So good morning, everyone, and welcome to CityCon's Full 2020 Result Audiocast. We have today published our 2020 financial statements. These can be found from our webpage under the Investors section as usual. My name is Laura Jaujianen. I'm the Vice President, Strategy and Investor Relations at CityCon.
And with me in the audiocast today, you have our CEO, Mr. Scott Ball and our CFO and Executive Vice President, Mr. Eros Ihvonen. So we'll kick off with the presentation of the 2020 results and the highlights for the year. There will be a Q and A session once Scott and Eero have finalized their parts in the presentation.
So Scott, please go ahead.
Thank you, Laura, and good morning, everyone. It's a pleasure to present Citicom's Q4 results, which again outperformed the sector even during the greatest stress test we've experienced as a company. I will start with a summary of Q4 results and the highlights of the year. Then Era will go through the financial overview, and I will end with a review of our strategy of diversification through densification as well as our focus for the year. Citicom's outperformance in the COVID-nineteen environment reflects our urban hub strategy, which relies on a high proportion of necessity tenants and public services.
Our full year rent collection was strong throughout the year and averaged 96%. I would like to point out that the reporting practice on this metric differs between companies. Some show a number that has been adjusted for rent relief. However, our number is a total cash collection number, which has not been adjusted for rent relief or any other corresponding items. Net rental income adjusted for exchange rates declined by 3% compared to 2019 and minus 5.5 using historical exchange rates.
Our like for like NRI declined by 5.9%. This drop was a result of COVID-nineteen and weaker exchange rates. EPRA EPS was $0.77 per share and was in the upper half of our guidance, which we reinstated in Q3. The valuation decline was relatively modest compared to our peers and for Q4 was minus 0.9% and minus 3.5% for the full year. This again demonstrates the resilience of our portfolio and the fact that our tenant mix truly differentiates Citicom from other players in the commercial real estate sector.
We also continued managing our administrative costs lower, and this year, they declined by an additional 3.2% on top of the 4% decline last year. Total tenant sales increased by 2.5% in our centers. We saw footfall drop by 12% following government restrictions and recommendations. However, the average purchase increased by 16% as people visited with a clear intention to make purchases. We also made significant progress in renewing our financial facilities.
Citicom issued a TAP bond of EUR 200,000,000 and a green bond of 800,000,000. Additionally, Citicom's revolving credit facility of EUR 500,000,000 was renewed and extended. These transactions were done under challenging market conditions, which demonstrates our access to the financial markets. Towards the year end, we saw our credit spreads tightening as a reflection of our strong operational performance, and they continue to tighten even further in 2021. The company also focused on strengthening the balance sheet last year.
This was demonstrated by the decision in the spring to adjust the dividend on a long term basis. I should point out that Citicom continued to pay a dividend every quarter, and the dividend yield remains attractive. In line with strengthening our balance sheet, we continued our capital recycling initiative with the divestment of three assets in the Stockholm area. In addition to strengthening the balance sheet and providing financial flexibility, the deal was done above the appraised values, confirming both the value and the liquidity of our portfolio. We also made progress in our strategy of diversification through densification, which aims at adding other uses, primarily residential, to our urban hubs.
This creates synergies with our retail real estate. Construction of Leap Alive progressed as planned, and we reached several important milestones. A construction agreement for four of the eight residential towers was signed, and the building rights of two residential towers were sold in December. Leap Alive will be a showcase of our strategy that capitalizes on the densification potential around our existing assets and will include 500 apartments apartment units when we are complete. In addition, we launched a new densification project in connection with our existing asset in Lillihon.
In cooperation with the city of Stockholm, this new project will be comprised of residential, office and health care premises supplementing the existing retail and train terminal. Behind the scenes, we continued our work to realize the identified building right potential of EUR 200,000,000 in connection to our existing assets and strengthening our resourcing for this strategic transformation. We hired a Director for Residential Business and recently established a strategy function to support the transformation and maximize value creation. Our mixed use strategy provides an attractive value proposition for current and potential tenants. This resulted in a record high leasing activity in 2020, which was a 12% increase over last year in the amount of leases signed.
This also includes a significant number of municipal deals, which is in line with our strategy. Strong operational and financial results highlight the resilience of Citicom's mixed use strategy and necessity based tenant mix. It demonstrates that we are truly a different player in the commercial real estate sector. With our strong operating KPIs, including rent collection, tenant sales, NRI performance and modest valuation declines, you could argue that our assets represent their own unique asset class. Our geography is also important as The Nordics have taken a holistic approach to dealing with the pandemic.
As you can see on this slide, The Nordics are expected to clearly outperform the Eurozone again in 2021, and the most important metrics describing economic environment and forecasting consumer purchase behavior. As mentioned previously, our total tenant sales increased 2.5% on a year on year basis, which highlights the difference that the tenant mix makes in our business. Footfall dropped following government restrictions, and the full year decline was 12%. Despite lower footfall, tenant sales have increased because of the 12% higher average consumer spend per visit. As mentioned, a part of our strategy is focusing on increasing our share of necessity and municipal tenants.
This adds to the resilience of our portfolio and brings stability to business and cash flows. Over 35% of our GRI comes from stable necessity tenants, and only a very small portion of leases are turnover based. In line with our mixed use strategy, the public sector is a growing part of our business. Currently, public sector and health care services account for 8% of our contracted GLA with strong credit behind these leases. We intend to increase this proportion of public services even further.
Mixed use hubs provide an attractive value proposition for tenants, which resulted in strong leasing activity this year. In supporting this is an important leading indicator of our business and future results. Leasing activity in Q4 continued on a strong level after a slowdown earlier in the year. And at the end of the year, we leased 199,000 square meters of new leases, which is the highest number in the company's history. We signed several important deals with municipalities, including the new Espoo City Library in Lipa Live.
And as a result, contracted municipal leases stand at eight percent. We also contracted with several grocery deals such as Lidl and Columbus and a long term renewal contract for Prisma and Isla Almina, which highlights our key tenants' willingness to commit to our centers over long term. As we examine our 2020 operations and the impact of COVID-nineteen, we note a few items. The impact of rent discounts granted in Q2 was approximately $500,000 for the quarter. No new COVID-nineteen discounts were given after Q2.
EPRA EPS was $0.77 It was in the upper half of the guidance reinstated in Q3. 100% of our centers remained open in 2020, though some tenants were forced to close due to mandated restrictions in some markets. Retail occupancy at year end was 94.3%. The valuation decline remained modest relative to peers, and Q4 valuations were flat when looking at 100% owned operating assets. Citycon forecasts the 2021 direct operating profit to be in a range of 170,000,000 to $180,000,000 excuse me, 88,000,000, EPRA EPS to be €0.65 to €0.75 and adjusted EPA EPS to be €0.558 to €0.658 With that, I'd like to turn it over to Eero.
Thank you, Scott. As Scott mentioned, we had indeed a strong quarter and a strong year overall. I will be giving you a short update of the numbers and results, and you will be able to find a lot more details from the financial statements release, which were also published today. And I will start by giving an overview of the most important numbers and then after that, going a little bit deeper with certain bridge revenues. First of all, for the quarter, Q4, we had a net rental income, which was €49,900,000 and that was 6.7% below previous year's level or €5,600,000 below.
On the prior earnings level, we ended up the quarter at €32,000,000 and that was €3,600,000 before previous year's level, I. E, 10% approximately. And both of these numbers represent a very good achievement, taking into account the pandemic situation and also the fact that particularly Norwegian krone was quite weak over the year. I will be going through those impacts in a little bit more detail going forward. Our net reinstatement value was 11.48%, which was 7.8% below last year's level.
And I will describe the new EPRA KPI net reinstatement value in a little bit more detail later. Turning over to the full year financials. Net rental income for the year ended up at €205,400,000 which is €12,000,000 below last year's level, 5.5 with exact foreign exchange rates and 3%, taking away the impact of the weaker Norwegian krone, mainly the impact of currencies overall. EPRA earnings ended up at €136,600,000 and that was €9,000,000 below previous year's level. We had EPRA earnings, which was closer to previous year than the net rental income due to the savings in finance costs due to somewhat lower SG and A.
The company continued very tight cost control over the year and also somewhat lower taxes, which, of course, is normal in a year where the also the earnings was slightly lower. The adjusted EPRA earnings was down a bit more, highlight in the fact that we issued the hybrid bond late in 2019. Then I will start the analysis of the results with the impact of foreign exchange. And you can see on the graph that actually both Swedish and Norwegian currencies reduced in value quite substantially when the pandemic started late in March in this geography. But since then, both currencies have strengthened back, and particularly Swedish krona is actually now stronger than where it was in the beginning of the year, whilst Norwegian krone continues to be below the beginning of the year level.
During the quarter, we had positive translation gains due to the fact that both currencies strengthened against the euro for the quarter, and the impact of the translation gains for the quarter was positive €65,000,000 leaving the translation result for the whole year as minus €30,000,000 approximately. Then to the net rental income bridge, first of the two bridges and there by the type of movements in portfolio. And as mentioned, our net rental income ended up at $2.00 €5,000,000 approximately. The impact of two centers that we acquired in Norway, Stovner and Torbjorn, was approximately €8,600,000 positive. Disposals completed in 2019 had an impact of 2,400,000.0 like for like approximately negative €10,000,000 which again is a good very good achievement in the circumstances.
And as mentioned already, foreign exchange had an impact of approximately €5,900,000 on net rental income. Then turning over to the other bridge, I. E, the impacts of COVID on our net rental income. And of course, these are not like exact audited figures, there's nothing that can be audited as such, but are based on the best estimate of management and given to give you additional guidance on where which line items exactly were impacted. And in our case, as can be seen, the COVID impact is extremely moderate compared and much lower than that of most other players.
And the impacts related to gross rents, capital rents, our occupancy has stayed at a good level, but naturally slightly lower than compared to the situation prior to the pandemic. Rental discounts have been granted to some extent, and the impact of that is €1,600,000 I. E, fairly low. Credit loss provisions due to the pandemic have been increased by approximately €3,300,000 And overall, this gives a bridge of all the COVID related impacts, which total approximately thirteen point five million euros for the year. Fair value changes, like mentioned earlier by Scott, we had a very modest change in fair values, reflecting our business model, reflecting the fact that we are in The Nordics and we our business is based on grocery anchored necessity based shopping centers in The Nordics.
And furthermore, our property values have been sort of approved to be right by the recent transaction, which we announced just a few weeks back. So overall, the 100% or the majority owned portfolio had an impact of €36,500,000 for the quarter and for the full year, 146,900,000.0. And including Chista 50%, those numbers were 51,100,000.0 and 179,000,000 respectively. As can be seen, the average cap rate valuation cap rate of our portfolio is now approximately 20 basis points wider compared to where it was one year ago. And additionally, of course, the market trends used in the valuation are now slightly changed as well.
But overall, a very good valuation result. Then turning over to the new EPRA KPI, EPRA net reinstatement value. As you might know, EPRA has modified their net asset value KPIs and the former NAV and triple net NAV are not going to be used anymore. And for the first time, we published replacement KPI, and we have chosen net reinstatement value to be that KPI that we mostly are following. But naturally, we disclose all of these three KPIs, also net tangible assets and net disposal value, and the details of them can be found on Page 22 of the release.
And as such, our net reinstatement value ended up at €11.48 And the only difference between former NAV is the real estate transfer taxes that in this NRV are added back. Then the main financing metrics. We continue to be in compliance with all of our essentially most of our targets, including portfolio hedge rates. The fact that most of our financing is mainly unsecured, 95.4% is unsecured. We have one drawing on the revolving credit facility.
I will come to that in a while. Our loan to value was more or less the same as previous quarter, 46.9%. And in a while, I will show the impact of the disposed centers to that loan to value. Financing key figures on next page, and I think that the main message here is that adjusted with the full impact of the three divested centers here in Sweden, loan to value is expected to be at 45% exactly, assuming year end balance sheet as a basis and making no other adjustment apart from the fact that this the proceeds of this transaction are assumed to be used towards debt repayment. We had a quite successful and busy program regarding refinancing already in 2020.
And actually, we have taken care of most of the refinancing agenda already. And we only have a very modest maturities in 2021 and the next maturities in like September 2022, when we have €255,000,000 bond maturing. During last quarter, we successfully issued another green bond, 800,000,000, NOK approximately 80,000,000 issued on November 13. And as importantly, we also renewed our €500,000,000 revolving credit facilities for another three point five years. So current financing needs are extremely limited, and we have enjoyed quite nice bond spread tightening over the last few weeks and months.
Liquidity position continues to be very good. As can be seen here, syndicated revolving credit facility unutilized $4.00 €5,000,000 means that €95,000,000 is utilized, and that €95,000,000 will be repaid with the proceeds from the transaction, as already mentioned. Then my final topic is outlook for 'twenty one. And as mentioned, we have a fairly or very predictable business model based on necessity and grocery anchored business model. And as such, we have utilized the same process as previous years.
And indeed, we'll be giving outlook. And even the range is exactly the same as previous years in this. So early in the year, we will, of course, naturally come back to the guidance and tighten it as the year goes by. But current guidance, the starting guidance is direct operating profit, 170,000,000 to €188,000,000 EPS, 0.651 to €0.751 and adjusted EPRA EPS, €5.8 €6.58 And of course, this assumes that there is no major second wave lockdown or other restrictions resulting in very significant store closures. And such things have not happened before in the pandemic either, but these naturally are the most important assumptions behind as well as the fairly stable FX rates.
Back to you, Scott.
Thank you, Eero. As you can see, a very busy year on the financing front, and my hats off to Arrow and Ben and the team. I mean, they've they really did an amazing job this year. As mentioned, we continued our capital recycling efforts. A lot of that work was done in 2020, but it culminated in an announcement just a couple of weeks ago that we are selling three noncore properties in the Stockholm area EUR 147,000,000.
It's important to point out that the gross purchase price exceeded the appraised values. The deal is expected to close in the first quarter, and the proceeds will be used, as Earl mentioned, to strengthen the balance sheet. But it also increases our financial flexibility, which allows direct capital for our strategic transformation of the company. The purchase price confirms, I think, both the value and the liquidity of our portfolio. A few words about our diversification through densification strategy.
We own assets in prime locations with direct connection to the most important transportation hubs. These are natural places to gain new building rights as cities seek further densification. Furthermore, existing and strong relationships with these municipalities and working with area development make CityCon the preferred partner. We also have a proven track record for creating award winning destinations and are known for developing green assets with innovative energy and recycling solutions that are important for the Nordic community hubs. For CityCon, densification provides an attractive growth oriented business on top of our already stable retail assets and also provides significant portfolio diversification.
It also increases the number of people in the catchment area, creating synergies with the existing retail portfolio and balances intraday fluctuation of customers in our centers. As part of our strategy, we envision that the future mix of the company will be 40% residential and office, 20% necessity goods and 40% retail. Capital recycling continues to remain a strategic priority for Citicom. This means shifting the portfolio further towards mixed use through capitalizing on the densification potential around our existing assets. As mentioned, this would be complemented with making selective disposals of noncore assets.
It is important to highlight, as you will see later in the presentation, that the value creation from densification starts in the zoning phase once sellable billing rights are received and prior to potential capital outlays. Another important point to emphasize is that the planning and zoning process allow a case by case decision making on actual execution of the individual developments. All decisions can be made gradually, balance sheet allowing. As mentioned earlier, these projects create value upon completion of the planning and zoning phase through the building rights. This value creation in connection to our existing locations is estimated at EUR 200,000,000, which equates to approximately EUR 1.12 per share.
Advanced planning and zoning requires minimal CapEx. Decisions on whether to invest or cash in on building rights is made later at a later stage in the process. We already control the sites, which makes us essentially free land for Citicom. Execution and building will involve a case by case decision on how to proceed individual developments. Depending on the site, we may choose to develop it ourselves or to partner up on a JV or simply sell the building rights outright.
Leap Alive is a prime example of an urban hub combining residential with retail and services. Leap Alive's construction progressed significantly in 2020. The new Leap Alive located in direct connection to a metro station is scheduled to open in '2. Leap Alive will be a modern urban hub in a wealthy and growing suburban area in the Helsinki Metropolitan Area. The development combines necessity goods and retail with public services and a significant residential component.
During 2020, several important milestones were achieved. This includes signing a contract with the construction company Skanska to build four of Leap Alive's permitted eight housing blocks. And we also sold building rights for two of those blocks to the construction company, Halsea. This covers in total six of the permitted eight housing blocks planned for the development project, and Citicom will hold the rights to develop the remaining two. In total, when finished, this area will comprise 500 housing units.
In addition to the progress made in construction, several important leasing contracts were signed, including a new Espoo City Library. As a result, our pre leased rate at the center stands at 70% with another 3% at lease execution and another 9% in direct discussions. And this is one point five years out ahead of opening. A new area development project in Lillieholmen is another showcase of our transformation strategy. Lillie Hulman is a well connected suburban area in the heart of Stockholm.
It is located next to Sodermalm and is expected to grow substantially in the future. Citicom has established assets in the area and currently holds a mixed use urban hub comprised of retail with a large proportion of necessity tenants and health care services. Lily Home will include new areas totaling approximately 70,000 square meters to accommodate the needs of future residents and office workers. New developed space is distributed between residential, office, services, culture and public meeting spaces. The project is currently in the zoning phase and construction is planned in phases starting from 2023.
These densification plans are done in close partnership with the City of Stockholm. In 2021, we will continue building on top of these strong results. We anticipate continued operational outperformance as the pandemic continues. The company will continue to expand its necessity based municipal service offering. Municipal services in our centers provide for logical locations for vaccination centers, and we currently have four in place with more to come.
Continued capital recycling, strengthening the balance sheet and managing the cost of debt downward will continue to be priorities for us. The company will also continue to advance its diversification through densification strategy. Targeted value delivered through zoning is EUR 1,000,000 for 2021 and approximately EUR 60,000,000 for 2022. We expect to bring LEAP Alive online in the '2. Finally, as Earl laid out, we are providing guidance for the full year 2021, which actually shows growth over the prior year.
So with that, I'd like to thank you and hand it back over to Laura.
Thank you, Scott Anero, for the presentation. And now it's time for the questions, and we turn the audio line on. Operator, please go ahead.
Thank Our first you. Question comes from the line of Tobias Kaja from ABG. Please go ahead. Your line is open.
Yes. Thank you and good morning. You reported 5.9% decline in like for like net rental income for the full year, and it was 44.7% down year to date in Q3. What was the figure in Q4? It indicates that it's like 8%, 9% down in the fourth quarter.
Is that correct?
The reduction in Q4 was indeed larger. It was probably in the order of eight or 9% down, yes.
And what do you expect for Q1? Do you expect a similar figure?
I think that we are giving the full year guidance on operating profit level, but we are not giving anything more detail than that for obvious reasons, and forecasting on a quarterly basis would be very difficult. And of course, as you will be able to see in Q4, we had slightly higher credit loss provisions compared to last year. So the main reason probably was the slightly increased credit loss provisions that were taken at the end of the year.
Yes. And I would point out that we still finished the year in the upper half of our guidance. So what occurred in Q4 was nothing that was not already kind of planned out and assumed.
And I mean, is it fair to assume that the like for like is close to zero or even positive for kind of offices and necessity and so on? And for the 57% of the portfolio, which is retail, is it more than 10% down for the full year?
It's a very detailed question already. So of course, world is easier for groceries grocery operators and a little bit less easier for the others, but we have not given such detailed descriptions.
And in Sweden, taking into account in those figures?
Sweden all the regions, of course, all the countries are within our figures, of course, yes.
Yes, but also the divestments the effect of the divestments is included.
Well, the divestments only take place in 2021. The divestments are reduced from our guidance in 2021, if that's the question.
They're in the guidance, if that's your question.
Okay. Perfect. Do you expect to do any more divestments during 2021?
Yes. I think as I've said ever since I got here, we are we've made a practice of not committing in advance to a specific number of divestments that we are not forced sellers and that we will if the market is appropriate, we will sell at the appropriate pricing. And I think we've delivered on that promise consistently over the last two years. That being said, we are always considering divestment of noncore assets. We continually look at that, but we are not going to commit to a specific number as we have not in the last two years.
I think I said, Tobias said, I'd much prefer to I don't want to overpromise. So we're going to be very consistent about that. But I think we've demonstrated our ability to do this over the last two years.
Yes. And you have had a very high activity of signing lease contracts during 2020. I mean when you do renegotiation, can you say what is normally the outcome of a renegotiation in within retail?
Yes. I think, again, it is really dependent on which sector of the mix you're talking about. We've had strong success in renewing our grocery store operators at rents that are higher and getting extended term. Our new deals with municipal tenants also tend to be longer term with great credit behind it and at market rents. Not surprisingly, fashion tenants are struggling, and therefore, those conversations are a bit more difficult.
We're fortunate that fashion makes up a smaller portion of our business as compared to peers. And frankly, I think that's a contributing factor to our outperformance. We haven't faced some of the same headwinds that our peers have faced. That being said, obviously, we do have some of it in our shopping centers, and therefore, we are we do have to deal with that with those tenants as those renewals come up. But it's really kind of a mixed bag.
I mean if you have to average it out, think if you look at our guidance for next year, we are showing growth. So we are predicting rental growth, but it's a mixed bag depending on which sector of the business you're talking about.
Okay. That's all for me. Thank you.
You. Our next question comes from the line of Nikol Levikari from ABN AMRO. Please go ahead. Your line is open.
Okay. Hi, good morning, everyone. Good morning. Thank you for the presentation. I had a small follow-up.
Maybe we can kick off with the ERV negative impact of the minus three point one percent in 2020. I appreciate the comments from the management that you already said it's a bit of a mixed bag. But can you comment or elaborate a bit more if there was a particular segment that was driving this impact? And what is your expectations regarding 2021? Do you expect to see reversion to positive renewals and relatings impact?
Or do you still see that the market rents are pushing this down?
Yes. As can be seen from our valuation result, in our case, the impact of ERVs is much less, again reflecting the stable business model, again reflecting the fact that we have more groceries and we have more municipal businesses. It's very difficult it's a very difficult question.
I think but I guess what I would add on is we announced two weeks ago this transaction in Sweden at pricing that is above our value. And so therefore, I think the struggle the appraisers have had is there's been no transparency into pricing in the market because there's been so few transactions. Therefore, I think this transaction gains additional importance because it is at least a benchmark that everybody can point to. And I think it probably helps the whole sector, quite frankly, not just Citicom. But it is a transaction you can point to that demonstrates that values have held up.
And so I think that it's we never know. It's somewhat out of our hands, but I would when you look at our Q4, obviously, as mentioned, our 100% owned centers were close to flat. So I think it demonstrates, at least directionally, that any negative impact on valuation declines is at least moving in the right direction. And then I think our transaction, hopefully, is reinforcement to keep these values where they're at and maybe even start to see some cap rate compression. Because quite frankly, when you think about where interest rates are in the spread, it's historical right now in terms of the spread.
I would argue that, that should mean that there should be start to see some cap rate compression. We haven't seen it yet, but I hope it's coming.
Okay. Well, thank you for that. Regarding, let's say, the scrip dividend then. I just wanted to get a confirmation or a bit of clarity on that. So are you still intending to make the proposition to the AGM that this will be, let's say, unlimited in each of the quarterly payments, I.
E, you can have the whole quarterly payment paid out as shares instead of the cash payout?
Will not probably be part of Yes, it will probably not be part of the AGM yet because the technical preparations still continue. And the technical preparations, due to reasons that we have no control, seem to take a little bit more time, the background being that the Finnish Euroclear system was not ready for a quick implementation of the scrip dividend. So unfortunately, slight time out at least will be needed here.
But our intention is still to move forward.
We're just
we're at mercy of as Ero said, we're at the mercy of EuroClear Finland.
But that's not something I can now expect to happen in twenty twenty twenty one, sorry.
Call EuroClear Finland and ask them. We anticipate it will be, but
Yes, we certainly do hope so.
Okay then. Maybe as a small follow-up on the CapEx plans for Lipuliva. Can you comment a bit on the total CapEx that you envision for the project? Because that seems to be still be open, at least when I look at the Q4 filing.
Yes. Well, we are planning to give more guidance on that and more clarity like, call it, next quarter due to the fact that we are nearing the point where we know all the details about the residentials and other bits and pieces. It would not be like a proper before that to give you a very, very rough estimate. So bear with us another quarter, and you will have more details.
Yes. I think I'll just add on to that. As Eero said, in Q1, we should be able to provide that detail. We have made progress, as mentioned, on six of the eight, but we're still sorting out the last two, which will obviously have an impact and move the needle on that. So standby, and we will give you that detail in Q1.
Okay. Last question from my side. I mean I appreciate that, obviously, the waivers impact was very limited in 2020 when you really compare it with Fosidicom compared to your peers. But what indication can you give, for example, for 2021? Can I put in on top of my figures, let's say, couple of million impact, assuming you indeed follow this IFRS 16?
I'm sorry. When you say waivers, you mean like rent discounts provided or?
Oh, yes. Yes. Yeah. Indeed.
Yeah. Again, I would I would point out, you know, we we did give some rent discounts in q two at the at the kind of worst point or the bottom of the pandemic, if you will. But since then, we have not given any, And we are not underwriting. I can't we're not underwriting any moving forward.
Yes. And therefore, technically, the same sort of discounts apply in accounting because we needed to do the straight lining. So that's probably a fair assumption.
Okay. So yes, it's probably very limited. Okay, that's it from my side then.
Great. Thank you.
Thank you. Our next question comes from the line of Sung Allison from Green Street. Please go ahead. Your line is open.
Hi, good morning, gentlemen. Three questions from my side. Question number one is about your Swedish asset disposal. It's great to sell, but can you maybe just give us more additional color like how much it is above the book value? And what's the reason for those disposals?
Is it because you want to do the asset management or you see better returns elsewhere? And the second question is about the noncore asset disposal you just mentioned. Can I ask what's the criteria for making those disposal candidates, if there's any? And the last question is more general one on the capital allocation. So what's your priorities right now?
Is that deleveraging? Or I understand you have to cut down your development pipeline in the first half last year, but still compared with the total asset, it's still quite sizable. So what do you think on that front? Are you going to keep cutting or actually start to looking for opportunistic acquisitions opportunities in the future? Thank you.
Okay. Hopefully, I can remember your questions now. You're testing my memory very early in the morning. So first question was, I guess, why did we sell the three assets in Sweden? Then More
so if it's above book value by how much?
Yes. So we these were deemed noncore assets. They're great assets. I mean there's nothing wrong with them. I think Neum has picked up some good assets.
However, they're smaller and they really when you think about our criteria for how we think about our portfolio, we wanted to be direct connection to transportation, preferably train. We want it to be in the heart of the city that we operate in. And we want direct excuse me, and we want some scale and the ability for further densification. I think these assets probably missed the mark as it relates to the size because they were smaller. And frankly, as we look at our portfolio and we look at our densification opportunities, I think if you were to compare this to, say, Lillie Hulman, which is also in the South Side Of Stockholm, Lillie Hulman is much larger scale.
There's much kind of bigger bang for our buck, if you will, in terms of the development opportunity there and the densification. So it's as we prioritize our pipeline, that kind of becomes a one of the benchmarks we use when we think about whether we want to sell an asset or not. Did that answer your question?
Yes, yes, yes. That helps. But if you can give any more details on the Swedish asset disposal? Like I know you mentioned the yield is like 5.7, but how much is above the book value? If you can give us that detail?
Yes. I mean the book value was a bit of a moving target because this was these assets actually saw a value increase from Q3 to Q4. And I think it's because there was some transparency as it relates to pricing because we had multiple offers for this portfolio. And I would say multiple offers that were above our book value. So it's it depends on if you want to say what was the book value comparing it to Q3 or to Q4.
So we've tended to just say it's above our book value because it was kind of a fluctuating. But whichever metric you use, it was still the pricing was still above that value.
Okay. Got you. Got you. Then maybe in terms of asset allocation, like what's your priority right now versus the development pipeline?
Yes. Again, I think our immediate priority is getting these building rights, which doesn't require much in the way of CapEx. And that creates €200,000,000 of added value that's not well, I guess some small portion of that is now on our books. Think €25,000,000 or something like that has now been recognized. But again, it's there's tremendous value creation there without a significant CapEx spend before we actually execute on the development.
But I think if you were to use LEAP Alive as kind of the an example, as we look at each of these development opportunities, we will make the determination based upon kind of balance sheet and other considerations whether we want to develop these ourselves or whether we want to sell the building rights or whether we want to JV. At Leap Alive, we've made some we made a decision to have some combination of those choices. So we've sold two of the building rights, and we're developing four of the building rights ourselves. So it's going to be kind of a as we go and as we continue to make progress on our balance sheet, we'll make the determination on what we want to do. We have been approached by numerous operators as well as developers who are interested in potential JVs with us and a number of assets that we are working on right now.
And I think there will clearly be some instances where that makes sense for us, where we contribute basically the building rights and the land, and they bring capital to the table. And I think that will make sense for us in a number of assets. And we are, in fact, exploring that in a number of those assets.
We have a follow-up question from Nikolavikari from ABM Amaral. Please go ahead. Your line is open.
Yes, hi. Just a small follow-up regarding the scrip dividend. Have you received any indication from your largest shareholders that they will be taking part in the scrip dividend, I. E, taking the shares instead of the cash once this becomes available? Just that's it.
It's a bit early to go into that, but we certainly hope so that, that would be the case.
The only thing I would add to that is they sit on our Board, and the Board has approved this. So you can make whatever determination you want to make with that, but we can't you can ask them.
Thank you.
Thank you. We have no more questions from the line. I will hand it back to our speakers.
Thank you for all the questions. If there are any further questions, please feel free to contact myself or Eero. We're happy to answer any of the questions you potentially might have. So thank you also for attending today's call, and have a great day, everyone.
Thank you.