Yeah, ladies and gentlemen, welcome to the conference call of TAG Immobilien AG. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, please press star key followed by zero on your telephone for operator assistance. May I now hand you over to Martin Thiel, who will lead you through this conference. Please go ahead.
Many thanks, good morning, everybody. This is Martin from TAG. Many thanks for dialing into our H1 2020 conference call. We will go through the presentation, and of course I will report on our H1 2020 numbers and then, of course, also say some words on the transaction that we announced this morning that you have probably seen, which is the issuance of a new convertible bond and a partial repurchase of an outstanding convertible bond. Let's start with the H1 figures, and I'm now on page four of the presentation, which is the highlight slide. Looking at the operational performance in the German portfolio, vacancy rates were broadly stable. A slight increase between the end of the second quarter and the end of the first quarter by 20 basis points. We've been now at 5.1%.
Like-for-like rental growth was a little bit weaker in the second quarter 2020 due to some effects from the COVID-19 pandemic mainly, I will come back to that a little bit later. A very strong development from our point of view in the FFO development. We are up in absolute amounts, EUR 2.5 million quarter-on-quarter, and if you compare that with the previous periods, with H1 2019, we are up by more than 9%. The EPRA NTA, or formerly known as EPRA NAV, stands now at EUR 20.77, up from EUR 20.15 at the beginning of the year, which is a 3% increase even after the dividend payment. If you exclude the dividend payment from this calculation, you would arrive at total NAV increase of around 7%. LTV broadly stable at 44.9% after 44.8% at the beginning of the year. Very positive news from the acquisition front.
We were able to sign contracts for more than 4,200 units in several transactions from January to August 2020. You know that at the end of the first quarter, we had some around a little bit more than 800. We've been successful now, after the balance sheet date in July and August, with other transactions. Total purchase price of around EUR 163 million, a gross yield of nearly 7% and average vacancy rate of all portfolios acquired in the financial year 2020 of 21%. Closing of the acquisitions has, to a smaller part, approximately 800 units already taken place, and that was in the course of the second quarter of 2020. We expect that the largest part of the remaining acquisitions here the closing will take place towards the end of the year in Q4.
Still a little bit uncertain whether this is then more the first part of Q4 2020 or more towards the end of the year. Smaller disposals with our ongoing disposal program, 200 units. That's not really material, so that's book value. As in the past years, we also had our portfolio valuation by CBRE. CBRE valued the full portfolio, and the outcome was a valuation gain of EUR 174 million for the German portfolio. That's a 3.3% semi-annual uplift. The new valuation levels for the portfolio stand now at EUR 1,070 per sq m or a 5.9% gross yield. Coming to the next slide number five, which is an overview of the effects of the COVID-19 pandemic in our business. To make it short, the effects are really very limited.
You know from us from our Q1 presentation that we had a voluntary waiver on rent increases in the period from March until June 2020. July 2020, we are, for once, back into a kind of normal mode. We're increasing rents again. It's more a timing effect that we have seen in the second quarter. Rent increases will follow up, afterwards, in the next weeks and months. Vacancy rate, as said already, remained stable. We already see that we are now down at 5.0% in August 2020.
Therefore we had definitely on the vacancy rate not any negative effect from the COVID-19 pandemic. Very good news, we had a very small impact on rent payments. Just 0.1% of our total residential tenants were not able to pay the rent as an outcome of any problems they had from COVID-19 pandemic.
Even in the commercial tenants, the numbers are now even better than in the first quarter. It's just 1.4% of the total commercial tenants who ask us for any rent deferrals. In Poland, the business was not really materially affected, and important was that the construction sites were running all the time. We see here no material delays. We were able to acquire further land banks and projects. Besides Warsaw, we have now three locations.
Poznań, where we already had acquisitions in the first quarter, and new in the second quarter, Łódź is our third location in Poland. What we've seen is reduced Q2 sales. I think we already discussed this in the Q1 call. If you look at the numbers, the average sales number per month was down to around 20 units from something around 68 units per month in the first quarter.
We see from the numbers in July, with nearly 60 units sold, that we are already back on a kind of pre-crisis level. Perhaps even more important, sales prices remained stable or even increased in the course of H1 2020. Let's move on to page number seven, where we show you some details for the income statement.
First of all, looking at the development between H1 2020 and H1 2019, the net rental income increased by EUR 5 million, not only driven by higher rent, also driven by lower expenses from property management. Here, mainly lower ancillary costs of vacant real estate that we were able to reduce in the past 12 months. We saw a strong increase in the net income from our service business in H1 2020 versus the prior year period by nearly EUR 3 million, and it shows our expanding service business.
Mainly, this development is coming from our multimedia and energy services, where you know that we're expanding this year by year throughout our portfolio. Looking at the net income from sales, don't be surprised that we have here even a loss of EUR 1.4 million in H1 2020. That does not really mean that we economically selling portfolios of properties below book value, but we have simply here effects from the purchase price allocation from the first time consolidation of Vantage. A EUR 3.3 million additional negative effect is here included in this number. If you want some more technical, therefore, we arrived at a negative result. Economically, we are achieving, of course, here pure profits. Personal expenses increased a little bit.
This is, of course, because our internal service business is growing and very simple; if you compare it with the prior year periods, we have additional personal costs from our business in Poland. Net financial results improved in H1 2020 by EUR 0.5 million year-on-year. This is also a good development. Income tax, as not unusual, mainly contain deferred taxes to see that we have cash taxes in Germany that are still on a very moderate level, which is for around EUR 3.6 million in the first half of 2020. Coming now to the next slide, which is page number eight. More details on the EBITDA, FFO and AFFO calculation. First of all, looking at the EBITDA margin, and from our point of view, definitely good development.
Looking at each number, H1 2020 numbers, we are now at an EBITDA margin close to 71% after 67.5% in the comparable period of the previous year. That shows that we are not only growing our rents, but also are able to keep the costs on a, let's say, relatively stable level. I already commented on the FFO development, which was very positive. We saw a slight decrease in the AFFO, which is then driven by higher modernization CapEx that we are using. Modernization CapEx, nothing new. That means not any new programs for existing tenants. As you know from us, mainly driven from CapEx programs for vacancy reduction here, mainly in the Berlin and Chemnitz region, unchanged basically to what you have seen from us in the last quarters.
Again, important to point out that the total results from Poland do not contribute to the FFO I. When we talk about the FFO I, that solely refers to our German business, and we include all results from our business in Poland as it is in 2020, solely a disposed business into the FFO II. You see here on the right side of page number eight, a detailed calculation. We're basically calculating a kind of net profit from disposals, cash after minorities, after effects from purchase price allocation, after any non-cash effects, for example, from the valuation resulting from deferred taxes, to arrive in the first half at a small loss of EUR 800,000.
For the full year, we expect a significant contribution to FFO II from our business in Poland, as you know that most handovers will take place in the development business or in the construction business towards the end of the year. Coming to the next slide, page number nine, just a small comment from my side. If you compare the figures from June to December, please be aware that the December numbers are still without any effects from our acquisition of Vantage that took place at the beginning of January this year.
Some of the differences are caused by this effect. For example, if you look at the intangible assets, we pointed this out here in point number two, you see a goodwill of nearly EUR 19 million that is coming from this first-time consolidation. On page 10, you see details regarding the EPRA NTA calculation.
I already commented on the general development, and the EPRA NTA stands now at 20.77. You will see in the appendix, we have a detailed calculation of the old EPRA NAV calculation and also the other two new EPRA NAV metrics. Looking at the EPRA NTA calculation, important to mention that we are not including transaction costs into our EPRA NTA calculation. Please have a look at the footnote. If we would do that, so if we were to put on top of the numbers you see in the table, the potential transaction cost, that means mainly the real estate transfer tax, then the EPRA NAV, NTA would be on a per share basis, EUR 2.84 higher. That means it would stand at 23.61 per share. We are not including this transaction cost.
I know that this is something that is currently handled differently in the peer group, because you know that from the past, we decided, I think maybe around three years ago, to exclude that from formal NAV calculations, because we simply see here a risk in the current German rent law that this real estate transfer tax- free share deals are not possible anymore in the future. Therefore, we think it's perhaps the more prudent approach to leave that out from the very beginning. I'm on page number 11, which is the financing structure. The average cost of debt is now down to 1.6% with a total average maturity of the financial debt of seven years. The Moody's rating is still at Baa3 with an outlook that is stable.
Perhaps interesting to look at the last updated credit opinion that Moody's published some weeks ago in July 2020, and that confirmed that we are very stable even in these not easy times of COVID-19 pandemic. There's still further refinancing potential, EUR 409 billion of German bank loans maturing or interest terms of these loans are ending in the next three years. We included now the 2023 bank loans as well. If you look at the coupons, they are between 2.5% and 2.7% in these bank loans. I'm coming now to page number 13. That's a table with the main data about our German portfolio at the end of June 2020. The total GAV stands now at EUR 5.6 billion.
If we include the Polish portfolio, where the total GAV is EUR 150 million, we arrive at a total GAV of EUR 5.7 billion. 1,000 units more than at the beginning of the year. This is mainly the result of the closing of some acquisitions, as I already mentioned, in the course of the second quarter of 2020. Page number 14 is a slide with details on rental growth and CapEx allocation. I think the CapEx allocation and the CapEx amounts, also on per square meter basis, are very comparable to what you have seen from us in 2019 and in the first quarter of 2020. Perhaps it's more interesting today to look at the development for like-for-like rental growth quarter-on-quarter.
If you look at the total like-for-like rental growth that we achieved in the first half of 2020, we ended up with a total like-for-like rental growth, including vacancy reduction of 1.5%. You have to take into account when looking into this number, basically, three different effects. What we had, first of all, is a lower impact from vacancy reduction than, for example, in the previous quarter, which is an effect of around 30 basis points. You know that during the COVID-19 pandemic, the reletting processes simply have been not that easy. Therefore, for us, the vacancy rate or keeping the vacancy rate at a stable level was definitely a success.
To make that clear, we will stick to our guidance for vacancy reduction, and the vacancy reduction for the residential portfolio should be at the guidance, which is 4.3%-4.5% towards the end of the year. As I said, in August, we are at 5.0%, we should clearly expect now in the next month and in the course of the third and fourth quarter, a vacancy reduction to come. We had, again, effects from the voluntary waiver of rent increases that we did during the first and second quarter, that is already discussed. What we have seen and what led to another effect of around 20 basis points is a reduced tenant turnover during the COVID-19 pandemic.
Whereas our normal turnover stands typically between 10% and 11% in the total portfolio, we have seen more numbers between 7% and 8%, which is for us then quite unusual. The turnover is perhaps back on a quite normal level, so more towards the 10% and 11%. Therefore, we also had here a slight effect from reduced tenant turnover as the reletting rents then were not on that level where we normally have it. This effect is not material, but in combination, we are now at a rental growth of 1.5%. If you try to adjust this, then you end up at something which is perhaps around 2.2%, as shown here in the presentation, and that's absolutely in line with the guidance for the total like-for-like rental growth for 2020, which is also unchanged, which still stands in a range between 2.0% and 2.5%.
On page 15, you see details regarding the vacancy rate reduction. I think we already discussed this. Again, in August, the vacancy rate was 5.0%. We should see a positive development here in the next month and quarters. Page number 17 shows you more details on our acquisitions. Please understand that the individual transaction details we have to keep confidential. Therefore, perhaps also it's enough to look at the aggregate numbers for this year. Comparing that with the prior years, perhaps in the last two years. First of all, the total number of units is definitely positive. We are already at 4,200 units for this year. That's, of course, a very successful acquisition volume for us in the first eight months. The vacancy rate is definitely slightly a little bit higher to what we've seen in the last one to three years. Nothing extreme.
A reason why the average gross yield is not at an 8%, but more towards a 6.8%. The 6.8% is really based on the current cash flow. That means taking into account this 20.8% vacancy rate in the current portfolio. I think we discussed this in the last calls. We of course see increasing prices, but based on this vacancy rate, a gross yield of only 7%, this is still something from our point of view, very attractive. Moving on to the portfolio valuation, which is on page number 19. You see here the results. The semi-annual valuation uplift without any effects from CapEx was 3.3%. That compares to 4.2% in H2 2019. Looking at the absolute demands, you see not really a material difference.
EUR 174 million in the first half compared with EUR 202 million in the second half of 2019. The overall valuation levels are still on a moderate level, so 5.9% gross yield and EUR 1,070 per square meter should best definitely not be the end of the road. Any predictions on a second- half valuation, we will do, of course, a full- year valuation at year-end again, is, of course, difficult. If you ask us, we don't see here any change in the demand for our properties, any change in the markets. We don't see any distressed sellers on the market that would potentially put pressure on valuation levels or on prices.
Therefore, the positive development that we've seen in the past should also continue in the year 2020 towards the year-end valuation. Looking at our business in Poland, you see a summary on page 21.
You know this summary from the previous presentation. We basically gave you an update now, including a new location, which is Łódź. All other parameters are unchanged. The total pipelines, the really current projects, current projects means we have already acquired the land banks or are already constructing the projects, stands at 5,800 units. There are additionally planned projects of 9,300 units, where we are already negotiating. We should be very much on track to achieve our midterm goal, which is unchanged to the next three to five years, between 8,000 and 10,000 bedding units in Poland. On page number 23, we give you some information about a very successful ESG rating that we received from Sustainalytics. Perhaps you have seen the press release that we published some days or weeks ago.
ESG is, of course, becoming more and more important and basically was always a big topic for us internally. Perhaps we look also more on communicating on this. Being amongst the top 5% in the total real estate sector worldwide should be a very nice outcome. For us, ESG is not only, let's say, focused on environmental things, I mean, that's still important, but especially the social responsibility, during the time that we have now, good relationship to tenants. That's something that we really work hard on. Therefore, the total ESG score that we received in this and other ratings, I think, confirms that we're here on a very good way. Finally, on page 25, the guidance for financial year 2020. The FFO guidance for Germany and the disposal guidance requirements for Poland is unchanged.
Perhaps you've seen in the press release this morning that we're thinking about a potential increase of the FFO and also the dividend guidance that will come for 2020. That depends a little bit now on the closing of the acquisitions. Generally, if you look at the development of the FFO in the first half, you multiply the FFO for the first half of two, then you end up as an FFO of EUR 173 million. Acquisitions could have perhaps an additional impact between EUR 1 million and EUR 2 million. Perhaps we see also some tax benefits from the transaction that we announced today, especially from the repurchase of the outstanding convertible bond. Therefore, let us work a little bit on that and by the latest, with the publishing of the Q3 results that will also include the FFO guidance for 2021.
We will give you an update on the FFO guidance and the dividend guidance for 2020. If everything continues as it is now, and that should be the case, then we are very positive that we are moving more towards an increase in the guidance in the coming weeks. Some final comments on the transaction that we announced today. I think you have seen that we published that we're issuing today a new EUR 450 million convertible bond with a six-year maturity, a coupon between 0.375%-0.875%, conversion premium between 32.5%-37.5%. The outcome of this transaction will be announced today. Use of proceeds for this new convertible bond are, A, financing for our acquisitions. That's in total up to date, around EUR 163 million. You've seen that in the presentation.
As a second point, we're buying back not in total, but for the volume of 50%, the outstanding EUR 262 million convertible bonds, which is due in 2022, by a book-building process. The total investment volume for this repurchase will be around EUR 180 million. If you do a simple calculation and say, okay, EUR 450 million from the new convertible bond, less a total investment volume of around EUR 180 million from the repurchase, that leaves you with EUR 270 million net cash proceeds.
If you deduct the EUR 163 million for acquisitions signed this year, then you end up something around EUR 110 million-EUR 115 million that are still left. That is, of course, liquidity that we can use for further acquisitions, for example, in Germany or also in Poland. We will report on the outcome of this transaction today regarding the new convertible bond. We'll report and inform you about the outcome of the tenders of the repurchase of the outstanding convertible bond tomorrow morning. That's it from my side as an overview, not just on this transaction, but also on the H1 2020 numbers. Of course, now we are happy to take your questions.
Thank you. We will now begin our question-and-answer session. If you have a question for our speaker, please dial zero and one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find your question is answered before it is your turn to speak, you can dial zero and two to cancel your question. If you are using speaker equipment today, please lift the handset before making your selection. One moment, please, for the first question. We've received the first question. It is from Andrew [audio distortion] of Green Street Advisors. Your line is now open. Please go ahead.
Hi. Good morning. I'm just wondering why do you believe the convertible bond is a good financing option? Just from the looks of it seems that you're buying it back from EUR 180 million for the principal of something along the lines of EUR 130 million. The kind of implied annual cost comes to north of 10% per annum over the three-year period.
Yeah. Thank you for the question. I mean, you can, of course, look at a convertible bond. I'm talking more generally purely from a more debt perspective and compare it with the corporate bond and say, okay, if the coupon is lower, but you have the dilution risk, and if you buy that back, then perhaps it's expensive debt, which could be then the case. We look at a convertible bond primarily from the view that we are placing equity also with a new convertible bond with a premium, and to have flexibility. Also, we could have now decided to convert the existing convertible bond into equity. Of course, we have the dilution effect. I mean, perhaps the alternative or a fair alternative would have been in 2017 to place equity. Therefore economically we would have a similar dilution as of today again.
Therefore, we still like convertible bonds. I know that this discussion, especially amongst German residential companies, is intensive. As I said, we are not looking at that from a perspective that we achieve, somehow cheaper interest rate on debt. A convertible bond really gives us flexibility, and it's really also a tool to place equity with a premium.
How should we think about this premium that you're paying now with the repurchase? I assume that won't flow through your FFO.
First of all, the calculation is correct. Basically, that's EUR 50 million that we are paying on top or something around EUR 50 million on top of the notional amount, which will then not be included in the FFO. It's also, by the way, already reflected as a debt, as a derivative liability in the balance sheet. We are already accounting and have accounted for that in last year's for the fair value of this option in our balance sheet.
Thank you very much. That's all from my side.
Thank you. The next question is from Kai Klose of Berenberg. Your line is now open. Please go ahead.
Yes, good morning. I've got three quick questions if I may. The first one is on page seven. Could you elaborate a bit more on, as you mentioned, technical effect on the income from sales due to Vantage? Second question is on page 29 of the presentation, where you show the split of the valuation change by regions. I was a bit surprised about the relatively low uptick in values in Chemnitz after you've spent there quite a lot for CapEx and modernizations. If you could explain that a bit more in detail. The last question would be on the LTV. You're now at the upper end of your target, or virtually at the upper end of the target. Is it fair to assume that by September, that might be slightly above that 45%?
What are your plans then, looking forward, as there's presumably limited upside in values for the end valuation? Thanks.
Thank you, Kai, for the question. First of all, as I try to explain this purchase price allocation effects a little bit more in detail. What we had to do under IFRS. That we account for every property that Vantage is constructing with a fair value. That means also the construction projects, which are normally valued at cost in the IFRS balance sheet on Vantage level, are in our balance sheet at the acquisition date, that means in January 2020, at the fair value.
For example, if Vantage is selling something at 100 and their book value at cost is, let's say 70, we have it in our books from the very beginning at the 100. Therefore, as long as we are selling properties that already have been in the balance sheet of Vantage at the acquisition date, we're basically not making any book profits.
On top of that, you have ongoing sales costs. That means mainly marketing costs or mainly any kind of broker fees that you're paying upfront. Just, I would say for the first one to two years, technically in the IFRS balance sheet, we have a result which is around zero or even slightly negative. Of course, economically, the cash flow is there. They are clear Vantage is making profits on their level, the margins are, if you look at the really gross margins, perhaps something around 25%. You're right that the Chemnitz valuation uplift is not that spectacular, especially having in mind that we are investing a lot, but that's not an uncommon picture. What we have seen, maybe always in the past, is that we have modernization programs. Of course, that's a kind of discussion with our valuers.
What's really the new rent level afterwards we can achieve? What's really the new vacancy rates we can achieve? Normally, after one or two years, we always get the valuation uplift, but perhaps not already at the point in time where the construction process is still ongoing or where the construction process or modernization process is just finished. Therefore, we need to prove that our plans are really going into the right direction. Therefore, achieving just small valuation gains during modernization phases that's uncommon, but here in Chemnitz, we are very positive that we will see here a positive development in the next one or two years, also regarding valuation levels. LTV targets. You're right. Basically, we are exactly at our LTV target. The LTV target is approximately 45%, and now we are at 44.9%.
Canceling in today's transaction, where we're buying back an outstanding convertible bond, that would increase the LTV by approximately 100 basis points. That would go then from 45, to speaking rounded numbers, to something around 46. Well, if you have 46 in an LTV target of approximately 45, that's from our point of view, not a big difference. It's clear we don't want to lever up here, so you should not expect that we are now going towards a higher LTV and go more back towards the 50% or something like that. We clearly stick to our LTV target, which will take them some weeks and months to bring that a little bit more down from our ongoing results. Also, by the way, we are selling assets, not in material amounts, but this continuous sale of properties will also reduce the LTV in the next quarters.
Maybe two quick follow-ups on that. First one on Chemnitz again. The EUR 4.9 million valuation result. Is this on top of the amount of CapEx you have spent? What I'm asking, has CBRE acknowledged the amount of modernizations in full as modernization investments? Second question, also on the LTV, is it fair to assume that by the end, the LTV will be slightly above your upper limit? Do you expect from the second quarter from the year-end valuation, this to come down closer to the 45%?
That's the case. We expect that at year-end, we are basically again where we are now. Regarding your first question, it's on top. The little bit more than EUR 4 million is on top of the modernization that was then, if I want to, accepted by CBRE.
Okay. Great. Thank you much.
Thank you. The next question is from Daniela Lungu of First Sentier Investors . Your line is now open. Please go ahead.
Yes. Thank you for the presentation. Can I ask two questions, please? One is on your rental growth guidance of 2%-2.5% for the full year. I've noticed you've gone through the potential adjustment just to explain what the impact from COVID-19 was in the first half. My question is the guidance based on pure real rentals or should we look at this 2%-2.5% on an adjusted basis, meaning that if we add back the negative COVID-19 impact would be 2%-2.5%, but if we don't add that, the real rental growth at the year-end would be lower?
No. Thanks for the question. Perhaps I have the chance to put it clear that it's based on real rental growth. It's not adjusted rental growth.
Okay. That's great. Good to hear. Secondly, could you give us some more color on the acquisition you've made? Apologies if I'm not fully cognizant of the German geography. Are these locations similar to where you already operate? Why is the vacancy so high? Do you need to do some CapEx? Is there a lot of investment? Just a little bit more color for us that are not Germans to understand a little bit more of the portfolio that you are acquiring, please.
Yes, of course. Basically, all the transactions that we signed in the course of 2020, so also the transactions that we did after the balance sheet date, are typical TAG portfolio. First of all, looking at the locations, that's, I think 100% all located in East Germany, which is for us now for years a big focus. It's not Leipzig and Dresden. It's more the secondary or the mid-size city in East Germany, which we like a lot. We also like vacancy rates as long as we understand what's the reason for the vacancy rate and what can we perhaps do better than former owners. Therefore, as we are purely buying, and that's also, I think, for 100% of the portfolio, for nearly 100% of the portfolio too, in locations where we already are.
We are very positive that we have here the right concepts to fill up vacancy. If you are now at a vacancy rate of, on average, 21%, it's clear getting that to 2% or 3% is perhaps not possible. Reducing that year by year, and would bring us really very nice extra cash flows on top of the starting gross yield, which already stands at 7%. That's really something that we like. Again, the total amount of more than 4,020 units for 2020 should also be something very positive.
Okay. Thank you.
Thank you. The next question is from Thomas Neuhold of Kepler Cheuvreux. Your line is now open. Please go ahead.
Good morning. Thanks very much for taking my questions. I only have two questions. Basically, on the page 31 of the presentation regarding the NRV calculation. It looks like that you have chosen not to reflect the value of the service business in the NRV. I was wondering, firstly, what were your considerations here not to reflect the value of the service business here? Secondly, can you give us an indication what the FFO contribution of the service business was in the first half year and what it could be this year? Thank you.
Yeah. That's a valid question. Why did we not account in the EPRA NRV, so the Net Reinstatement Value, for the fair value of our intangible assets, that's mainly the service business. First of all, there's one, let's say, formal reason. We have not any valuation report on that. Honestly, we are waiting a little bit what is really here the market standard within the peer group, and if it's clear that everyone is publishing valuation reports on the intangible assets. That means mainly on the service business includes this into the EPRA Net Reinstatement Value. This is something that the market needs and likes, then of course, we will do it. That's also, by the way, what the EPRA guidance says. You can't calculate it on your own, so you need external valuation. If you ask me personally, how do I see this?
Is this something that makes sense? Well, I think everyone that has made a valuation on intangible assets knows the range is really extremely broad. Therefore, personally, I would be careful when looking at fair values for intangible assets. That's more personal opinion. Thomas, give us some time and perhaps towards year-end, we will do something. Again, it's clear if this is something that is a kind of market standard peer group, then we would also follow. For now, it's just the book value.
The second question from the FFO distribution from the service business. I think from the top of my hand, we had ended last year, we had a contribution for the full year of around EUR 8 million-EUR 9 million, if I remember that correctly. We're expecting for 2020 for the full year, something between EUR 10 million and EUR 12 million. I think we are completely in line. As a rough number, we are between EUR 5 million and EUR 6 million FFO contribution for the service business in H1 2020.
Okay, super. Thanks a lot.
Thank you. At the moment, there are no further questions. As a reminder to ask the question, you have to press zero and one on your telephone keypad. We have received another question. It is from Andre Remke of Baader Bank . Your line is now open. Please go ahead.
Yeah, good morning. Thanks for the presentation, also from my side. Only one question. On your acquisition path, after the strong number of units you acquired year-to-date, should we expect more to come for the remainder of the year, at least in terms of finding, or is this status 4,500 roughly what is achievable this year? A related question, is it fair to assume that if the mix, or let's say larger state portfolio, what would come to your mind, cash capital increase would be needed, given your reach LTV target? That's the question, please.
Thank you, Andre. Good morning. Outlook on further acquisitions, it's always difficult. Normally, third and fourth quarter are typically stronger quarters. It's really difficult to make a concrete forecast. First of all, we're happy with this, more than 4,000 units. Should we expect other 4,000 units in the remaining part of the year, so the next four months? I think that will be too optimistic. Germany is definitely competitive, but let's see what is possible. It's really hard to give you a concrete guidance. Poland looks not that competitive. Here we have some opportunities. We're doing this, as you know, step by step, by acquiring further land banks. Therefore, in Poland we will be definitely active. In Germany, of course, we are also looking at the market closely.
We're working hard on that, but here we are actually, as well as in Poland, really price disciplined. The question, if you see other significant acquisition size, whether it is Poland or it is Germany, do we need a capital increase? I wouldn't assume that as a choice we need for the next month. As we said in, I think also in the last call, looking especially at our plans in Poland and continuing there, or expanding our pipeline there , we're investing more than EUR 1 billion, or at least that's the plan in Poland over the next five years. At some point in time, at this point in time, perhaps not 2020, but more from next year onward, we will also think and also perhaps do something on the equity capital market to have our LTV here in line with our target.
At the moment, we're absolutely not worried that we get into another dimension with acquisitions regarding our LTV target.
The acquisitions you have in your pipeline, or you are working on, let's say until year-end, there is no additional capital needed other than you have from your operating business.
The cash is enough. That, especially with the hopefully successful transaction from today, the cash position should look very good.
You would allow to exceed your LTV target of 45 to a certain extent.
Yeah. If we are at an LTV of 46%, economically, the situation would not really change now. We've also seen, let's say, a lower LTV in the light of that, here, the situation does not really change that much. If we're around the 45%, then we're absolutely fine. One percentage point more or less does not really change our view on our debt structure. Again, it's very clear we don't want to lever up, so you should not expect that we're now moving towards the 50%. That's clearly not the plan.
Okay, excellent. That's from my side. Thank you.
Thank you. The next question is from Georg Kanders of Bankhaus Lampe. Your line is now open. Please go ahead.
Yeah, good morning from Düsseldorf. I have one question regarding the service business. Compared to Q1, I saw a decline in the expenses from the service business. Why there's not such an increase against Q1? Is there some special in Q1 or a special factor in Q2 that's here in the expenses?
Yeah. Thanks for the question. The cost position as well as the revenue position in the service business is floating quite strongly because of the energy business. In the energy business, we are mainly, to make it simple, buying gas. In any case, we have quarter with perhaps more purchases of gas, and we have more costs and perhaps also more revenues. I think looking at the net numbers, or really the net income from services, is something that makes sense. Looking at the development of cost position in total, that's difficult to analyze.
Okay then. If the gas business is such important, you need more gas when it's colder.
Perhaps we are also buying gas because it's simply cheap on the market, and then we buy it for the next quarters or the next two years. That's really not predictable. I think in the full- year presentation, we also published details on expenses and revenues for each service business line. That's then helpful to look into that. We see a little bit the proportion of expenses and revenues within these different service lines.
Okay. Yeah. Thank you.
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