Good morning, everybody. Thank you for joining us for Aroundtown's first half 2021 results call. You should have received our press release and can view this presentation on Aroundtown's website, either on the home section or under financial reports of the investor relations section. I'm Sylvie Lagies, Aroundtown's Head of Communications and Sustainability. With me today will be CEO, Barak Bar-Hen, CFO, Eyal Ben David, Chief Capital Markets Officer, Oschrie Massatschi, and our Executive Board Member, Frank Roseen. For the duration of the call, all participants will be on a listen-only mode. Following our presentation, you will have the opportunity to ask questions, but please feel free to send us your questions via email also during the presentation. The email address is info@aroundtown.de. With that, I'd like to pass you over to Oschrie Massatschi, who will start presenting you our results.
Many thanks, Sylvie. Good morning, everyone, and welcome to our first half 2021 earnings call for Aroundtown. Once again, the diversification in attractive asset classes in top locations has served us well as a protection during the COVID-19 pandemic. Offices, logistics, and retail properties have nearly reached pre-pandemic collection rates and show good resilience during the latest lockdown periods. The pandemic and the recent lifting of lockdowns have an asymmetric impact on our hotel portfolio, with a good recovery in domestic leisure hotels during the summer holiday season, but demand from domestic business and international travel remain to be low. Hotels depending on business travelers require more reassurance of a safe and controllable environment to rebound, and we will further elaborate later in the presentation. We will also emphasize the main results of our business financially and operationally and highlight the strengths of our diversified portfolio.
On slide four, we start with our business and financial performance highlights of the first half of 2021. The net rental income came in lower at EUR 458 million as we enhanced our disposal activity, and we now start to see the full effect from our significant disposals last year. Our FFO I before COVID-19 adjustments amounts to EUR 247 million. After the impact of the extraordinary provision we put in place for this year, our FFO I amounted to EUR 172 million. The share buyback offset the decrease partially, which resulted in an FFO I per share of EUR 0.15 and in line with our 2021 guidance.
As in the past, we will provide a breakdown of the different FFO metrics later in the presentation. The like-for-like net rental income growth excluding hotels resulted in plus 0.8% for the first half, and including the like-for-like effect of our hotels amounted to a minus 0.7%.
Moving to slide five, we summarize the achievements of our disposal and share buyback programs during the first half of this year. The transaction markets remain competitive also after lockdowns being lifted at the end of Q2, which is reflected by high demand for real assets and very high liquidity in the markets remaining. We therefore continued to identify further mature and non-core assets for sale in our portfolio. In H1 2021, we sold properties in the amount of over EUR 1.1 billion above book value at an average rent multiple of 23 x and a 51% margin over total cost with 3% margin over book value. Continuing to dispose non-core and mature assets above book value well into 2021 is a strong validation of the valuations of our portfolio. 41% of disposals were classified as non-core retail or logistics assets across several non-core locations in Germany.
The majority of disposals, however, were made up of 53% of offices and the remaining 6% were hotel disposals. As demonstrated in 2020 by means of the successful disposal program, we capitalize on significant value creation and recycle the funds to strengthen our balance sheet, repay shorter and more expensive debt, as well as execute accretive share buybacks at significant discount to our EPRA NTA. We continue with our share buyback program for the remainder of the year of up to EUR 500 million announced back in March. 37% of which have been already executed as of August 20th this year. That amounts to approximately EUR 190 million at an average share price of EUR 6.5 and reflects a discount to our EPRA NTA of over 30%.
This share buyback program allows us to reinvest capital from successful disposals into our own portfolio at higher quality with a significant discount to the NTA per share, representing a good alternative in the absence of accretive acquisition targets. Let's continue on slide seven with our operations and the portfolio overview. Our strategy is to focus on our two core markets, Germany and the Netherlands, which make up the lion's share of our asset locations with 85% of our commercial portfolio value. 64% of the portfolio in these two countries is concentrated on the top cities alone, such as Berlin, Munich, Frankfurt, and Amsterdam. Since early days, Aroundtown focused on these two strong EU economies. Both markets better withstand the economic impact of the pandemic and recover from a stronger base compared to most other EU member states.
With a moderate unemployment level due to flexible employment regulations, a strong governmental financial support system, and still low debt levels. They both also hold a triple A sovereign credit rating. Having caught up on the vaccinations in recent months, both countries show high vaccine penetration levels across their populations and below average number of infections per capita across Europe. Therefore, we would expect the economic rebound to be faster and with less negative long-term effects from the pandemic. One of our key competitive strengths has always been our diversified investment strategy into top European locations that we break down on slide eight. This diversification is a combination of strong asset types, key locations, and a healthy tenant structure without any dependency on a single tenant or industry.
These elements of diversification protect us to some degree in volatile times linked to macroeconomic or domestic uncertainties, but also during times of political change. Such events will therefore not have a negative impact on our entire portfolio equally. On the right-hand side of slide eight, you can find the breakdown of the geographic distribution as well as the composition by asset class. The office portfolio remains our dominant asset segment with 51% by value and 66% combined with the residential assets through our proportionate holding in Grand City Properties, which we will start to consolidate from July of this year. The hotel assets, which continue to be negatively affected by domestic business and international travel restrictions, account for 24%.
During H1, we were able to successfully dispose additional non-core retail assets above book value alongside other asset classes and could maintain the exposure of the segment at 7% of the portfolio value. Our intention is to reduce this exposure even further in the coming years. At the same time, the exposure to logistics and industrial assets was reduced to only 3% after successful value creation and selling these assets above their book values. Going forward, this allows us to focus more capacities on our three core asset classes: offices, residentials, and hotels, where we see the greatest value creation potential in the long term. As illustrated on slide nine, we present our tenant diversity with around 3,500 tenants from various industries across property with limited exposure to any single tenant.
In spite of the large disposal volume we achieved since last year, 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. Our overall commercial portfolio amounts to EUR 21 billion with a WALT of 8.9 years. End of H1, the rental yield stood at 4.5% and the vacancy rate at 8.9%, both similar compared to the end of 2020. We continue to work relentlessly on our letting activities in order to reduce vacancies in the coming periods. On slide 10, we reiterate our revisionary upside potential in our existing commercial portfolio. The June 2021 rental income run rate, excluding assets held for sale, amounted to EUR 861 million on an annualized basis.
Assuming no further acquisition and disposals and no changes to today's market rents in the locations of our assets, the gap to market rent results in a 21% rental growth potential, including filling our vacancies. This upside potential also serves us as a strong downside protection from the existing gap to market rent levels and ensures our in-place rents have a strong buffer in case of weakening rents. The long WALT of 8.9 years and current asset valuations of less than half the replacement costs in our locations further ensure stable rental income and valuations in the long term. On slide 11, we illustrate the resilience we continue to see in the top eight German and Amsterdam office markets since Q4 2019.
Just months away from the outbreak of the pandemic, these main metropolitan cities entered the pandemic in a very strong shape, which has mitigated the impact of the pandemic, and we have not experienced signs of material long-term impact by the effects of the pandemic. When comparing Q2 2020 to Q2 2021, we notice a 20% increase in the office take-up since the dip last year. Vacancy levels increased only marginally and remain at record low levels of about 5% on average, compared to 11% just before entering the global financial crisis in 2008. Due to high liquidity levels in the market, stable demand, and continuous undersupply from new developments, prime rents as well as yields even slightly strengthened throughout the pandemic without any significant fluctuation.
We can observe a similar pattern for pre-let ratios of new developments. As shown on slide 12, our office assets represent the largest portion of our group portfolio with 51%. We continue to focus on central locations in top-tier cities of Germany and the Netherlands, such as Berlin, Munich, Frankfurt, Amsterdam or Rotterdam. They alone account for 63% of our office portfolio. Further diversification into additional top-tier cities can be seen on the pie chart. With a WALT of 4.7 years and no significant dependency on any single tenant or location, we continue to maintain a well-diversified and robust tenant structure. Nearly half of the office rent comes from the tenants in the strongest industries such as insurance, banking, governmental, infrastructure, health or energy. Public sector continues to represent by far our largest tenant segment with 29% of the rent.
Some of our top office tenants are well-known names such as the German and Dutch governments, the Bundesbank, Siemens, Deutsche Bahn and many more. We have seen an improvement in the markets since the low levels of H1 last year. The opening up of markets and the recovery of certain industries resulted in a lack of workforce, materials, as well as components. We also experienced a pickup in demand for new lettings after tenants have been very hesitant last year and preferred to prolong existing leases instead of signing new spaces. As the first half of this year was mostly marked by the ongoing lockdowns that started last November, the letting activities remained below pre-pandemic levels.
After the home office regulation has been abolished, we also see employees welcoming the option to go back to the office and employers change their views and preference to bring workforce back to a centralized office. New office tenants expect more flexibility in terms of lease durations. We notice a stronger pickup in demand during summertime as lockdowns have been removed again. Our long-term holding in residential sector through Grand City Properties is reflected on slide 13. The diversification to residential assets in the top German cities plus London continues to be a strong element of our long-term investment strategy. This asset segment has proven to be very resilient throughout the pandemic, whilst capital values further gained in the first half. By the end of Q2, this segment accounted for 15% by value of our group portfolio share.
Aroundtown will start to fully consolidate Grand City Properties as of Q3 this year, which will be illustrated first time in the Q3 financial report. The consolidation creates a stronger position for Aroundtown over a portfolio of the strongest and most resilient real estate class in Europe. The impact on our KPIs and other financial metrics will be immaterial as we continue to include only the proportionate share in our operational results. Grand City and Aroundtown both have a focus on a conservative capital structure and similar leverage levels. The ownership level in Grand City currently stands at over 44%.
Grand City reached a 2% like-for-like rental growth in the first half, while achieving 13% premium to book value on its EUR 300 million strong asset disposals. The value of its portfolio grew by 2% and embeds a high revisionary potential, which can create long-term value with continuous new and relettings.
Berlin saw the abolishment of the highly controversial rental cap last April and gave way to new residential rental growth in the capital. However, rents in all locations with high demand continued to increase due to a shortage of new supply and further regulation tightening, which makes it more difficult to become homeowner. In face of a housing shortage, increased rent levels and low interest environment, we continue to see strong demand for condominiums and in turn, growing capital values for German residential assets across almost all main and secondary cities during the pandemic and lockdowns. I'll now hand you over to Barak, who will continue with the hotel portfolio.
Thanks, Oschrie. On slide 14, we give a summary of the hotel portfolio. The past 18 months have been challenging for hotel operators, but we're convinced of the accretion of our hotel investment in the medium to long term. The portfolio is located across top European cities such as Berlin, London, Paris, Brussels, Frankfurt and many other key cities. We focus on strong geographic diversification that spans across operations and hotel types. The core of our hotel portfolio is 85% of 4-star hotels, which capture the both segments, leisure and business travelers. All our double and triple net leases have fixed plus CPI-linked rents without a variable component, with more than 30 different experienced third-party operators and stable WALT of 17 years. Our largest tenant in hotel portfolio remains Center Parcs with 6% of the group's rental income.
All our parks are open during this summer period and enjoy from the strong demand in the leisure travelers. On slide 15, we highlight the drivers for an asymmetric recovery of the hotel business as there are diverse factors that support specific aspects of the hotel demand from travelers. We're glad to see that the majority of hotels in our portfolio have been open for business since the last lockdowns came to an end mid-June. This has allowed particularly the leisure hotels to capture the high pent-up domestic leisure demand from tourists from summer holiday season. Demand from domestic business and international travel remains very low. Corporates need more clarity in order to adjust their travel policies and pre-bookings. Potential further lockdowns or travel restrictions, such as quarantining, especially with increasing infections rates from virus variants, retain uncertainty in the market.
We expect the demand from this segment to not recover this year, and only partially next year. The first half collection rate of our hotel portfolio came into at 34%, bearing in mind that almost all of the first half of this year was impacted by the lockdowns and high numbers of infection across Europe as the vaccination progress started to pick up speed in late Q2. Looking at the first month after the lockdowns have been removed, we see an improvement in July's collection rate to 45% in comparison to 33% in July last year. Our historically high ratio of domestic travel demand in Germany, the Netherlands, and the U.K. from leisure and business travelers act as a support for the current recovery we see.
Nevertheless, we remain cautious for the second half of this year as we still don't see a significant amount of domestic business and international travelers or many large events being planned yet. Corporate travel will take longer to rebound in significant volume. Moreover, the spike in leisure traveling will most likely level again to some degree after the summer holiday season comes to an end. We estimate that the business travel segment will perform better once the threat of infection can be controlled and people do not fear to undergo quarantine or lengthy waiting periods at airports. As explained in previous calls, we used the time of lockdowns to bring forward refurbishment and repositioning works in several hotels, which were originally planned for the next years.
This asset improvement results in decrease of current rents due to work interruptions, or in some cases, in complete closure of the hotel, but once completed, will lead to a higher return in margin as we improve the quality or increase the lettable space variable of the hotel. In all the works planned, we ensure the flexibility and modularity of the renovated hotels to be used also for alternative purposes such as residential, long-term stay, micro apartments, and more. Oschrie, please continue.
Please move to Slide 16, where we summarize our remaining logistics and retail portfolios. We continue to see a strong transaction market for these asset types as a result of the accelerated transition to stronger e-commerce and essential goods fueled by the pandemic. Whilst we continue to view these assets in general as non-core, we identified further non-core and mature assets within these segments and achieved additional successful asset disposals during the first half. Our updated remaining position of these asset types at the end of the first half stood as follows. The retail portfolio accounts for 7% of the group portfolio value and logistics for 3%, less than half of what it was 15 months earlier. Their WALT were 4.9 years and 5.1 years respectively. The top investment location for both asset classes remains Berlin, with well over 40% of the assets' value in each segment.
Over 40% of the remaining retail assets are essential goods stores, such as supermarkets, pharmacies, or drugstores. They continue to experience high demand even during times of lockdowns. We present on Slide 17 the composition of our development and building rights portfolio. The development segment makes up only 6% of our total assets and is therefore not material on a group level, but implies significant upside potential given the shortage in new developments across many prime locations. The composition is illustrated in the two pie charts on the right-hand side, with Berlin as the one most attractive single location with nearly 50% of the value embedded. In terms of asset type breakdown, also half of this segment are offices, which matches the undersupply of office space in several prime locations, including Berlin, Dresden, and Frankfurt. These three hubs together make up 2/3 of the segment.
In most cases, we aim to sell these building permits. If we see significant yield potential and strong tenants with long-term pre-let agreements, we will also undertake projects ourselves, for which we employ third-party developers, some of which you can find already in the appendix of this presentation. These are long-term projects as the approval process with municipalities can be a cumbersome and slow process in many instances, and we only publish projects with high execution certainties. I will now hand you over to Eyal to present you the financial results.
Thank you, Oschrie. On Slide 19, we present the profit and loss results for the first half of the year.
Our recurring net rental income in H1 resulted in EUR 442 million, a decline of about 11% year-over-year, resulting mainly from the many successful disposals above book value we achieved since then. In this figure, as well as the adjusted EBITDA and FFO, we exclude the impact of the assets that are already marked for sale despite their positive cash flow. Our like-for-like net rental income, excluding hotels, amounted to +0.8% in June. After two additional quarters of lockdowns, the hotel segment pushed down the like-for-like growth to - 0.7% overall year-over-year, of which - 0.2% comes from in-place rents and - 0.5% from occupancy decrease. We evaluated only a quarter of the portfolio during the first six months, for which we recorded a property revaluation and capital gains of over EUR 109 million.
As every year, we evaluate each asset once per year and plan the remainder of the portfolio to be evaluated during the second half of this year. Capital gains came in at EUR 33 million for the first half, fueled by strong disposals above book value. Due to the challenging start of the year, the collection in hotel rents remained low, and we booked an extraordinary provision in the net amount of EUR 75 million for the first six months. Operating expenses came in somehow lower than the comparable period of last year, and in line with the recorded revenues. Administration and other expenses remained stable, while finance expenses decreased substantially due to our debt optimization efforts in the last periods. The deferred taxes decreased significantly from EUR 178 million to just EUR 13 million year-over-year, mainly because of our evaluations have been delayed to H2 2021.
Finally, the net profit for the period amounted to EUR 362 million, generating EUR 0.25 earning per share for the first half. Moving to slide 20, the adjusted EBITDA amounted to EUR 452 million in the first half of this year, down 10% compared to the same period last year. This negative change was driven to a large extent from the successful disposal program, which allows us to recycle capital into new positions with higher upside potential. The adjusted EBITDA calculation is already after excluding EUR 9 million contributions of assets held for sale, therefore referring only to the recurring long-term portfolio. Positive contribution derived from our proportional holding in GCP and other investments, which contributed EUR 83 million in the first six months. Slide 21 provides a detailed view of our funds from operation. Our FFO I amounts to EUR 172 million in H1, or EUR 0.15 per share.
Both figures are in line with our full year 2021 guidance range. The decrease is once again related to our successful disposals, as well as the provision for uncollected rents, which we only partially recorded during the same period of 2020 as the pandemic hit our markets in March 2020 the first time. The FFO I per share before COVID adjustments increased by 5% to EUR 0.21 year-over-year, which emphasize the positive effects of the share buyback program and indicates the performance that can be achieved once the pandemic is under control and the economy rebounds. As a result of further successful disposals in the second quarter, the total profit from disposals in H1 amounted to EUR 376 million. The FFO II therefore increased to EUR 548 million from EUR 340 million 12 months before.
On slide 22, we provide a detailed breakdown of all three EPRA NAV metrics and the change since end of last year. Since December 2020, all three KPIs remained stable on a total level, whereas on a per share level, we saw a small improvement, which are partially an impact of the share buyback program we are executing over the last six months. The EPRA NTA amounted to EUR 11.2 billion or EUR 9.6 per share. The ongoing relative discount of the share price to the EPRA NTA per share in the face of our disposals above book values presents how accretive the ongoing share buyback is to all shareholders. With that now, back to Oschrie to conclude the final part of the presentation.
Thanks, Eyal. Maintaining a healthy capital structure continues to be a priority for us in the long term. Strong fundamentals and conservative financial ratios build the basis for our strategy. Thus, our debt maturity profile on slide 23 shows no major debt expiries coming up until the beginning of 2025, except for one EUR 600 million senior bond expiring in July next year. As a result, our cash cover ratio for the next three years stands at 3 x.
We continue to maintain a moderate LTV level and reduced it further to 33% throughout the first half of this year, whilst keeping our low average cost of debt at 1.4% with an average maturity of 5.8 years and a robust interest cover ratio of 5x , up from 4.5 x 12 months before. We increased the holding of our assets free of any debt to 81%, or EUR 16.1 billion, which provide additional sources of capital for us if required. These conservative financial ratios allow us to maintain a large headroom to all our covenants, which we see crucial during these times of greater uncertainty in the markets. Our strong liquidity position stood at EUR 3.2 billion at the end of Q2, which will allow us to quickly act on attractive external growth opportunities, debt repayments, and further economic challenges if and when they arise.
The deal pipeline is gaining further traction, and we continue to participate in many tender and due diligence processes, but remain cautious and reinvest our capital into accretive acquisition opportunities only when we see sufficient upside potential to the current market. Once again, we continue to reiterate our long-term rating target upgrade to A from currently BBB+, which was reconfirmed by Standard & Poor's last December. We see the consolidation with Grand City Properties as a positive support to our long-term rating in terms of size and asset type. You can find a more comprehensive list of our financial policies in the appendix. In conclusion, we can confirm the guidance provided for the full year 2021. The first half results are in line with our guidance figures presented already at the full year 2020 results, but lays on the lower side due to the significant effect on the hotel sector.
We continue to expect the FFO I for 2021 to be in the range of EUR 340 million-EUR 370 million. As the first half of this year was again marked by lockdowns, which negatively impacted our hotel portfolio, we maintain our moderate guidance view at the hotel industry and our hotel properties performances for the remainder of this year by assuming a collection provision in a net amount of about EUR 120 million. We have successfully completed a share buyback program in the amount of EUR 1 billion last year, and an additional 37% of the ongoing share buyback of up to EUR 500 million until the end of this year. The full effect of the buyback programs on a per share growth level will start to fully reveal only later in the year.
Therefore, we still expect the FFO I per share to be in the range of EUR 0.29-EUR 0.31, up from EUR 0.27 in 2020. As a reminder, this calculation does not include the ongoing buyback program, as we cannot estimate the timing and how much of the EUR 500 million will be bought back eventually or at what average price. Finally, we see our expected 2021 dividends per share in the range of EUR 0.22-EUR 0.24 based on a 75% dividend payout ratio. That concludes our first half 2021 presentation. We regularly update the information in the appendix and, as always, encourage you to take a look. I'll now hand you over to Sylvie, who will lead the Q&A session.
Thank you, Oschrie. Before we invite your direct telephone questions, we would like to answer questions that we have received by email prior to this call. For simplicity reasons, we have taken liberty to group similar questions in order to answer as many questions as possible. Allow me now to read out these questions. First question: How did the office market in Germany and the Netherlands develop year to date? Do you see signs of recovery? What can we expect going forward?
The economies of Germany and the Netherlands are experiencing a partial recovery after the demand shock last year. In some industries, the recovery resulted in a lack of workforce, materials, and components. Market expectations also guide for good GDP recovery for the next quarters. We experienced a similar development in terms of new lettings with a trough in Q2 and Q3 of last year, which was significantly impacted by the outbreak of the pandemic and the related lockdown. We started to see a slight pickup of new lettings, but these are still below pre-pandemic levels. The demand for letting is picking up, supported by pent-up demand from tenants who decided last year to postpone letting decisions. We see the impact from home office reverting after the lockdowns were lifted with corporates and much of the workforce welcoming to go back to the office after long lockdowns.
Prospective tenants are looking to rent new spaces for a shorter period of three to five years, compared to five years and longer before the pandemic. We managed to stabilize our vacancy rates with office vacancies slightly decreasing to 11.2% in June 2021, compared to 11.3% in March 2021. We signed in the first half this year new lettings for 90,000 sq m at an average rent of EUR 20 per sq m, which is 1/3 more space assigned in comparison to the first half of 2020. Prolongations in the first half 2021 were similar to the first half 2020. We prolonged 110,000 sq m at an average rent of EUR 14 per sq m. Our new lettings lease lengths are around seven years, while prolongations are at five years.
It is difficult to assess the future developments, but so far it looks like the momentum is positive and we hope it won't be interrupted by another lockdown or other virus variant effects.
The longer the pandemic and social distance will remain, the higher the challenge will be. We get confidence from the top location and high-quality office portfolio, which is focused on the strongest and most resilient economies of Europe, paired with relatively low rent and high replacement costs in comparison to other European markets, which leads to high demand and low supply.
Next question. Can you please provide an update on the hotel market? How is the recovery progressing, and how do you assess it will develop?
The hospitality industry remains to be highly impacted by the continued effect of the pandemic. The impact is very asymmetric, with leisure travel recovering fast this summer due to the holiday season, and leisure locations perform very well. Whereas demand from business travel, conferences, and international travel did not recover. As we experienced last year summer, we do experience a recovery of domestic leisure travel once the lockdown restrictions have been lifted. Leisure hotels generally have simple demand drivers, often driven by specific on-site amenities or access to public amenities such as the beach or mountains. As these kinds of demand drivers are quite straightforward, the easing of restrictions has resulted in a fast rebound in demand for those hotels in the summer holidays.
Furthermore, as many of these locations depend more on domestic travelers and are usually accessible by car, restrictions related to international air travel do not have the same impact as with other types of hotels. Booking is starting to pick up once date has been communicated as to when lockdown restrictions were lifted, indicating a high pent-up demand. As the recovery is currently progressing in leisure travel, there is still a lot of progress to make to get back to satisfactory recovery. It is also important that the underlying drivers of demand are available and unrestricted for the hospitality industry to recover, and it is hard to estimate the impact of another infection wave. It is not sufficient for the main accommodation to be allowed to open.
Amenities such as cultural events and fairs, spa, restaurants, and cultural venues need to be available in order to generate demand for hotel bookings as well. The pandemic has changed the consumer behavior. Less hotel bookings are made in advance but postponed to shortly before the actual stay. Therefore, there is still low visibility on demand in the next month. Another even more important factor for our portfolio recovery is the demand from business and international travel, which are still in a very low level. Many companies still have policies in place aimed at protecting their employees and thus reduce travel to a minimum. International leisure and business travel will only start to recover once uncertainties about further lockdown or other restrictions, such as quarantining after flight, will be lifted for travelers and corporates to start planning.
We do see slight increase in inquiries regarding corporate agreements, which indicates that the underlying demand for business travel is there, but the uncertainties limit companies from actually committing to travel in the current stage. Conferences and corporate events are slowly returning, but these are mostly in reduced size or with hybrid elements, as the uncertainties regarding future restrictions make it difficult for such events to be organized to the same extent as the pre-pandemic. City hotels, on the other hand, are dependent on a more diverse set of drivers, such as social venues, conferences, events, and the like, which create a vibrant urban environment that attracts national and international tourism, as well as demand from business travel. It takes longer for such environment to recover in comparison to leisure and international travel restrictions have much more significant impact. As a result, these hotels did not recover yet.
Currently, it is hard to predict what are the impact of another infection wave a new virus variants will have in the future, and whether restrictions may come back and to what extent. Therefore, we remain cautious on the recovery and expect 2021 to be weaker than 2020 as the strong first months of 2020 prior to the pandemic breakout are missing in 2021.
Next question. When do you expect your collection rates to recover?
As explained, the hotels market still didn't recover. Whereas leisure tourism has come back fast, the market is still lacking demand from business travel, corporate events, conferences, and international travel. City hotels benefit greatly from conferences and events which take place in the city, and the summer is anyway always a weak season for business travel and conferences. Business travel is not depending on a personal decision, but on a corporate travel policies and corporate travel and event planning. The positive impact of the holiday season can be seen in the increase of our collection rate from 34% in H1 to 45% in July. It is hard for us to estimate the future collection rate, as it is hard to estimate hotel performance after the holiday season due to the ongoing uncertainties about virus variants and increase in infection rates.
We expect business and international travel not to recover this year and only partially next year, which will weigh on the performance of city and business hotels. Fall and winter months are usually dominated by business travel, conferences, and events. We don't expect this demand as long as infection rates increase. We did expect better performance in 2021 after the vaccination levels increased. So far, we prefer to stay conservative, and we expect extraordinary rent provision in the 2021 guidance to be on the higher level than initially assumed beginning of this year, at about EUR 120 million net. Nevertheless, the guidance stays unchanged, as the higher expected provisions are so far offset with positive effects from synergies with TLG, higher efficiencies, and more.
Next question. Will you continue the level of disposal activity? What is your disposals pipeline?
We disposed in the first half approximately EUR 1.1 billion of disposal for all asset types, offices, retail, logistics, as well as hotels at a disposal margin of 3% above book value and 51% above total cost, including CapEx. As a reminder, held for sale properties and completed disposal are excluded from our portfolio overview, recurring net rent, adjusted EBITDA, and FFO as their impact is not recurring. We will continue to dispose non-core and mature properties when we get attractive offers, which factor in large portions of the future potential, and we can thus secure now. We have an advanced disposal pipeline of over EUR 1 billion. The disposal proceeds are utilized to a large extent for debt repayments and for share buybacks, which increases FFO and shareholder value on a per share level.
The disposals are carried out above book value, and our share is traded at a significant discount to book value, and therefore, we are able to benefit from this discrepancy. We continue to extract rights and rents from our existing portfolio and believe that such efforts will be seen in the next years, and in parallel, we monitor the markets for attractive deals.
Next question. Your growth from acquisitions is muted since the outbreak of the pandemic. When do you expect to restart your external growth? Would you consider further M&A instead, or in addition to property acquisitions?
We focus on acquiring properties below market prices, which needs strong expertise in operational management to lift the upside potential. These opportunities have become rare as the transaction markets are very competitive. The pandemic and its related stimulus packages from governments and central banks resulted in a hike in demand, and consequently, prices, leaving less room for upside and less downside protection. Nevertheless, we are working on several growth opportunities. Our current portfolio holds a large internal upside potential from rent and occupancy increase and development value. The rent revisionary upside is 21%. Lifting this potential will lead to significant FFO and value increase in the future. Although our property acquisition activity has reduced, we continue to scan the markets and thoroughly check for acquisition opportunities. We are well prepared to capture opportunities when they arise. 2020 was marked by a very large portfolio acquisition through the TLG merger.
The merger with TLG added many strong properties to our portfolio, and the non-core properties, which comprise mainly retail, are being successfully disposed above book value. We are further increasing our portfolio quality and are better positioned for future and further upside. In addition, we continue to execute our high-quality development pipeline and have several projects running in parallel, which will create future cash flows once construction and refurbishments are finalized and the properties are back on the market. Further, recently our offer for Globalworth ended, and our joint venture with CPI now holds together over 60% in Globalworth. This strong control position opened various options for us, and we will explore opportunities going forward to create more value and synergies. With TLG and Globalworth, we closed two M&As in the last one and a half years.
We look at potential M&As like any other property acquisition, which needs to be accretive, so a strong and high quality portfolio embedding a significant upside potential at the right pricing and deal structure. In addition, we are executing share buyback programs, and since we started the first program last year, we have acquired over EUR 1 billion in value of our shares at significant discounts. The share buyback program is a reinvestment into our portfolio at a very accretive price and as an alternative to acquisitions for achieving growth on a per share basis.
Next question. How much of the current share buyback program has been executed, and will you do more buybacks after the current program is over? What is your intention to keep the shares in treasury?
Our current program is up to EUR 500 million, of which around 37% has been bought back. With our strong cash balance and our shareholders voted for an increase of further potential buyback in the last AGM, we could execute further share buybacks. First, we will still have to complete the current program and will evaluate the situation afterwards. At this stage, we intend to keep our treasury shares as is and not cancel them, which can provide us flexibility in the future.
Are there any updates on your development portfolio?
We present in the appendix of our presentation several projects and their status. We have several hotels under full refurbishment as we use the lockdown period to bring forward planned CapEx works. We want to use the time effectively to bring the hotels back to the market in their upgraded state earlier than the originally planned pre-pandemic. We also have some office developments ongoing. For example, the 25,000 sq m Dresden office next to the historic palace and opera house, for which pre-letting is improving, and it is now at 40%, with advanced negotiation ongoing for a further 50%. The Dresden office market is performing very well, with vacant office space now in its historically lowest and rents at the highest. We are thus confident to fill up the remaining space, same as with the NEO office asset, which was completed end of December and which is now basically fully let.
We obtained the full building permit for 37,000 sq m office property in Berlin Mediaspree. Our strategy is to obtain the building rights and sell them, or on selective basis in top location at the highest pre-let ratio, we consider to construct and hold the properties. We are exploring how the pre-let ratio would develop before making a decision. The Mediaspree location is very strong, with many other office properties in the vicinity rented to top tenants such as the headquarter of Zalando. We obtained a pre-permit for mixed use office, resi, retail, property, and are currently working on obtaining the full building permit, hopefully next year. Obtaining permits is a lengthy process, and it is dependent on the municipalities, and it is fully not in our control.
Moreover, the ability to optimize and maximize building rights is a competitive advantage and a significant value creation driver.
Inflation rates have been increasing significantly. Do you see any impact on your operations, and how do you assess the impact if interest rates will increase?
Inflation rates have been increasing as expected due to base effects. e.g., sales taxes were temporarily lower last year, and the demand shock last year resulted in temporarily lower prices. Also, currently, there is a supply shock after the market reopened and as demand recovered fast. Market expectations are indicating the inflation hike to be short term and will normalize when these effects vanish. We do see a certain cost inflation impact on our operation, some of which are temporary and relate mainly to the cost of materials and CapEx, and some are more long term, such are personal expense. We see salaries increasing in the last periods across all functions and departments in our organization, and we expect these levels to remain. The operations cost inflation is offset by increasing efficiencies and from extracting economies of scale.
On the income side, we are protected as the majority of our leases are linked to the CPI and, therefore, we expect higher rents in case CPI increases. Regarding interest rates, considering that several economies within the EU are still struggling with the pandemic impacts, markets do not expect the ECB to stop their easing programs anytime soon. Either way, interest rates hikes will probably be gradually.
Next question. As your portfolio is mainly made up of existing assets and less new builds, how much CapEx will be needed to upgrade your portfolio in the future to comply with the energy requirements? Our CapEx investments are targeted at tenant fit-out, space expansion, and maintaining and/or upgrading the asset quality, which includes improving the environmental footprint through insulation, heating systems, et cetera. Our ongoing CapEx spendings are including many of these upgrades. Naturally, the market and with the tenant requirements are changing, and we are adapting accordingly. We see, especially in the Netherlands, an increasing demand from existing and prospective tenants for greener assets, mainly focused on buildings with a green building certification. We expect this demand will translate into higher rental prices. The CapEx spending for the green upgrade could be covered by higher rent, higher demand for those assets, which result in lower vacancies.
We don't see overall demand from tenants in Germany on greener leases or buildings yet. We expect the demand will come. We just started our pilot project in the Netherlands, where we scanned 1/3 of our office properties for potential green building certifications and identified so far around half of the scanned assets, which can be certified soon. Our goal is to have most of our office portfolio in the Netherlands certified by 2025. We will utilize the experience we will gather from this pilot project to apply to the rest of our portfolio. In addition to our ongoing CapEx spending, we have a target to increase our property's energy efficiency and the generation and storage of renewable energy.
In practice, this means installing solar panels, increasing energy utilization through CHP and CCHP, electric vehicles charging stations, replacing inefficient fossil fuel heating systems, switching to energy providers who provide climate neutral energy, and engaging tenants for more conscious energy, water, and waste usage and energy saving methods. The Energy Investment Program will be developed gradually and will both enable us to significantly improve the energy efficiency and as a future value driver. Please see more details in our presentation in the appendix, as well as in our sustainability reporting available on our website. Next question. Your rent like-for-like, excluding hotels, was 0.8%. What is the breakdown of the 0.8% in terms of in-place rent and occupancy? What is the reason for the flat results, and what do you expect in the coming periods?
Excluding the impact of hotels, the rent like-for-like increase of 0.8% was driven by an increase in in-place rents of 1.4% and supported by new lettings as well as prolongations at above average rents and occupancy. Occupancy decreased by 0.6% on the like-for-like basis. The largest increase was in the office portfolio and were in Amsterdam, Dresden, Berlin, Hamburg, Leipzig and Utrecht. The hotel portfolio like-for-like was negative at -3.4%, which brought the average like-for-like for the total portfolio to a -0.7%. The negative hotels like-for-like is reflecting the large impact of the pandemic on this asset type, and is the result of a temporarily reduced rents in certain situations and on a selective basis. Although the results are below our average in the recent years, they do reflect the stability and strength of our portfolio and our platform in the currently challenging environment.
Excluding the hotel portfolio, we continue to see positive like-for-like performance increase in our rents and maintain stable occupancy rates. The letting process is longer since the outbreak of the pandemic, which extends the time needed to increase occupancy and capture the revisioning potential.
Next question. Can you please elaborate more on your revaluation gains of the period, and what do you expect going forward?
In the first half of 2021, we have revalued a relatively small amount of the portfolio, approximately one quarter. As we have mentioned in our previous call, we plan to carry out evaluation of a larger portion of our portfolio in the second half of 2021, when we expect to have a better visibility on the market and our portfolio after the relief in the lockdowns and restrictions. We recorded in the first six months of 2021, EUR 100 million of revaluation and capital gains equal to over 0.5% like-for-like on the total portfolio, including the portfolio which was not valued yet. In H2 2021, we expect to continue and see stability in our valuations in line with our performance in the last quarters.
Those were the questions that we received prior to this call. We can now start the open session for your questions. We would appreciate if you can ask all your questions at once, and we will answer them one by one.
Thank you. We will now begin the question-and-answer session via the telephone line. 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 are using speaker equipment today, please lift the handset before making your selection. One moment please for the first question. The first question we've received is from Manuel Martin, ODDO BHF. Your line is now open. Please go ahead.
Good morning, gentlemen. Three questions from my side. The first question is, again, on hotels. Maybe you could give us some flavor on your ongoing rent negotiations. How are they going? That would be question number one. Question number two, also in the hotel segment. I saw in the presentation that you assume to reach pre-pandemic levels in Germany in 2023 and in U.K. in 2024. Maybe you can elaborate a bit why U.K. might come later. Question number three, it's on the upcoming consolidation of Grand City. Is there any beneficial effects for Aroundtown because of that? What was the reason of the consolidation? Thank you.
Hi, Manuel. Thank you for your question. Referring to the hotels, on the market side and the recovery, we follow market researchers and see also how the industry is behaving. Based on these market researchers, it looks like that the recovery is planned to pre-pandemic level in 2023 in Germany and in the U.K. in 2024. Referring to rent negotiations with hotels, our leases are fixed long-term with steady increases. There are not heavy discussions on what should be the rent levels. We are in constant discussion and communication with the tenants about their operation and their ability to pay rent. We follow the performance of these hotels. We make sure that we do the right thing.
On the other hand, we are looking into use these times to maybe make conversions or other types of uses for the properties that will give the best use. Referring to the consolidation with GCP. There were several events in the last periods that eventually our position in Grand City increased to nearly 45%. It's mainly coming from us choosing all the time to scrip dividends and increase our relative position. Grand City in parallel did a share buyback and twin share buyback, which also we didn't participate in, also our position increased. It reached to a point that we feel, or our board feel that we have the majority in almost every shareholder meetings, which lead, according to IFRS standards, to a de facto control, which will then lead to a technical consolidation of Grand City in our books.
We see this consolidation as a good thing, as we will present Grand City books and investments in the residential portfolio as part of our investment property, and not as part of our JV investments. Thank you for the question.
The next question is from Ben Richford, Societe Generale. Your line is open, please, go ahead.
Great. Thank you. Just a quick follow-up on the consolidation. I know you said in the initial notes that it was immaterial, but I'm not sure you fully answered the question just previously around any beneficial effects. Based on the H1 numbers, what would be the difference on the net assets of the company, please? Second question, just a little bit more on Globalworth, what your intentions are there now that you've got over 50% of the voting rights of that company, and there's a major shareholder who has refused to tender their shares to you. Just a third question. You base your share buybacks on NTA, which I think there's a lot of logic to choosing a measure and being very clear about that to drive your capital allocation, which has been impressive.
I just wondered to what extent you debate whether NTA is the right measure, whether you should use an adjusted number, maybe there's a full amount of transfer tax optimization in there, or whether you consider NDV, which is another widely used measure, as more appropriate, which would give you a lower benchmark for making buybacks.
Thank you, Ben, for your questions. In terms of the consolidation in Grand City, we also announced it as part of the announcement on the consolidation. If we look at the NAV post-consolidation, we don't expect any material change. On the FFO side, we already include our group share in the FFO of Grand City. Also on the FFO side, we don't expect any material change, and that's why we called to the consolidation more a technical consolidation. We do see a positive side to have the portfolio in our books and present it in more details. On the FFO level, the FFO already currently in the guidance presents our group share in GCP's FFO. On Globalworth, we just completed last month, as you mentioned, the offer over Globalworth, together with our partner, CPI.
We are now starting discussions with Globalworth management and together with CPI to explore potential synergies and cooperations between the groups. We will have more data on such achievements later in the year because these discussions just started. We see the full portfolio of Globalworth as complementary to ours. We like the properties and their main locations and their tenants, so it give us an additional diversification. The relationship with the third shareholder that didn't tender his shares is good. We are in contact. We see many things eye to eye, and he is part of the consortium that big shareholders of the company, of Globalworth, and I can say that so far the relationship is good, and it seems that he see what we plan in a good manner. Referring to the NTA.
Look, I think at least from our perspective, the NTA is more or less market standard for replacing the EPRA NAV, which was the main EPRA metric that the market used. I agree that there could be arguments right or left on, let's say, how and when you should use it. I think that we build up our NTA very clearly. We exclude from all the deferred taxes that were added, all the hold-for-sale portfolio. We exclude the developments. We exclude the non-core portfolio, mainly retail. We think that our NTA really reflects the former NAV on one side. In terms of the addition on the purchaser cost, we only added back 40%, which we feel that from a structure perspective we can use, and 60% we didn't use at all.
We feel very comfortable with the way we present it, and we actually see this as the right pro metric to compare. Thank you for your question.
The next question is from Kai Klose, Berenberg. Please go ahead. Your line is now open.
Yes. Good morning, everyone. May I can ask three questions? The first one, could you indicate how much of last year's rent reliefs you have granted to tenants have been collected since then, or until now? The second question would be on the NEO office project you mentioned, the one in Dresden. Has it now been completed? Could you indicate what was the yield on cost, which has been achieved there? Last question would be on page 59 of the presentation, on the Hafenstrasse property in Frankfurt. You gave some details regarding the CapEx you're going to spend there for repositioning. Could you indicate how much has been spent or might be spent this year, and how talks with potential tenants have been progressing so far? Maybe a bit of a timeline until when we can get this project being completed. Thanks.
Hi, Kai. Good morning. Thank you for your questions. In terms of the rent relief that we gave last year, we did collect some, but very minor part. As you remember, this year also most of H1 was under lockdown in most of the areas where our property is located. We didn't feel that it's the right time now to push for collecting rents that we gave a relief from last year. I think that we will need to see how the market evolve in the next quarters and if there will be an opportunity, for sure we will collect more than what we did so far.
7%.
About the NEO portfolio. The yield on cost so far is 7%. I will let Barak answer about Hafenstrasse.
Regarding Hafenstrasse, the situation is that we are getting the permits for additional square meters into the building. In general, we're getting more net lettable area of approximately 3,000 sq m. That is coming hopefully in the next weeks. In addition to that, we're in a pre-let situation, at the end of the day, if we start the project, we'll start it also with, let's say, only with a pre-let ratio that will satisfy our strategy. Hopefully we can start it very soon. I'm sure that you see comparables in the market. Previous week, we saw sales there for approximately 16,000 sq m. We're very positive about the project.
Thank you for your questions, Kai.
The next question is from Jonathan Kownator, Goldman Sachs. Your line is open. Please go ahead.
Good morning. Thank you for taking my questions. I have four, if I may. The first one on vacancy and vacancy reduction. Can you confirm if your development projects are included in the vacancy or not? Where are the main points of vacancy today in your portfolio and how you're planning to reduce those? That's the first question. The second question, can you comment on the impact from Globalworth acquisition on your financials, and is that included in your guidance? The third question is third and fourth on disposals and capital recycling. Apologies if I missed it. Can you give us a few thoughts on further disposals in your portfolio in terms of volumes?
Also on capital recycling, you have now sold over EUR 1 billion this year already, and share buybacks are only less than EUR 200 million at this stage. The question is, are you planning to distribute back capital in another form than share buyback can be more efficient in terms of distributing proceeds back from acquisitions, or do you intend to keep most proceeds for deleveraging? Thank you.
Thank you, Jonathan, for your questions. The development projects are not part of the portfolio and are not part of the vacancy. The development projects, some of them are only building rights, it's not really that you can measure the vacancy on that items. Every time a portfolio or the project is being built, it enter into the portfolio and being calculated as part of the vacancy and all the KPIs. Our vacancies in the investment portfolio, which is presented, is allocated across all the portfolio with no specific concentration. We are working together. Our teams are working day and night to work on reletting. I think we presented reletting and prolongation this H1 much better than what we did in H1 2020. We have nice negotiations on our books as well. We need to see how and when exactly these negotiations are going to be completed.
As we said, it takes a bit more time now than before. Tenants are taking a bit more time to decide. There are not so fast increase in spaces. Prolongations are now for a bit shorter than what they were before. We will keep you updated on a quarterly basis about the developments of reducing the vacancies and the reletting. In terms of the impact of Globalworth, what we included so far, referring to Globalworth in our guidance, is just the dividend that they are distributing. They are distributing 90% from their EPRA earnings. This is what is included in the guidance. Referring to disposal volumes, going forward, we have negotiations for about EUR 1 billion of properties. Currently in the held for sale, we have about EUR 600 million that we expect to dispose in the next 12 months. There are always discussions.
Let's see what actually is going to be finalized, and for sure, we will update in the next reports. Referring to the disposal of the EUR 1 billion, yeah, we so far did EUR 200 million of buybacks out of a EUR 500 million program, so there are still EUR 300 million to complete. In addition to that, we are working on repayment of debts, especially bank debts. For all the surplus that will come on top, we need to decide when the time comes. Maybe we enlarge the program of the buyback. Maybe some acquisition will kick in. We feel very comfortable that in these times, we are sitting on cash and that we have strong liquidity and waiting for additional opportunities to come. Thank you for your questions.
Thank you. There are no further questions, so I would like to hand back to you.
Thank you all for your time to participate in this call and the many questions you have submitted via email and during this call. As always, we are available for further discussions and look forward to speaking to all of you in person as soon as feasible. Till then, stay safe and take care.