Dear ladies and gentlemen, welcome to the full year 2021 results presentation of Grand City Properties S.A. At our customer's 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 difficulties hearing the conference, please press star key followed by zero on your telephone for operator assistance. May I now hand you over to Ms. Theresa Steier, Manager of Corporate Communication, who will start the meeting today. Please go ahead.
Thanks. Hello, and good morning to everyone. Thanks for joining us today. In the name of GCP, I kindly welcome you to our results call for the full year of 2021. With me today are CEO and CFO Refael Zamir, Chairman of the Board of Directors Christian Windfuhr, COO Sebastian Remmert-Faltin, and Senior Financial Analyst Michael Bar-Yosef. Christian Windfuhr and Refael Zamir will guide you through the results presentation directly after this introduction. You will find the results presentation for this call on the company website in the section Investor Relations under Publications. The presentation of the results will be followed by a session with questions and answers. The management is available for questions. We have already asked you in advance to send us your questions by email. Please continue to send us your questions so that we can include them accordingly.
Please send your questions to the following email address: info@grandcity.lu. I repeat once again, the email address for your questions is info@grandcity.lu. With this, I will hand over to Christian Windfuhr to begin with the presentation.
Thank you, and welcome also from my side to our full year 2021 financial results presentation. Let's turn to slide two for an overview of the year 2021. The year was marked by our strong operational performance and the stability and resilience of our portfolio and operational platform, even during challenging times. We met our guidance as well as our internal targets and are well positioned to continue and benefit from our robust operational platform. Throughout the year, we have continued our strong letting performance and value creation on a consistent basis with a focus on increasing the quality of our portfolio through internal operational growth, combined with the disposal of non-core properties and acquisition of quality assets.
The success of these efforts is reflected in a continued strong increase in value per sq m to EUR 2,005 during the year, reflecting an increase of 19% over last year's results. This was driven by a further increase in in-place rent per sq m to EUR 8.10 from EUR 7.40, and a further reduction of vacancy to a historic low of 5.1% from 6.2% in 2020 and 6.8% in 2019. Net rental income was just a touch above last year, primarily due to our disposals and the recycling of capital over the last twelve months. The acquisitions were made during the year had only a partial contribution to the 2021 results, but will have a full year impact starting 2022.
The net rent run rate as of end of December 2021 reflected a 12-month rental income generation of EUR 383 million compared to EUR 375 million rental income generated in 2021. Our Adjusted EBITDA remains stable as compared to last year's results, while FFO I saw a slight increase of 2% or 4% on a per share basis, benefiting from the lower share count as a result of the EUR 270 million share buyback we carried out in 2021. Total profit for 2021 amounted to EUR 670 million, 37% higher than in 2020 on the back of strong value creation. Accordingly, EPRA NTA per share increased 15% per share to EUR 30.4 or by 18% when adjusting for the dividend. We will go deeper into the operating numbers in the next slides.
Thank you, Christian, and good morning, everyone. Also from me, a warm welcome to our full year 2021 result call. Let us move to slide three and start with the rental income, which increased by 1% in 2021 to EUR 375 million from EUR 372 million, mainly due to disposal activity above book values. The like-for-like increase was higher and amounted to 2.8%, of which 2.2% came from in-place rent growth and 0.6% from occupancy growth. The revenue, which include also operating and other income, decreased by 2% to EUR 525 million as a result of lower operating income in 2021. Operating and other income related mainly to income connected to expenses recoverable from tenants.
The decrease is in line with the decrease in property operating expenses over the same period, and is mostly the result of change in portfolio between the two periods. As a result of capital recycling, in recent period, GCP acquired properties with leaner cost structure while disposing properties with a higher operational expenses. Our operational profitability was further driven by consistent improvement in our operational efficiencies, as well as by optimizing our cost structure as a result of disposal non-core and mature properties, while acquiring higher quality properties in strong locations. However, we have experienced a certain degree of cost inflation, mainly in personnel expenses and with external service provider, which offset those gains. We continued to digitalize our letting process, which started in the beginning of the pandemic, and currently, most of our lease agreements are signed digitally, supporting the letting activities and decrease costs.
Adjusted EBITDA for 2021 amounted to EUR 299 million, stable in comparison to previous year. Property valuations and capital gain during the full year 2021 amounted to EUR 695 million, which was driven by strong revaluation during the second half of the year compared to previous periods, and includes EUR 64 million of capital gain resulting from disposal of our properties at 22% gain over previous book value. In 2021, we recorded a strong 8% property valuation like for like increase, excluding the CapEx effect. Finance expenses decreased in 2021 as a result of the refinancing and proactive liability management.
Finance expenses was down to EUR 46 million in 2021 from EUR 53 million, in accordance with the decrease of the cost of debt to 1% in the end of 2021 from 1.3% in the end of 2020. Our other financial expenses increased in 2021 in comparison to 2020, were mainly affected by the liability management of EUR 1 billion buyback of bonds and in change of fair value of derivatives and financial assets. On slide four, you can see that our FFO I is EUR 186 million, 2% up against previous year, and the FFO I per share increased by 4% to EUR 1.11 during 2021.
Continued optimization of our financial profile resulting in reduction to our cost of debt and coupon attributable to the perpetual note investor, supported our growth in FFO I, offset by higher current tax expenses. FFO I on a per share level was supported by our accretive share buyback program, whereby we reinvest into our portfolio at attractive pricing. During the year, we completed share buyback of EUR 270 million. The FFO II amounted to EUR 288 million in 2021. Disposal during 2021 were primarily non-core asset in Eastern Germany cities and secondary cities in NRW, as well as building right and amounted to approximately EUR 360 million, which reflect 22% above book value and generating a profit margin over cost including our CapEx of 39%.
On slide five, you can follow our EPRA NAV metrics. Due to the continued profit generation during 2021, we were able to further increase our EPRA NAV per share metrics compared to December 2020. The EPRA NTA per share increased by 15% to EUR 30.4, and on an absolute basis amount to EUR 5 billion during 2021, compared to EUR 4.6 billion at the end of previous year. EPRA NAV metrics were supported by profit generation and partially offset by the payment of the dividends and the share buyback, while on a per share level, the buyback supported the growth of the EPRA NAV per share.
The decrease due to the dividend distribution was partially offset by the fact that approximately 70% of the company's shareholders opted to receive their dividend in the form of scrip dividend. On the same slide five, we present you some more information on our approach regarding the EPRA NRV, EPRA NTA and EPRA NDV. Let me now hand back to Christian for the portfolio overview on slide six.
Thank you, Rafael. Now to our portfolio overview, where you can see that in spite of the disposals mentioned earlier in the presentation, our investment property further increased by 16% to over EUR 9.3 billion as compared to the end of last year. Total, we have around 65,000 units at the end of 2021. On the one hand, we have sold some EUR 360 million worth of non-core and mature assets, mainly in secondary cities in Germany. On the other hand, the portfolio grew by over EUR 700 million, including over 6,700 units at an average multiple of 18x. 2,000 of these units were located mainly in London, Berlin, Dresden, Munich and other German cities, and amounted to EUR 400 million.
4,700 of these units were in North Rhine-Westphalia, where we increased our stake as minority in a joint venture, resulting into full consolidation and amounted to EUR 280 million. The full impact of these acquisitions will be seen in the next quarters as the majority we acquired during the second half of 2021. Our annualized rental income of EUR 383 million at the end of December 2021 has an upside potential of 21%, which amounts to EUR 465 million net rental income once the full market potential is reached. This is driven by continued rent and occupancy growth.
Recent measures implemented by the new government, which increase the calculation period for Mietspiegel, as well as other measures which have been proposed in the planning of the new government, in our opinion, do not reduce the upside potential of the portfolio itself. However, they could impact the time required to unlock the potential. Following the general overview of our well-diversified portfolio on slide seven, let us quickly review our portfolio region by region as it stands today. Our main locations, North Rhine-Westphalia, Berlin, Dresden, Leipzig-Halle, and London, have strong and sustainable fundamentals and also are very diverse in terms of economic and demographic drivers. On slide eight, you can see that Berlin makes up 24% of our portfolio value and is our largest single location.
70% of our Berlin portfolio is located in top-tier locations, including Charlottenburg, Wilmersdorf, Mitte, Friedrichshain, and others, and the remainder is in affordable locations, primarily Reinickendorf, Treptow, Köpenick, Marzahn-Hellersdorf. In North Rhine-Westphalia, Germany's largest metropolitan area, we have 20% of our portfolio, with Cologne, the fourth largest city in Germany, being the strongest location with around 29%, and the rest distributed well throughout the region's main cities. Our quality London portfolio on slide nine makes up 19% of our portfolio and is well distributed in the suburbs of London, with around 80% of these properties situated within short walking distance to Underground or overground stations. Total London portfolio consists of over 4,000 units, including pre-marketed units in the pre-let stage.
Since acquisition of our London portfolio, our strong letting performance has taken double-digit vacancy down to an occupancy of over 94% as of December 2021. We continue to see a strong letting momentum and expect it to continue to reduce the vacancy further in the next periods. We have reached a sizable portfolio in London, enabling us to benefit from economies of scale, and we feel comfortable going forward in maintaining a portfolio size in London of around one quarter of our total portfolio. On slide 10, we show Dresden, Leipzig-Halle, Germany's dynamic eastern cities with strong fundamentals, which make up our quality East portfolio with 13% of our portfolio and a further 5% of our portfolio are in Hamburg and Bremen, Germany's largest northern cities.
Our maintenance and repositioning CapEx on slide 11 was EUR 21.50 per average sq m for the full year 2021. This amount is almost EUR 2 up compared to the same period last year. EUR 5.5 of this amount went to maintenance and the remaining EUR 16 to repositioning CapEx. Repositioning CapEx is dedicated towards improving the asset quality and supporting the letting activity. The repositioning CapEx also includes investments into the surroundings of our assets. The increase in CapEx per sq m is partially related to cost inflation during the last periods, in addition to a general increase in the investment carried out to support the attractiveness of the portfolio. We were able to curb the cost increase with the maintenance and even have decreased slightly on a per sq m basis.
As a result, AFFO for the full year 2021 amounted to EUR 123 million compared to EUR 120 million in 2020. On slide 12, we present you an overview of our modernization and environmental investments. In rather general terms, you can review on this slide our modernization strategy, which follows a detailed analysis of the portfolio, underlying opportunities for rent drivers and enhancing the value proposition through increased tenant satisfaction and reduced turnover. It also includes, of course, energetic modernization targeted at improving energy efficiency and CO₂ reduction through improving the overall insulation of our buildings and modernizing heating systems, et cetera. Another important part is attention to biodiversity, which addresses a whole range of activities, including creating green spaces, planting trees, creating wildflower meadows, placing insect and bee hotels, birdhouses, et cetera. With this, let me hand you back to Rafael.
Thank you, Christian. Our financial policy present on slide 13 remain unchanged. We keep significant headroom to our financial covenant and continue to maintain healthy relation with the banking sector, and we are committed to maintain a conservative financial policy. Our dividend policy remain at 75% of our FFO I per share. We also show you on this slide that we remain comfortably above our bond covenant in all the aspect and are committed to maintain a conservative financial policy. On slide 14, we review our capital structure, and you can see that our LTV is at 36%. Only 3% of our debt has variable interest rate. Our cost of debt stand at 1%, a record low for the company. Our average debt maturity is six years.
We take care to maintain and improve our debt profile by repaying high interest bearing short-term financial debt, taking advantage of favorable market condition and replacing it with low interest rate debt with longer maturity. We repaid over EUR 1 billion of debt during 2021, and we completed around EUR 270 million share buyback during 2021 in two separate programs. After the closing of the year and during Q1 of 2022, we repaid back Series F convertible bond and bank loans due in 2023. Therefore, we have a very clean debt maturity schedule at a low cost of debt. Debt coverage and credit rating on slide 15 show that we maintain our very strong interest cover ratio with a 6.4.
Our unencumbered asset ratio remains strong at 88% of a value of approximately EUR 8.4 billion, and our liquidity position remains strong with approximately EUR 1.1 billion. Our corporate rate credit rating remains strong with BBB+ by S&P, and our long-term goal remain to achieve a rating improvement to A-. S&P has recently reaffirmed our credit rating, highlighting our moderate leverage and financial policy with a strong liquidity position. Christian.
On slide 16, we have summarized for you some of the non-financial highlights which demonstrate the success of our relentless effort to provide top-notch customer service. This is evidenced by receiving the fairest customer hotline designation by Focus Money magazine in October 2021, reaching 97% tenant satisfaction rate, and experiencing very positive response to our loyalty program and support for digital lease signing, reaching almost 95% of leases signed digitally by November 2021, just to name a few. Furthermore, we have been very active in supporting, through our foundation, the cleanup works after the floods in North Rhine-Westphalia and providing funds for local schools that help children with mental disabilities. Furthermore, in light of recent events, the company has additionally provided support for the victims of the war in Ukraine.
Through the foundation, we have provided a donation to support children in need from Ukraine and are checking where we can provide additional support. Before we move to our guidance, let me shed some light on our continuous strong efforts in respect of ESG and sustainability. While equally important is our financial reporting, we have summarized the respective slides in the top position of our appendix of our presentation, and they provide good insight into our ESG results, activities and goals. Important here, of course, is that we have published on our website our non-financial report, which shows how we intend to manage material and environmental social governance matters. Furthermore, we have presented 12 topics identified as material in Grand City's materiality assessment. These insights follow the guidelines developed by the Global Reporting Initiative, GRI, EPRA, and the disclosure requirements of the main investor-oriented ESG benchmarks that we participate in.
More information regarding our ESG insights can be found on the sustainability section of our website. Needless to add here that the recognition of ESG and sustainability measures, i.e., our excellent scores from EPRA, Sustainalytics, SAM, CSA, now part of S&P Global, etc., have remained strong as in the past. Finally, on slide 15, our guidance for 2022. FFO I will come in between EUR 188 million and EUR 197 million. FFO I per share between EUR 1.13 and EUR 1.18. Dividend per share at EUR 0.85 to EUR 0.89. Total net rental like-for-like growth will exceed 2%, and LTV will remain below 45%. FFO I will be driven by increased operational performance through increased like-for-like rental growth and 2021, 2022 year-to-date signed acquisitions.
Additionally, debt optimization measures in 2021 and 2022 year to date will further provide tailwinds. With this, let me hand you back to Theresa for our questions and answers.
Thank you very much. We are now starting the Q&A session. We will answer the questions we have received by email so far. We have grouped them together for the reason of simplification. The answers to your questions have been prepared by the team. I will now start with the first question, and answer will be given by Christian Windfuhr. How do you see the German residential market developing? Do you see any changes in trend? How does the market impact your portfolio and operations?
The strong dynamics of the residential real estate market in Germany continue to be supportive. There was no material impact on our operations, nor on the market. Our investments into technological solutions have allowed us to keep operations unaffected, keeping employees, tenants, and partners safe. Our letting process can now be done completely digital and remote, from virtual apartment viewing to digital signing of contracts. Since implementation of these options for tenants to digitally sign leases, the vast majority of leases have been signed digitally, which will continue to benefit the company's operational efficiencies and customer satisfaction also post-COVID. The German economy as a whole is still somewhat impacted by the effects of the COVID pandemic. In recent months, GDP growth has slowed, mainly as a result of supply chain constraints, which also resulted in higher inflation levels.
The labor market, however, has continued to show strong momentum, and unemployment remains low. We see the strong labor market as a key driver for the German economy and supportive of long-term demographic trends, such as urbanization and migration, which drive demand for affordable housing in key metropolitan areas throughout Germany. As a result, demand for affordable housing remains strong, while at the same time supply remains muted. Furthermore, regulatory constraints are still creating long approval times for new building permits. While the new government plans to target higher construction volumes, partially through reduction of regulatory hurdles, it is unclear when and how this will impact the market. For the short to medium term, at least, we do not expect any material changes to the demand-supply imbalance and expect the market to remain supportive.
We continue to see the prevailing strong market dynamics impacting our portfolio as we record a like-for-like rental growth of 2.8%, with 0.6% coming from occupancy increases. Vacancies have continued to reduce and reached 5.1% as of December, compared to 6.2% a year before. At the same time, we have seen very strong revaluation results driven by the strong dynamics of the residential real estate market and operational performance of the company.
Do you see any impact on GCP as a result of the conflict in Ukraine?
We see the outbreak of the conflict in the Ukraine as a huge tragedy, and our thoughts go out to the people suffering the lives lost as a result of this situation. We hope a peaceful solution will be found very soon. GCP's operations are not directly impacted by the conflict, and the indirect impacts are limited. The indirect effects of the war may impact GCP in the future, especially the impact of higher energy prices is expected to have an impact on our tenants as energy is mostly a recoverable item.
In addition, the large numbers of refugees which have entered Germany as a result of the crisis may result in extra strain on the residential real estate market, similar or even more to what we have seen as a result of the peak of the Syrian refugee crisis in 2015, which may further enhance the supply and demand mismatch, particularly in the event that the crisis will be prolonged. The full effects are still unclear and will depend on the duration and outcome of the conflict.
Can you please provide color on the revaluation gains and on the drivers for the strong result? Where did you see the strongest uplift? What are your expectations for 2022?
In 2021, we recorded EUR 630 million revaluation gains. The revaluation gains occurred across the portfolio with the strongest in NRW, Hamburg, Bremen, and Dresden/Leipzig/Halle. Revaluation gains were 8% on a like-for-like basis. Please note that this is net of CapEx and is calculated only on the like-for-like portfolio, and those exclude acquisitions and disposals. Revaluations were driven by the strong operational performance of the portfolio, reflected by like-for-like rental growth of 2.8% and a record low vacancy of 5.1% as at the end of 2021. Furthermore, yield compression was around 0.3% in 2021, which was driven by the improved position of our portfolio, as well as from the strong underlying market fundamentals in our portfolio locations.
In addition, we recorded EUR 64 million of capital gain as a result of approximately EUR 360 million of disposals, which reflect 22% above book value in the period. We expect to see positive revaluation gain also going forward, along with internal operational growth. We continue to improve the operational metrics of our portfolio and invest in value-enhancing activities, which will drive further value growth. Further, when looking at our disposals as well as market transactions, we still see a gap of valuation to market level, which we expect to lead to further revaluation gain in the coming period.
Could you share some insights on the development of the London market? How did your portfolio perform?
We have seen in recent periods a strong positive momentum in the London residential market, which has resulted in an increase in demand, particularly in London's middle class boroughs, with upscale inner city also recovering. This underlines the importance of diversification within markets with our portfolio well distributed across different boroughs with their own sets of demographic trends and target groups, reducing dependency on specific target groups. At the same time, our portfolio benefits from strong micro locations in close proximity to underground and overground stations. We saw another quarter of strong vacancy reduction within the portfolio, resulting in a vacancy of 5.8% compared to 8.4% during the lockdown periods and pretty much in line with pre-pandemic levels. The fundamentals of London remain positive. London has its own unique set of value drivers, which provide diversification benefits compared to the main German cities.
We see our London portfolio as accretive to the company. We used the market opportunity in recent years to build up a sufficient scale at very attractive prices. We currently have a solid platform in the market and feel that the portfolio has reached a comfortable size. Our main portfolio focus will continue to be Germany's main metropolitan areas.
Could you share your view on the current inflationary environment? How are you affected by the higher inflation? What is your view on interest rate changes?
We have seen increased levels of inflation in 2021 and see it also in 2022, which impact us in different ways. General inflationary pressure have increased, resulting in increased personnel costs related to external service providers, as well as IT. We saw a slight increase in our operational cost base. However, the cost increases were offset by increased efficiencies, internal growth, and cost recovery from tenants. Moreover, as we operate a high EBITDA margin, cost component is relatively small and therefore the impact of inflation is limited. Since the latter half of 2021 and continued into 2022, there has been significant inflation in energy prices, initially driven by the strong rebound in economic activities following the easing of COVID restrictions and more recently as a result of the conflict between Russia and Ukraine.
This has resulted in higher prices of energy in our own operations, as well as higher energy costs for our tenants, which is mostly recoverable. Therefore, also here, operational profits are not significantly impacted. In addition, we see inflation of material costs, such as cement and steel, which have increased in recent months, mostly due to supply chain disruptions and energy cost inflation. This may result in further inflation of construction costs, which would impact our refurbishment and construction costs, although we do not expect such an increase to be very significant and within a manageable range. Higher construction costs may, however, result in additional tailwinds for our standing portfolio, as it may limit the supply and further increase both the gap between supply and demand, as well as between portfolio values and cost of new construction.
In regard to interest rates, it is hard to assess what the direction will be in the medium term. In recent months, we have seen inflationary pressure putting upward pressure on interest rates. While the ECB is expecting inflation to last longer than previously expected, they do expect price pressure to decrease in the course of 2022. However, despite recent increases in bond yields, the spread to rental yields remains very wide and have a higher buffer in comparison to historical yields. In any case, GCP has a well-structured maturity profile as a result of its proactive debt optimization in recent years, with an average maturity of six years and average cost of debt of 1%.
Could you provide some more information on your acquisitions? Where did you acquire properties, and at what multiple? What is your pipeline?
In 2021, we acquired over EUR 700 million of properties across several transactions. The properties were acquired at an average factor of 18. The acquisitions include approximately 6,700 units located mainly in NRW, Berlin, Dresden, Munich, and London. Our London acquisition include mainly properties located in the London boroughs of Waltham Forest, Havering, Newham, Bromley, Lambeth, Merton, Haringey, Hounslow, Wandsworth, and Harrow. The properties are mostly fully occupied and also include over 150 units in the pre-letting stage, which will start generating income in the upcoming periods. We have recently signed acquisition amounting to EUR 100 million located in Berlin, which we expect to close in the coming period. Besides this, we have a pipeline of several deals worth a couple hundred million that we are reviewing.
We will remain disciplined and only acquire properties when we see attractive deals in strong market at discount prices. As the acquisition market remain highly competitive, we remain focused on optimizing value for the company. In addition to acquisition, we bought back over EUR 270 million worth of shares in 2021, representing 7% of the outstanding share amount. The share buyback program was finalized in November 2021 and will contribute fully to the FFO I per share in 2022.
Could you provide some further information on the changes in maintenance and repositioning CapEx? On a per square meter basis, why did the CapEx increase? What are your expectations going forward?
In 2021, GCP spent EUR 22 million on maintenance and refurbishment expenses, which was 18% lower compared to 2020, when we spent EUR 27 million. On an average square meter basis, maintenance expenses reduced slightly from EUR 5.6 per sq m to EUR 5.5 per sq m. The decrease was mainly the result of disposal activities in recent periods and the acquisition of higher quality properties, which have a relatively lower maintenance burden. Furthermore, due to the stronger focus on our core locations as a result of disposals of non-core properties, we were able to increase efficiencies. While there was cost inflation in our maintenance expenses, the efficiency gains were able to offset these. In regard to repositioning CapEx, we spent EUR 63 million in 2021, which is in line with the EUR 62 million we spent in 2020.
Per average square meter, the repositioning CapEx increased to EUR 16 compared to EUR 14.1 per average square meter. The increase here is mainly due to an increase in the CapEx projects we undertook, as well as from cost inflation. The increased investments have also contributed to the vacancy reduction in recent periods. The repositioning CapEx further includes EUR 3 million of modernization CapEx, which directly contributes to higher rents. We expect that the higher amount of CapEx spent in 2021 will support rental growth and vacancy reduction all in the coming periods. While we continue to work on enhancing the efficiency of our CapEx and maintenance projects, we are currently seeing relatively strong inflationary pressures impacting maintenance and CapEx, and as a result, a certain increase might be seen in the next periods.
Are you looking to drive internal growth through modernization? Also, what is the status with the Berlin development project?
In 2021, we spent around EUR 3 million on modernization projects. We focus on our investments on low-hanging fruits and invest in locations where large portions of the rent upside has been already captured. Towards the end of 2021, we finalized the analysis and planning of several modernization projects in the portfolio. The current project pipeline is relatively small at around EUR 20 million. While we expect to add further projects in the coming periods, we do not plan a major shift in strategy and will only execute projects on a case-by-case basis where we see a sufficient value creation. We are currently expecting around 8% yield on cost for the projects identified. As to the Berlin development, we broke ground at the end of 2021. The project is located in Lichtenberg, close to the border of Prenzlauer Berg.
The area is a residential location, and we see the potential in developing the project. We expect to finish the project construction in 2025. At this stage, we are developing the first plot, which should result in approximately 450 new units and generate us around EUR 5 million net rent per annum, translating to a total yield over cost and land value of 4%-5%. In parallel, we are working on receiving the building permits for the second plot, which is still in the zoning process.
Could you provide some more details on your disposal? How many units did you dispose, and what was the multiple? Do you have a disposal pipeline?
In 2021, we disposed around EUR 360 million of property. The disposal comprised mainly of non-core assets, which were mostly situated in Eastern German cities in Saxony-Anhalt, Thuringia, Saxony, and Brandenburg, as well as secondary cities in NRW. The disposal additionally includes the disposal of building rights. In total, we disposed around 8,000 units at an average factor of 17, including around 2,300 units, which were previously classified as held-for-sale. The disposal also includes the sale of development rights over EUR 30 million, which was sold at a high premium to book value, validating the high value of development portfolio.
The disposal generated capital gain of EUR 64 million, reflecting a premium of 22% over book value and EUR 101 million disposal gain over cost, resulting in a profit margin of 39% and an FFO II of EUR 298 million. Through those disposals, we are able to crystallize the value that has been generated so far, allowing us to utilize funds to have been freed up to further enhance the quality of the portfolio by acquiring high quality properties with stronger growth potential. Furthermore, the disposals above book value serve as testament to the conservative nature of our valuations. We currently have properties in assets held-for-sale amounted to EUR 100 million, which we expect to dispose in the coming periods depending on the offer we receive. Besides those, we may dispose further assets on an opportunistic basis if attractive opportunities arise.
Could you please break down your like-for-like, which areas contributed? What was the impact from indexation? What are your expectations for the next year?
We recorded 2.8% like-for-like rental growth, which break down to 2.2% from in-place rental growth and 0.6% from occupancy increases. The like-for-like rental growth was a strong contributor to the rental growth, as well as the increase in in-place rent, which reached to EUR 8.1 per sq m, and the lowest vacancy for GCP on record of 5.1% as of December 2021. However, we still see a strong gap to market rent, which we expect will drive further rental growth also in the future. The 2.2% in-place rental growth comprise of 0.8% from re-letting and 1.4% from indexation, with the indexation rent impacted by the reversal of Berlin rent cap.
We saw solid like-for-like performance across the portfolio, but particularly in Berlin, NRW, Leipzig, Dresden, and London. Berlin like-for-like was over 7% as a result of the rent cap, which was effective at the end of 2020 and since then canceled. In London, we reduced vacancy significantly from 8.6% as of December 2020 to 5.8% as of December 2021, which was driven by a strong rebound in re-letting activity following the easing of restrictions related to the corona pandemic. The strong vacancy reduction has driven strong like-for-like in London of over 4% as of December 2021.
As a result, the occupancy in London portfolio has nearly reached pre-pandemic levels, with positive momentum currently expected to continue. For the portfolio as a whole, we continue to see positive development and expect like-for-like rental growth over 2%. As we have significantly reduced the vacancy in recent period, we expect this to be a smaller driver of like-for-like rental growth in the coming years.
Thank you. I think those were the questions so far. We will now start the open Q&A part. If you have several questions, then we kindly ask you to ask all your questions together right at the beginning. We are now looking forward to your questions, please.
Ladies and gentlemen, if you have a question for our speakers, please dial zero and one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find your question is answered before it is your turn to speak, you can dial zero and two to cancel your question. If you are using speaker equipment today, please lift the handset before making your selection. One moment please for the first question. The first question is from Manuel Martin of UBS. Your line is now open. Please go ahead.
Hello, gentlemen. Thank you for taking my questions. I have two questions, basically. The first one would be on the valuation gains you achieved this year. The line was too bad, but could you give me again or elaborate on the portion of yield compression and the portion of operational performance in your valuation gains? That would be the first question. The second question would be on your CapEx program. Have you included any kind of decarbonization program or outlook on what decarbonization could cost for Grand City? Thank you.
Thank you, Manuel, and good morning. First about the revaluation gains. We had a yield compression of 0.3% in 2021, and that was the main driver of the revaluation gains in the year. As to the CapEx, in 2021, EUR 16 per sq m, we did not have a significant amount related to CO₂ reduction. We're currently evaluating the costs and the methods in order to reduce the CO₂ significantly. We're looking also on the subsidies and the grants and building up a program which will come up in the next periods. Thank you.
The next question is from Paul May, Barclays. Your line is now open. Please go ahead.
Hi, everyone. Thanks very much for taking my questions. Just got two or three. First one is, does anything change within the business and the operations and the strategy post Aroundtown's increased share ownership and now full consolidation of Grand City within their accounts? I think you mentioned that Berlin like-for-like rent growth came in at 7%, which is sort of a recovery post the removal of the rent cap. Given strong rent increases were kind of a driver of the implementation of the rent cap, and the government still appears to be of the view that rents are growing too fast. Do you think levels such as 7% per annum are sustainable? Finally, you mentioned, I think, on the limited effect from an inflationary impact.
I mean, if tenants are facing material increases in utility costs, and as such, take-home pay or disposable income is lowered, particularly if you add on increases in food costs as well, are they still able to sustain or accept further rent increases to the level that we've seen previously? Or do you believe that there will be greater pushback from tenants? Thank you very much.
Okay, thank you very much for your question. I take question number one and three out of your questions. The first one relating to Aroundtown, there's no change in the way we operate. There's no change in the management of the company, the independence of the management of the company. Aroundtown has said that they do not expect to make any changes because their growth and shareholding in the company. This will be remaining as is in the past. Regarding the cost increases for tenants, there are discussions in the government how to ease the burden on the tenants for cost increases related mainly to energy costs.
We expect that there will be probably, especially for the lower income groups, more support coming forth if that becomes critical. We do not expect that our like-for-like rental increases, which we can do under the Mietendeckel regulations, will be affected by this. The next one is from.
Yeah, as to the rent increase in Berlin. The rent increase of like-for-like 7% was on the back of the reverse of the rent cap that we had the year before in Berlin. I'd say the 7% was definitely a one-time, relatively high number. Going forward, we'll see Berlin and all of our portfolio around 2% in like-for-like in 2022. The like-for-like is coming mainly from reletting, so it has a real, I'd say, a small impact from indexation. Indexation is around, I'd say, expected to be 0.7%. Therefore, the discussions on rent increases will only have a small impact on the like-for-like and is already factored in our guidance for the year. Thank you.
The next question is from Andres Tong, Green Street Advisors. Your line is now open. Please go ahead.
Hi. Good morning. I was just wondering about the like-for-like rent growth in the last quarter. It seems to have accelerated from Q3 2021. Is this driven purely by Berlin's high inflation and then recovery in London? I guess what happened in the other parts of the portfolio on a like-for-like basis. The second part, in terms of like-for-like rent growth guidance, it does seem a little bit light, you know, just looking at your historical figures as well, and also considering that I would expect at least to get a further boost from London as that market recovers.
Thank you for your question. As I mentioned, Berlin did give the boost in the last quarter, which brought us up to 2.8%. The effect of Berlin itself was around 0.7%. If I would take that out, we're around just over 2% the way we see next year. London was positive as well. London in the year was also above average, was about 4% like-for-like, which also had a positive impact. Looking into 2022, as I mentioned, most of the like-for-like will come from reletting. We were quite conservative on rent increases we took in light of the regulatory environment. Of course we see this as an upside. London is additional upside, that's why we guide over 2%. We see 2% as the lower level that we expect for 2022. Thank you.
The next question is from Marius Fuhrberg, Société Générale. Your line is now open. Please go ahead.
Hi there. Good morning. Thanks for taking my questions. Just firstly on the development plans you have in Berlin, would it be possible to give us a bit of a reminder of the development plots here, and your future ongoing plans? I think you mentioned that you're developing out the first plot, but is there potential that as the remaining plots right to receive that you potentially consider a dispose of these? Also a bit more information on the plots you did dispose of in the year would be helpful.
Yeah, sure. In the last quarter, we disposed plots in Hamburg. It was a plot that we penciled in for disposal. We didn't expect to develop it, so it went according to the plan, so we disposed it, and we basically crystallized on the gains we had there. As in Berlin, we have. I'd say in Berlin, we have the largest plot is around EUR 100 million, which we are developing. As mentioned, we just broke ground, and we expect to develop it. We're expecting to be completed in 2025. It will generate us around EUR 5 million rental income. That's on one portion of that plot. The second plot is a bit behind in terms of of permits.
We expect now that we are advancing with our first plot that will follow to the remaining plots in Berlin. We currently evaluate either we would develop it or we would dispose of the property. I'd say it's at a single property basis. However, we are continuing with the permit process just to crystallize more value and to have all the options open. Thank you.
Okay. Those seem to be the questions which we're following. We thank you very much for your attention. We thank you for joining the call, and hopefully, we'll have opportunities to meet in person not too long from now. With all that, we wish you a very good day, and stay healthy. Thank you very much.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.