Good morning, and welcome to CPI Property Group's Webcast, covering our results for the first half of 2023. This is David Greenbaum, the Chief Financial Officer of CPI Property Group. I am pleased to be joined today by a handful of colleagues who are also very excited to be speaking to you, including our CEO, Martin Němeček; Tomáš Salajka, Head of Acquisitions, Asset Management, and Sales; Pavel Měchura, Group Finance Director; Jakub Vybíral, Director of Corporate Strategy; Katharina Sara , Head of External Reporting and Compliance; and the Legal Officer, Martin Matula, General Counsel, and Moritz Mayer, Head of Capital Markets. But first, let me talk about the agenda, and I think I will give you a few words today. If you turn this on lower, you might want to check. Today's presentation uses a webcast format.
There is a tool on the webcast for submitting questions, and our goal is to answer every question, so we really encourage you to ask whatever comes to mind. Our presentation is available on our website at cpipg.com, under Investor Relations. This is the same presentation being displayed on the webcast. If you are having any technical issues or problems with the webcast, please send us an email and we will try to resolve your issue. Before we move on, I want to emphasize that we host webcasts like this one for the benefit of our bond investors, hybrid investors, and our many lending banks. I really appreciate the positive feedback we have received from investors and banks about the quality of CPIPG's disclosure.
It seems clear that some of you appreciate our efforts to inform, inform the market about real estate in the CEE region, and that you acknowledge our accessibility to banks and investors. Most of you know, I'm just one phone call or email away. We try to show that we genuinely care about our banks and bond investors. The question I have is: How much do bond investors really care about our efforts? Are you listening to facts or are you following the herd? Banks have been incredibly supportive of our group, but the way CPIPG's bonds are trading is so far off base from the operating reality of our business, we simply cannot make sense of it.
I am convinced that many of our investors are simply wrong, and we intend to prove you wrong, and we hope to generate nice returns for those who understand what we are doing. We are committed to continue doing the work to maintaining best-in-class disclosure, but it would also be nice to eventually see some results. So back to the agenda. In my regular conversations with investors, there are a few themes which typically come up. While our primary goal today is to update you on H1 2023, I also want to address these themes upfront. The first theme relates to real estate valuations. There is, I believe, a general misperception among bond investors that real estate in the CEE region is riskier, or that properties in the CEE region are more vulnerable to a price adjustment in this higher interest rate environment. We disagree.
While we can observe signs of softness in certain geographies and asset classes, CPI PG believes that real estate valuations in the CEE region will hold up better than the West because our properties are high quality, in many cases, newer, higher yielding, with inflation index rents easily passing through to tenants, and rents growing more than 8% per year. Our markets are not suffering from high office vacancy, mass working from home, or overbuilding in the office or retail sector. Offices in our region are doing well, but retail, residential, and hotels are thriving. Some of you listening to the webcast actually made the effort to join our property tours in Berlin, Prague, and Warsaw earlier this year. I believe this allowed you to really see the quality of our real estate, which is what matters the most. Our door is always open.
You are invited to visit and touch the properties and see for yourselves why we believe the valuations will be more resilient than you think. After asset prices, investors always want to know about liquidity and leverage. I will remind you then of our consistent access to external financing and our continued progress on disposals. In fact, the numbers are big for H1 2023. EUR 2 billion of liquidity available as of 30 June, EUR 600 million of disposals completed in H1, EUR 850 million of fresh, secured and unsecured external financing year to date. We made significant progress on repaying our bridge loan facilities with about EUR 1 billion outstanding now, and EUR 635 million recently extended for another three years with a group of six banks, by the way, with an accordion feature for up to EUR 1 billion.
We cut our expected shareholder distributions from 65% to 25% of FFO. Our near-term bond maturities are manageable from our liquidity resources, and banks are rolling over maturing secured loans without a problem. Therefore, we feel very comfortable from a liquidity perspective. Naturally, with liquidity and leverage come questions about credit ratings. As we've said consistently, CPIPG is doing everything that is possible and sensible to maintain our investment-grade credit ratings. We are in very close communication with Moody's, S&P, and even JCR, and we believe we have a clear roadmap to maintaining investment-grade ratings. The key credit rating issues for CPIPG are complexity, leverage, and interest coverage. Complexity is a temporary factor and will be resolved through further integration of the strategic acquisitions of IMMOFINANZ and S IMMO that we completed in 2022. Leverage is also being addressed.
We are already showing progress with LTV down 1% from year-end. Net debt to EBITDA has dropped sharply, and we are confident to reduce leverage further during the second half to land in an LTV range of 45%-49% at year-end, with the goal of getting back down to 40% as soon as possible. Equity is also very much on the table. You all know that we have Apollo as a minority shareholder. They have been very supportive of us. In fact, I feel highly confident we can raise equity through multiple sources. Now it's about finishing the job and choosing the right deal that makes sense for everyone.
Our interest coverage ratio has dropped somewhat given the level of rates, and one agency, by the way, offers a much more generous buffer than the other, but we can tackle this issue by continuing to repay our relatively expensive bridge financing and by reducing costs. The bridge alone is a negative drag on ICR of at least 0.3-0.5x , maybe more, depending on how you look at it. Ultimately, we might need to keep repaying debt until the point where we can meet the rating agency threshold, and we just need the rating agencies to remain calm and patient as we execute in this environment. We have shown, I believe, that we can deliver results. So that is my speech. As a reminder, we are doing this for you, our bond investors, hybrid investors, and banks.
We are a family-owned company trying to operate at the highest level of transparency in a more volatile environment. We hope you see that, and we hope our hard work pays off. Now, let me give Martin the opportunity to focus on our operational results, which tell a great story of how we run the business. Martin?
Hello, everyone. This is Martin Němeček, CEO of CPI Property Group. Thank you, David, for your very passionate introduction to the webcast . I certainly share your feelings, but now let me focus on the excellent operational results of our business in H1 2023. Let us begin on page two of the investor presentation. The first half of this year is really the first time you can see the full effect of our consolidation of IMMOFINANZ and S IMMO, and the effect is significant. Total assets of the group were EUR 23.1 billion as of H1 2023, with a property portfolio of EUR 20.3 billion. Overall, the property portfolio declined by about EUR 600 million during first half, as the group completed disposals and recorded a small valuation loss of about EUR 200 million, offset by value-enhancing CapEx.
Our group has more than EUR 900 million of contracted rents and generated nearly EUR 400 million of EBITDA and more than EUR 200 million of FFO during the first half. These numbers are quite impressive and show the high-yielding nature of our properties. It's even more impressive when you consider that about EUR 2 billion of our portfolio land bank, which is strategic, but not income generating. Our portfolio is well occupied at 92.3%, a slight improvement from Q1 2023. Even more impressive was our like-for-like rental growth of 8.3%, which reflects both the impact of inflation and strong organic tenant demand in our markets. David mentioned leverage earlier. Our LTV was 49.9% as of H1, down about 1% from year-end 2022.
We are focusing on this figure a lot, and we are focused on LTV in a range of 45%-49% at the year-end. Unencumbered assets declined to 51% as the group continues to execute bank financings, with more than EUR 850 million of external financing executed in H1. Our ICR at 2.6x is lower than what we want, but mostly this reflects the impact of our relatively high cost bridge financing related to the IMMOFINANZ and S IMMO transactions. And I'm glad to report that the bridge continues to be paid down, and we hope will be zero or close to zero at the year-end. Overall, we are a big company generating a lot of rental income. On page four, you can see the group overview. About 48% of our properties are in offices, mainly Berlin, Prague, and Warsaw.
About 24% is in retail, primarily regional shopping centers in the Czech Republic and retail parks around the CEE region. We own some residential properties, mostly in the Czech Republic and in the U.K. We own hotels in the CEE region, and we own land. It's a diversified portfolio, but based on a very specific belief about the future of these markets and segments. Still on page four, you can see that 27% of our properties are in the Czech Republic, where our group originates from. About 21% of our properties are in Germany, mostly focused on Berlin, 13% in Poland, mostly focused in Warsaw, along with investments in Romania, Hungary, Italy, and other CEE countries. These are markets where CPIPG is the local expert, the best operator with the best track record and access to finance.
On page six, I'm very proud of what the group has accomplished on external financing. Across our region, banks remain interested to lend against good properties and continue to support CPIPG on a senior unsecured basis. Just last week, CPIPG extended our bridge loan with a group of 6 banks. The loan was extended for another 3 years, which technically gives us breathing room, but frankly, our goal is to repay the bridge within the next 1-3 quarters. In July, S IMMO issued EUR 75 million senior unsecured green bonds, which were mostly sold to investors in Austria with a coupon of 5.5% and a maturity of 5 years. Really, an incredible demonstration of liquidity in the local market.
While some of real estate owners have become totally dependent on bond markets for financing, CPIPG never made that mistake and maintained our expertise in secured borrowings and our relationship with the banks. In fact, our acquisitions of Immofinanz and S IMMO also brought some strong banking relationships in Germany and Austria, which we didn't have before. Our ability to execute secured loans was demonstrated through multiple transactions in H1 2023, including a loan from Aareal Bank in Poland for nearly EUR 300 million, backed by three office buildings in Warsaw, an upsize loan in Germany, and a 10-year loan against assets in Hungary. You can find even more details on the many financings we completed in our H1 report. Moving on to page 7, the very important topic of disposal.
CPIPG has completed over EUR 900 million of disposals since August 2022, which is when we announced our EUR 2 billion disposal plan. Over EUR 600 million of disposals were completed in H1 2023, and we believe CPIPG is on track to reach our goal of EUR 2 billion by mid to late 2024, as originally planned. We have disposed offices in Prague and Vienna, land in Slovakia, a hotel in Italy, a large portfolio of residential properties in Berlin, and commercial assets in Rostock and Leipzig. Many of the properties we sold were part of IMMOFINANZ and S IMMO. CPIPG benefits from the fact that our portfolio is diversified, and we have about 750 commercial properties in various sectors and locations. In terms of value, our average property size is not very large. Our disposals do not rely on one type of investors.
The buyers have been local real estate funds and family offices, not large, listed companies, simply not financial investors. Most of our buyers did not rely on bank financing, and I want to confirm that all the sales were for cash. None of the vendor loans you see within our competitors. Disposals are a key part of CPIPG's strategy to repay debt in 2023 and 2024, and I'm confident we can continue to deliver. So in conclusion, CPIPG delivers excellent operational results, occupancy, rental growth, income generation. We are delivering on financing, liquidity, de-leveraging, and disposals. I think this is a good message, and I hope our bond investors and banks will agree. Now, let me turn the floor over to Tomáš Salajka. Thomas?
Thank you, Martin, and good morning, everyone. This is Tomáš Salajka. I'm responsible for asset management at CPIPG. I will begin at, on page nine. At the end of H1 2023, occupancy was 92.3% for the group. Retail was 97%, residential was 93%, and office was about 90%. The trend has been marginally negative since 2020, with overall occupancy declining 1.5%. On the other side, rents have been growing very strongly, so our overall rental income has been growing nicely, even as occupancy declines slightly. So overall, 92.3% occupancy, which means 7.7% vacancy. Of the vacancy, I estimated about one-third is intentional. For example, in Berlin, we terminated a lease early with a sizable tenant at Gebauer Höfe, so we could start our development construction works. This is what CPIPG does best.
We invest in our properties, we invest in quality, and we invest in performance. Some of you will notice that most of the weakness has been in offices, where occupancy is down more than 2% since 2020. In addition to the intended vacancies for refurbishment like I just described, we cannot ignore some effect of working from home on overall office demand. I would estimate the effect is about 1% or so, nothing too significant. Like David mentioned earlier, the CEE region does not have a large adoption of working from home. Commute times are short, we have excellent public transportation systems, and people are back in the office... plus there is limited new construction of offices, and demand remains healthy. So yes, we see an effect, but it's minor in terms of the overall picture.
Finally, on this page, I would like to highlight that our WAULT to first break remains stable at 3.5 years. This is consistent with pre-pandemic levels, as our focus is on multi-tenant buildings coupled with in-house asset management teams. We proactively manage our tenants and leases. Quickly on page 10, you can see more information about the diversity of our tenants and assets. I should highlight, particularly on the retail side, that our tenants are oriented towards daily shopping, grocery, daily fashion, drugstores, that kind of thing. Stores that are part of people's daily lives. Also, on page 10, you can see the Group's most valuable assets. As I mentioned earlier, for a EUR 20 billion company, we have more than 750 assets, and the top 10 assets are only 12.5% of the total.
So concentration risk is not a major factor. Of our top 10 assets, you can see a consistent theme of Berlin, Prague, and Warsaw. You can also see FLOAT in Düsseldorf and Maximo in Rome. While these are excellent assets, they are also potential sale candidates, as the group really focuses on cities and regions where we have a broader platform. Moving on to page 12, we wanted to give you some more information about the market. Construction activity is down significantly across Europe, and completions of new offices have dropped to the lowest levels we have seen in many years. Some of our markets, such as Warsaw, are expected to see supply gap next year because demand is growing and not enough space is available, particularly in the CBD area of Warsaw. On page 13, we are frequently asked about working from home.
Some interesting surveys have been published on this issue. In very simple terms, the top reason to be in the office is to collaborate more effectively with colleagues, and the top reason people dislike the office is time spent commuting. I completely understand why someone living in a village outside of London or in Westchester County, New York, or in the San Francisco Bay Area, would be unhappy with the long commute in traffic or on poor public transportation, only to leave behind a large, comfortable house with a nice home office. In the CEE region, attitudes and life are simply different. Prague and Berlin is among the best public transportation systems in the world, and commute times in our regions are shorter. Homes are not large in the CEE region.
For instance, in Poland, the average dwelling has 1.1 rooms per person, compared to 2.4 rooms in the USA. That's why we believe the office in the CEE region will remain strong. Macroeconomic factors are important, but the local dynamics are even more significant. On page 14, going back to the topic of disposals, the market is stronger than most people think. Based on what the press is saying and how our bonds are trading, you would think the activity must be zero, but it's not true. While volumes are certainly lower and average sizes are smaller, we still see relevant transactions on a regular basis. If you look at the table on the left-hand side, you will see plenty of examples of real estate transactions in the CEE region in 2023, covering office, retail, residential, and hotels. Who are the buyers?
I will guess that many of the names are not familiar to our bond investors, and that is exactly my point. There is a limited supply of good real estate in our region. Investors are still active, and people on the ground see the difference. Now, I will take a small break and turn the floor back, back to Martin.
Thank you, Tomáš. I'll quickly run through this next section and maybe ask you to comment again as well. On page 16, some more specifics about office. Leasing activity was up 29% in H1 2023 in Berlin, Prague, Warsaw, and Budapest, partly also reflecting the increased portfolio size. Rental growth for the segment was 5.1%. Generally, I would attribute most of this to inflation. Headline market rents remain stable. On page 17, just a reminder that CPIPG's major office segments have occupancy above 90%. Berlin, Prague, and Warsaw, in particular, are all above 90%. If you go further into the details, you can find that the group's office occupancy of 89.6% reflects a negative impact from two assets in Düsseldorf with low occupancy.
These are recently constructed buildings, which are owned by IMMOFINANZ and which we believe are excellent candidates for sale to the right buyer over the next 12-18 months. We have also been seeing slight weakness in Budapest, where the re-leasing, some vacant space has been slow, but we have an excellent team in place, and I know they are focused on improving the KPIs. On page 18, a reminder that GSG is our operating business in Berlin, a company which has been part of the fabric of Berlin for 60 years, with 41 assets across the city. We have been investing in our properties over the years, and as you can see on slide 19, rent has been rising consistently year after year.
Our offering in Berlin is affordable compared to the market, with average rent of EUR 10.8 per square meter, versus EUR 28 per square meter for the overall market. But because of a strong demand for our office space, we still see upside in our rents, with Savills estimating that on average, we should be renting closer to EUR 14 per square meter. So there is still plenty of upside in GSG rents. Page 20, Warsaw, we are the number one landlord in the city. We have touched on many of the important factors already. I do want to highlight that about 12% of our tenants in Warsaw are public or municipal entities. In fact, this has been a great leading success for us in 2022 and 2023.
Much credit goes to the team for the 93% overall occupancy of this portfolio, which is relatively new, green, and located in the CBD areas of Warsaw, which continue to see the strongest demand. Page 21, I do not want to ignore Prague, but the market is very steady, no major development. Our occupancy is 94%. Rents are rising. It's a small market with huge barriers to entry and very limited construction where we are number one landlord. Thomas, would you like to cover retail?
Thanks, Martin. On page 22, you can see a good snapshot, snapshot of our retail properties. We have 97% occupancy across this segment. Our properties are primarily located in the CEE region, and mostly consist of retail parks and regional shopping centers. On the bottom of-- On the bottom left of this page, you can see Spektrum in the Czech Republic. This is a nice example of a recently refurbished retail park in the Czech Republic. Open air format with model for people in the area. Page 23 gives an even better picture of our retail parks. It's really a huge network of 153 properties covering the region. Our acquisition of IMMOFINANZ brought on board the large and very successful Stop Shop brand. You can see a photo of a Stop Shop in Austria on the bottom left.
This is a format which works very well for us. In the retail parks, the occupancy is 99%. We have every confidence this will remain a very good place for us to stay invested going forward. On page 24, just some data on sales and footfall. We have now seen a recovery from COVID. Sales are well above COVID levels since 2022, and while footfall is not fully normalized, we are seeing improvement year after year. Our tenants are happy because sales are up and footfall is good, and we invest in our shopping centers. On the other hand, our tenants are happy because our rents remain affordable, with a 10.5% affordability ratio below 2019 levels of 12%, as sales are rising faster than rents.
I will jump over page 25, which describes the lower retail density and limited construction activity in the CE region. I will instead spend time covering page 26, which gives you a picture of our residential portfolio, which primarily consists of CPI properties located in the regions of the Czech Republic and here in Prague. CPIPG is the second largest owner of residential properties in the Czech Republic, where there has long been a national shortage of affordable housing, and as I have mentioned earlier, very limited construction. In general, our Czech residential portfolio has seen occupancy steady in the mid-90s%. We have invested a lot of CapEx into the portfolio in recent years to preserve value and drive rents and occupancy. Overall, it's a fairly small but steady and important part of our business.
Now, let me turn the floor over to Mindy to discuss hotels. Mindy?
Thank you very much, Thomas. Page 27 summarizes our hotels and resorts portfolio. CPIPG owns and operates most of our hospitality assets, valued at just over EUR 1 billion. The group's hotel properties consist of convention and congress hotels, mostly located in the Czech Republic, in Prague and in the regional cities, resorts on the island of Hvar in Croatia, and also long-stay residential hotels. The properties are operated under multiple international brands, such as Marriott and Choice Hotel, as well as our own brands, such as Mamaison. Operational performance of the hotel has been, to say the least, extremely encouraging, especially after the past few years of COVID impact. Tourism in Europe witnessed a strong recovery in the first half of the year, continuing on from last year, despite rising inflation concerns.
Consumers remain willing to spend on leisure travel, with many destinations across Europe already recording exceptional performance during summer. We recorded total hotel revenues in excess of .... This is largely driven by the recovery in travel this year versus 2022. Remember that the operations in the first half, first quarter of last year were still somewhat marred by the Omicron COVID variant. On page 28, you can see the monthly occupancy and average daily rate or ADR of CPI PG's portfolio of hotels. Occupancy in the first half of 2023 improved to 56%, a significant improvement versus 2022. Albeit, this is still slightly below the levels of 2019. However, we witnessed a strong growth in ADR in 2023, with the portfolio ADR reaching over 75 EUR, a 16.6% growth compared to the ADR in 2019.
The growth in ADR has been supported by improving demand from leisure, congress and convention events, and corporate travel. We have also upgraded the positioning and the product offering of our hotel properties through reinvestments in the past few years. I would like to highlight again that CPI PG directly manages and operates most of our hotel properties. This allows us to cluster and optimize operations, driving revenues, cross-selling multiple properties, and keeping costs low. As a result, we recorded a net hotel income of EUR 29 million for the period. While there remain challenges from increasing costs and labor shortages, at CPI PG, we are focused on keeping profit margins healthy. Year to date, our region has recorded a growth in long-haul tourists, particularly from the U.S., and further opportunities could arise from the increasing return of Asian travelers.
Overall, we are optimistic about the pace of travel recovery, having experienced a solid performance during the summer months and business on the books outlook for the remainder of the year. Lastly, let me comment briefly on CPI PG's complementary asset segment on page 29. This segment consists predominantly of land bank, which is mostly in Prague but also in Berlin and Italy. We view our land bank as a strategic component that can be developed over time and proceed with selective developments that can organically grow our property portfolio. For example, one of our current development projects in Berlin involves extension of existing properties and small-scale new construction. This will enhance the income generation potential and the valuation of the existing assets. Finally, the other assets in this segment include our agricultural and industrial assets.
Now, I will turn the floor over to David and Moritz to discuss financial policy and ratings. David?
Thank you, Mindy. I'm picking up on page 31. Our financial policy targets have not changed. Perhaps you're wondering why we haven't changed the targets, and the answer is: we still believe these are the right long-term targets for our business. LTV, 40% or below, ICR above 3, senior unsecured financing, high liquidity. These are very simple but important measures and objectives for our group. Most of you are fully aware of why CPI PG is currently outside of our target range because of our acquisitions of IMMOFINANZ and S IMMO. However, we know those acquisitions make sense over the long term, and we see the current financial ratios as temporary and are already making good progress on restoring LTV and other key metrics to our target ranges. I'll say it again, our credit ratings and reputation with investors is important to us.
We are delivering on disposals, delivering on liquidity. Equity discussions are productive. Every day, in every way, we are working towards two simple objectives: running the company well and our capital structure and ratings. With that in mind, Moritz, would you like to comment specifically on the ratings?
Thanks, David. During the first half of 2023, we had our annual rating meetings with the agencies, which are longer and comprehensive meetings, while we are in regular and frequent dialogue on an ongoing basis, providing additional information and details on our plans beyond public disclosure. This also includes assessing potential plans to ensure that our actions have a positive rating effect and determine the exact impacts on ratings. S&P successfully completed the review in May, with the rating remaining at BBB- with a stable outlook. Moody's affirmed our Baa3 investment grade rating in July, while changing the outlook to negative. We think, given the negative rating actions observed across peers, this is a positive.
On the other hand, we continue to take proactive steps to support our ratings, such as our early announcement in May to cut distributions to less than 25% of FFO after the previous year's cuts, and our most recent refinancing with the new EUR 635 million 3-year bridge loan. We proactively refinanced it to ensure an excellent outcome under the rating agency's liquidity assessment, pushing maturities well out. You might have also read in our half-year report that as we are on track to achieve our disposal targets by mid-late 2024, we intend to exceed expectations to create further headroom in our credit metrics.
I think all of it should provide agencies with an additional layer of comfort, together with the healthy real estate markets in our region, our strong operational performance, proven access to financing, ongoing disposal progress, and less severe negative revaluation results than agencies may expect. We would expect agencies to maintain our investment rate as we continue to reduce leverage. Perhaps I can just finish this last section by pointing out to page 33, which is our debt maturity profile. Remaining bank loans in 2023 will be rolled over, and the bonds will be paid back with cash. In 2024, we have already made progress in refinancing the bulk of the bank loans coming due and see no major obstacles.
In 2025, the bridge financing make up the bulk of this, and as you can see, the balance has already been further reduced in H1 and afterwards, and the new maturity is 2026. We hope the rating agencies and our bond investors will recognize the process and progress we have made on this front. Now I will turn it over to Petra to discuss ESG. Petra?
Thank you, Moritz. This is Petra Hajná. I am the Group Sustainability Officer and would like to walk you through the ESG highlights. Starting on page 35, during the first half of 2023, the group focused on the integration and alignment of ESG strategy and goals. Now, we are pleased to announce our updated ESG strategy and goals that are fully aligned among CPIPG, IMMOFINANZ, and S IMMO. There are 15 clear goals, 6 environmental, 5 social, and 4 governance. In the environmental part, we focus mainly on greenhouse gases intensity reduction, as well as water intensity reduction and increased waste recycling rate. Social part focuses on increasing share of certified buildings, group-wide green lease agreement being offered for all new commercial leases and renewables, or minimum 33% share of female senior managers.
Governance part encompasses group-wide code of conduct for suppliers, mandatory for all new suppliers and renewals, mandatory annual employee training on code of conduct and associated policies, or alignment of management board remuneration up to ESG criteria. Also, the group reported on climate change via CDP questionnaire for the fourth time, for the first time on a consolidated basis, including IMMOFINANZ and S IMMO. We also joined the UN Global Compact on a consolidated level. We strive to be active and visible at the market. Therefore, our sustainability colleagues continue partnering with local green building councils, such as Czech, Polish, Hungarian Green Building Council, DGNB, and Austrian Sustainable Building Council, as well as participating in actual topics and involving themselves in several professional working groups.
We also appreciated an opportunity to speak at various conferences and workshops in the region to share our ESG knowledge, experience, and journey during the first half of 2023. Further, to our goal to increase the share of green buildings, we are pleased to report 37.5% of total value and 33.2% of total leasable area of our property portfolio being certified as of 30 June 2023. So that covers the ESG section. David, do you want to take over?
Thank you very much, Petra. Before we move on to the Q&A, since so many of our investors asked, I would like Martin Matula to give an update on litigation. So Martin Matula, over to you.
Thank you. Hello, everyone. This is Martin Matula, General Counsel of CPIPG. Before we start with the Q&A, I want to briefly touch on the litigation, that there were some misleading press reports this year on the Cyprus litigation. Since the beginning, we have been very transparent about the litigation, and we will continue to provide clear updates when anything material occurs. This litigation started in late 2022. In January 2023, we received information about the lawsuit filed in Nicosia by Mr. Čmejla, Mr. Diviš, and entities controlled by them. This was largely presented by the counterparty as an asset freeze injunction. That is not true. The claim includes a temporary injunction, which simply covers the alleged value of the claim, i.e., CPIPG should not reduce its assets below EUR 535 million.
The lawsuit again recycles all the allegations and claims pursued in previous lawsuits, which have been consistently denied. Moreover, Cyprus is a jurisdiction where CPIPG simply doesn't belong. We made very clear from the beginning that we are disputing both the injunction and its effects, as well as the claim on the merits. On advice of our lawyers, we are also disputing service and jurisdictions. Given that the claimants have understood that this will not get them very far, they have resorted to a negative press campaign against CPIPG, which we challenged successfully. The current position is that we have filed a very strong opposition, counting several thousands of pages of evidence in June. We feel that our arguments are very strong, both on procedural and substantive basis. The other side had time to respond, and a few days ago, we received their additional evidence.
It is clear from the new filings that the claimants are trying to rectify their mistakes from the initial filing, and they are also changing the story again. In a number of points, we read this as an admission that the claimant did not put the necessary information before the court at the beginning. Full and frank disclosure is a requirement for unilateral order to remain in effect, and the claimants are far below meeting this standard. So we are looking forward to the hearing on the injunction, which is scheduled end of November. This will be the first time that the court will rule, having regards to our evidence as well. We will, of course, keep all parties informed about the outcome. Now on to the Q&A. David?
Okay. Thank you very much, Martin. So look, I'm delighted to report that we've received a lot of questions. Some of them were actually submitted before we began the webcast, and I think we've actually covered a decent number of them. But now I'll ask Moritz to start reading the questions. You don't need to try and impersonate the person who's asking them, even though I love your special accents. But why don't we go through and answer some of the questions? I will either answer or I'll ask one of my colleagues to answer. Moritz, do you want to go ahead?
The first question is, what was the margin on the new EUR 635 million three-year loan you signed?
So we haven't disclosed exact terms on the bridge loan. But what I can tell you is the old bridge loan had what I'd say is a low to mid 2 handle on the spread, and the new loan had a mid to high 3 handle on the spread. So hopefully, that should give you enough guidance. Both of the loans step up on a quarterly basis. Yes, you will hear with the margins on the new loan, it is expensive, no question about it, but it is also temporary, and our goal is to be out of the bridge ASAP. We paid for the length, and for me, that's the most important thing, is we got 3 years of additional liquidity from 6 very good banks, and so we're very happy about that.
The next question: What was the margin on the new EUR 850 million of external financing you have signed year to date?
As you can see, we did multiple external financings this year, both secured and senior unsecured. What I'd say is that, you know, the secured financings range from anywhere from high 100s to low 200s. So high 100s might be Germany, even surprisingly, high 100s is in Hungary for the long financing that we did in Hungary. The good quality Polish loan that we did was more like low 200s, and the senior unsecured financings have been closer to the 200s as well. So those are... That gives you a sense also, compared to the bridge and compared to where our bonds are trading, we continue to see much more attractive financing in the secured market.
The next question, I think you partially covered it already. Can you please give some color on recent bridge extension, financing terms, tenor, pricing, process, banks appetite, and current secured lending conditions for CPI? Further, what do you think the impact on CPI's financing will be if CPI was to be downgraded to a high yield?
Okay, I'll try and answer this one, too. So the bridge extension process, from our perspective, was mostly about giving some comfort to the rating agencies and to you, our investors, that, you know, we are prepared for just about anything, and that we're not waiting to the last minute on anything. And so we really focused the whole summer on redoing this bridge loan. The good news is we have really nice support from our banks. There are six banks involved in the deal. SMBC is a new bank in the bridge. They were not in our original bridge financing. We had a very nice mix of, you know, regional and international banks in the bridge, and really good support from our relationship banks.
I think, you know, that's one of the things that maybe makes us a little different, is we really do have very strong banking relationships. That also extends into the secured financing. You know, you've seen us do transactions this year in Poland, the Czech Republic, Germany, Hungary, Slovakia, and the UK, across office, residential, and retail. I mean, isn't that a pretty good example of how broad our ability to access external financing is? At the end of the day, if you have quality properties, banks want to lend. If you don't, then it's tougher. What do we think the impact on our financing would be if CPI was downgraded to high yield? Look, at the end of the day, there are we have bonds that have some remaining bonds that have step-up provisions.
And, you know, there are some sort of minor immediate impacts. Ultimately, you know, it's not a scenario we are really thinking about a lot because frankly, we plan on saving and maintaining our investment-grade ratings at all costs. At the end of the day, I think their secured financing is global, and that's really what's missing in this whole equation with the bond investors right now. The local banks, they can walk down the street, look at the building, they know what it is, they know why it's good, they can lend against it. We see no reason why that is going to stop, regardless of our credit rating. Look at most of the real estate universe. Most of the real estate universe is not rated. Most of the real estate universe is not reliant on the investment-grade bond market to issue.
They go to banks, they get a good quality loan against a good quality property. Simply, that will be the way for us going forward if we're downgraded. That is not what we want, and frankly, we want to, you know, we want to be high triple B, as we've said many times. But you asked the question, so there's, here's my reply.
The next question: Can you please give some color on H1 2023 valuations, methodology, cap rates? What is the full valuation, and who are the valuers you use?
I will ask Pavel Měchura to answer this one. Pavel?
Okay, thanks, David. So first, I would say that,
... We will revalue the entire portfolio definitely for the year-end. Yeah, so this is the first statement. For the half year, we revalue some of our like countries, mainly Germany and Austria. To me, the countries with the historically lowest yielding countries. And in terms of the external evaluators, we use mainly or only CBRE and Colliers, so well reputable, well-known independent companies. And they definitely use the same methodology, valuation methodology, as they use for the revaluation of the year-end.
In terms of or as for assumptions used for the revaluation, I would refer you to the financial statement, to the management report, and you can find the overview of all assumptions used for the H1 revaluation on page 99.
Thank you, Pavel. The next question is: Is the EUR 600 million of sales achieved in the first half, gross or net? Your H1 report mentions a further EUR 1 billion LOI signed, and the two thirds are at DD stage. Can you provide some timing expectations on this?
So I'll jump in and try and answer this one. So EUR 600 million was the book value of the properties that we sold, and more or less, it's gross proceeds. There was only a bit of a debt associated with the sale, about EUR 40 million or so. So really, you can think about the EUR 600 million mostly as gross and net, or very close. The additional LOI signs and the progress that we're making on the disposals, you know, all I can say is that this is something that we are working on every single day, you know? We're a large company. We have teams in every region who have disposals as their key KPI. We are working on this every single day.
We always said that Q1 would be busier, Q2 would be a little slower, and we'd expect to see a little bit more in Q3 and Q4. I still consider that to be the case, and I think you should expect that we'll have additional meaningful disposals to announce in the coming months. And that's really all the color I can give. We're keeping our options open. The pipeline is much larger than the headline amount, meaning that we don't simply expect everything in our pipeline to go through. We always have a plan C, D, E, and F, and that's how we're doing things. So please stay tuned.
I think the next question we haven't answered yet, you mentioned ICR was down at 2.6x due to refinancing of the bridge. Does this mean you expect ICR to now stabilize and remain comfortably above 2x ? Some color expectation, please.
I think the answer to that question is more or less, yes. That's precisely how we see things right now. You know, the bridge is a temporary problem, and, you know, we've made enormous progress. Remember, we drew EUR 2.7 billion under the bridge. We paid EUR 1.7 billion. You know, we're going with a new facility for EUR 635 million. Yes, it's expensive, but our plan is to get out of it very, very quickly. We have enough visibility on the disposals and external financing that give us that confidence. And I think once we're out of the bridge, that will leave us with plenty of headroom above two. And as I said earlier, the goal is to be above three.
The next question: Please be sure to talk about the dynamic of the secured percentage debt. How much of the debt do you expect to be secured at end 2023 and 2025, or medium-term date? And how much of the portfolio will be pledged at the same date?
So I would love to give you very specific answers here, but it's not entirely up to us. It's also up to you. Yeah. As of the first half, 43% of our debt is secured. As we get to the end of the year, it's likely to be closer to 50/50 because the bridge will be repaid, which is repayment of unsecured, and I think we will raise more secured in order to repay the bridge. That'll be part of the equation. So it's likely we're going to drift more towards 50/50. And if the bond market never gets its head on straight again, then yes, the percentage of secured financing will trend higher. That's really not up to us, it's up to you. The bond spreads are like 400 basis points wider than where we can borrow from a more sensible option.
So we'd love to replace the complexity of secured loans with senior unsecured bonds, and that's... You know, we're doing our very best to convince you why we're an excellent investment-grade proposition, and we hope you are listening.
The next question. Actually, here are three questions from my side. Commitment with hybrids and coupon payments, potential capital increase, equity investment. I think you need to be a bit more concrete on timing, potential size, etc., for the market to take this serious. And more color on disposals. You say you expect to overshoot your EUR 2 billion target. Any more on this?
Okay, taking those questions one by one. Commitment with hybrids and coupon payments. So hybrids, we've said the same thing for a long time now, which is we are keeping our options open, but with the general principle of doing things that are bondholder-friendly.... Bondholders are friendly, but not stupid, okay? So, you know, we will get to 2025. When it's time to look at the hybrids, we will make a decision that we believe is the right thing in terms of our reputation in the bond market. We are not interested in having unhappy bondholders, but we're not interested in doing things that are ridiculous either. So simply, we will wait, and we've got some time, and we'll decide when the time is right.
On the potential capital increase or equity investment, you asked me to be more concrete, saying that the market isn't taking it seriously yet. Well, I understand that, and I realize that you'd like more detail. Unfortunately, you'll just have to wait. Since we are, you know, not issuing bonds right now, I assume the bondholders can wait a little bit. I wish we could say more. You know, at the end of the day, you know, we are making very good progress. You know, we have Apollo as an equity investor. We have very good banks advising us. I think you have all seen that we can deliver, that we can be creative. So it's just simply about us deciding which deal is the best deal for us, and we're trying to make good decisions.
We're trying to make good decisions, not under pressure, which is one of the reasons, again, we did things like proactively extending our bridge. We want to take our time. You know, the bond investors might be acting as if there's some, you know, catastrophe on the horizon. We do not see it that way. We see a very good business. We believe we have time, but we're working on it very, very seriously, and I hope you will see some news in the coming months. And then more disclosure, more just color on the disposals. I said earlier, the pipeline significantly exceeds EUR 2 billion. We've given the rating agencies even more transparency and detail about the disposal pipeline, so they can clearly see every single thing we're working on.
We just simply hope to show you investors over time, what we've done.
Thank you, David. I think the next question we haven't tackled yet: Have you spoken with Moody's since your results have been published?
So I will admit, because I know Oliver is listening to the call, we have not had a verbal conversation with Moody's since the results have been published. On the other hand, we have done so much work with Moody's in the last couple of months, and we are in regular touch with them. I don't think anything we are going to afford should be surprising to Moody's. But I know Oliver is listening, and we'll, I'm sure we'll catch up with them very soon.
Um, I-
I think... Have we covered everything?
I think so. Just looking if there are questions.
I mean, there's one question in here, you know, how far progressed are you with the equity raise? I think I've answered that in the sense that we're making serious progress, and we have multiple options on the table. I understand none of you will believe it till you see it, so simply, I would ask for some patience. The other part to that question is: Can you live with Moody's going to a high yield rating? The answer is no. We are absolutely doing everything we possibly can to preserve our credit rating. We believe we have a clear plan. Now, at the end of the day, you know, there needs to be some reason, there needs to be some patience, there needs to be some trust and understanding.
We hope we have that with Moody's, and we hope they will give us the time to execute our business plan. And simply, we don't want to be sub-investment grade. On the other hand, you know, I believe we have more than enough liquidity, more than enough access to markets, limited debt maturity. So simply, you know, we are prepared for whatever comes, but we've been absolutely clear what our objective is.
I think we have four more-
Oh, okay.
Questions.
This is what happens when I keep talking, people ask more questions. Okay.
Can you provide any color on how incentives in your office portfolio have evolved, given the impact of hybrid working for the group as a whole, and in the major markets, Berlin, Warsaw, Prague, and Vienna?
Okay, Tomáš?
I can say that as a percentage, it remains pretty much, pretty much consistent with the past because there was an increase of, increase of rents, and at the same time, the inflation of the construction works and actually the CapEx and fit-out contributions in our case, which are part of the incentives, are also taking place. So I would say the, the percentage is very similar to what was, what was before. Yeah, and, in principle, in, in, Prague, it's closer to, let's say, 20%-25%. In, in, Warsaw, it's more 30%-35%, yeah, as an average. Depends, depends on the location, depends on the type of assets with newer, older, et cetera. In Berlin and Vienna, it's, it's even slightly less.
So I don't think it changes the percentage, but it is a kind of inflation going through all the aspects. I think, in absolute amounts, it's slightly bigger as the rents are. Yeah.
Thank you. The next question: Can you comment on potential repurchases of bonds and/or hybrids, given current prices, please?
So we did the bond buyback earlier in the year, because frankly, so many of you were asking for it, and we had some excess cash, and we felt it was the right thing to do to step in and buy back some of the bonds. Again, this was really... You know, I know there, there's been some debate about this, but this was actually an attempt to be bondholder-friendly on our side and to do what you were asking us to do, which is to try and buy back some of the bonds that might have been trading a bit heavy. Now, you know, what I'd say is, everything we're doing is focused around our rating on paying the bridge as quickly as possible because it's expensive. So what I'd say is, right now, we look at the bonds-...
as low cost, long dated instruments. Frankly, right now our focus is on repaying the bridge. Once we get through the bridge, then our attention definitely will turn to the bonds again. It doesn't mean we won't. We might buy back small amounts of the bonds from time to time. I'm pretty well connected to what's going on in the secondary market. We get offers from time to time on both the bonds and the hybrids, and every once in a while, there might be something that's really compelling or, you know, an investor we really love, or a block that's for sale or something. But in general, we're focused on the bridge, and I think you'll see us start to buy bonds back in hybrid, possibly in the future, once we get clear of the bridge and feel more comfortable from a liquidity perspective.
I think the next question is the same, and then the final question. You, you reiterate in your presentation, your plan to exit German residential. Are there any other pockets of the portfolio you are more likely to execute disposals?
Thomas?
Yes. I mean, we won't sell assets which make also sense from a mid to long-term perspective. So we are selling residential in Germany because we don't want to be in the segment. At the same time, we are selling step by step, the portfolio, which is out of Berlin, so typically smaller cities, small assets, in, in Germany. We are also considering selling some, some, let's say, non-core cities, in the CEE region, for example, Bratislava, at some point, the same with Zagreb. And throughout the portfolio, we are selecting assets which makes sense for us to sell. For example, small assets, because the group when actually grew dramatically, and of course, it make more sense to focus on bigger assets and focus on, on the management efficiency as well.
So we are selecting things which are going through the whole portfolio, but also, at the same time, we want to, we don't want to negatively impact the future, so we are trying to be strategic what makes sense to sell. I hope this is answering the question.
Thank you, Tomáš. I think we don't have any further questions we haven't answered yet.
Okay. Well, look, all of you know, that are listening, Moritz and I are very easy to find. We reply to emails, we reply to phone calls. You can call us anytime. We appreciate all of the effort that you have all spent getting to know us. We appreciate your support. Thank you very much, and enjoy the rest of your day.