Dear ladies and gentlemen, welcome to the Aroundtown SA Full Year 2020 Results Presentation. At our customers' request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulty hearing the conference, please press star key, followed by zero on your telephone for operator assistance. May I now hand you over to Sylvie Lagies, Head of Sustainability, who will lead you through this conference. Please go ahead, madam.
Good morning, everybody. Thank you for joining us for Aroundtown's Full Year 2020 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 Sustainability. With me today will be co-CEO and COO, Barak Bar-Hen, Chief Financial Officer, 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. 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 our results.
Many thanks, Sylvie. Good morning, everyone, and welcome to our full year 2020 earnings call for Aroundtown. 2020 was a very challenging year, impacted by the outbreak of the COVID-19 pandemic and its implications. The year started with significant uncertainties, but continued with improved optimism once several vaccinations were developed. We learned that over 75% of our portfolio is resilient to the effects of the pandemic, and the main impacts are on our hotel portfolio. But more on this later. We continue to see a strong demand for real estate investments in our core markets, and we are convinced that our existing business model of repositioning value-add assets in top locations remains the right strategy to create shareholder value in the long term.
During the following presentation, we will highlight the key achievements of our business, financially and operationally, in light of the ongoing pandemic, and how our committed portfolio management provides resilience in the face of the ongoing challenges during this pandemic. Before we start with our presentation, I would like to update you that this morning, our board of directors resolved to launch an additional share buyback program with a volume of up to EUR 500 million. We are launching the program on the back of a strong equity base, which was further supported by positive portfolio revaluations. In addition, in 2021, we continued to dispose properties at a premium to book value, while our share price remains to be traded at a significant discount to NAV.
We continue to see a share, a competitive transaction market with increasing pricing and compressing yields, while our share is traded at an FFO yield of around 5% to our 2021 guidance, including the impact on our hotel portfolio. Once the restrictions will be lifted and hotels will be open for all travelers, we expect to see a significant steep increase in the FFO, and accordingly in the yields. Therefore, we see the share buyback as an accretive reinvestment into our portfolio at a very attractive pricing, which is an alternative to acquisitions. The share buyback will create long-term accretive growth on all per share KPIs and enables us to benefit from the mispricing of our share. Let's begin on slide four, where we summarize our financial performance highlights for the full year 2020.
Starting with our net rental income, this resulted in EUR 1 billion, an increase of 31% year-over-year. Our FFO 1 decreased to EUR 358 million, and was largely impacted by the extraordinary hotel rent provision we applied in 2020. Last year, this KPI was defined as FFO 1 after perpetuals and COVID adjusted. Respectively, the FFO 1 per share came in 29% lower year-over-year, at EUR 0.27 per share, in line with our 2020 guidance. We will provide you a breakdown of the different FFO metrics later in the presentation. Please note, the dividend payout ratio in 2020 of 65% of FFO 1 per share before perpetuals, amounted to EUR 0.22, which reflects a yield of 3.5%.
From 2021 onwards, the dividend payout ratio is set to 75% of FFO 1 per share. For the first time, we also report on the new EPRA NAV metrics. The EPRA NTA for 2020 stood at EUR 11.2 billion, or EUR 9.5 per share. A per share growth of 10% year-over-year. More details will follow later in the presentation. I will speak shortly also in more detail about our successful revaluations and capital gains. But you can see here already that we had another successful year with like-for-like revaluation gains of 3.9% year-over-year, amounting to EUR 769 million. On slide five, we present you a glance of the business highlights of 2020.
Excluding EUR 830 million of assets held for sale, the group portfolio stood at EUR 24.5 billion at the end of 2020. Two-thirds of that value is offices and residential assets alone. Both of these segments were very limited, impacted by the pandemic. We focused last year on strengthening our financial and liquidity position, and increased our cash and liquid assets positions up to EUR 3.3 billion. At the same time, we kept our loan-to-value low at 34%, and further reduced our average cost of debt to currently 1.4%, after we issued our 0% coupon bond. Whilst maintaining a long debt maturity of 6.1 years and 76% of investment properties by rent remained unencumbered.
Our capital allocation last year was highlighted by our significant debt repayments and share buyback programs, funded through successful disposals and very favorable refinancing terms. We will go into more details of each KPI as we go through the presentation. Moving to slide six, we see an overview of our successful disposal program in 2020. Even during the lockdown and challenging market environments in 2020, we managed to execute disposals of non-core and mature assets in an amount of over EUR 2.7 billion, of which EUR 2.3 billion have been completed during 2020. The disposals were done with a 3% margin over book value, a rent multiple of 19x, and 33% margin over total costs, including CapEx.
As you can see from the charts, the disposals were made up of 57% retail and wholesale, 35% office, and the remaining 8%, a mix of hotel and development rights. As we experienced during 2020, also in 2021, we expect to see attractive selling opportunities above book value for additional non-core and mature assets, capitalizing on significant value creation, and recycling the freed up funds into the share buybacks at a steep discount to NAV. Support further debt repayments, strengthen our balance sheet, as well as accretive acquisitions. The disposals of non-core properties enhances our overall portfolio quality and maintains our focus on strong assets, desired asset types in top-tier locations. Year to date, the total signed disposals stands at around EUR 200 million.
These assets were sold across several deals above book value, and we are in further advanced negotiations for additional disposals. These successful disposals reiterate once again, the sound valuations of our portfolio with even further upside potential to be unlocked in the future. The proceeds of our disposals have benefited several strategic decisions, as can be seen on slide seven. One key element was a share buyback program from last year, that amounted to EUR 1 billion at an average purchase price of EUR 4.9 per share. That's a discount to the year-end EPRA net tangible asset of nearly 50%.
The accretive value creation of the share buyback amounted to EUR 0.70 per share, and together with the profits and other items, resulted in an EPRA NTA per share of EUR 9.5 for December 2020, in comparison to EUR 8.6 per share in December 2019. Including dividends, the EPRA NTA amounted to EUR 9.6 per share, which is a shareholder return of 12%. Moreover, we used the proceeds from disposals to repay over EUR 1.5 billion of debt during the period, and the remaining proceeds further strengthen our liquidity profile for future acquisition opportunities. As mentioned earlier, we initiated today an additional share buyback program in the amount of EUR 500 million, in line with the former shareholders' approval. The buyback will further support our 2021 per share KPIs, especially the EPRA NTA and FFO 1 per share.
The new share buyback program is not included in the 2021 guidance. Some key ESG achievements of 2020 are summarized on slide eight. In an effort to emphasize the importance of ESG for Aroundtown, we made it a goal for our management, the board of directors, as well as each employee within the company, to create a strong sensitivity towards our ESG position within the real estate universe. Our ambition is to continue relentlessly to be ranked amongst the top companies within our industry. We will spend later more time going into details of what our main targets are and how we want to achieve them. In the next section, Barak will give you an update of our stable operations and the portfolio development during 2020.
... Thanks, Oschrie. Moving on to operation and the portfolio overview. Please turn to slide 10. Our two core markets, Germany and the Netherlands, continue to make up the lion's share, with 86% of our commercial portfolio and 85%, including our proportional residential portfolio, to our 41% stake in the Grand City Properties. Both markets are very strong microeconomic sectors, and we continue to focus our external growth in the metropolitan regions of these triple A-rated markets. Berlin, Munich, Frankfurt, and Amsterdam make up 60% of the office portfolio value, with high asset quality and under supply in those regions. Our diversified investment strategy into top European locations has always been one of the competitive advantages, especially in the combination with a strong diversification across asset types, micro locations, and tenant mix.
On the right-hand side of slide 11, you can see the breakdown of the geographic distribution, as well as the composition by asset class, of which the office portfolio is our largest asset segment, making up 51% by value and 65% combined with the residential assets we are holding in GCP. The hotel properties, which are heavily affected by the lockdowns, account for 24%. Our high diversification elements protect us significantly against macroeconomic or domestic uncertainties, which in turn will not have a negative impact on our complete portfolio. In 2020, in line with our view to dispose non-strategic assets, we were able to reduce our retail exposures from over 9% of the portfolio value to 7%, through many successful disposal above book value.
At the same time, the exposure to wholesale assets was significantly reduced after successful value creation and selling these assets above their book value. This allows us now to focus our capacities on our three core asset classes: office, hotel, and residential. They will remain the key growth drivers in our target for future acquisitions when market transactions will meet again our acquisition criteria, while strengthening our dominant position in the top-tier cities of Germany and the Netherlands. As presented on slide 12, our tenant base includes more than 4,000 tenants across our properties, with limited exposure to any single tenant. The rental income of our largest 10 tenants accounts for 18% of our total rental income. Our overall portfolio amounted to EUR 21.2 billion, not including assets held for sale in the amount of EUR 830 million.
The rental yield stood at 4.6%, down 30 basis points from last year. Our vacancy rate moved up slightly to 8.9%, predominantly due to the high volume of disposals with low vacancy levels. We work relentlessly on our lettings and believe to reduce vacancies in the coming period. The collection rates for all our asset types, except hotel, recovered fast after the Q2 lockdown was lifted and basically leveled off at the pre-pandemic level. In our view, our asset and location diversification are translated into our conservative valuations, which are highlighted on the next slide. Moving on to slide 13. Although we saw last year stable rental levels across all asset classes, except for hotels, we also noticed a slowing number of new lettings. Our letting activities continued in full force during the lockdown.
At the beginning of the pandemic, we felt a natural slowdown in take-up, which was also reflected in tenants hesitating to increase their spaces. So our team placed an extra effort on our presentation activities. Over the recent months, however, we noticed in the market an increased demand for spaces and have been approached by potential new and existing tenants who returned to their expansion plans, which we see as a good sign going forward. Our like-for-like net rental income, excluding hotels, amounted to 1.3% for 2020, coming predominantly from an increase in in-place rents. However, our support to our hotel tenants dragged down the overall 2020 like-for-like growth to 0.2%, of which 0.4% come from in-place rents and -0.2% from occupancy decrease. Oschrie, please continue.
Thanks, Barak. Turning to slide 14, we highlight our healthy portfolio valuations. The commercial portfolio like-for-like revaluation gains, excluding hotels, amounted to 7.2%. Including hotels, the like-for-like revaluations came in at 3.9% increase and reflects a total revaluation and capital gains of EUR 769 million, which supported the EPRA NTA growth to EUR 11.2 billion. As highlighted before, the like-for-like revaluation and capital gains in our residential segment through Grand City Properties amounted to over 4%, thanks to the resilience and high demand of this asset class, which contributes to our equity and investment balance as a proportion to our holding... A key to our portfolio value uplift, even in times of uncertainty, is the multiple layers of diversification across our portfolio.
The demand for real estate in top locations remains, remained high during 2020, and we have been able to further improve our portfolio through operational efforts and the strengthening of our fundamentals. Our successful disposals worth over EUR 2.7 billion in 2020, above book value, are a testimony to the recoverability of our assets and fair assessment through external valuators. On slide 15, we want to highlight our reversionary upside potential in our existing commercial portfolio. Now, during the current market conditions, it might not be the optimum time to extract this reversionary potential. However, having the significant cushion serves us as a strong downside protection. Our December 2020 rental income run rate amounts to EUR 883 million on an annualized basis. Let's assume we freeze today's market rents and the locations of our assets with similar asset quality.
The gap to market rent results in a 23% rental growth potential, including filling our vacancies. The majority of that potential is recognized in our office portfolio. Our December 2020 development rights and projects, valued at EUR 1.9 billion, have not been included in this reversionary potential and would add further growth opportunities, given the low speculative volume of new developments we see in our key markets. One should not underestimate the downside protection from the existing gap to market rent levels, reflected in the 23% just highlighted. This upside ensures our in-place rents have a strong buffer in case of weakening rents. The long WAULTs of 8.9 years and current asset valuations of less than half of the replacement costs in our locations, further ensure long-term stable rental income and valuations.
As shown on slide 16, with 51% in value, our office assets represent the largest portion of our group portfolio. We didn't need to adjust our strategy because of the COVID-19 pandemic. Already before the pandemic, our strategy has always been to focus on central locations in top-tier cities such as Berlin, Munich, Frankfurt and Amsterdam. They alone account for 60% of our office assets value. The chart on the left reflects the further diversification into additional top-tier cities across Germany and the Netherlands. With a WAULT of 4.6 years and no dependency on any single tenant or location, we maintain a well-diversified and robust tenant structure, of which more than 50% of the rent generated comes from tenants in the strongest industries, such as governmental, health, or energy.
Our largest office tenant is a public sector with 25% of the rent and includes heavyweights like the Deutsche Bundesbank, Siemens, the German and Dutch governments, and insurance companies. Our strategic investment in the residential sector through GCP is reflected on slide 17. The residential assets account for 14% by value of our group portfolio share and have an average lease length of 9 years. This diversification to residential assets in top German cities has proven to be the most resilient asset class exposure in Europe last year, and even achieving a 1.8% like-for-like rental growth, whilst decreasing vacancies and values further appreciating. Residential rents in high-demand locations continued to increase, with the exception of Berlin, where rents were negatively impacted by the rent cap last year, and as a result, the gap between rent levels and purchase prices further widened.
On slide 18, we give a summary of the hotel portfolio. As you surely know from your own experience with travel restrictions and the many ongoing virtual video meetings, the hotel industry is still under enormous pressure from lengthy lockdowns due to the COVID-19 pandemic and the resulting absence of hotel guests. Without a doubt, we strongly believe in the accretion of our hotel investments in the mid to long term. Our historically high ratio of domestic hotel demand in Germany, the Netherlands, and the UK from leisure and business travelers, will eventually act as a catalyst for faster recovery once lockdowns are lifted. We already experienced such strong rebound effects in the summer of last year.
Our 174-strong hotel portfolio of mainly high-quality four-star hotels located across top European cities like Berlin, Cologne, Frankfurt, London, Brussels, Paris, and many other cities, ensure a healthy mix of geographic diversification. Slide 19 gives a snapshot of our third-party hotel operators and brands with more than 30 different high-quality tenants. The lease contracts are up to 25 years long, fixed with no variable component, and a WAULT of 17.3 years, up from 15 years WAULT in 2019. These tenants have a strong track record of successfully navigating through numerous cycles, including the global financial crisis of 2008 and 2009. As you can see, our hotels use a diverse branding blend, each of them matching the unique operational strengths needed for the specific location and assets they operate.
Our largest tenant in the hotel portfolio is Center Parcs, with 6% of the group's rental income, reflecting 22% of the total rental income from hotels. In the meantime, however, our hotel tenants face challenging times under the imposed lockdowns, travel restrictions, delayed governmental subsidies, and slow vaccine rollouts across Europe. On slide 20, we provide an update on the hotel rent collection of our portfolio. Whilst rent collection levels of all our other asset classes are again similar to pre-corona levels, the full year collection rate for hotels came in at 60%, supported by a good third quarter from our leisure hotels. The continuation of the travel ban and the return to a lockdown in Q4 placed significant financial pressure on hotel tenants and resulted in a rent collection in Q4 of 46%.
During the year, we continuously supported our tenants in every way economically sensible. In several cases, we were able to reduce the financial pressure of our tenants in the short term, and in return, negotiated longer contract periods, increased future rent, or discussed alternative asset usages. Due to the uncertainties that remain until this day, on when the market will fully open again, travel bans lifted and hotels accepting international tourists again, we created an extraordinary expense for uncollected rents for 2020 in the amount of EUR 120 million, in line with our published 2020 guidance. We used the time of lockdowns as efficiently as possible by accelerating refurbishment works in several hotels, which were originally planned for the next years.
These asset improvement results in a decrease of current rents due to work interruptions, or in some cases, in a complete stop of the hotel operations. But once completed, will lead to a higher return and margin. We have full confidence in our tenants that once the lockdowns and travel bans will be lifted, they will benefit from the fast recovery, and our contractual rents will be paid in full. Some of the main arguments why we are convinced of the recovery potential of our hotel assets are highlighted on slide 21. All of our double and triple net leases have fixed plus CPI-linked rents. With more than 30 different third party operators and 17 years vault, we are in business with a strong network of experienced tenants that understand how to shift gears in challenging waters.
Compared to less than 10% of hotels that remained open in our portfolio during the first lockdown in Q2 2020, today, 80% of our hotels by rental share, remain open for business at an optimized cost efficiency and a safe environment for guests and employees. Germany and the UK historically have both over 80% domestic demand for hotel bookings, and in the top cities of these locations, 68% of our hotels are located. All these locations share the high demand for residential apartments, an asset class, which we touched on moments ago, that has proven to be very resilient during the pandemic. We keep the option to convert some hotels into micro apartments, should the environment for the hotel business deteriorate in the future.
So while we remain cautious for the short-term outlook of our hotel business, we are confident this segment will be an outperformer once the threat of infections can be controlled and people gain their confidence in traveling. Following our successful disposals of our wholesale, logistics, and retail portfolio in 2020, you can see on slide 20, the remaining position of these asset types. At the end of 2020, the retail portfolio stood at 7% of the group portfolio value, and logistics at 4%. Their WALTs were 5 years and 5.7 years, respectively. The top investment location for both asset classes remains Berlin, with almost half the asset value, followed by North Rhine-Westphalia, and several other attractive locations across German and Dutch metropolitan regions. Over 40% of the remaining retail assets are essential goods stores, such as food-related shops.
Due to the strong locations and high demand for these assets, the collection rate for the full year 2020, for retail properties amounted to 95% and 99% for logistics. In other words, very similar levels as seen before the outbreak of the pandemic. Whilst we believe the impact of the pandemic had a positive long-term influence on our last mile logistics assets, due to the acceleration of e-commerce, we fear that retail assets will have long-term difficulties to withstand the trends that emerged away from the traditional shopping.... therefore, we continue to view retail assets in general as non-core, and we look for opportunities to recycle the capital into our core asset types. On slide 23, we classify our three main CapEx investments.
The proportional split between CapEx for expansion, tenant improvements, and other related CapEx expenses shifted slightly towards tenant improvements when comparing 2019 to 2020. The overall CapEx, accounting for 1.3% of investment opportunities, remained stable in each of the two years. The total CapEx investment amounted to EUR 286 million in 2020, +EUR 31 million for maintenance. The ratio of of maintenance over invested properties increased therefore to 0.14% when comparing to 2019. As you can see from the pie charts, the majority of CapEx was invested in tenant improvements and expansion activities, that create additional income drivers and value creation potential.
Last year, the focus for tenant improvement CapEx was shifted to accommodate investments that enhance social distancing, improve air quality, and other initiatives that were a priority for our tenants during the COVID-19 pandemic. I'll now hand you over to Sylvie to present the ESG part of the presentation.
Thank you, Oschrie. On slide 25, we highlight the top line ESG goals of Aroundtown. We have set ambitious sustainability goals on ourselves, and our ambition goes far beyond the roofs and walls of our properties. The company has set clear goals and objectives to create opportunities for our operations to flourish, for our people to develop, and for our communities to grow. This will be achieved through the creation of solutions for innovative and healthy work environments, through applied research into flexible work methods, by offering smart solutions to our tenants, through developing our employees and the communities that we are active in, while keeping in mind a strong governance of the business. At present, we still have much room to improve before achieving the results to becoming a market leader.
We follow our goals, as we know that these will drive innovation, and we know that sustainability is also a prerequisite for sustainable long-term growth and profitability. At the bottom of this slide, you will find some links that will direct you to more information in the presentation about our initiatives, how we address each aspect of our ESG approach. On slide 26, we break down ESG into its individual elements in order to take a closer look at each component. To our tenants, we want to offer customized solutions where they can run their business effectively. Our ambition is to be a market leader and to constantly improve our tenant satisfaction. This can be achieved by open communication and a high level of transparency.
To further improve employee satisfaction, we have set ourselves the target to be considered as one of the top 10 employers in the commercial real estate space, to ensure that we always attract the best talent, and we have put various measures in place to achieve this goal. In 2020, we appointed our head of human capital development, who is dedicated to improving employee satisfaction. We also conducted an employee satisfaction survey, and will do these surveys now on a regular basis. On the environmental side, we set clear targets to reduce CO2 emissions by 40% by 2030.
This will be achieved, among others, by replacing and/or upgrading fossil fuel heating systems and switching to climate neutral energy providers, by offering tenant incentives through green lease elements, through installations of photovoltaic and EV charging stations, as well as smart meters in order to create more energy efficient facilities. Furthermore, within our integrated sustainable business strategy, we are planning to increase the number of green certified buildings within the portfolio through refurbishments and new builds. On the social side, and with the COVID-19 pandemic in mind, 2020 was an exceptional year that challenged our capacity for flexibility, innovation, sustainability, and creativity. Active community contribution is one of our main priorities. We are aware of the important role we play in our local communities and take our responsibility very seriously. We engage and communicate with our local stakeholders in an open, meaningful, accurate, and timely way.
We established the Aroundtown Foundation, which complements our asset level engagement to support charitable organizations and people in our local communities. The foundation works closely with local partners to identify and support programs focused on youth and elderly care, adult and vocational training, including student scholarships, community development, sport and civic engagement for charitable purposes. On the governance side, the board of directors currently consists of a total of six members, of which 50% are independent, with a minority position to executive directors, and one third of the board is female. The board has formed several committees of its own members and assigned certain duties to them. The board has determined the duties and procedures of the committees in its rules of procedure or in a separate resolution. These help the board to have better oversight of specific important topics.
That wraps up the operational section, and I will now hand you over to Eyal for an overview of our financial results.
Thanks, Sylvie. On slide 28, we present the profit and loss for the year 2020 compared to 2019. Our recurring net rental income resulted in EUR 953 million, an increase of 26% year-over-year. The increase was mainly as a result of the successful merger with TLG in Q1 2020, offset by the property disposals. These numbers doesn't include assets that were already marked for sale, despite their positive cash flow. Due to our diversification and strong locations, and in spite of the high volatility in the market, we recorded this year property evaluations and capital gains of EUR 1 billion, including CapEx, and EUR 769 million net of CapEx, which is also reflected in the 3.9% like-for-like growth. The approach this year was more conservative and reflected the uncertainties, especially in the hotel properties.
Therefore, evaluation results came in below the EUR 1.2 billion of last year. Property operating expenses, administration expenses, and finance expenses were in line with our expectation and guidance. The item other financial results increased mainly due to the one-time EUR 70 million euro expense related to the net prepayments of EUR 1.2 billion euro bonds, as part of our liability management activities in 2020, as well as changes in fair value of derivatives, which took an opposite turn in comparison to last year. The net profit for the period amounted to EUR 906 million, generating EUR 0.50 earnings per share for the full year. Moving to slide 29, the adjusted EBITDA grew to EUR 944 million in 2020, up from EUR 773 million in 2019.
In line with the increase in net rent, this 22% year-over-year increase was driven to a large extent through the merger with TLG. The adjusted EBITDA calculation is already after excluding EUR 41 million contributions of asset sales for sale, and therefore referring to the recurring portfolio. Slide 30 provides a detailed view of our funds from operation. FFO-1 before COVID, previously defined as FFO-1 after perpetuals, grew from EUR 446 million in 2019 to EUR 478 million at the end of 2020. Our FFO-1, previously defined as FFO-1 after perpetual COVID adjusted, amounted to EUR 358 million in 2020, or EUR 0.27 per share, in line with the 2020 guidance.
The decrease this year was mainly owed to the EUR 120 million non-recurring rent provision we put in place for uncollected rents from hotel tenants, due to the uncertainties of the effects from the pandemic over the hotel industry. Due to the large volume of successful disposals closed in 2020, in the amount of EUR 2.3 billion, the FFO-2 increased from EUR 757 million to EUR 933 million, reflecting EUR 575 million disposal gains for the full year. Continuing with slide 31, we illustrate how we derive in our calculations to the three new NAV metrics, replacing the EPRA NAV and EPRA triple NAV. These are the EPRA net reinstatement value, EPRA net tangible assets, and EPRA net disposal value, and are calculated according to the EPRA Best Practice recommendations.
As a starting point, all three new NAV metrics are calculated based on the IFRS equity attributed to the shareholders and using the same number of shares outstanding. The EPRA NRV scenario aims to reflect the value required to re-create the entity and assumes that no selling of assets takes place. Therefore, we added back the complete deferred tax liabilities, and we deduct the goodwill created in relation to the mergers with TLG, which mainly refers to deferred taxes. The EPRA NRV resulted in EUR 13.1 billion, or EUR 11.1 per share in 2020, in comparison to EUR 9.8 per share in 2019, an increase of 9% year-over-year. The EPRA NTA aims to reflect the tangible value of assets and assume that entities buy and sell assets, thereby crystallizing certain levels of unavoidable deferred tax liability.
Therefore, EPRA NTA excludes intangible assets and goodwill, and adds back the portion of deferred tax liabilities that are not expected to crystallize as a result of a long-term holding strategy. Therefore, we add back only the deferred tax liabilities with regards to our long-term portfolio, which means that deferred taxes for assets held for sale, the retail portfolio, which we see as non-core, and the development rights and investment portfolio, which all amounts together to 20% of the portfolio, are not added back for the NTA.... With regards to the purchaser's cost, we analyzed the portfolio structure and only added back purchaser's cost, which relates to properties that enable real estate transfer tax optimization at disposal. We found that real estate transfer tax optimization can be achieved in 40% of the portfolio, and therefore added back real estate transfer tax related to these properties.
The EPRA NTA amounted to EUR 11.2 billion in 2020, or 9.5 euro per share, in comparison to EUR 10.5 billion in 2019, or 8.6 euro per share, which reflects 10% year-over-year increase on a per share level. As mentioned before, the deep discount of the share price to the EPRA NTA per share, while we dispose properties at book values, presents how accretive the share buyback is. The EPRA NDV aims to represent the shareholders' value under an orderly sales of business, where the deferred taxes, financial instruments, and certain other adjustments are calculated to the full extent of their liability, net of any resulting tax.
The EPRA NDV amounted to EUR 8.4 billion, or EUR 7.1 per share in 2020, in comparison to EUR 8.4 billion or EUR 6.9 per share, which reflects 3% year-over-year increase on a per share level. Slide 32 illustrates graphically all three EPRA NAV metrics and the change to last year. With that now, back to Oschrie to conclude the final part of the presentation.
Thanks, Eyal. Let's continue on slide 33. We've been placing great emphasis on our conservative capital structure to strengthen our fundamentals throughout this pandemic and beyond. As you can see from the debt maturity profile, until the end of 2024, there are no major debt expiries coming up, except for EUR 600 million euro senior bond with a very low coupon of 0.375%, expiring in Q3 of next year. Therefore, our cash cover ratio for the next three years resulted to 4 x. In 2020, we successfully maintained our defensive loan-to-value level of 34%, whilst further reducing the low average cost of debt to 1.4%, with an average maturity of 6.1 years, and kept a strong interest cover ratio of 4.3 x.
These conservative financial ratios ensure sufficient headroom to all our covenants, including our stricter internal board LTV limit of 45%. In addition, 76%, or EUR 15.6 billion of our assets remain unencumbered, providing additional sources of capital, if required. During 2020, we repaid over EUR 1.5 billion of bonds and bank debt with higher cost of debt, and issued new bonds with lower cost of debt. At the end of 2020, we had a strong liquidity position available in the amount of EUR 3.3 billion for growth opportunities and further economic challenges. But as always, we plan long-term and will monitor several funding options across markets when we see that acquisitions pick up again.
Moving to slide 34, we provide a glance of our strict financial policies and highlight the fact that we keep our goal of a rating upgrade to A- from currently BBB+ rating, which was confirmed by S&P recently. This upgrade remains a high priority for us, and we continue to see a high level of financial cost savings opportunities associated with our merger with TLG from last year. Following our revision of the FFO 1 definition this year, we have updated our dividend policy distribution to 75% of FFO 1 per share from this year onwards. On slide 36, we want to provide an outlook for our full year 2021 guidance. We prepared the guidance based on our existing portfolio, taking into account the disposal of the assets held for sale, and conservatively didn't consider any material acquisition.
Due to the continuous lockdown and slow rollout of vaccines across Europe, we based our guidance on the conservative assumption that our hotels will not fully recover in 2021, and will therefore perform similar to 2020. We expect the FFO 1 for 2021 to be in the range of EUR 340 million-EUR 370 million. Having successfully completed our share buyback program in the amount of EUR 1 billion last year, we will see the full effect on the per share growth during 2021. Therefore, we expect the FFO 1 per share to be in the range of EUR 0.29- 0.31, up from EUR 0.27 in 2020, which reflects an increase of 7.5% to 15%. This calculation does not include further potential buyback programs in 2021, including the one started today.
We see our expected 2021 dividends per share in the range of EUR 0.22- 0.24. That concludes our full year 2020 presentation. As always, the appendix holds plenty more information for you all to look at, and 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: Could you comment on the office market in your locations, Germany and Netherlands? What are the current dynamics of the letting market, and how do you expect the trend to develop?
The office markets in Germany and the Netherlands entered the crisis at very low vacancies due to the high demand, which exceeded the supply for many years. The new construction could not meet the demand either, which resulted in high pre-let ratios that further increased during 2020. You can see the development over the last quarters in the appendix of our presentation. The vacancies in the German property market significantly reduced from over 10% in 2010 to below 3%. Of the top cities in Germany and the Netherlands, Berlin, which is our biggest location, is the strongest office market. Although the vacancy in Berlin since the outbreak of the crisis slightly increased from a very low level of 1.8% to 2.8% as of year-end, rents increased further. Prime rents across Germany continued to increase during 2020.
One year into the pandemic, we see the impact on the letting market was not as large as initially feared. According to market reports, the average vacancy slightly increased to 3.7%, up from just below 3% before the pandemic. In 2020, 2.7 million square meter were rented in the top seven cities in Germany, 750,000 square meters in the last quarter of 2020 alone, after 600,000 square meters in Q3. We saw in 2020, hesitation from new lettings from prospective tenants, as it takes new tenants longer to decide and on average, took less space. We have signed approximately 130,000 square meter new lettings in 2020, at over EUR 15 per square meter, which is 40% higher than our average EUR 10.8 per square meter.
Due to the letting hesitation of prospective tenants in the midst of the pandemic, we were not able to fill in newly vacated space fast enough, and this resulted in an increase of 0.6% in the office vacancy in comparison to last December. In the last periods, we do feel an increased demand for offices across our locations by new tenants and expect to fill in the vacancies within the upcoming periods. Referring to our existing tenants, we saw a higher amount of tenants prolonging their short-term leases in order to postpone their decision making. We prolonged over 310,000 square meters of office space in 2020 at around EUR 12 per square meter. As a comparison, in 2019, we have prolonged 260,000 square meters of office space.
We believe a significant amount of pent-up demand exists, which will be released with the easing of the restrictions and with the progress of vaccinations. The high pre-let ratios for new construction is also giving us confidence going forward. Looking forward, we are cautiously optimistic and expect to see continuous progress in the office market. The headwind for strong progress is dependent on the long-term economic condition in Germany and in the Netherlands, and there's no assurance when and in which way the economies will recover from the pandemic effect. High unemployment and a large amount of insolvencies is a threat to demand for office space. Therefore, we are focusing on signing longer leases. The current situation has proven, again, the importance to focus on the strongest and more resilient economies in Europe.
The office market in Germany and the Netherlands also have a competitive advantage over other strong office markets in Europe, as rents are comparatively lower, while construction costs are similar. This leads to high, continuous demand and a low amount of speculative construction. The strength and stability of the office market of our locations is highlighted by the strong investment market. Although the total investments were lower in 2020 than in 2019, as a result of the initial uncertainties after the outbreak of the pandemic, the year ended with a strong fourth quarter. Initial yields for prime properties were below 3% in the fourth quarter, a historically low level. The decreasing yield is supported by the low negative interest rates on government bonds and the historically large spread to office yields. As said, we will continue to analyze the market and remain cautiously optimistic.
... Next question: Did you experience any structural shift to working from home? If not, do you expect any material impact?
No, we did not experience any significant impact. We don't believe there will be a significant structural shift in demand related to working from home. The lockdown taught many companies to deal with a remote workforce, and at the beginning, probably the majority of workforce also enjoyed the flexibility to some extent. But we believe after such a long lockdown period and forced working from home, many employees are also happy to go back to regular work, office working environment, and employers seek to have more control and closer contact to their employees. However, we do believe that working from home, although not a new concept, is here to stay and will become part of corporate culture to provide its employees more flexibility. A flexible usage of office space and increase in mobility are going to improve further along technological solutions.
Although flexible space is expected to reduce the average number of employees at the office, it does require more communal and shared areas, which offsets, to some extent, the reduction in space. Therefore, the net effect remains unclear, and we currently do not expect the flexible work habits to fundamentally change the demand for office space. On the other hand, working physically together in teams and physical meetings have many advantages, which can hardly be replaced with remote working. Please also note the incentive for employers to implement permanent remote working is highest in large cities with high rents and long commuting times. Our office locations, mainly in Germany and the Netherlands, are characterized by short commutes from affordable housing in central locations and low office rents compared to international standards such as Paris, London, New York, and others.
Next question: How do you see the hotel market recovery?
Local and international travel restrictions, minimum distance restrictions, as well as other restrictions, remain to significantly impact the hotel market. Currently, our hotels are restricted and limited to business travel, and essential workers are not allowed to host leisure tourists, and the minimum distance restrictions and availability of vaccination reduces the demand for conferences. The hotel market will not recover until restrictions are lifted and the population will be vaccinated at a high degree. For our biggest hotel market, Germany, infections are currently increasing again, and we are in the middle of a third wave, and the recovery is accordingly delayed. Currently, the vaccination progress is unfortunately very slow and cannot reduce the increasing infection rates. We believe that only a significantly higher vaccination rate will eventually lead to a lift in restrictions, as we see recently in the UK, where we also have hotels.
The vaccination progress in the UK has been going well, and the UK government laid out an opening plan in which hotels are expected to open for all, business and leisure, by mid-May. Our hotel tenants are receiving a high demand of booking already, also for conferences and weddings. UK gives us an idea of the recovery potential of our hotel portfolio, which is based on pent-up demand and high share of domestic demand. The locations where our hotels are located have a historically high domestic demand and low share of international demand, and this will help our hotels to recover faster compared to markets with a high demand for international travel. Air travel restrictions might be lifted later than hotels, and thus we expect the domestic demand will be higher compared to historical averages.
Next question: Can we get more color on the rent collection of your portfolio and the provisions made in 2020? Did you account for provisions in the guidance for 2021, and how much acquisitions and disposals did you account for in your guidance?
Excluding the hotels, which are mostly impacted from the government-imposed restrictions, the collection rate is basically back to pre-pandemic levels and reached to over 97%. In this regard, the uncertainty we have seen in the beginning of the pandemic has decreased significantly as the diversification and strengths of our portfolio and tenants prevailed. We are confident to continue and maintain a high collection rate also in 2021. The collection rate for the hotel assets amounted to 60%, including 11% of the rents, which were settled for lease extension. Due to the continued restriction, followed by the second lockdown crossing into Q1 2021, we have conservatively accounted for the remaining uncollected rents as an extraordinary expense. We are in continuous negotiation with our tenants, and on a case-by-case basis, find the right solution to assist them in this difficult period.
Only in very specific cases, we reduce rents short-term, which will be charged back at higher amounts. We believe it is important to support our tenants, who generally have a very strong track record in achieving stable and high profitability, but for that, they need the hotel market to be open. The collection level in 2021 clearly depends on lifting the restrictions. For now, we stay conservative and assume collection rates to remain on the current level. Our base case for 2021 guidance is that markets will not fully open, and will have a similar trends as in 2020. Therefore, we factor in an amount of EUR 90- 120 million of extraordinary rent provisions, as we cannot assess when restrictions will be lifted, and we prefer to remain conservative and assume the current situation going forward.
A better than assumed scenario will support our performance, and we will continue to update our guidance in the next reporting periods. For the guidance, we only accounted for signed deals, so currently signed disposals of over EUR 200 million are included on top of the held-for-sale portfolio of over EUR 800 million, which are not included in the guidance. At this stage, we didn't include acquisitions in our guidance. We will update the guidance along new acquisitions and further disposals.
Next question: the rental income, like-for-like, amounted to 0.2%. In which locations did you have the highest like-for-like performance? What was the reason for the decrease in like-for-like results? What do you expect going forward?
The decrease in like-for-like growth is predominantly related to a negative like-for-like results in the hotel rents. The rental like-for-like growth in 2020 was 0.2%, which is the net results of a positive 1.3% rent like-for-like growth in the portfolio, excluding hotels, and a negative 1.8% like-for-like in the hotel portfolio. In certain situations, on a very selective basis, where our hotel tenants have been mostly impacted from the restrictions, we have agreed on short-term reduction in the lease agreement, which affected the like-for-like negatively. These rents will flow back shortly after the restrictions will be lifted and the market will be open. For offices, we experienced a slightly lower like-for-like as compared to previous periods, as in the current market uncertainties, tenants postponed their decision to expand and let new space.
We believe the hesitation to rent new space create a large amount of pent-up demand, but it will probably only be released once uncertainties will disappear, which will favorably support new letting achievements, and in turn, increases our like-for-like rents. We achieved the strongest like-for-like increase in Utrecht, Amsterdam, Berlin, Hanover, and Dresden. As mentioned before, the degree of letting is depending on lockdowns and restrictions. It is very difficult to make a reasonable assessment going forward. We are a few months into 2021, and start to feel a slight rise in office pick-ups, but on the other hand, the hotels continue not to perform. It is hard to see a significant improvement so far as the lockdown restrictions have remained. We therefore conservatively expect the like-for-like to remain leveled this year.
Next question: Can you please elaborate on your revaluation gains? What were the key drivers, and where did you achieve the strongest increase? What was the valuation like for like? Also, what do you expect going forward with the current market still in lockdown and potentially open up with a successful vaccination progress?
We achieved EUR 1.1 billion of revaluation gains in 2020 in all asset classes, excluding hotels, which have been offset by a devaluation in the hotel portfolio of EUR 300 million, resulting in a net revaluation gain of EUR 770 million. The like-for-like performance, excluding hotels, was 7.2%, and 3.9%, including the hotels. The high degree of diversification of our portfolio in terms of asset types, locations, tenants, and lease structures, resulted in an overall positive result, as we were able to capture many different key drivers of the different markets we are in. Each city, country, tenant, and asset type is differently affected by the lockdowns, and can benefit or be negatively impacted by it. Our revaluations are the result of operational achievements and yield compression.
Yield compression, which was around 25 basis points, contributed, accounted for almost all the revaluation gains, with our modest rent improvement over the year contributing marginally to the value. We achieved revaluation gains across our portfolio locations in top cities of Germany and the Netherlands, mainly in Berlin, Munich, Dresden, and Leipzig. The highest revaluations were recorded for our offices, in which the result of the focus on central locations is in top cities paired with a high quality. Our strong disposal activity also validated our valuations, as we have been able to sell above book value. Further, current market transactions are executed at low yields, partially lower than before the crisis, especially in top cities in Germany and the Netherlands.
Therefore, we expect our valuations to remain stable, and with a hopefully progressing pace of vaccinations and subsequent lockdown restrictions, we believe the lettings and hospitality markets to recover, which will further support our valuations.
Next question: There have been several transactions in the markets at high multiples, especially in German offices. What is your assessment on this?
These acquisitions highlight that office yields contracted. As buyers seek a stable investment, Germany, which provides long-term upside potential. The demand is highest for properties with a strong tenant, at long WALEs, and in strong locations. Negative government yields direct, especially funds and insurances, to invest in real estate where positive yields can be achieved. You can see on page 75 of the presentation, that the spread of prime office yields to bond yields is at historically high levels. We used the opportunity to dispose part of our portfolio, mainly non-core, but also mature properties. The high demand resulted in disposals above book value, which also validates the valuation of our portfolio.
Will Aroundtown pay a dividend this year? If yes, how much, and what is it based on?
Based on our payout policy, we will suggest to the AGM in June, a dividend of EUR 0.22 per share for 2020. The dividend is based on the FFO 1 before perpetuals, after the COVID adjustments. As we changed our FFO classification, going forward, our dividend policy is based on the FFO 1 after perpetual notes, now simply called FFO 1, with a payout ratio of 75%. This is also reflected in our guidance.
Next question: Why did you issue new debt and perpetual notes, and what are you planning to do with your large cash balance, which also increased due to disposals?
Part of our financial policy is to proactively manage our debt maturity schedule by refinancing shorter term debt at times when the markets provide a favorable opportunity to refinance with longer maturities and lower rates. We issued in December of last year, a EUR 1 billion bond at 0% coupon, with a maturity of 6 years, and bought back around EUR 600 million of bonds at an average coupon of around 1.5%, with an average maturity of 3 years. Due to these efforts, Aroundtown will have lower financing expenses, which increases the future FFO and the dividends, as Aroundtown's dividend policy is tied to the FFO one per share, while extending the average debt maturity.
The excess funds will be used for further debt repayments, such as bank debt, which will further improve the debt structure, as well as for general corporate purposes and further acquisitions. The property disposals have been funding the share buyback, as well as debt repayments during 2020. Therefore, the share buyback was leverage neutral. By disposing mainly non-core properties of mainly retail and wholesale assets, we also further increase the focus of our portfolio on stronger asset classes and increase the overall asset quality.
You announced an additional share buyback program. What do you plan to do with the shares held in treasury?
In the former buyback programs, we bought back 13% of our share, and we can go up to 20% according to the approval we received in the OGM in May 2020. We see the share buyback as a reinvestment into our portfolio at a very attractive pricing, which is an alternative for acquisitions. Further, disposing properties at a premium to NAV while buying our shares at significant discount to NAV, is creating immediate value. We intend to keep the treasury shares to be used for future scrip dividends, acquisitions, capital increases, and others. As the shares are held in treasury, they will not carry any voting rights, not entitled to dividends, and are also deducted from the per share KPIs, therefore, increasing each shareholder's share in the company.
Next question: Can you provide more information about the disposals? What was the vacancy and WALE of these properties? Are you planning to continue disposing in 2021?
We disposed numerous properties, which are mainly located in various locations across Germany and the Netherlands, and included about two-thirds of retail and wholesale, and the remaining were office properties, hotel and development assets. The WALE was 6.5 years, with nearly full occupancy. The disposed retail and wholesale properties are spread across Germany, mainly in non-major cities, in the states of Saxony, Baden-Württemberg, Thuringia, Brandenburg, Mecklenburg-Vorpommern, and others. We sold retail properties at around 5% above book value, and wholesale properties at 2% above book value. We sold offices in Berlin, Utrecht, Frankfurt, Amsterdam, Wiesbaden, Rostock, Hanover, and others. Offices were sold at 2% above book value. The hotels we sold were in Dresden and Rostock, and were sold at 5% above book value.
The disposal multiple increased to 19x, as at the end of the year, we sold more mature properties, mainly offices in Germany and the Netherlands, compared to previously, mainly retail and wholesale, which had a higher yield. The signed disposals are not part of our portfolio overview, neither, as well as not part of the recurring net rent, adjusted EBITDA and FFO. Part of our strategy is to optimize our portfolio by disposing non-core properties. Additionally, selectively, we dispose mature properties to capitalize on the value we lifted.... Year to date, 2021, we signed disposals for around EUR 200 million of retail and office properties in Leipzig, Dresden, and various cities in the Netherlands. We have an advanced disposal pipeline of over EUR 500 million.
Next question. After a low acquisition activity in 2020, are you expecting to pick up your acquisition pace again? What is your firepower?
Up until the outbreak, we finalized the major acquisitions through the merger with TLG, and it's a EUR 5 billion portfolio. With the outbreak of the pandemic, we muted our acquisition activity in order to preserve our high cash balance and see to what extent the pandemic will affect our business. As after some time into the pandemic, we were able to assess the impact on our business better. We launched a share buyback, which is highly long-term accretive, substantially more accretive than the deals we saw on the market. We continue our opportunistic acquisition activity, and we are scanning the market to find the right deals. Our acquisition strategy is focused on accretive and high quality additions to our portfolio, with a substantial upside potential, which create long-term shareholder value. Currently, we are looking at a pipeline of over EUR 500 million.
We currently have a significant firepower of EUR 2 billion.
Can you please give us an update on your development projects?
Please see the slide 55 in the appendix of our presentation, where we present a breakdown per location, asset type, and current development projects. Our strategy is to analyze our portfolio for unused land or underutilized space of existing properties, or land of existing properties, for which we can obtain building rights. These rights we either sell at high gains or, on a selective basis, we will consider developing the properties if they are located in top locations and with high pre-let agreements. In addition, our development portfolio includes properties which are subject to enhanced repositioning, which will significantly increase their value and rental income. Our target yield for development is 8%-10% NOI over the costs, depending on the location and asset type. As of December 2020, the portfolio includes EUR 1.8 billion of projects and building rights.
These are mainly located 50% in Berlin, 13% in Paris, 10% in Frankfurt, 4% in Hamburg, 4% in Munich, and also 4% in Rotterdam. The asset types are mainly for residential, hotel, and office properties, but as they are not finalized, they are still subject to change. To utilize the current hotel lockdown restrictions, we brought forward large CapEx plans of few hotel properties, including a complete facelift, upgraded interior, and adding more space to the hotels. Therefore, we are able to fully execute the refurbishment instead of in small steps per section of the hotel, how we usually do it in order to maintain the operations of the hotel tenant.
Therefore, we are able to use the current situation effectively, as the hotels will be renovated faster and will come back to the market in an improved stage, and we are able to achieve higher rents sooner. The total amount of building rights and developments reflect only around 6% of our total assets committed, is currently EUR 200 million, less than 1% of the portfolio value.
When do you expect to enter the DAX index, which will now be extended to 40 companies?
Based on the current rankings with the other companies, our current market cap is not sufficient to enter. With a share price recovery to over EUR 8, we see good chances to enter the DAX.
Have you been able to achieve any synergies so far after the merger with TLG?
Yes, we have been working on the integration and raising synergies despite dealing with the challenges from the pandemic. We issued EUR 1 billion bond at 0% coupon and a EUR 600 million perpetual at 1.625%, which is even lower than the anticipated synergies level. While in parallel, we paid EUR 400 million of TLG bond with a coupon of 1.4%, and a bank debt from TLG at an amount of EUR 130 million, with an interest rate of 2.1%, and expect to further repay bank debt also in 2021. This reduces long-term finance expenses and increases the FFO. Additionally, we implemented several operational synergies on the property management level in locations where we have strong overlap, economies of scale, as well as the corporate level.
Due to one-off expenses to implement these changes, we will benefit from the positive long-term impact on the operational profitability going forward. In addition, our long-standing deal sourcing network supported our high disposal activity and supported the deal preparation, negotiation, handling, and execution, which resulted in a successful disposal above book values. Further, our combined portfolio has become more resilient, with a larger focus on top cities and strong asset classes, and thus weathering the impacts of the pandemic. The largest synergies potential we see in is potential rating upgrade from S&P. The merger has many rating supportive criteria, such as a larger portfolio with strong focus on quality assets in top tier locations in Germany, and also larger footprint in these top locations at higher diversification, lower vacancy, lower tenant dependency, and higher profitability.
We initially expected the rating discussions around the positive aspects of the merger would be towards the end of 2020. We now expect it to be delayed until the impact of the current crisis and ongoing uncertainties can be clearly assessed.
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.
Ladies and gentlemen, we will now begin our question and answer session via the phone. If you have a question for our speakers, please dial zero 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 time to prefer to turn to speak, you can dial zero two to cancel your question. If you're using speaker equipment today, please lift the handset before making your selection. Sorry. One moment, please, for the first question. The first question we received is from Rob Jones from Exane. Your line is now open, sir. Please go ahead.
Great. Yeah, thanks so much. So there's a couple of questions from me. You've touched on it a little bit already, but in terms of guidance for disposals for this year, obviously EUR 200 million done year to date, you've got EUR 0.8 billion of assets held for sale, and I think you mentioned as well, EUR 500 million, a EUR 500 million figure in terms of pipeline. But could you give an idea in terms of total quantum for the whole of FY 2021? That would be quite helpful.
Secondly, on the buyback, Oschrie, I get the impression that you are alluding to the fact that, post this EUR 500 million buyback, as long as you continue to undertake disposals and the shares continue to trade at, you know, let's say EUR 6.5 or less, then we should expect realistically further buybacks this year like we saw last year. Just a bit of clarity on that, or whether I'm reading that wrong. And then just a final one, actually, two, one on hotels, one on ESG. So in terms of hotels, do you see any potential for tenant failure, if lockdowns are still in place by, say, the end of Q2?
I appreciate you've got a diversified portfolio by operator, but, you know, could you see some, isolated examples of hotel tenant failure in your portfolio? And then the final one's on ESG. Do you have a target for energy efficiency, or energy consumption reduction? Obviously, I can see the CO2 reduction target there. And in relation to those targets, in general, do they include scope three, or, or are they just scope one and two? Thanks so much.
Hi, Paul. Hi, thank you for the questions. So, about the disposals, we didn't put for ourselves a complete target of how much we want to sell in 2021. We analyze the market, we see the demand, and then we decide if it's worthwhile to sell or not. We have our non-core assets that, in general, we don't expect to keep them for long. It's clear that we want to reduce our retail exposure. We currently have about EUR 600 million signed, another EUR 500 million in the pipeline, and from that we will see how the demand will be and how the market will change. Referring to the buyback, at the moment, we see the EUR 500 million buyback as a good quantity for this year.
That's why we see that EUR 500 million will continue until the end of the year. Additional buybacks will be considered, again, depend on the market, and if we find other attractive acquisitions that we want to do, depend on a valuation of this year to see if the market recovers, pandemic, pandemic is over. So there are several elements that we'll, let's say, we will use if we wish to extend the EUR 500 million that was announced this morning. On hotel tenants, we don't see a tenant failure. The tenants are strong, and they are all begging the market to be open. We are in continuous contact with them, assisting wherever we can assist.
They're, at least, let's say in the UK, when there are no signs of the market to be open, everybody's excited. We don't see any, let's say, sign of failure for a tenant. On the ESG, we are going to prepare our targets also on the consumptions. Our targets at the moment includes mainly Scope one and two, but our investments are also invested in Scope three. But on that, we will give more information in our next calls, while we are also, let's say, preparing a deep analysis of the portfolio and our program and targets for the next years. Thank you for the call—for your questions.
... The next question received is from Kai Klose of Berenberg. Your line is now open, please go ahead.
Yes, good morning. Could you give us a split of last year's sales of assets between non-core and mature, and what was the average margin over book value for the sale of non-core and for the sale of mature assets?
Hi, hi, Kai. Thank you for, your question. I think we put it in the presentation, the information of how, how the split. We need to find it, but what we see overall that, we closed EUR 2.3 billion. You see on, in page six of the presentation, that on the right side we sold, in non-core cities about 40%. We sold 20% in Berlin, and 13% in Frankfurt, and we also give you, a bit more information on the, also on the, asset classes. So wholesale and retail, which we don't see as, core, and basically see as a non-core, amounted to nearly 60%, including the hotel and development is 65%, so, about 70% are non-core from the disposals. Thank you.
The next question is from Manuel Martin of Oddo BHF. Your line is now open, please go ahead.
Thank you very much for taking my questions. Two questions from my side. The first one is a kind of to check the understanding. So if I understand correctly, your assessment regarding your hotel portfolio valuation is that the valuations will stay stable or maybe even rise if vaccination accelerates a bit, if it's correct? That would be the first question. Second question is a follow-up on your share buyback program. This EUR 500 million volume, is it really a set number, or would you think about reducing the share buyback if suddenly a lot of purchasing opportunities would appear in the market for properties? Thank you.
Hi, Manuel. Good morning, thank you. About the valuation of hotels, yes, we believe that if vaccination will be available and the market will be open, we will, we'll see an increase in values. For sure, we need to see it long term, and we need to see the extent of the recovery, but we want to believe that we will see an uplift in the valuation if everything is back to normal. On the buyback, currently we see a EUR 500 million program as sufficient. I mean, we have sufficient firepower for additional acquisitions, so the buyback is not stopping us from entering into acquisitions.
You're right, I mean, if we come to the conclusion that we see that it's not, let's say, benefit for us to continue with the buyback, we can stop it. It's not an obligation, it's an up to EUR 500 million program. Thank you.
Thanks.
The next question we received is from Paul May of Barclays. Your line is now open, please go ahead.
Hi, guys, got four questions from me. Just to be clear, on the FFO guidance, you're assuming, was it EUR 9 0- 120 million impact from hotels? So if we were to just add that back to the guidance, that would be a sort of full recovery guidance number. Secondly, given cheaper valuations, and as you mentioned, probably more stable and better growth opportunities in Grand City than through Aroundtown at the moment, would it not make more sense to buy more into Grand City? What are the limits you have there in terms of acquiring more than necessarily doing a share buyback in Aroundtown? Take-up in Germany across the main cities was down 37% year-on-year in 2020. Appreciate obviously there was a pandemic and a lockdown, so that's expected to be down.
How quickly do you expect this to recover, and do you expect it to recover back to 2019 levels? Will this affect your ability to capture the reversion? I think you mentioned you wouldn't be able to capture it at the moment, but I'd assume on a return to full demand, you would be able to capture that. Then finally, on the work from home, you sort of mentioned that you don't expect there to be any impact going forward, but companies will adopt work from home. Just noting the Deloitte survey back in the last year that suggested two-thirds of companies want to increase remote working, and just over one-third want to reduce costs through reducing office space. Just wondering what your thoughts were on that survey and whether you'd seen anything in your portfolio. Thank you very much.
Thanks, Paul, for the question. So, referring to the FFO and full recovery, we did include the provision for EUR 90-120 million, and we started with the current adjusted EBITDA and FFO ratios that we have now. There is more if the market will be completely open. There are more cost savings we can achieve, and we can perform better, not only by removing the provisions that we have created. We will increase the rent. The like for like will grow, so I expect that if the market will be open, the recovery will be more than just eliminating the EUR 90-120 million provision. Regarding valuation, we see and the, let's say, additional positions in Grand City. We do believe in Grand City.
We see the position in Grand City as a long term. We constantly choosing the scrip dividend when Grand City wants to achieve. That's why our percentage in Grand City is gradually growing. Grand City itself issued the buyback program, which is currently running, and yeah, it's always in our mind, and it's part of our consideration if to continue or, let's say, actively buying shares or just let our position grow naturally while Grand City is buying their own shares. Your third question is about the take up if we see a recovery to 2019. It really depends. I mean, we do feel...
It's surprisingly, but we do feel really in the last month and a half on the office sector, we do feel a rise in demand. It's something that we didn't see in Q4 last year. So, we see companies stop hesitating or get to a conclusion that they do want to continue, that they can measure on their own businesses, how the pandemic is affecting, like we know now better on our business, and basically they are able to take decisions, and we see more and more demand coming in, not only for prolongation, but also for new lettings. How fast we can go to 2019, it's still early to say. Let's see in the next reports, and I will update about the progress of the pickup.
About working from home, you know, I don't want to say that I'm fully aware about everything which is done in that survey, but I... What we hear from our tenants that are working on prolongation is also a mix of the both. One wants to use the working from home to cost, let's say, save cost. Some businesses were harmed by the pandemic, not only related to, specifically to the hotel industry, but in general. So they do see it as a cost saving measures, and some are still hesitating and really want to integrate that home office as part of the concept. But it doesn't fit to every tenant or every industry. So, as we said before, we do see working from home here to stay. It's not going to disappear.
It's not a new concept, though, it will have an effect, but we see it as a limited effect and not something material. We will need to learn how to live with it and to cope with it, and also assist our tenants who wish to have this in any way we can. Thank you for your questions.
So thank you all. Many thanks for your questions and participation in this call. These were all the questions we received. Stay safe, and we look forward to speaking to all of you, hopefully soon again in person. Goodbye and all the best.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect your line.