown.de.
I repeat, info@aroundtown.de. I will hand you over to Osri now, who will guide you through the presentation of our full year results. Thanks.
Thank you, Catherine. Good morning, everyone, and welcome to Aroundtown's full year 2021 earnings call. This year, a new chapter in the development of the pandemic has started. With increasing vaccination rates, we are in a better situation than when the pandemic broke out and after the last full lockdown was lifted in summer of 2021. After nearly half a year of lockdowns and travel restrictions across our market in 2021, summer arrived. The market started to open again, and we experienced strong leisure travel demands. During the same period, also pent-up demand in the office market pushed new lettings, which supported our like for like performance. Meanwhile, residential markets have remained very robust during the entire time. Nevertheless, we remain cautious as uncertainties remain alongside additional negative macroeconomic changes, such as increased interest rates, cost inflation, and supply chain disruptions.
The Omicron variant resulted in the highest infection rates in our markets, which led to new restrictions towards the end of 2021, but appeared less severe on the economy than the hard lockdowns. Unfortunately, the world, and especially Eastern Europe, is already facing new challenges from the tragic war in Ukraine. We believe that the diversification in attractive asset classes and top locations will continue to serve us well as a protection for future challenges, help us to meet our targets, and as a catalyst when markets recover again. Let's start on slide 4 with Aroundtown's key achievements of 2021. We have further expanded our dominant position in Europe, and the company grew to nearly EUR 40 billion in total assets. This has turned Aroundtown to the largest landlord in several key cities in Germany and the leading asset owner across the most attractive asset classes in Europe.
By means of further asset rotation and signed disposals of EUR 2.8 billion above book value, as well as an increased focus on our top tier locations, we enhanced our portfolio quality and mix of asset classes. At the end of last year, the office and residential segments accounted for nearly three-quarters of the portfolio. The increased economies of scale and well-timed capital recycling of non-core assets continued to strengthen our portfolio. Since the successful tender offer for Globalworth last year, Aroundtown continues to hold a joint controlling stake of over 60% together with our joint venture partners, CPI. We continue to increase our engagement with the management and operations of Globalworth to identify additional value drivers and growth potentials in the portfolio.
We further strengthened and simplified our portfolio with the delisting of TLG end of last year, and consolidated Grand City Properties since the second half. We have a dominant investment position in Grand City Properties, which is now over 50% excluding treasury shares. To emphasize the priority we give ESG related projects, we summarized some highlights from 2021 on slide 5. We strongly believe that our long-term investments in ESG are not just benefiting the environment and society, but lifts our asset values and unlocks further rent increase potential. In 2021, we continued making good progress on many ESG related topics as we put a strong focus on increasing our share in green building certification, continued our energy investment program and engagement with our communities.
One year ago, we successfully launched a pilot project for green building certification in the Netherlands, and as a result, 30% of our portfolio in the Netherlands obtained a green building certification from only 2% in 2020. We rolled out the strategy in further locations, and we continue to strive for more property certifications. Our Sustainalytics score further improved to be among the top 4% globally across all industries. We also engage with multiple other ESG rating agencies that all have different focus when assessing the performance. All this effort pays already off. While we see Aroundtown being included in ever more sustainability indices and obtaining EPRA Gold awards across all significant categories. On slide 6, we provide a glance of our financial performance highlights of 2021.
We will discuss each of these numbers in more detail in the financial section, but I want to confirm that our 2021 guidance has been met, including keeping our strong financial profile and debt structure. Please note that Grand City Properties has been consolidated in Aroundtown's financials since July 2021, which is reflected in those figures, except for the like-for-like results, where GCP is not included yet. The net rental income increased year-over-year by 8% to EUR 1.1 billion. The expected dividend for 2021 is EUR 0.23 per share based on our payout dividend policy of 75% and is subject to approval at the AGM in June 2022.
As we continue to navigate carefully through uncertain times, we manage also at the end of 2021, a strong cash and liquid asset position of EUR 3.2 billion, while repaying EUR 2.3 billion of shorter and more expensive debt over the course of the year, and issuing EUR 1.3 billion cheaper and longer debt. We continue to make every effort to improve the fundamentals of our company. Slide 7 breaks down how we achieved a 10% total shareholder value growth in the course of 2021, leading from EUR 9.5 EPRA NTA per share in December 2020, to EUR 10.4 per share, including the dividend payments in 2021.
EUR 575 million of the ongoing EUR 1 billion share buyback program for 2021 and 2022 has been completed so far, which was funded by strong disposals and therefore remained leverage neutral. As a result of the share buyback at current discounts, we expect a positive impact on the NAV and FFO I per share. Let's move on to the operational results starting from slide 9. Having increased our position over the last few years in consolidating Grand City, we see that the contributions of its quality residential assets located in strong metropolitan locations has a positive impact on the overall portfolio of the group.
As a result of the consolidation with GCP and our asset rotations by the end of 2021, our portfolio diversification has become more balanced, with 44% in offices, 30% in residential, 18% in hotels, and the remaining 8% in logistics and retail, with an overall vacancy rate of 7.7%. With over 90% in value, our portfolio further increased the focus on the European key markets of Germany, Netherlands, and London. Two-thirds of the entire portfolio is located in the top cities of these markets. We emphasize that these elements of diversification protect us to some degree during uncertain market conditions linked to macroeconomic or domestic uncertainties. During times of political change and even the tragic war in the heart of Europe, we must all witness. Such events will therefore not have an equal negative impact on our entire portfolio.
On slide 10, we highlight the value growth of our investment platform from December 2019 to December 2021. Over these two years, the scale of investment properties grew by 61% from EUR 18.1 billion to EUR 29.1 billion, which includes the merger with TLG, the consolidation of Grand City, and the capital recycling measures. Excluding the consolidation impact of Grand City, the investment properties grew by 9% despite selling EUR 4.7 billion of assets. The higher portfolio quality becomes evident in the increase in value per sq m over time, which increased by over 18% to EUR 2,880 per sq m since December 2019, excluding Grand City. Moving to slide 11, you see an updated split of our signed disposals for the full year 2021.
EUR 2.8 billion signed disposals, of which EUR 2.3 billion have been closed in 2021 at a 37% margin over total cost, with 3% margin over book value. 38% of disposals were located in non-core locations. The segment split of disposals was made up of 42% offices, 31% hotels, 22% retail, logistics and residential, as well as 5% development rights. These disposals of non-core and mature assets above book value once again validate the conservative external valuations of our portfolio. With over EUR 5 billion of signed disposals above book value, we could prove over the last two years that by means of our successful asset rotations. We capitalize on significant value creation and recycle the funds into our own portfolio at a higher quality.
We did this by executing the accretive share buybacks at a huge discount to our EPRA NTA, which creates long-term shareholder value and further repay shorter and more expensive debt. Having tapped our last share buyback program by EUR 500 million in January this year, we continue to execute the buyback of up to EUR 1 billion by end of 2022, of which about 57% has been already executed as of last week. As illustrated on slide 12, we present our tenant diversity with around 3,500 commercial tenants from various industries across our properties, with limited exposure to any single tenant, and additional 65,000 residential units from Grand City. Our tenant dependency remains low, as the rental income of our largest 10 tenants accounts for less than 20% of our group's total rental income.
Aroundtown's group portfolio platform at December 2021, including the consolidation of Grand City, came in at EUR 29.1 billion and EUR 1.2 billion net rental income run rate. At the end of 2021, the rental yield further compressed and resulted in 4.4%, while the vacancy rate of the group reduced to 7.7%. We see further rent increase potential in our portfolio, and we will continue to work hard to optimize these metrics. As shown on slide 13, our office assets represent the lion's share of our group portfolio value with 44%. We continue to be the largest office landlord amongst listed real estate companies in Berlin, Frankfurt, and Munich. These three locations alone make up 56% of our office portfolio value.
Additional key cities of Germany and the Netherlands, such as Amsterdam, Rotterdam, Hamburg, Dresden, or Stuttgart, remain our focus, as shown on the pie chart. Balanced average lease term of 4.6 years and no significant dependency on a single tenant or location, we continue to maintain a well-diversified and robust tenant structure. We also maintain a strong tenant industry base with over 45% of rents deriving from governmental energy, IT, health, and infrastructure segments. Please now move to slide 14. In 2021, we saw the second strongest year in office transaction volume in Germany ever recorded. Office rent remained stable with a slight increase and was led by the largest cities in Germany. Although vacancy levels in the market increased, they're still at historically low levels.
2021 was a stronger year for office lettings in our markets than the previous year due to the released pent-up demand after lockdowns were lifted in June 2021. However, we remain cautiously optimistic for 2022, as the war in the Ukraine and the number of COVID infections keep European markets on the edge. We cannot rule out further setbacks from macroeconomic or geopolitical risks in the course of this year. Our historical and strategic investment in the residential sector through Grand City is reflected on slide 15. By the end of 2021, we had increased our diversification to strong residential assets in the top German cities plus London, representing now the group's second-largest segment with 30% of the portfolio value after offices.
With Berlin, North Rhine-Westphalia, Dresden, Leipzig, London, and other German key cities as organic growth drivers, Grand City is very complementary to Aroundtown's top-tier investment locations and further adds to the asset class diversification and balances the portfolio between asset classes with different fundamental drivers. Throughout the pandemic, the German residential asset class has proven to be one of the most resilient types of European real estate, and Grand City could book for its portfolio a like-for-like rental growth of 2.8% and a like-for-like capital value increase of 8% in 2021. Both achievements are not included in the 2021 like-for-like results of Aroundtown. As the housing shortage and pressure on rent levels continue, we see strong demand for condominiums.
The demand supply gap results in strong operational performances and, in turn, growing capital values for German residential assets across almost all main and secondary cities during 2021 and well into 2022, in spite of the ongoing pandemic. I'll now hand you over to Frank, who will continue with the hotel portfolio.
Thank you, Oschrie. On slide 16, we summarize our hotel portfolio, the third-largest asset class in our portfolio. Our hotels are located in top-tier cities across European countries such as Germany, the Netherlands, Belgium, the U.K., France, and others. The majority of these countries enjoy for decades already a very high proportion of domestic travel demand. We ensure a strong geographic diversification that spans across multiple operators and hotel types. Our hotel portfolio remains stable with a 15-year WALT and 85% in the four-star category that captures both leisure and business travelers. Due to the increased share in residential assets and hotel disposals above book value, the share of this asset class reduced from 24% in December 2020 to 18% in December 2022. Please move to slide 17.
There was a distinct imbalance between the first and the second half of 2021, as the first half was dominated by heavy travel restrictions, and therefore, our collection rate was only 34%. During summer, we saw a healthy rebound in the booking numbers, and in particular amongst leisure hotels, and the collection rate for the hotel portfolio improved to 60% in Q3. However, the impact of the Omicron variant took its toll on the pace of the recovery and is resulting in a collection rate of over 55% in Q4. As a result, our 2021 full year collection rate for hotels came in at 48%.
Looking at the chart, it is fair to say that during the summertime of 2020 and 2021, the combined overnight stays in Germany, Belgium, and the Netherlands were not inferior when comparing to 2019 before the outbreak of COVID-19. The steep increase in bookings during the summertime of the last two years shows that people want to travel and validates the investment case for quality hotels in top destinations. The collection rate in Q1 2022 is so far around 45%, but as most travel restriction across Europe have been lifted in March, our expectation for the hotel collection rate is to come at 60% to 70% for the full year 2022. Of course, assuming that the sector will not be confronted with new COVID lockdowns and that the impact of the war in Ukraine will remain limited. On slide 18, we summarize our remaining logistics and retail portfolios.
During 2021, we achieved a significant volume of asset rotations in both asset types due to strong e-commerce and strong demand on essential goods, which benefited positively by the pandemic. Both asset types remain non-core for us, and we aim only to hold on to the most assertive assets, while we will continue to recycle the capital of the mature and non-core properties. Our remaining position of these two asset types at the end of 2021 stood at 2% in logistics, down from 7% two years ago, and 6% retail, down from 9% during the same period. At the end of 2021, their WALT were 4.8 years and 4.9 years, respectively.
The top investment location for both asset classes remains Berlin, with 40% of the assets value in each segment, as we strongly believe in the growing importance of Berlin and the upside potential of the city. Barak, please continue.
Thank you, Frank. We present on slide 19 the composition of our development and building rights portfolio, which accounted for 5% of the total assets at the end of 2021. It is therefore not material on a group level, but it is a growth driver that gains more attention as we identify additional value by obtaining sellable building permits as well as selective construction initiatives ourselves, where we see more significant developer upside and the lowest risk. Given the shortage in new supply across many prime locations and increased asset values, the development portfolio implies significant upside potential that we already experienced last year. In 2021, we signed around EUR 350 million of development rights for disposal above book value.
Composition of development rights is illustrated on the 2 pie charts, which also account for Grand City with nearly half of all right values in Berlin. On a standalone basis, Grand City also identified most development rights in its Berlin portfolio. We consider the German capital as the most attractive location in Germany for developments due to its growth, importance, and severe shortage of housing. In terms of asset type breakdown, 43% of this segment are offices, which matches the under supply of high quality and green office space in several prime locations. 40% of this portfolio was identified for residential and mixed use, and the remaining 17% for hotels. The locations of our largest development rights include Berlin, Paris, Frankfurt, Munich, and Rotterdam. These five hubs together make up over 70% of this segment.
In most cases, we aim to sell these building permits. However, if we see significant yield potential and strong tenants with long-term pre-let agreements, we will also undertake projects ourselves for which we engage third-party developers. Once again, we added additional development projects to the appendix of this presentation for which we recently obtained building permits or pre-permits. On slide 20, we want to show you some examples of our disposal of development rights we achieved in 2021. These three examples in central locations of Dresden and Berlin shall give you an idea of the potential of this segment in our portfolio. Please note that it can take several years to obtain building permits, as the cooperation with the municipalities can be very slow. Unfortunately, lockdowns in the past 2 years worsened this situation.
On a positive note, though, time is on our side, as we see values of development plans in top location increasing steadily. On slide 21, we present our CapEx investments for 2021. The CapEx investment resulted to 1.7% as a proportion of the average portfolio value. Of the three CapEx categories, 55% went into expansion programs, of which 5% are Grand City pre-letting modification during the second half of 2021, that allow us to create additional letting space or enhancement of existing space. This is followed by 27% of tenant improvements.
Unless part of expansion CapEx, ESG related CapEx is included in other CapEx section and will continuously increase over the years as we identify additional measurements to lift our asset quality to a higher green standard, with the aim to reduce our carbon emission by 40% by the end of the decade. I'll now hand you over to Eyal to present you the financial results.
Thank you, Barak. Please move to slide 23, where we present the profit and loss results for 2021. Our recurring net rental income resulted in EUR 1.08 billion. That's a growth of 41% compared to two years ago, resulting mainly from the consolidation with GCP and TLG and subsequent disposals. Excluding GCP, the rental income increased by 15%. As always, in this figure and also in the adjusted EBITDA and FFO, we exclude the impact of the assets for sale despite their positive contribution. Our like-for-like net rental income, excluding hotels, amounted to 1% for the full year. Including the hotel segment, the like-for-like growth amounted to 0.3% overall, of which 0.8% come from index rents and -0.5% from occupancy decrease.
Please note that the like for like calculation does not include GCP yet. We will start to include GCP next year. We recorded property revaluations and capital gains in the amount of EUR 810 million, which includes capital gains of EUR 66 million for the full year, and is the result of the disposals above book value. Due to the challenging start during the first half of 2021, and the emergence of the Omicron variant towards the end of the year, the collection in the hotel rents remains subdued, and we booked an extraordinary provision of EUR 125 million for the full year. For 2022, we expect a higher collection rate in the range of 60% to 70%, assuming no further lockdowns will impact the recovery.
Administrative and other expenses increased by about 10%, mainly as a result of the GCP consolidation. Finance expenses came in about 10% lower year-over-year due to our liability management efforts to reduce cost of debt and extend debt durations. Current taxes were up 12%, which was also impacted by the GCP consolidation, while the deferred taxes reduced compared to the previous year, mainly as a result of the deferred tax income on derivatives. As a result, the net profit for 2021 amounted to nearly EUR 1.1 billion, generating EUR 0.55 earnings per share, a 10% increase year-over-year. On slide 24, we see the adjusted EBITDA before the contribution from JVs, which increased year-over-year by 12% from EUR 777 million to EUR 871 million in 2021.
This figure is already after excluding EUR 12 million contribution of asset sales, classified as held for sale, and therefore referring only to the recurring long-term core portfolio. Positive contributions derived from our JV investments in the amount of EUR 104 million in total, which mainly include GCP for the first half of 2021. In the graph below, you see the accretive growth of 12% of the adjusted EBITDA before JV contributions in the past two years as a result of net acquisitions. The consolidation of GCP in the third quarter further supported the growth to 36%. Looking at our funds from operations on slide 25, we recorded in 2021 a FFO I of EUR 353 million or EUR 0.30 per share. Both figures are within our 2021 guidance.
The marginal decrease compared to 2020 on an absolute level continues to be mainly the results of the successful disposal activities. You can see the positive effect from our share buyback programs as they increase our FFO I per share by 11% year-over-year, more than offsetting the slight decrease in absolute FFO I. The FFO I per share before COVID adjustments increased by around 11% to EUR 0.41 per share year-over-year, which again emphasized the positive effects of the share buyback program. This provides a good indication of the potential we can achieve when rents will recover. Please keep in mind that the consolidation of GCP has no effect on the FFO results as we continue to apply the related share in GCP as we did before. Now we deduct the minority, whereas before, adding only our share in GCP's FFO.
The total profits over the course from disposals in 2021 amounted to EUR 615 million as a result from the completed disposals of EUR 2.3 billion. The FFO II, therefore, increased to EUR 969 million from EUR 933 million last year. On slide 26, we provide an overview of the development of the EPRA NTA and the NRV metrics over the last two years. Year-over-year, since December 2020, the total EPRA NTA increased by 3% to EUR 11.6 billion. On a per share basis, that is a growth of 7% to EUR 10.2. Also here, the positive impact of our ongoing share buyback program is demonstrated. Oschrie, please continue to conclude the final part of the presentation.
Thank you, Eyal. Since going public, we've been proactively managing our debt maturity profile and maintaining a defensive capital structure that is for us, not only a top priority during times of rising interest rates, but even more so when funding was more attractive. Slide 27 underlines the attention we have given to our debt maturity profile in recent years, as we have no major debt expiries coming up until the beginning of 2025. This protects us in the midterm from potential interest rises as our liquidity covers the maturities for the next years, and 97% of the debt interest is hedged. In 2021, the LTV increased to 39%, which is mainly due to the consolidation of GCP. Nevertheless, Grand City Properties' conservative debt profile is supportive for the company and impacts positively the company's financial metrics.
Furthermore, as a result from our active liability management efforts, once again, we further reduced our low average cost of debt to a new historic low of 1.2% with an average maturity of 5.7 years and a stable interest cover ratio of 4.9 times. We also increased again the holding of our unencumbered assets to 83% of the rent, representing nearly EUR 24 billion of the portfolio value, which provide additional sources of capital for us, if and when required. Our strong fundamentals and conservative financial ratios continue to be the basis for our group strategy, and they have proven to be essential during times of ongoing pandemic. As highlighted during the presentation, we met all KPIs of the announced guidance for 2021. On slide 29, we've now added our guidance for some KPIs for 2022.
The total FFO I will benefit from our liability management and improved hotel collection rates. Therefore, we expect FFO I to be in the range of EUR 350 million to EUR 375 million. As a result, we expect the FFO I per share to be in the range of EUR 0.31 to EUR 0.34, up from EUR 0.30 in 2021 due to the accretive share buyback programs that will benefit all shareholders. Our expected dividends per share for 2022 should be in the range of EUR 0.23-EUR 0.25 based on a 75% dividend payout ratio. That concludes our full year 2021 presentation, and I'll now hand you over to Catherine, who will lead the Q&A session.
Thank you. Before we invite your direct telephone questions, we will now answer questions that we have received by email prior to or during this call. For simplicity reasons, we have grouped similar questions in order to answer as many of them as possible. Allow me now to read out these questions. First one going to Oschrie, please. Can you elaborate on the development of the office market and your performance, and what do you expect for this year?
The office market started showing signs of recovery starting from middle of 2021. Despite the surge in infections over the winter months, the office market in Germany and the Netherlands has remained relatively stable. Market vacancies have slightly increased, and market rents remain stable. On one hand, we see positive letting activity, but on the other hand, macroeconomic changes such as increase in interest rates, cost inflation, supply chain disruption, the war in Ukraine, upcoming changes in regulation due to environmental changes could negatively influence the office market, and therefore, we remain cautious regarding the pace of recovery. In Germany, where restrictions have been longer and stricter compared to other countries, home office was mandatory until last week. We experienced that office employees prefer to keep a home office flexibility, but are less willing to share desks or being forced on which days to take their home office.
We believe that the home office concept will remain part of the office working environment with partial impact on office demand. We already saw an increased demand from employees for partial participations by employers for their home office days, such as office equipment, internet, and more. Therefore, we believe that employers will do their math of the economics savings of working from home to the productivity of their employees. In German top cities, commuting times are shorter compared to other Western European top cities, as residential rents are more affordable and office rents are also comparably lower, which reduces the incentive of corporates to reduce their office footprint. In the Netherlands, remote working has been a working concept already prior to the pandemic, and thus the impact is expected to be lower. Besides the coronavirus pandemic, the conflict in Ukraine created new uncertainty in the markets.
Although it didn't have a direct influence, currently, we cannot assess the potential impact of the conflict on the Western European economy and the implications of new letting activities. Although we do not have any investments in these countries or Russian tenants which might be sanctioned.
There could still be potentially indirect implications on the German and Dutch economy, especially the availability of sufficient energy and energy prices. In 2021, we signed 160,000 sq m of new office lettings, which is 30% more than in 2020, at an average rent of 14 EUR per sq m and a WALT of 6.5 years. Office lease prolongations totaled 350,000 sq m at an average rent of 12.5 EUR per sq m and a WALT of 4 years.
Next question going to Barak, please. What is the situation of the hotel market and the performance of your hotels? When do you assess collection rate to recover?
The recent months have been negatively impacted by new restriction relating to a surge in infection rates, especially in Germany. The new restrictions limited the access of unvaccinated people to hotels, and only triple vaccinated or double vaccinated with daily testing were allowed to enter. Although not a full lockdown, this restriction still reduced the demand of hotel visitors. Furthermore, with the increased infections, the portion of the population in quarantine has increased significantly, also impacted the travel demand. As these restrictions were enacted later in Q4, and the Christmas seasons usually has a higher demand, our collection rates stayed relatively stable with 55% in Q4 and 60% in Q3, resulting in a full year 2021 collection rate of 48%, which was significantly impacted by the full lockdown in the first half of 2021, where we had a collection rate of 34%.
Looking into 2022, as these new restrictions have been lifted only in March and has impacted in full the first entire quarter of 2022, which adversely impacted our collection rate in Q1 this year. However, we expect the upcoming months to show recovery, especially in the summer months within the leisure hotels. We currently expect for 2022 the collection rate to be within the range of 60% to 70% in comparison to the 48% of 2021. We therefore expect 2022 to perform better than 2021. Since the proportion of the hotel portfolio decreased due to the disposals activity and increase in residential portfolio, we expect a smaller negative impact in 2022 overall results. The U.K. already fully lifted all restrictions, and in turn reduces uncertainty, which is improving planning certainty of international and business travelers.
However, we note that it's not enough for restrictions to be lifted that the market normalizes. The level of infection rates and quarantine requirements still impact planning ability to a certain extent. Furthermore, for a full recovery, we need to see international and business travel, as well as conferences and fairs recovering, which we believe still needs more time, as recovering is at slow pace and will probably be delayed to 2023, 2024.
The next question is going to Oschrie, please. Can you elaborate on the considerations to increase your stake in GCP?
We've always had a focus on the residential market in Germany through our investment in Grand City. That focus increased over time through Grand City's growth and our increased holding rate over time. The increased position in the residential market increases the quality and strength of our portfolio. German residential is the strongest asset class in Europe, and the additional diversification into London adds an additional value driver based on very strong and sustainable fundamentals. As long as Grand City trades at a significant discount to its NTA, we expect to continue increasing our stake gradually by participating in Grand City scrip dividend option and by acquiring shares in the market. The strong and resilient performance of the German residential market is basically the result of the persistent gap between supply and demand.
Demand in metropolitan locations is steadily increasing due to the positive net migrations and the reductions of household sizes. Supply is not catching up due to the bureaucratic hurdles delaying building permits and the increasing prices of land and construction costs, which reduce attractiveness to build rental units in a regulated market. We believe these strong fundamentals will support strong, stable, and steadily increasing long-term cash flow generation, which subsequently lifts property values.
The next question for Barak, please. The like-for-like for 2021 without hotels was 1%. In which asset types and locations did you have the strongest like-for-like performance? Do you expect the like-for-like to recover further in 2022?
We didn't include Grand City Properties in our 2021 like for like, which by itself recorded 2.8% like for like in 2021. Grand City Properties will be included starting 2022. Therefore, the main contributor to the like for like was the office sector with 1.3% like for like in 2021. Of the overall 1% like for like without hotels, 1.7% came from in-place rent increase, and 0.7% came from occupancy decrease. We experienced the strongest like for like performances in Frankfurt, Leipzig, and Utrecht.
The next question is going to Oschrie. What are your disposal plans for this year? How much disposals did you sign in 2022 so far? What type of assets are you disposing? Are you targeting acquisitions?
The strong transaction market enables us to recycle capital and to increase the quality of our portfolio, which is made up of mostly offices and residential properties. The disposals, together with the share buyback programs, are creating accretive shareholder value while increasing the strengths of our portfolio. We signed in 2021, EUR 2.8 billion of disposals, of which EUR 2.3 billion have been closed last year. So far in 2022, we have around EUR half a billion of signed disposals which haven't been closed last year. Additionally, we signed this year around EUR 100 million, but we are continuously receiving attractive offers across all asset classes at or over our book values. We review the offers based on the unlocked upside potential we see in the properties, the period and investment needed to unlock it and compare it to the offer price.
We see disposal pipeline of about EUR 1 billion, but we'll provide more development updates in the coming periods. Important to reiterate that we continue to utilize the arbitrage situation of disposals above book value and buying back our shares at a deep discount to book values. This creates long-term shareholder value as evident in our FFO per share growth, more than offsetting the decrease in absolute FFO. As long as we continue to receive good offers for our properties, which are either non-core, and the disposals improve the focus and quality of the portfolio, or matured, where we lifted the majority of the value and can utilize the funds into a share buyback and debt repayment, we will continue, as this opportunity currently creates the largest shareholder return. Disposals above book value, also of development rights, validate how conservative our portfolio is.
Overall, the transaction markets are competitive, which are supportive of property valuations and further yield compression, but less attractive for significant acquisition, with prices already reflecting the potentially future value uplift. Currently, as regards to external growth, we wait to find acquisition opportunities which follow our criteria. In the meantime, we focus on our existing properties and continue to extract building rights and develop whenever it is economic.
The following question is going to Timothy. Can you please provide an update on your development projects?
The development rights investment portfolio amounts to EUR 2 billion and includes many potential projects. You can see in the appendix of the presentation that we added further projects, which reflects our ongoing progress with our development projects. They further include hotels for which we brought forward CapEx programs in order to utilize the period of lockdowns and restrictions. Thus, we're able to execute CapEx programs faster instead of executing them in parallel during running hotel operations and bring a new product to the market faster. In 2021, 2 hotels were reopened, the hotel in central Cologne and the hotel in Davos, which reopened just before the winter season. Further, we demolished a former retail park and broke ground in a residential development project comprising around 166 units across 11,000 sq m rentable space in Berlin.
In Berlin Tiergarten, we are about to start the demolition of a 2000 sq m property, and through integration with the surrounding buildings will result in over 7000 sq m. These projects and many others are presented in the appendix of presentation. As part of our value creation process, we extract and maximize development rights and then consider if to dispose or to develop the projects ourselves. We recently signed the disposals of a few projects, 25,000 sq m office in central Dresden, which is under construction and 40% pre-let, and a mixed-use 25,000 sq m property in central Berlin at Warschauer Strasse, for which we obtained preliminary building rights, a 17,000 sq m logistic park in the north of Berlin at the city highway.
These projects have been sold above book value and thus validate the values of our development rights.
The next question is going to Eyal. Can you please elaborate on your revaluation gains? Which asset type outperformed which locations? Did you record yield compression, and what do you expect for the next period?
Property revaluations amounted to EUR 744 million in 2021. Around EUR 500 million are revaluation gains we recorded through GCP since consolidation in July 2021. Excluding GCP, the revaluation gains reflected a total like-for-like value growth, net of CapEx, of positive 1.3%. Including the CapEx, the like for like in the period amounted to 4.3%. The yield compression amounted to 0.2% and was across the portfolio, but especially in Berlin and NRW. GCP reported like-for-like value growth of 8% for the full year 2021, which is not included in our total like for like and will be included in 2022. The German residential market continues to show strength and increase in valuations. The commercial values remain stable across our portfolio.
The higher value increases were in Berlin, NRW, Utrecht, Leipzig, Munich, Hamburg, Wiesbaden, and Stuttgart, and the majority was in the office portfolio. The hotel portfolio like for like was 0.5% positive. Going forward, we expect to continue to see stable values, and we stay cautious due to the recent negative macroeconomic developments.
Another question for Eyal, please. In the beginning of the year, you received authorization from the shareholders to increase the share buyback potential, and recently you increased the running program by another EUR 500 million to EUR 1 billion. Will you continue buying back more shares after the current program is finalized?
We increased and extended the buyback program as we continue to utilize the arbitrage situation of disposing properties at above book value and buying back shares at a significant discount. The situation results in a significant shareholder return in the long run. The impact of the buyback of last year, you can see in the FFO I and NAV per share increase of 11%, fully offsetting the slight decrease of 1% in the absolute amount. We will consider our next steps depending on the market conditions once the current program is ended. Note that of the current EUR 1 billion program, close to 60% has been utilized so far.
This question is going to Oschrie. On the impact of the currently high inflation, can you please provide us an overview which portion of your rental contract contains an inflation link? How does higher inflation impact your costs?
Rental agreements in our commercial portfolio are mostly CPI-linked or include a step-up rent clause. Rent increases for residential properties in Germany are regulated at 20% in a three-year period and 11% in tense markets. There's a time lag between the actual increase in CPI until it is translated to rental income, as the CPI-linked indexation takes place once a year or once reaching thresholds of CPI increases within a timeframe. It is hard to estimate the indexation impact on 2022. Note that many leases are adjusted in the end of the year, so we expect to see most of the impact on our income statement for the beginning of 2023.
From the cost side, we are experiencing the impact of higher prices to some extent, mainly in personnel expenses, although the main price drivers currently are energy, raw materials, and electronics, but not all of these impact our business in a material way. The increase in energy costs are mostly passed on to our tenants, so here also we expect a limited impact. Increased prices of raw materials impact our CapEx and construction activities, but currently with no material impact on our overall performance.
Next, two questions for Eyal, please. Which main assumptions did you account for in the 2022 guidance?
We remain conservative with hotel collection rates of 60% to 70% and no significant acquisition. We incorporate disposals in the amount of EUR 1.5 billion, including the EUR 1 billion held-for-sale portfolio, of which EUR half a billion of disposals are already signed. Due to the prevailing uncertainties, we kept the like-for-like growth as neutral.
The market is expecting interest rates to increase on the back of higher inflation rates. How will higher rates impact your company?
Higher interest rates can impact us in three main aspects: current cost of debt, new financing, and valuations. Our current debt is 97% hedged for fixed interest and has long average debt maturity of 5.7 years, so we don't see a significant short-term impact here. Our high cash and liquid assets balance of over EUR 3 billion can cover debt maturities for the next years, which gives us an additional hedge against the material impact. We do not have any material financing needs. Our funds from operations are highly positive, and our cash position can easily cover our current CapEx and development programs. We have EUR 24 billion of unencumbered assets that gives us additional financial flexibility and in favorable terms in comparison to the current interest environment.
Our disposal activity also flows into our cash position and support the financial strength of the company and ease the need for new debt. Regarding property valuations, we don't expect a material impact due to a few factors. The valuations apply a 10-year DCF method, and the real interest rates, net of inflation, would need to be elevated for many years to have a material impact on the valuation method. Besides, valuations are mostly driven by the property market fundamentals. If real estate interest, net of inflation, will increase significantly, then valuations can be negatively impacted. Also, higher interest rates and inflation increase construction costs, which further reduce the incentive for new construction and thus keep supply low unless market rents catch up in line, which, in turn, has a positive impact on our existing assets.
Following question is for Oschrie. Does the Ukraine and Russia war and the increased rates impact the transaction market?
Currently, we do not see a significant impact of the war or of the increasing rates on the transaction market, but it is still too early to assess. Deals which were in negotiation before the recent events have been closed, and we don't see yet a change of direction here. However, the ability to raise financing in the recent weeks has decreased, and certain players might have difficulty to raise funding at attractive pricing if the current situation gets worse. It is hard to estimate at this stage where the trend is going. But given our high liquid position, coupled with a strong and well-established capital market access, any negative change in the market may be an opportunity for us. We are well prepared to capture attractive opportunities when and if they arise.
As to the impact on disposals, we have signed around half of the held for sale portfolio and expect to complete the disposal of the remaining half in the next 12 months. We have no need to dispose additional properties and would do so only if the price is attractive for us.
Following question is going to Frank. Your share of green building certificates increased in your Netherlands portfolio to close to 30%. Are you going to increase this portion, and how much of your total portfolio is currently green certified?
We started last year in the Netherlands with a pilot project for green building certification, where we had only one building certified. We choose the Netherlands for the pilot as a demand from tenants for green properties exist in comparison to other locations. We analyze the portfolio to find out if a building is either eligible already and/or which adjustments are necessary before we enter the certification process. Currently, close to 30% of the building in the Netherlands are green certified, and we expect to reach the 40% level by the end of this year. We started applying the knowledge that we gained from the pilot in other locations. Our goal is to gradually have more and more properties of our portfolio certified. Please note that green building certificates were not in focus when our buildings were constructed, and therefore we have to obtain the certificates ourselves.
Another question for Eyal. Will you offer a scrip dividend also this year?
We have a dividend policy to pay out 75% of FFO I per share, so we expect to pay EUR 0.23 per share, which reflects a yield of 4.2%. We will suggest the dividend to the AGM, which takes place in June. As in previous years, we expect to also offer an option to elect the scrip dividend, which has been sought after by our shareholders in the past.
Yes, those were the questions that we received via email. We will now start the open session for Q&A. We would appreciate if you, during that, can ask all your questions at once, and we will answer them one by one. Thank you.
Ladies and gentlemen, if you have a question for our speakers, please dial zero and one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find your question is answered before it is your turn to speak, you can dial zero and two to cancel your question. If you're using speaker equipment today, please lift the handset before making your selection. One moment, please, for the first question. The first question is from Ellis Acklin, First Berlin. Your line is now open.
Yes, good morning, everyone. Thanks for the very detailed presentation. Just one question for now on my side. Do you plan on making a COVID extraordinary provision for this year? If so, is this already factored into your guidance that you just gave? Thank you.
Hi, Ellis. Thank you. Yes, we plan to have an extraordinary provision for this year, which reflects in basically the 60%-70% collection rate, and it is already included in our guidance. Thank you.
The next question is from Manuel Martin, ODDO BHF. Your line is now open.
Thank you. Hello, gentlemen. One question from my side. Could you elaborate a bit on the valuation gains, please? I'm particularly interested in how much euro valuation gains or losses you had in the office business, and how much valuation gains or losses in euro you had in the hotel business. I mean, you already said that EUR 500 million profit comes from GCP in terms of valuation. Maybe you could elaborate on the EUR 309 million remaining in that regard, please.
Hi, Manuel, thanks for the question. The main valuation came from offices which amounted to about EUR 200 million. The overall, except for the residential part, we have about EUR 250 million of revaluation gains, 257 to be accurate. About EUR 200 million in the office. Another EUR 30 million we recorded in the hotel sector. The rest was relatively proportional with the logistics and retail portfolio. Thank you for the question.
The next question is from Bart Gysens, MS. Your line is now open.
Hi. Good morning. Thank you for your presentation. The EPRA, you comply with EPRA best practice recommendations on quite a few metrics. EPRA has now also published best practice recommendations on loan to value ratios. Do you intend to start disclosing LTV on that basis? Have you calculated what your LTV would be on those new EPRA best practice recommendations? Thank you.
Hi, Bart. Thanks for the question. We just noticed, I mean, the publication of this new metrics was just recently published, and we will explore it in detail following our reports. We will continue to report our current LTV metrics. We closely notice that part of the new EPRA calculations, including hybrids as that. As you know, we personally think it's different. We look at it more as an equity component, but we will explore it. We will follow, let's say, the presentation of the LTV as is now, and we'll consider how to present the next EPRA LTV calculation in the future. Thank you.
The next question is from Jonathan Kownator at GS. Your line is now open.
Good morning, and thank you for taking my question. Two questions, if I may. The first one, vacancy in offices is about 10% currently. Can you please let us know where are the highest concentrations and what you're doing to address this, and where do you think this vacancy is going to evolve, shall we say, in 2022? That's the first question, please. Second question, in the guidance, I think you've given already a few assumptions. Can you just please confirm what assumption you're making in terms of the buyback in that guidance? Thank you.
Thank you, Jonathan. About the buyback, I will start with the second part. We assume about half of the remaining program to be completed by the year-end in terms of the guidance. Referring to the office, the distribution is relatively across the portfolio. We are doing a lot of letting activities, which, as we said before, comprises on one hand prolongation of existing tenants to prevent tenants to move out, and on the other hand, new letting activities to bring new tenants in. 2021 already performed better than 2020, and in some areas even better than 2019. We currently all of us feeling the changes in the macroeconomic environment. We hope that this will not make interruption or a significant interruption to our letting activities.
We will continue to update you on a quarterly basis on the development and the like for like in this sector. Thank you.
There are no further questions. I'll hand back to the speakers for closing remarks.
Thank you all for your time to participate in this call and the questions, of course, that you've submitted before and during the call. As always, we remain available for further discussions, and we look forward to meeting many of you in person again at various conferences in the coming weeks. Till then, stay safe and goodbye.
Ladies and gentlemen, thank you for your attendance. This conference has been concluded. You may disconnect.