Thank you, Haley, and good morning, everyone, from Dusseldorf. So welcome to our full year twenty '20 results call, and thank you for your participation. You have in the call our entire management team today with our CEO, Larsson Lakkum our CFO, Susanne Schroeder as well as our COO, Volker Wiegel. Also, we from the LED side are together in the call. Everybody sits in his or her own office.
So we would never ask you to limit your questions for the Q and A session to three, and you can certainly rejoin the queue in case you still have open questions. You'll find the presentation document as well as the quarterly report within the IR section of our homepage. And please note that there is also a disclaimer, which you'll find on Page two of our presentation. And with this, I hand it over to you Lars.
Thank you, Frank, and good morning everybody also from my side. 2020 was certainly a very challenging year for all of us, while the long term macro and socioeconomic implications of the current pandemic are still unknown. Therefore, am proud of what we as the LEG management together with our 1,600 colleagues achieved as a team. We dedicated €1,000,000 of our foundation to support tenants in need. We enabled home working for all of our staff to safeguard their health and we digitalized many processes to the benefit of our tenants and employees.
From an operational perspective, we simply did what we had promised to do. We further optimized our core business, which resulted in record low vacancies and further increasing margins. We successfully expanded the value chain via smart acquisition and strongly benefited from the further rollout of our services business. We grew our portfolio by capturing growth opportunities outside our home turf of North Rhine Westphalia. Overall, that led to a strong FFO I of EUR383.2 million above the upper end of our guidance and a dividend increase of 5% to EUR3.78.
I am now on Slide six of the presentation summarizing our highlights. All of our financial figures turned out to be strong and they are slightly ahead of our last guidance. With an LTV of 37.6% and a long maturity of seven point four years at very attractive average interest costs of 1.33%, our financial profile offers sufficient optionality to provide a strong balance sheet in uncertain times, but also for growth if interesting opportunities should arise. With regards to our operations, we grew our rents by 2.3% on a like for like basis, which was slightly less than anticipated at the beginning of twenty twenty, partly due to our voluntary suspension of Mietz Spiegel rent increases in Q1 and Q2 last year. In spite of the challenges of the pandemic, we have been able to reduce the vacancy within our portfolio to a record low of 2.6% while benefiting from a high demand for affordable rents in times of uncertainty.
Our ESG efforts were influenced clearly by the COVID-nineteen crisis. We supported our clients as well as our colleagues through the crisis via different measures. Around 7,000 clients benefited from our voluntary rent suspension. Over 10,000 people benefited from the diverse charitable offerings of our new tenant foundation. We reduced working hours for employees with children at times of home schooling by one hour per day, leading to a total reduction of working hours of more than four thousand four hundred hours.
Additionally, we paid a bonus to all our employees to recognize the strong performance. Another major achievement was our Sustainalytics upgrade, which puts us now among the top 2% of all corporates covered globally by Sustainalytics. Finally, we have worked intently on our bottom up carbon accounting, which allows us now to set the starting point for our transformational agenda. I will come back to this in a minute. let me just highlight some of our digital achievements described on Slide seven.
As already stated, the COVID-nineteen crisis provided a boost to our digitization strategy. Fortunately, we started the offerings of a digital rental contract already by the end of twenty nineteen. Therefore, we have been prepared when the pandemic hit us. We started to digitalize the complete renting process. We offered virtual visits of the apartment or contactless entry via a key box to allow interested parties physical visits in times of distancing rules.
We further optimized our offerings via the app and tenant portal. Tenants can access our service via chatbots and have direct access to their documents and mail history with LG. Until the end of twenty twenty, we already signed more than 7,000 digital contracts. We also made great progress concerning the application of robotics solutions. Those typically have take over highly repetitive, error prone, time consuming tasks, which had been previously done manually.
We have already more than 20 robots running across several departments. For example, within our level service center, a robot distributes incoming client requests automatically to employees based on availability and respective topic. So far this robot handled already more than 100,000 client requests. We have also some pilots running in the area of artificial intelligence as we handle huge volumes of documents when it comes to client mails, bills or other administrative work. With this, let me turn to slide eight, another area where we made a strong progress during the last month.
For the time, we present to you today our carbon balance sheet for 2020. We start with a carbon footprint of 36.7 kilograms CO2 equivalent per square meter. During the last year, we set up our carbon reporting. We base our reporting on actual usage rather than estimates based on energy certificates on a strict bottom up approach. We cover 100% of our portfolio.
Therefore, we also include all listed buildings, although those do not require any energy certificates. We clearly face the same constraints as the entire industry, I. E, we typically get the ancillary costs for heating only with a time delay of one year. Our carbon balance sheet is therefore based on the previous year actuals. For 2019, we cover more than 80% of our portfolio on actual consumption and the remaining part based on energy certificates.
For the 2020 numbers, we extrapolate changes within the portfolio. For example, the impact from modernization measures or from acquisitions and sales. By converting energy efficiency into carbon equivalents, we make use of the so called BAFA factors. The BAFA is the Federal Office for Economic Affairs and Expert Control, which provides the conversion factors. Those factors are in line with the greenhouse gas protocol.
From our perspective, this is the most accurate approach and allows us to track precisely the effects from our corporate actions going forward. Modernization measures, but also acquisitions will be evaluated along the same real world methodology. On Slide 39 in the appendix, we provided you with an overview of the main options available when establishing the carbon balance sheet. We provide you with the sensitivity, how our 36.7 kilogram CO2 equivalent per square meter would look like if we had decided for different parameters. You need to be well aware of those differences in order to avoid comparing apples with oranges.
On Slide eight, you see that our portfolio has an average energy efficiency of 157.5 kilowatt hour per square meter. This is a function of our DNA and corporate history as we provided affordable housing in postwar Germany and still own a portfolio with a respective age structure. Around 89% of our portfolio has been built before 1979, which is slightly more than the average within our core markets, but overall not a bigger deviation from the market average. We are of the core belief that the energetic modernization of the German housing stock is a task for all market participants as all of us are facing similar challenges. However, the difference between us and the bigger share of the market is that we as one of the three big owners of residential properties are in a better starting position than landlords with smaller holdings.
For us, energetic modernization is in no way a new topic as we modernized already around 3% of our stock per year in the last few years. Additionally, as you see in our specified ESG targets later on, we will continue on that path sustainably. Therefore, energetic modernization for us is not a question of if, but only how we do it. We will present to you our ESG strategy on May 11 together with our Q1 numbers. We will then go into detail of how we do it, at least our current approach to it.
Just to manage expectations, we do not think that there is a single big bank solution which could fix it all, at least none that would allow us to stay within our core asset class of affordable living. The industry will still need to invest substantially into future innovation, e. G. Standardization of insulation, green energy generation and efficient energy consumption. We clearly commit ourselves to the Paris Climate Accord targets, but I dare say that the transformational path will not be a straight line until 2030 or 2050 as very likely today's technology will substantially differ from that in ten, twenty and thirty years.
Major efforts by the residential owners, but also by the state and our clients will be needed over that period. Let me now move to Slide 10 with a short catch up on our portfolio. In 2020, we made a strong progress with our portfolio expansion. Our portfolio grew by 8% to almost 145,000 units and we were able to expand our footprint outside our home turf of North Rhine Westphalia. Assets outside of NRW represent now 8% of our portfolio and allow us to significantly expand our addressable market.
All our acquisitions outside NRW followed our growth strategy. While entering a new market, we only buy into orange and green market and we acquire exclusively portfolios with a minimum size of 1,000 units to allow for efficient operations. On Slide 11, you see the development of our portfolio. Please take note that we onboarded the bigger portfolio, which we bought in summer in November, so that the full earnings impact will only be seen in 2021. Certainly, bigger portfolio side is one of the key drivers for our guided FFO I improvement in 2021.
Otherwise, the smaller acquisitions of 600 units announced at the beginning of the year will be transferred mainly in April. Now I am happy to hand over to Volker, who will guide you through our operational results.
Thank you, Lars, and good morning, everybody from my side. Let me start with Slide number 12 and the rent development. Like for like rents in our portfolio grew by 2.3%. The refinanced units, which account for 75% of the portfolio, were up 2.3% on a like for like basis. In our subsidized portfolio, we could adjust cost rents in January as in every year, leading to a like for like increase of nearly 2%.
In absolute figures, this translates into a tolerable increase of €09 per square meter for the tenants in the restricted units. You can find the breakdown of the rent growth drivers in the middle of the slide, depicting that the cost rent adjustment contributed 30 basis points to the overall like for like rental growth. The other drivers refer to the Free Finance segment. The rent increase according to rent tables represented 90 basis points of the overall like for like rent growth of 2.3%. Re letting contributed almost as much with 80 basis points.
The share of modernization is lower. With only 30 basis points, it reflects the postponement of modernization measures due to COVID-nineteen. On a like for like basis, the average in place rent for all segments reached €5.96 per square meter at the December or 6.34 for the free finance units. This clearly underlines our focus on an affordable product. Nevertheless, we are able to increase our rents in a reasonable way.
I will point to a few highlights for the three finance units on a like for like basis. In the dynamic Rhine area, our in place rents in Cologne rose by 4.6% to now eight point two seven euros In Monheim, near Cologne, rents were up 3.3% to €7.64 In the stable markets, that is the segment that actually showed the strongest rent increase for the refinanced units, we are particularly pleased with the development in our two largest locations. In Dortmund, rents were up 3.5% to 5.82 And in Menschenladbach, average rents were up 3.1% to 6.37 each per square meter. Let us now move to Slide 13 for an overview of our operating performance, which was positive across all market clusters despite the COVID-nineteen impacts like the voluntary suspension of rent increases according to the Mietzpiegel or the postponement of some modernization measures. Let me point to the highlights by market.
In the high growth markets, the number of residential units grew by around 12 due to the acquisitions made. We increased rents by 2.2%, and we were technically fully led in these areas with a low vacancy of 1.5% on average. At the top left of the slide, you can see that the high growth markets now contribute around 45% to LED's gross asset value. The stable markets constitute the largest segment in our portfolio in terms of units. These areas clearly benefit from the ongoing momentum in the commutables areas.
With 2.5% rent increase like for like, they saw the strongest growth while further reducing the vacancy rate by 10 basis points. With our offering in the high growth markets and stable markets, we are well positioned for the two major demographic trends on the German market: the urbanization or appeal of swarm cities on the one hand and the growing attraction of commuter belt areas on the other hand. Finally, coming to the higher yielding markets that also showed a decent performance with 2.3% like for like rental growth and a really impressive reduction of the vacancy rate by 100 basis points. That reduction is the result of the new target operating model developed and implemented over the course of the last one point five year. Looking again at the portfolio as a whole, we can see a very positive trend regarding our vacancy rates.
In order to give you deeper insight, we have included Slide 14 in the slide deck, including a few examples for the successful vacancy reduction. On this slide, we have broken down our vacancy reduction into our market segments and provided you with examples for important locations, which supported that development. Please keep in mind that those numbers reflect the actual levels and our acquisitions, so it's not on a like for like basis. However, they allow us to show the strong improvements over the last years. On that basis, we reduced our vacancy by 70 basis points over the last years for the entire portfolio.
Key drivers for this achievement were the stable as well as higher yielding markets. The strong reduction of our vacancies in our higher yielding markets is driven by many locations, and it's not just a one hit wonder. We saw significant improvements in major locations like Giesenkirchen, Harner and Drusburg. This is certainly testimony to our leading position in the affordable housing segment and shows why we are the best owner for the affordable housing segment. If you might wonder on the rising vacancies for the high growth and stable markets, then those can be fully explained by acquisitions, which allow us to improve the occupancy for those new locations going forward.
The strong demand for affordable housing and our exposure to attractive regions certainly help keeping However, we certainly also rely on a variety of communications tools to attract and inform new customers, whether by Internet, messenger, phone or by a digital letting process. Another reason is the efficient and speedy refurbishment of vacant apartments, which accelerates the reletting process, especially thanks to our acquisition of Fischbach Services into 2020. This brings me to the value added services on Slide 15. The FFO contribution of our services again strongly increased in 2020, reaching €31,000,000 There are several reasons which contributed to this big success, and all services contributed to this strong result.
Firstly, our service offerings benefit from a growing portfolio. So we could roll out our services to new locations once they are integrated. For example, we could provide 6,000 new units with our multimedia offerings. Our energy unit, ESP, benefited from the buyout of its minorities in 2019 and the inclusion into the LG tax group. Our craftsman services, TSP, were able to take advantage of an overall higher demand and a bigger portfolio.
LWS plus our latest acquisition, was consolidated in Q4 for the time and therefore made a contribution. For 2021, we expect LWS Plus to contribute around €5,000,000 to our EBITDA as we have announced. This is unchanged to what we told you when we bought the company. Let's now move to Slide 16 on our investments. Overall, our investments grew roughly by 32% to EUR388.7 million.
While maintenance expenses grew along our portfolio growth, CapEx spending saw an increase by roughly 40%. Energy efficient modernizations remain one of our biggest drivers for our CapEx program. In 2020, we completed energetic modernizations for approximately 6,200 units or more than 4% of our portfolio. Another major driver for our CapEx program were churn cost spendings, which allow us to catch our rent potential from reletting. Since 2020, we also offer a new bathroom program for our tenants.
Those who want a new, really modern bathroom can choose from various packages with fixed prices starting at €60 additional rent per month. Whether tenants decide for a bathtub or a shower, we will modernize the old bathroom, including all sanitary objects as well as floor or wall tiles. Individual fittings such floor level showers are also possible. And with this, I hand over to Susanna for the financials.
Thank you very much, Volker. Good morning also from my side. Let's start on Slide 18, which shows the development of our key P and L items. The numbers once again demonstrate further noticeable margin improvements across all P and L lines. Our net coal trend increased by 7% to 6 and €27,300,000 This is driven by both organic growth and acquisitions.
Please keep in mind that we had a bigger disposal in 2019, which affects the year on year comparison. The recurring net rental and lease income outpaced the top line growth and rose by 8.8% to €493,000,000 As a result, the margin increased to 78.6% driven by scale effects. Please be aware that the reported net rental and lease income is affected by a goodwill write down of €45,600,000 This was driven by higher capitalization rates due to the increased capital markets volatility. In total, we amortized €66,600,000 of which €45,600,000 affected the NRI and circa €21,000,000 the admin cost line item. After this write down, the remaining goodwill represents only around €100,000,000 or well below 1% of our total assets.
The adjusted EBITDA grew by 9.5% to €466,900,000 and we could increase our EBITDA margin by 160 basis points to 74.4%. This is slightly ahead of our 74 target. Our FFO I grew strongly by 12.3% to €383,200,000 On a per share basis, the FFO I grew by 3.3% as we increased our equity capital to finance our portfolio acquisitions in summer twenty twenty and to a smaller extent due to the scrip dividend, which we offered for the time last year. We will see the bulk of the financial contribution from the bigger portfolio only in 2021, which will benefit the FFO I on a per share basis going forward. For detailed drivers of our FFO expansion, please turn to the next slide.
So the biggest driver of the FFO increase compared to 2019 is the contribution from last year's acquisitions. The biggest driver were rent increases, which contributed €16,500,000 We also benefited from low operating costs as we kept our cost discipline and put some projects on hold at the beginning of the pandemic. There will be certainly some catch up effects on that in 2021. But as you see from our EBITDA margin guidance, we also expect further efficiency gains this year. We also benefited from lower cash interest payments and lower cash taxes.
The latter is due to effects from the sales program in 2019 and the fact that an additional group company now benefits from a German trade tax reduction for corporate residential property owners. The minorities effect comes from the full takeover of our energy services company, ESP, where we bought the outstanding 49% from innogy in 2019. On Slide 20, I would like to highlight the efficiency gains we have achieved over the years and especially in 2020. For transparency reasons, we decided to show it in a similar way as in the previous year. Throughout the years and despite our growth, we were able to operate the platform at a stable admin cost level.
We have today the same cost basis, but operate 35% more units than in 2014. Accordingly, our admin cost ratio came further down to 5.3%. We are aware that peers often like to disclose per unit operating costs. If we do that calculation on a similar basis, we get to operating costs of well below EUR 400 per unit for 2020. We are able to operate very efficiently because we exclusively focus on a single product category in one jurisdiction with one type of customer and one set of standardized processes.
And with this, let me move to the valuation on Slide 21. In 2020, we benefited from a major valuation uplift of our portfolio. On a like for like basis, the uplift is 9.6% from yield compression, which is well within our guidance range. All market segments contributed similarly to the strong valuation result. Please keep in mind that the valuation date for us is September.
This means that almost 6,300 units, which were only transferred after the valuation date, are therefore not reflected within our valuation. On a calendar year basis, this turns into a 9.4% uplift on a reporting base from the valuation. And including value adding CapEx, we arrive at a total value increase of 11.2%. We believe that this strong outcome reflects the strong demand for the assets in our focused location and more generally our asset class of affordable living, and we expect demand for this asset class to remain high. For valuation purposes, we already included the effects from the 2021 carbon tax of EUR 25 per tonne, assuming that the tax burden is shared equally between LG and the tenant.
As you know, the outcome of the legislative process is still unknown, but we wanted to reflect that risk as early as possible. Therefore, we have also included it in the valuation of our assets at the end of twenty twenty with an amount of around €400,000,000 And with this, let me come to Slide 22. On Slide 22, we show the key valuation metrics broken down by markets. I would like to reiterate that we feel very comfortable with our asset profile. Our assets offer an attractive gross yield of 4.7% in a still negative interest rate environment.
The average gross value per square meter for our residential assets amounts to $15.00 €3 which translates into an in place rent multiple of 21.4x or just 18.7x based on market trends. We continue to see upside to our valuation. On the one hand, valuation should benefit from the targeted rent increases, but also from our last acquisitions, where we see upside by lowering the vacancy rates and from specific investments. Additionally, we see ongoing price competition for portfolios in the market and competition from financial investors with lower hurdle rates. Let us now move to Slide 23 and the NAV and TA bridge.
On a per share basis, our NAV increased by 16.4% to €122.65 in 2020. The two key drivers are the portfolio valuation effects as well as the profit contribution. Please keep in mind that the diluted share basis has increased given the fact that our €400,000,000 convertibles issued in 2017 and due in 2025 was in the money. We also provide you for the time with the three new EPRA metrics. We consider the EPRA NTA as the most relevant, which is why we focus on it on this page.
We follow the EPRA guidance regarding the calculation very closely and are not adding back real estate transfer tax. Consequently, as you can see, there is only a very slight difference versus our old EPRA NAV. You find the detailed table for the new EPRA NAV, NTA and NDV on Slide 30 of this presentation as well as in our annual report on Page 59. On Slide 24, you have our financial profile. On the left hand side of the slide, we have updated our maturity profile.
Our finance and structure remains well balanced, and there are no maturities until 2023. Our average interest cost came further down and stand now at 1.33%, secured for an average debt maturity of seven point four years. Liquidity remains strong with more than €350,000,000 cash and RCF of circa €400,000,000 at the February. At the reporting date, we had an LTV of 37.6%, benefiting from the valuation uplift as well as our conservative financing profile. We also take net debt to EBITDA into account, which amounts to 11.8% sorry, 11.8x, and this again reflects our conservative financial profile.
Overall, our financial situation provides us with sufficient flexibility to deal with any unexpected capital market turmoil, but also allows us to take advantage of further growth opportunities. And with this, I now hand back to Lars for the outlook.
Thank you, Susanna. I am happy to present to you the updated guidance 2021. We confirm all our financial targets for 2021. We expect an FFO I in the range of EUR410 million to EUR420 million. This suggests an increase of 8%, taking the midpoint of our FFO one range into account.
Similar to our valuation, our guidance already includes the effects from the 2021 carbon tax of €25 per tonne assuming that the tax burden is shared equally between LNG and the tenant. This would translate into a negative effect of around €2,000,000 which is included in our guidance range. We slightly amended our LTV target to a maximum of 43%. Previously, we had a range of 40% to 43%. We slightly adapted the target as net debt to EBITDA is a KPI with growing importance for us and the industry.
While our financial targets remain unchanged, we added a transparent set of ESG targets to our target metrics. Those targets are fully reflected in the ESG targets for the Board of Management and rolled out to all management levels. They are specific and measurable, so that our auditors will be able to give limited assurance on those going forward. On the environmental part, we aim for an energetic refurbishment rate of 3% of our units for 2021. This number is in line with our achievements in the past and is reflected in our 2021 investment program.
For the LTI, we target a reduction of our CO2 emissions by 10% in absolute terms over the next four years. On the social part, we want to reduce the iteration calls with our customer service center by 15%. Those calls have a major impact on customer satisfaction. A lower number of iteration calls show that we help a bigger number of our clients faster and more effectively. For the LTI, we target to keep the trust index from the employee survey Great Place to Work at the strong level of 66%.
For the governance part, we aim to keep our Sustained Analytics rating at the strong 10.4 level just reached in 2020. From our perspective, the Sustained Analytics rating represents very well all relevant governance aspects and we found it more transparent and holistic than focusing on specific guidelines. You find all those targets also reflected within our remuneration system. The system is depicted on Slide 38 in the appendix. I am very happy to conclude my presentation with this ESG topic as it has been fully embraced on all levels of our organization and will be the major driver for our industry for the coming decade.
The entire team and I are now looking forward to take your questions. And so I hand back to Frank.
Thanks, Lars. And with this, we begin the Q and A session. And I hand it over to Haile.
You. And the question is from the line of Thomas Routhelder of Jefferies. Please go ahead.
Good morning, everybody. One question on rental growth actually. You provide a split of the 2.3 like for like rent growth for 2020. Is it possible to get a rough split for your 3% guidance you have for 2021?
Sure, Thomas. Happy to take this question. In 2021, we don't have any increase from the cost rent adjustment. So this will be flat there. And the this we will have a slightly larger part from modernization as we had there postponements from last year.
And the split will look then more or less the same, yes, with a larger part of the modernization part. This gives you it's precise enough.
Yes, okay. Okay. Maybe one on the new KfW program, which considers actually direct cash subsidies as we understand. And one of your peers recently referred to potential CapEx opportunities here. Maybe you could also comment on that, how you look at this.
Yes. Thank you, Thomas. Very happy to take your question on that. I think that's correct. The new introduction of the cash subsidies is certainly an opportunity for us as well.
As Lars pointed out in his presentation, a large portion of our CapEx each year is dedicated to energetic modernization. And certainly, we are very closely looking at how we can use this program also to benefit with our investments going forward.
Do you have an idea about when you can provide maybe an adjusted CapEx program considering the new cash subsidies?
Well, we are already using the program for our development. And so there's a new build we are doing, and we are already starting the process also for our existing housing stock this year. I think we will be able to provide further detail around that also with our ESG strategy in May this year.
Okay. Maybe a last one. I mean, you calculate SEK 2,000,000 of impact from carbon pricing for 2021. And do you assume a fifty-fifty split between landlords and tenants? I think currently, you charge 100% to tenants.
I mean, do you assume just to change in the short term?
Thomas, honestly, we just wanted to be on the very secure side. You know us, we are very conservative. Political discussions are still ongoing. It is absolutely unclear how legislation will look like. But the current discussions and the high regulation regulatory pressure we are seeing, we doubt that we can stick to the current solution that 100% of the costs will still be able to be attributed to tenants.
So therefore, we just took the easiest step and came up with this fifty-fifty split. Certainly, we also calculated worst case, but also best case solutions. Best case would also be or certainly be a full transfer to tenants. Worst case would be we as landlords would be forced to just take the full burden. But you now also have the number, which would hit us if we would take 100% of the burden, which is EUR 4,000,000 and also something which we wanted to make transparent.
We also included it in our evaluation, Mesquite being the ones in the market to do so. And also there, we came up with this base case scenario, which now is around EUR 400,000,000 as an impact on our valuation, also just trying to give you as much insight as possible as early as possible on the valuation impact coming from this possible change in legislation.
Okay. Thank you.
Thanks for your question.
The next question is from Jack Kewan of Von Landshort Kempen. Please go ahead.
Hi, good morning. So I've got a few questions, three of them, I guess. So could you remind us what your actual percentage of tenant rotation was in 2020 versus 2019?
Jeff, yes, just looking it up, I'll give you just in a maybe you do your other questions
Yes, sure. I will continue the next one. So looking at your market segmentation and the like for like rental growth, it seems that the growth numbers have converged also occupancy seems to be converging a bit. So maybe a bit more philosophical approach. I mean, is it time to look for a different split in your markets?
Is that split still relevant?
Yes. Very happy to take your question. So the split is still relevant. We are looking at it on a regular basis. We have just adapted it in 2020.
So we are revising it on a regular basis with regards to the development of households, household income, growth of number of people within a certain district, etcetera. So we think it's a pretty good reflection. But what you can see is that currently the demand for affordable living has substantially increased across all three markets. That's something which once again from our perspective underlines that there is just no growing supply to the market, because whatever is being constructed new comes at prices well above EUR 12 per square meter, which is not a comparative product and comparable to what we are offering. So therefore, and from our perspective, that's a reflection of the current market momentum.
We are thinking that this is going to persist, but it's not that we want to change those clusters, which we think are pretty much in line with those bigger developments of household number of income per household, etcetera, on a longer perspective.
Yes, clear. And then on modernization and climate change regulations, etcetera. Looking at that slide with your energy classifications, could you maybe share your philosophy on also what you've been doing in the last couple of years with your 3% modernization rate and what you're planning to do going forward? What's the kind of normal trajectory for the energy rating? Is it from h to a plus?
Or what is kind of the desired targets? And and what type of assets are you upgrading? Is it just the bottom end? A little bit more color would be very welcome. Thanks.
Yes, very happy to give you an insight there, Jaap, as well. So certainly, the focus is on the one hand side on those buildings with the lowest energy efficiency standard. So the G and the H buildings, so our target there is to reduce that by 20% and looking back at the starting point of 2017, where we started with the modernization program. At the same time, certainly we always take into account, which of the modernization measures can really be borne by the tenants. So affordability is the big question, which we also take into consideration.
So therefore, it's also possible that we are considering buildings even of higher efficiency classes to be modernized. If we think that this really helps tenants to live then in a better product and that we are seeing paying willingness also on the end of our tenants.
And what will be your quick take if you balance all regulation and modernization backlog increase, if you balance all that, do you believe this net positive for you?
From our perspective, it will be. And because once again, from our perspective, there is no question that we need to reach the Paris Climate Accord targets. In order to do so, that there will be a lot of modernization being needed and you know that around two thirds of the asset stock in Germany has been built before 1979. So just demolish all of that and rebuild it, it's definitely not the solution to that question. So therefore, we will need a lot of money, investor money, but also state money being invested into that direction.
Renovation wave of Europe and on the European level, I think is targeted exactly at that part of the market, which is the more affordable part and we think it's absolutely correct to do so. And because otherwise, you are driving exactly those tenants with lower income into energy poverty that can definitely be not working if you try to reach a climate neutral world. So therefore, from our perspective, that holds a lot of opportunities for us going forward and definitely will be the main driver for the industry, but especially for LNG for the coming decade.
All right. Thanks.
Maybe just to follow-up on fluctuation, that was 10% in 2020 as in 2019. So that was basically unchanged and no major driver.
All right. Interesting. Thank you.
And the next question is from the line of Kai Klose of Berenberg. Please go ahead.
Yes, good morning. I've got three quick questions, if I may. The one is on Page 31 in the appendix on this old quotation. Could you elaborate a bit more on the item other? There was a plus 9.5% after minus 1.3% the year before.
Secondly, on the same page, the already low cash taxes from 2019 have gone down further, half half. Could you elaborate a bit more on that? And then on the rent sorry, the allowances on rent receivables, could you elaborate a bit more to which regions, which sub portfolio in Energy's portfolio this refers? And sorry, there was one last question regarding also the CO2 and the energy efficiency of the portfolio. Could you indicate how the new assets or the assets you bought in 2020, if this will have a material impact or effect in this regard of the portfolio.
Kai, maybe to start from with the last question, if you could just repeat the last one.
Yes. How the I was just simply interested how the new assets or the assets you bought in 2020, how do they compare in terms of energy efficiency to LED's existing portfolio?
Okay. Yes, sorry. The well, we bought a large chunk of units in 2020, and roughly, they are more or less the same than the units we have in our portfolio. Some parts of the portfolio we bought from Deutsche Wohnen, for example, there, we plan increased modernization program as we see there, the upside from better from the markets and where they are and then also from the energy efficiency standards they currently have so that we see there maybe in that part a larger need for modernization. But if you compare the portfolios as a whole and take the average, I think it compares very nicely with what we have in our portfolio.
And so there's no big difference.
Susana, are you going to take the two questions from Kai?
I've unfortunately lost the connection at the moment, so I can't see the slide. That's the problem. So if you wish to proceed, that would be great.
Okay. Then we are getting back to you, Kai, after the call with an answer to those two questions, if you are all right.
The
next question is from Marius Pasteur of Societe Generale. I
just had a very quick question on your acquisitions, your targeted 7,000 units for the year. I just wondered if you could maybe give us some color on any progress that's been made towards this, the kind of the size of the pipeline you're currently tracking and which potential locations you're looking at, whether that be more weighted towards your existing exposures or in new markets? Thank you.
Yes, very, very happy to give you an insight there. So unfortunately, it has been quite a slow start into the year and certainly very much driven once again by the lockdown situation, which Germany currently is in. So we would have wished that more sellers would have prepared bigger portfolios. So currently we are facing more sizes between 100 to 500 units and that's the current sizes we are looking at. And we have heard about bigger portfolios coming to the markets up to 5,000 units over the course of Q2.
And therefore, we are sticking to our 7,000 units target. And you've seen that by the beginning of the year, we've been able to disclose acquisition of around 600. And we are looking equally weighted towards North Australia and also new regions. And currently, the portfolios we are looking into are more weighted towards Northern Australia. So opportunities we are looking into regardless the region.
But currently, pipeline has more chances in Northern Australia than it has outside of Northern Australia. Whether that is this is also a reflection of the of Q2 remains to be seen. And but that's the current state. And once again, we are very confident that we can reach the 7,000 units and still by the end of the year. And although Q1 has been quite a slow start into the year.
Thank you very much.
The next question is from Mark Musi of Bank of America. Please go ahead.
Yes. Good morning all. Thank you very much. I have only one question around your operating cost base. It seems that in Q4, and that's now for the year, you have a significant jump in your operating cost and maintenance cost, which is reaching about €28 €30,000,000 just for Q4.
How should we read that? You had one in Q4 twenty nineteen. You have one now in Q4 twenty twenty. Should we assume that on a regular basis, we're going to see this strong increase in your maintenance cost every Q4?
Thank you.
Yes. Thank you, Mark. I think you are correct to observe that this is an impact that we have every year. I think we do have higher maintenance costs in the fourth quarter very regularly. I think last year, the impact was even stronger because we also got a new portfolio from Deutsche Wohn, as you know, with 6,300 units that transferred in the fourth quarter.
So also simply, the number of apartments we were looking after had increased, which also contributed to the fact.
Okay. Thank you.
And there are no more questions at this time. I hand back to Frank Kopfinger for closing comments.
Thanks, Haley, and thanks for your questions. Kai, we will come back to your answers. I will give you a call on this. And but as always, should you have further questions like this, then please do not hesitate and contact the IR team, and we are happy to come back to you. Otherwise, please note that our next scheduled reporting event is on May 11 when we report our Q1 result.
And with this, we close the call, and we wish you all the best and hope to see you soon. Thanks, and goodbye.