Good day, and welcome to the Grand City Properties H1 2022 Results Presentation. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Theresa Sale, Manager of Corporate Communications. 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 first half of 2022. With me today are CEO and CFO, Refael Zamir, Chairman of the Board of Directors, Christian Windfuhr, COO, Sebastian Rehmert-Valtin, 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 very much, and welcome also from my side to our First Half 2022 Financial Results Presentation. Let us turn to slide two for an overview of the financial highlights for the first half of 2022. The first half was marked by our continued strong operational performance and the stability and resilience of our portfolio and our operational platform. We continue to be comfortably within our guidance during H1 2022, which mainly results from our robust operational platform. We see good like-for-like net rental growth of 3%. Our portfolio fundamentals remain strong, with the main parameters improving over the last years. Our vacancy reached an all-time low of 4.7% as of June 2022, and came down from 6.7% at the end of 2019.
The letting trend is strong and we expect to continue and extract internal growth from our portfolio. We highlight that despite volatile capital markets, our operations and business remain strong, reflected in an increasing FFO I per share of 5% and a 3% growth in EPRA NTA, adjusted for the dividend to 30.6 per share. Turning to slide three, you will note that in the first half of 2022, we also continued to improve our capital structure with no debt maturities until Q2 2024, and 95% of our debt fixed or interest hedged. We maintain a strong liquidity position with around EUR 450 million in cash and liquid assets, which covers debt maturities until Q2 2025, and almost 12% of total debt, plus EUR 300 million undrawn revolving credit facilities.
We also deployed over EUR 615 million to manage our debt proactively through redemption and repayment of near-term maturity debt, resulting in a clean maturity schedule. Our LTV came down 1 point to 35%. Our cost of debt remains at 1.1%, and average debt maturity of 6.4 years. Our encumbered assets ratio amounted to EUR 9 billion and 91% of value at the end of June. We believe that all these factors, including an ICR of 6.6x, 6.5x last year, an equity ratio of 53%, and a credit rating of BBB+ stable by S&P, shields us to a good extent from the current interest rate environment and volatility in the capital markets. With this introduction, let me hand you over to Refael Zamir for the following few slides.
Thank you, Christian, and good morning, everyone. Let us move to slide four and start with the net rental income, which increased by 6% to EUR 195 million compared to first half previous year. Adjusted EBITDA increased by 3% to EUR 152 million during H1 2022 compared to same period last year. Our operational profit was driven by consistent improvement in our operational performance, as well as by optimizing our cost structure. Our net rental income like-for-like in June 2022 grew by 3%, with 2.2% from in-place rent growth and 0.8% from occupancy growth.
On the other hand, we continue to experience cost inflation in several cost items, mainly in personnel expenses and with external service providers. Furthermore, strong increases in energy prices have resulted in higher operational expenses, although those are recoverable from tenants. To support our tenants on how they can better control their energy consumption and those energy costs, we recently launched an integrated all-channel info campaign on the subject of energy savings. The campaign include a large variety of information content, including info videos, flyer posters, a social media campaign, and information through GCP's service center and tenant website. We are encouraged by the government's recent commitment to support Germans with the increasing energy prices, but remain conservative as to the impact on us as the landlords.
Property valuation and capital gains in H1 2022 were EUR 234 million, compared to EUR 180 million in the year before. During the first half of 2022, we evaluated around two-thirds of our portfolio, and we plan to evaluate the rest of the portfolio in the coming periods. Revaluation gains were driven by operational improvement and the quality of our portfolio locations, supported by small change in yield compression. In the first half of 2022, we executed a small-scale disposal amounting to EUR 14 million, completed at a premium of 17% over net book value. Comprising most development rights and condominiums in Berlin. Our profit for the period amounted to EUR 234 million and represents the improvement in the operational performance, as well as the strong revaluation results.
Basic earnings per share resulted in 1.21 EUR, 21% per share against 0.72 EUR during the same period last year. On slide five, you can see that our FFO I during the first half 2022 is up 3% against the first half previous year and amounted to EUR 97 million. FFO I growth benefited from impact of net acquisition in 2021 and solid like-for-like rental growth. The optimization of the financial profile in 2021 and the repayment of over EUR 600 million of debt in the first half of 2022 supported this further, but were offset by slightly higher leasehold expenses. The FFO I per share increased to 0.59 EUR against 0.56 EUR the year before, has been additionally supported by full impact of the share buyback in 2021,
Annualized FFO I yield and dividend yield are 8.5% and 6.4% respectively, based on H1 annualized and last closing share price. On slide six, you can follow our EPRA NAV metrics. All EPRA NAV metrics show an increase in the first half of 2022 compared to year-end 2021. EPRA NRV per share remains stable. EPRA NTA per share increased by 1%, and EPRA NDV per share by 12%. On an absolute basis, EPRA NRV and EPRA NTA grew by 4% each, and EPRA NDV grew by 16%. EPRA NTA increased by 3% when adjusted for a dividend which issued in July, and for which the provision was already recorded at the end of June.
On the same slide, number six, we present you some more information on our approach regarding the EPRA NRV, EPRA NTA, and EPRA NDV. Let me now hand you back to Christian.
Thank you, Refael. Now to our portfolio overview on slide seven, where you can see that our investment property increased by 5% since December 2020 and reached EUR 9.8 billion in June 2022. We have added to the slide some information on the value of Grand City Properties in Germany, including land, and compared this to the median replacement cost, excluding land, in large German cities. This chart highlights two things. Firstly, it underlines the conservative nature of our average valuation, which are materially below replacement cost. Any new supply coming in would be nearly twice as expensive. Furthermore, when comparing our in-place rental values to the replacement cost, it becomes clear that significantly higher rents are required for new development to be profitable, which supports our rental upside and increases the relative attractiveness of our properties for prospective tenants.
Our annualized rental income of EUR 396 million at the end of June 2022 has an upside potential of 20% based on current prices, which amounts to EUR 475 million net rental income once the full market potential is reached. This will be driven by continued in-place rent and occupancy growth. In total, we have around 666,000 units at the end of H1 2022, and the portfolio has remained fairly unchanged since the end of 2021. Vacancy has decreased further, reaching a new all-time low of 4.7%, and in-place rent grew to EUR 8.2 per square meter. We have seen vacancy decreasing across our portfolio, specifically Berlin, Dresden, Leipzig-Halle. Vacancies are now below 4%.
NRW is at 5% vacancy compared to 5.6% in December, and London vacancy is now at 5.2% compared to 5.8% in December. In the period, we have acquired EUR 250 million of quality properties in London and Berlin. The acquisitions were signed in the beginning of the year, and the closing was at the end of the period, therefore not impacting our H1 2022 operational results. We expect to see the positive impact of these properties going forward. The general overview of our portfolio on slide eight shows that we continue to maintain a well-diversified portfolio in strong locations in Germany and London. 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 nine, 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. The remainder is in affordable locations, primarily in Reinickendorf, Treptow, Köpenick, and Marzahn-Hellersdorf. In North Rhine-Westphalia, Germany's largest metropolitan area, we have 21% of our portfolio, with Cologne, the fourth largest city in Germany, being the strongest location with around 29% and the rest distributed throughout the region's main cities. Our quality London portfolio on slide 10 makes up 20% of our portfolio and is well diversified in the suburbs of London, with around 80% of these properties situated within short walking distance to underground or overground stations.
The total London portfolio consists of around 4,500 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 95% as of June 2022. On slide 11, 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 4% of our portfolio are in Hamburg and Bremen, Germany's largest northern cities. Our maintenance and repositioning CapEx on slide 12 was EUR 10.9 per average square meter for the first half 2022.
This amount is slightly more than in the previous year, primarily as a result of larger volume of CapEx projects undertaken in the period, resulting in repositioning CapEx of EUR 8.3 per average square meter. We were able to mitigate the majority of cost inflation as we use long-term contracts and further offset inflation through increased efficiencies, which is also reflected in the lower maintenance expense, which was EUR 2.6 per average square meter for the period. Repositioning CapEx is directed towards improving the asset quality and supporting the letting activities. The repositioning CapEx also includes investments into the surroundings of the assets. As a result, the AFFO for the first half of 2022 amounted to EUR 63 million compared to EUR 64 million during the same period in 2021.
We additionally invested around EUR 2.5 million in modernization projects in the period and a further EUR 29.6 million in pre-letting modifications, mostly related to properties in London and Berlin. Let me now hand you back again to Refael.
Thanks, Christian. Our financial policy presented on slide 13 remains unchanged. We keep significant headroom to our financial covenant and continue to maintain healthy relation with banking sector, which provides additional flexibility to our financing resources. We are committed to maintain a conservative financial policy. Our dividend policy remains at 75% of our FFO I per share, and based on the Friday closing share price, reflects dividend yield of 6.4%. We also show on this slide that we remain much above our bonds covenant in all respects. On slide 14, we view our strong financial profile. As mentioned in the highlights already, our LTV is at 35%. Down from 36% in December 2021. We have taken care to maintain and improve our debt profile by repaying short-term financial debt, taking advantage of favorable market condition in previous periods.
Our cost of debt remain at 1.1%, and we maintain a high interest hedge ratio of 95%, which limits the impact of interest rate changes on our cost of debt for the next few years. During H1 2022, we have repaid EUR 615 million of debt using our strong liquidity position, which amounted to around EUR 1.1 billion at the beginning of the year. Presently, our liquidity position is approximately EUR 450 million, which is a cash cover of three years plus EUR 300 million undrawn credit lines without make-whole. Unencumbered investment properties are EUR 9 billion and reflect 91% of our values, giving us a good financial flexibility with bank financing.
Our interest coverage ratio is 6.6x, and our corporate credit rating remains at BBB+ with a stable outlook by S&P. On slide 15, we present our debt maturity schedule showing, as previously mentioned, our cost of debt at 1.1% and our average debt maturity at 6.4 years. We note that our current pipeline for bank financing is between 2%-2.5%, well below bond yields. We also show in some more details that there are no upcoming maturities in the next two years, and that cash and liquid assets cover our debt maturity up to mid-2025. We hedged the cost of debt of maturities and highlight that maturities up to 2028 are above current cost of debt. Therefore, the refinancing impact, if needed, will be less significant.
Head back to Christian.
Thank you. On slide 16, we want to present a short refresher on our perpetual notes, providing an overview of the characteristics of perpetual notes and our options for upcoming call dates. The very defensive characteristics of perpetual notes make them an attractive instrument in times of uncertainty. With no maturity dates, Grand City Properties' sole option to call the notes, no covenants, and senior only to full shareholders' equity, our perpetual notes are 100% equity instruments under IFRS. The defensive nature of these instruments is supportive of our corporate credit rating, and they remain an integral part of our capital structure. As you are aware, the rating agencies conservatively consider 50% as equity and 50% as debt, whereby the equity content may change under defined circumstances.
In the beginning of 2023 is the next call date for the EUR 200 million euro notes, and we have outlined the options that we are considering. The first option would be to proactively replace the note with a new series before the call. Generally, this is our preferred option, which we have carried with our previous notes. The current high yield for new perpetual issuances make this an unattractive proposition for the business. We still have time to act and are monitoring the markets closely. The second option would be to replace partially with another equity content instrument.
The third option is to use the authorized allowance according to S&P, limited to 10% of the full perpetual balance per year and up to 25% in 10 years, which would enable us to repay most of the outstanding amount in the next series, while replacing the remaining amount through one of the first options. The last option would be to extend the notes and not call them. Under this scenario, there will be a reset from 2.75% coupon to around 5% based on current swap rates, and the equity content of only this specific note will be removed according to S&P's methodology. We have the option to call at a later stage at any coupon payment date with replacement of new issuances when rates are more attractive.
Under the last option, we note that the equity content for the other perpetual notes remains unchanged. As the upcoming call is on a small series, the impact of losing EUR 100 million equity content is not significant. Before I close, let me point out to you that in the appendix of this presentation, we give you more detail regarding ESG and sustainability, which is also well covered in various documents on our website. Our full sustainability report, which can be downloaded from our website, is available to you. With this, allow me to confirm our guidance for 2022 on slide 17. FFO I between EUR 188 million and EUR 197 million. FFO I per share between EUR 1.13 and EUR 1.18. Dividend per share between EUR 0.85 and EUR 0.89 per share.
Total net like-for-like rental growth greater than 2.5% and LTV below 45%. FFO I will be driven by increased operational performance through increased like-for-like rental growth and the full year impact of 2021 and 2022 acquisitions and debt optimization measures in 2021 and 2022 year to date. With this, let me hand you back to Theresa for our Q&A.
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. Could you provide a market update? How is your portfolio impacted by the market developments?
Unlike the capital market, the German residential operational market continues to perform well and has so far not been significantly impacted by recent negative developments. We continue to perform positively, resulting in high rental income like for like performance and by continuous reduction in our vacancies. The like for like rental growth was 3% in June, which was driven by 2.2% in place rental growth and 0.8% occupancy increase. Vacancy in our portfolio has reduced further and stands at 4.7% as of June 2022, down from 5.1% in March and from 5.7% 12 months ago, while our in place rent has grown to EUR 8.2 per square meter.
We have seen good performance across all locations, and we see so far expect to continue to see the operational performance continuing. This has also had a positive impact on our values, which increased to 2,297 EUR per square meter. The value like-for-like increased by 2.5% net of CapEx, or 3.3% including CapEx. We continue to see positive long-term demographic trends intact, which are the main drivers of the long-term demand. Furthermore, the labor market remains strong, including wage growth, supporting rent affordability in the long term. On the supply side, we see a further reduction in new construction driven by strong increases in construction cost, shortage of staff, higher interest rates, and supply chain and regulatory constraints.
The strong rise in construction costs in recent periods further increased the gap between our portfolio values and replacement costs, which is supportive for our valuations. Furthermore, higher mortgage rates increase demand for rental apartments as these become relatively more affordable. Additionally, demand is further driven by the impact of the Ukrainian refugees. So far, more than 700,000 Ukrainians are estimated to have settled in Germany, and the number continues to grow. The housing requirements for these refugees have a strong impact on the demand for affordable housing across Germany, which fuels demand further. All these issues together further widen the supply demand imbalance in the German residential rental market in the short and medium term, which we expect will drive operational results and support our portfolio valuation.
We also see some negative parameters, such as increase in energy cost and inflation in other ancillary costs, which we expect will put pressure on rent increases in the coming periods and might offset some of the positive trends. Our London portfolio also continues to perform well, with strong underlying demographic trends and a very diverse set of demand drivers. These demand drivers also provide diversification to our German portfolio. In the current environment of higher inflation, the London portfolio provides a faster conversion of inflation into rental growth as compared to our German portfolio, where the inflation is captured over a longer period. In the first half of 2022, vacancy decreased further to 5.2% compared to 5.8% as of December 2021 and 7.3% one year ago in June 2021.
Like-for-like rental growth in London was 3.5% in the last 12 months. With the current stabilized vacancy levels, we are focusing more on increasing rent levels and as a result, the pace of the decrease in vacancy may be slower.
How do you see the inflation impacting your business? How does this impact your top and bottom lines?
Over the last month, inflation has remained high, driven mostly by continued higher energy prices and the spillover effect into our categories, such as the food and construction materials. Those higher energy prices are driven by a mix of issues. Most materially, the war in Ukraine and continued supply chain issues from the COVID-19 pandemic. In recent months, the inflation rate has ended its acceleration somehow as oil prices have stabilized. While energy prices remain volatile and uncertain in coming months, particularly the potential end to gas imports from Russia, market expectations are that inflation rates will start to gradually decline from 2023 onwards.
In the first half of 2022, we continue to see general inflation across our cost base, mainly experiencing inflation in higher personnel expenses, costs related to external service and IT which result in some increase in our operational cost base and our overhead expenses. The increase is in the range of 5%-10% on average. As we operate at high operational margin, the increase has manageable impact on the bottom line, especially as we continue to increase our rents. In addition, material prices continue to increase in the first half of 2022, which include partial availability of subcontractors, which has slowed down some of our works and resulted a cost increase of 10%-15%. We believe that the increase in the material prices has peaked, and we expect to see gradual decline also here.
In any case, we currently see a limited impact as for the near terms, we have contractually locked in prices for the main project we are executing. However, in the current environment, we are re-examining our project and execute only where we see high return. The higher inflation in recent months has also had a significant impact on interest rate expectation. This has resulted in a sharp increase in bond yield as well as swap rates. Although those have reduced somewhat since their peak in June, but they remain at higher rates compared to our previous years. Furthermore, the ECB increased interest rate by 50 basis points, bringing back to 0% in July, and is currently expected to increase the rate by another 50 basis points in September. This has also resulted in higher Euribor rates with the three-month Euribor turning positive in July.
The higher interest rates have not had a material impact on our interest expenses. GCP is well prepared for the current environment due to its proactive debt management and conservative financial profile. We have no debt maturity until 2024 and maintain strong liquidity with cash and cash equivalents of over EUR 450 million, covering our debt maturity until mid-2025. Furthermore, as currently 95% of our debt is fixed or swapped, we are not being impacted by higher Euribor in a material way on our current interest expenses. Our cost of debt remains low at 1.1%, and our ICR is very strong at 6.6x. Higher inflation, combined with current underlying market dynamics, additionally have a positive impact on rent levels, with recent Mietspiegel figures showing strong growth potential.
We expect to continue to derive rental growth in our portfolio in the future, which should mitigate higher operational costs as well as higher financial costs in case higher interest rates stick around for the long term.
With energy prices increasing sharply, do you see issues with tenants paying their ancillary expenses, potentially resulting in a liability for you?
When the higher expenses for energy and heating increase the financial burden on the population as a whole, we are currently not seeing material impacts on our collection rates. The topic of higher energy cost has been widely covered in all media, and we have proactively informed our tenants of the issue since the beginning of the year. Recently, we launched an additional information campaign across all channels with the aim of providing tenants with information on how to effectively save energy and, thus, reduce costs. The campaign included info videos, flyers, posters, a social media campaign, information through Grand City Properties service centers, and more. That being said, the issue with increasing energy prices is not specific and isolated to our tenants alone and is impacting the entire market across many sectors.
As a result, we do not expect that large numbers of tenants will be surprised by the higher ancillary expenses. Furthermore, we increased the prepayments where possible, and sent out letters to tenants for early voluntary increases of the service charge, which has been accepted by many of our tenants.
We note that we have had high collection rates during the pandemic, which does reflect the willingness of our tenants to pay and not to be in debt. The government has also provided relief through direct support and tax rebates. Following recent government declarations, we expect further government support to those who need it in the event the issue becomes more severe. Because of the combined effects of these measures, we do not expect to see material issues with collecting and settling service charges with tenants, and therefore, do not have a material liability as a result of the higher energy costs. However, we conservatively made a provision of EUR 2 million in relation to the potential lower collection of the heating costs.
Could you provide more details on your like-for-like rental growth? Were there any specific regions driving the result? What was the split between indexation and reletting? Do you see any negative impacts on your like-for-like in the coming months?
We recorded like-for-like rental growth of 3%, of which 2.2% came from in-place rent growth and 0.8% from increase in occupancy. The in-place rental growth of 2.2% can be broken down in 1.4% from reletting and 0.8% from indexation. The like-for-like rental growth is driven by operational measures and very strong market development in our main markets, all of which performed well, but we saw particularly strong growth in Berlin and London. In Berlin, the like-for-like rental growth amounted to 5%, which is a very strong result considering that the revision of Berlin rent cap is no longer having an impact on the like-for-like result. In London, we saw very good result with a 3.5% like-for-like rental growth.
We continue to see significant upside to market levels across our portfolio as underlying fundamentals remain very positive and our rent levels remain affordable. While inflation remain high, particularly in energy and expenses, we also see strong wage growth and government support mitigating some of the impacts. Combined with the wide supply and demand imbalance in the market, this is driving up market rents, which also flows into the Mietspiegel, providing further rental upside for the coming years. We therefore continue to expect positive development in like-for-like rental growth, but continue to watch carefully the impact of inflation in ancillary costs. For the year, we continue to expect more than 2.5% like-for-like rental growth.
How much of the portfolio was revalued in the first half of 2022? What do you expect for valuations in full year 2022? What is the impact from inflation and increasing interest rates?
We continue to see a good trend in valuation in the first half of 2022. Approximately two-thirds of the portfolio has been revalued in the period. The like-for-like after CapEx amounted to 2.5% or 3.3% including CapEx, which is calculated on a full portfolio basis, not only on the portion revalued. We have seen positive revaluation across all markets, especially in NRW, Dresden, and Leipzig. We note that the recent volatility in rates resulting from the uncertainty regarding future inflation and interest rates does not necessarily have a direct impact on valuation, which is mostly based on a 10-year DCF model.
The DCF model may include higher cost inflation and higher discount rate than previously assumed, but on a 10-year basis, the level of rent is also expected to increase faster due to the longer-term correlation between inflation and rent index level, which is also the case under the Mietspiegel regime. Furthermore, the strong inflation in recent period has significantly increased construction costs. This has resulted in an even wider gap to replacement cost, especially when considering the cost of land, with the median replacement cost plus land in large cities more than double our book values in Germany, which is another strong support for our valuations. As we continue to work on improving our portfolio and operational metrics, we expect valuation to continue to benefit from the value-enhancing measures we undertake.
However, depending on the long-term stabilized interest rate, there may be pressure on the real estate yield in the future. That being said, there is still a gap between our book value and recent transactions supporting our valuations. In the transaction market, there is no substantial even evidence to imply a significant downturn in valuations. However, the level of transactions has decreased substantially. Many transactions in the market have been put on hold as owners continue to see the strong fundamentals of the business and have no liquidity needs to sell. While buyers are wishfully waiting to see a price change, we do not expect transaction volumes to increase in the next quarters. We do expect the transaction volumes to increase in the next quarters. The direction of the actual transaction market will eventually also impact the valuations.
We expect to have more clarity in the second half of 2022.
Could you provide some info on your financing? With bond yields increasing significantly, are you able to raise funds from bank loans instead?
While in recent years we sourced our financing mainly from the capital market, we continue to maintain our relationship with banks and other lenders to maintain good access to private debt in case public markets were less attractive. In the current environment, we see the benefit of this strategy as we can obtain bank financing at significantly more attractive rates than those offered by the capital markets. We are currently seeing all-in fixed interest on secure bank debt at around 2.5% interest for seven-10 years, which is around 1%-1.5% cheaper than unsecured loans. We continue to maintain a very strong base of unencumbered assets amounting to EUR 9 billion, which reflects 91% of our portfolio. Additionally, we have unused credit lines amounting to EUR 300 million with no make-whole.
This wide base of high-quality unencumbered asset, combined with our strong relationship in private debt sector, provide us with a large pool of potential liquidity should we need it. While our strong liquidity position and well-structured maturity profile with no debt maturity till 2024 means we have no immediate refinancing needs in the coming periods. We are currently reviewing sizable pipelines of bank loans across several transactions and financing institutions totaling several hundred million EUR, which provide a liquidity source that we would be able to tap if we see accretive use for the funds.
You made few acquisitions in the second quarter of 2022. Could you provide some details on these? Where were these located and what were the multiples? Could you provide some details on your disposals?
We closed approximately EUR 250 million of acquisition in the period. The acquisitions were closed throughout the end of June and therefore did not have material impact on our operational results. They will start to contribute in full in the coming quarters. The acquisitions we closed in Q2 had already been signed towards the beginning of Q1 and were located in Berlin and London. The Berlin acquisition amounted to approximately EUR 100 million at a factor of 26 and comprises around 650 units. The property in London includes 350 units. The property is situated in the Borough of Brent and was acquired at the effective NOI factor of 24. We currently have only a very limited acquisition pipeline which fits to our acquisition criteria as the pricing remains rather high.
For future opportunities, we continue to stick to our acquisition criteria and are currently extra mindful of the higher cost of funding. Therefore, we do not expect material acquisition in the near terms. We keep our focus on internal growth, increasing occupancy and rents, which provide very accretive return. We have a revisionary upside of 20%, which is expected to be captured in the upcoming years. In the period, we disposed around EUR 14 million of assets. Our disposal mainly comprise development rights as well as few condominiums in Berlin. The disposal were executed in 17% above book value and at margin of over 100% over total cost, including CapEx. Regarding our disposal pipeline, we have asset held for sale amounting to around EUR 150 million, which we expect to sell in the coming periods.
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.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We will now take our first question from Ellis Acklin from First Berlin. Please go ahead.
Yes, good morning, guys. Thanks for the very detailed presentation. Just one small follow-up I couldn't hear because of the interruption of the line. You mentioned the current terms on the market for unsecured debt, and I didn't hear that. You said that was about 2.5% for bank debt, but I'd like to know what the unsecured is. Thank you.
Hi. As we mentioned, we have a pipeline of bank-secured loans with a 2.5% all-in interest.
Thank you.
Yeah. Okay. I was wondering what you're seeing for unsecured debt right now.
Yeah, we see currently around 3.5%-4% on the unsecured and the bond markets. That's where our bonds are currently traded. Thank you.
Okay, Michael. Thanks.
We will now take our next question from Manuel Martin from Oddo BHF. Please go ahead.
Good morning. Thank you for taking my question. Actually one. It's regarding the valuation gains recorded. You mentioned that you revalue two-thirds of your portfolio, which means that 25% is left for the next half year. Was there a reason why Grand City decided to value that much of the portfolio, 75%?
Hi. We mentioned that we evaluate two-thirds, which is 66% of the portfolio, and we will evaluate the remaining part in the next quarters. I think it's normal. Thank you.
We will now take our next question from Neeraj Kumar from Barclays. Please go ahead.
Thank you. Looking on the options mentioned on slide 16, will it be fair to assume that Grand City won't repay the hybrids beyond the 10% allowed limit on the first call date, if there is no additional equity in hybrids, i.e. solely from the disposal proceeds?
Yeah, thank you for the question. We keep currently all the options open. I mean, we still have time to decide, and there's a few moving parts here that may impact our decision. As we mentioned, our top priority would be to refinance perpetuals. Given the current environment, we see this as unfavorable, but we see there's something that may change. We are monitoring the market, and if these options are valid, we'll go to the other options just mentioned. Thank you.
We will now take our next question from Peter Yu from Wellington. Please go ahead.
Hi there. Sorry. Just on the hybrids question again. You know, and there's kind of two parts to it. I guess you mentioned that it's not attractive to refinance with issuing hybrids in the current market conditions. Just to help me understand, you know, come December, what? If current market conditions remain, how would you deal with this? Because you're gonna reach that 10% limit for S&P if you decide to fully refinance the hybrid. Secondly is, how do you think about, you know, keeping that equity credit for the remaining hybrids versus keeping hybrid holders happy?
Yeah, sure. Thank you. Maybe I'll answer the second question first. The equity credit for S&P is on a notional basis. Yeah. So only the EUR 200 million we're looking at coming in January might be lost in case we don't refinance it or replace it with an equity. So that's our option. So if we would not refinance it, we could do an equity instrument on half of the amount or we would repay up to 10% that we could do according to the budget we have with S&P. Or there's always optionality if really the market continues to be bad and negative to just do nothing and not call in the call date,
We still have the option to call afterwards. We still have the full flexibility, and to evaluate everything at the time. Thank you.
This concludes our call.
There seem to be no further questions from what we can see. We would like to thank all participants in the call. Thank you for joining us. As always, we remain available for any questions that you may have and look forward to meeting in person during some of the upcoming conferences. Thank you very much, and we wish you a good day.
This concludes today's call. Thank you for your participation. You may now disconnect.