Good morning, everybody. Hi, this is Alex. Welcome again. We're broadcasting live from, once again, NEPI Rockcastle Studios. I'm here today with my exec team. First, I want to take an opportunity to welcome Rüdiger Dany to our team. He's our new COO. I'll be presenting alongside him and Marek, whom you know, our exec, and Mirela, our CFO. Today's presentation will be structured in five sections. First, I'll provide a brief overview of our business. Rudy and Marek will provide details on our operations in this first half of 2021. Mirela will cover the finance side of what's happened, and I'll close with a few more details on our corporate governance and way forward. As was said a minute ago, we will take the questions at the end of the presentation, either via phone, which we would prefer, or the online written part.
With that, I'll begin our presentation. First, I want to say that it has been a good and recovering half of 2021. We have passed what, in my view, has been the toughest year in 2020 in NEPI Rockcastle's history. I think we have proven once again that our team is very capable of managing any situation, and with this occasion, I want to thank them once again for outstanding performance in the recent past, and hopefully, that will continue. A few details. We are now in August. I can say that our restrictions or our lockdowns have ended in May. Additional restrictions in relations to cinemas or lockdowns of cinemas have ended in June. As we speak, we are operating all of our GLA, and the only restrictions that remain are a few related to capacity of cinemas and some entertainment or leisure areas.
The turnovers of our group have improved significantly in these past few months, especially May and June. The end of June has seen almost 2019 levels. Consequently, our NOI is picking up, and this is also, of course, linked to our strategy with our tenants. I'm happy to say that consumer confidence is being restored. More and more people in the CEE are reverting to normal lifestyle, partly thanks to vaccination, partly thanks to the summer. I also want to mention that our strong tenant base, so our continued focus on quality tenants, having a large proportion of our tenants being large internationals, has helped us see through this tough period. Last, but very importantly, our valuations have seen a small uptick in H1, which is a very encouraging sign given the broader macroeconomic circumstances of the CEE. With that, I'll go on to some figures.
Here you see the main achievements in figures of H1. We've decided to present this versus H1 2020, as well as H1 2019. In all our internal discussions, 2019 has become the benchmark figure because 2020 we consider as a one-off or, let's say, unfavorable circumstance. We are striving to reach 2019 levels so that we can continue growth from those levels. What you see here, the EUR 17.64 distribution per share, this is still 10% lower than 2020 H1, but the main reason, and you will see a bridge of this calculation later on, the main reason is disposal of the offices. As you can see in the row below, the retail-related NOI actually shows an uptick in actual income collected. Yeah, we are still 17% lower than 2019, but the trend is very positive.
The occupancy rate linked to our tenant quality is just 1% away from our 2019 levels, and very similar to 2020 levels. Keep in mind that H1 2021 has had almost exactly the same number of lockdown days as H1 2020, which is a very interesting figure to see. If you look at the bottom two rows of this slide, specifically the left two columns, bottom two rows, you see that although our footfall is not much greater than H1 2020, which is directly linked to the lockdown days, which were similar, as I said, the turnovers that we achieved in H1 2021 are significantly higher than H1 2020. This will, of course, cascade through to our income levels and to the way we can negotiate with our tenants and all sorts of other financial-related aspects of the business. Moving on to some balance sheet figures.
You see that in H1 2021, we are pretty much flat versus December 2020. This is still a significant decrease from December 2019, which is mostly accounted for by the office disposal. NAV per share, relatively flat. LTV, I think this is a big achievement of ours, you can see has been maintained very low, very comfortable throughout this crisis period. Our unencumbered assets have actually increased to 91%, which positions us very well for the future, and debt maturities have been well managed. Yeah. That's it on this slide. I'll move on to this bridge, which all I want to point out here is the proportion of the office disposal, how much it actually accounts for in the decrease, about 9.5%. You have the other details that go from the 19.6% to 17.6%, which is our current half year distribution.
Moving on to what our current strategy is. What we've been doing today has clearly worked. We are continuing to do that. This is specifically the commitment to our current assets. Yeah, we are focused on our asset base, the retail ecosystem, which we are an important part of. The asset management team is doing a good job on this, in our view, and Rudi and Marek will speak more on this later. We are restarting some greenfield developments, which I'll talk about a bit later. I also want to highlight that throughout this period, we did not stop any of our committed developments. We continued work on committed redevelopments such as the Bonarka and Zielona Góra and various CapEx on existing properties.
Thirdly, we will of course continue focus on a conservative balance sheet and having the right liquidity for our business so we can take advantage of opportunities as they arise. Before I hand over to Rudi, I just want to show a couple of slides on the projects that we are starting this year. You've heard us say this for many years. It's actually been several since we bought this land plot in Promenada. We will begin finally the construction of Promenada. We have tenant interest. My colleagues will tell you how many leases we actually managed to sign this year. It's impressive. Before the end of the year, we'll start digging in the Promenada land plot. We've already commenced some site works there. We will also begin the greenfield development in Craiova, land plot which we acquired a couple of years ago.
We will continue our asset rotation strategy, the first step of which was the disposal of a couple of Serbian assets. We still retain the highest growth and most dominant asset over there in Novi Sad, which we've built ourselves. Lastly, the residential project, which we have done a lot of work on permitting on in the past year, will finally commence sales on September 13th. That's the highlight of new projects and initiatives for this year. Just one last thing to give you the liquidity position intro. We're sitting on almost EUR 1 billion in liquidity. A lot of cash and a lot of revolving facilities, which make our balance sheet more efficient. Mirela will speak more about it later. The investment credit rating or the investment grade rating has been maintained, which is a big accomplishment of the company overall.
Thank you, and I'll hand over to Rudi.
Thank you, Alex. Thank you. Well, hello, everybody. Well, I'm new to this company, just recently joined, so I will focus more on the major operational tip in this presentation. As Alex said, those are actually quite promising, and we see an increase in turnovers over the last six months. Let me switch this here. Which, of course, has an effect especially also on the support we need to give to tenants, and that has decreased over the first half year. I think the team has been doing a good job here on decreasing this by 25%. This has obviously, as I stated already, an impact on our occupancy, very stable at 95.6%, and also collection rate is improving.
When we look at actually the insolvencies, well, we haven't seen any major insolvencies, and especially on the 20 most important tenants that we're working with, which approximately generate 38% of our total rental income. We haven't seen any major problems so far. That's a positive sign. When we look at it a little bit more into detail on how this evolved over the first six months, you will see that the operating GLA that we had actually providing to our customers has been pretty low over these months. It's only 65, 75, 66 in the months of January, March, and April. Only in February, we had also Poland coming to the market, but only for one month. I think you see the big jump, and that's what we are seeing as a very positive sign.
As Alex stated, since May actually, we have 92% of our GLA operating, and that has resulted in a turnover versus 2019 of 100%. It means we have been back to 2019 with our turnovers, in May. The difference here of the 92 to the 100 is what Alex said. We did not open at that time, the very beginning of May. Still all the cinemas and our entertainment part was still very heavily restricted or closed. You see still this pattern that we saw all over the time in the pandemic, that the conversion rate between customers coming to the shopping centers and what they spend is quite enormous. Still 76% in May, coming back to 100% on turnovers. Improving this in June from 85% to almost 100%, 97% in June.
What we see now, and the numbers are not complete, but this trend seems to go forward also now in July. These are, I think, quite promising numbers and really good results in helping all over in the business. That is also reflected in the, let's say, retailers' confidence in their own markets. We see this in the leasing activity. What I've been focusing on in the first days, obviously, okay, what are actually the expiries that we are coping with within 2021, and are we up to speed? I think the team has been doing a really good job here. If you look at that, all the expiries have been already signed for this year, 72% and 81% in total, have been already agreed.
Because you could imagine that in a crisis situation like this, there would be tenants that might say they would leave the assets. As you see here, it's quite a strong leasing activity, and it gives us the confidence that we also in the near future will not see a vacancy coming up more than we expect. If you look at the expiry profile in total, when you look at only 30.5% of rent coming up next year, I think this is really a very solid number, which the team will be able to deal with. At this moment, I think I'll hand over to Marek because we have quite this very strong confidence of retailers, and that is also reflected in what is my dear colleague now presenting to you. That's been a pleasure. Thank you.
Good morning, everyone. Thank you, Rudy. Welcome again to the team. I'll take this opportunity to take us through what was our leasing activity in the first half of 2021, why we stay fairly positive going further. In this short presentation, we want to stress how the market is reacting and what is our interaction with tenants, what is our strategy, and what the numbers are. If we start with the numbers, it's important to notice we have signed close to 700 lease agreement. Those are new agreements and those are extensions.
If you compare the numbers to the results of 2019, you would notice that we signed, if we exclude new developments and refurbishments, which are non like-for-like properties, then we look at around 250 new agreements signed, which is almost the same number of the leasing activity in 2019 H1, which proves that leasing market is strong. That's around 140,000 sq m of GLA. Another interesting statistic looking at vacancy, we started the year looking at retail only with around 5% of vacancy, which was roughly 100,000 sq m of GLA. As of end of June, the number dropped to 80,000. We went down from 5% to 4%.
When we reviewed the leasing activity and reviewed what are the targets for the other half of the year, we strongly believe that we can take the number even further down to around 3%. Of course, the time will show, but we stay fairly positive, and this is backed by the performance we see of our tenants after reopening. Those numbers were strong. Rudy was talking about it. I won't repeat, but that proves the market is strong. If we see continuous improvement, the vacancy should drop even further. When we look at our tenants and what we do, you would remember we always stress, and Alex said that actually our tenant mix is our biggest selling point. Without our tenants, we don't have customers. We are very active cooperating with tenants.
We make sure we team up with those who are leaders in the market and who bring value to our shopping centers. In the slide, you can see various leasing that happened during the course of first half of the year, and that includes signing Primark for Bonarka, signing Deichmann, HalfPrice, Samsung, and some other brands. Some of you had an opportunity to see Bonarka actually at the beginning of redevelopment, where we started redesigning Leroy Merlin part. We can report today all of that space is leased, and we are just filling out, and tenants will gradually open in the shopping center. When we talk about tenants, it's not only working with tenants that create our tenant base, but it's very important for us to bring new tenants to the market. Primark is a great example.
We signed Bonarka, but we are actively discussing other opportunities in the region. You would notice in the slides that we have signed and opened the first store of Sizeer in Bulgaria. We have signed the first store of JD Sports in Romania. We are talking to dm Drogerie in Mammut, in Piešťany, but at the same time, because we have this close relation with dm market, we get to know tenant is interested in entering Poland. As we speak, there are negotiations on few locations in Poland already. We are very happy to see, actually, new tenants coming to the market.
We are very busy cross-border leasing and our teams make sure that we have all the latest information, and we know where our tenants want to develop, not only in countries, but in whole of our region, so that we can benefit from that as a group. You would notice that we talk about new openings, but we talk also about right sizing, and that includes enlarging the units, but that means relocating, getting tenants to smaller locations. What we've observed doing those asset management initiatives is that actually productivity of tenants after those changes, measured by turnovers per square meter, go up. This is exactly where we want to be. We want to be the landlord for tenants with the latest concepts, best performance in top quality properties in the region. You would notice that Mohito extended and enlarged their footprint in Alfa Białystok.
We have whole of LPP Group opening in Forum Liberec, which was another redevelopment of shopping center. You would notice we've opened at the beginning of July, Helios, which is a cinema in Poland, and we got a lot of questions. Is it a good time to open cinemas? Just to give you some statistics for July, this particular cinema in the city of Opole was the eighth in the whole portfolio of Helios, and that's over 50 cinemas in the country. Which proves that cinemas do have their place in the market, and customers are actually very happy to being able to come back to cinemas. We actually, given how much that has been said about entertainment, about cinemas, would they survive or not? Is the streaming going to kill that business or not?
We wanted to bring some more color and statistics, since now we are fully opened, with entertainment to showcase what the actual numbers are. When we look at June numbers, and that's quite remarkable, when we look at Romanian cinema's performance, June 2021 compared to June 2019, we see it's +24%. It's enormous number. Now when we look at Bulgaria, it's +4. Again, great story. There are some countries, of course, where the numbers are negative, and that's Poland, Serbia, Slovakia. I think it's important to note one thing. In those countries, there were still some restrictions. It was like 50% of capacity of seats that cinemas could sell. There was no popcorn allowed, no colas allowed, mask wearing obligation.
If we think that with capacity of 75%, those retailers did -4 or -9, respectively, in Poland and Serbia, this still sends a strong message, and we stay fairly positive that entertainment will play a huge role in us creating strategy going further. You notice in the slide that there were generally most of the cinemas and entertainment opened end of May. It's important to notice as well, when we analyze our footfalls, that entertainment was the first to get locked and the last to reopen. What we observed with our footfall is that since the restrictions on entertainment are lifted, that we get another wave of customers coming back to our shopping centers and seeking entertainment and proper shopping in our retail destinations. This makes us quite comfortable going further.
We all are aware that Delta variant is around the corner. We believe that with vaccination and people, actually customers learning to live with virus around, we are well positioned to deliver good results for the whole of 2021. I'll hand over to Mirela. Thank you.
Thank you, Marek. Hi, everyone. Thank you for joining our presentation. I will start by presenting financial matters and then continue to accounting valuation, and of course, address the dividend distribution at the end of this section. In terms of financial strategy, as you know from the past, the focus of our financial policy has been to maintain adequate liquidity and generally a safe balance sheet in terms of debt maturity, security, low LTV, and access to funding. We have maintained our BBB credit ratings throughout the pandemic period, and our LTV and net debt to EBITDA are extremely prudent, especially when compared to the ratios that we see with our peers. Over the past years, we have successfully maintained the balance between profitability and prudence by keeping LTV between 28% and 33%.
In June 2020, we had that decrease in asset values that resulted in a temporary LTV increase, but we have successfully reduced LTV and maintained it around 31% since August 2020. We also managed the net debt to EBITDA ratio closely, as you can see from the chart, this is again very prudent. We have increased the percentage of unencumbered assets from 83% to 91%, showing our commitment to de-leveraging our portfolio. In terms of liquidity, we closed H1 with almost EUR 1 billion in liquidity, this increased to EUR 1.1 billion at the end of July. This is split almost evenly between cash and committed revolving facilities. Obviously, the strong liquidity allows us to declare a cash dividend with 100% payout ratio, again, reconfirming our confidence in the balance sheet.
During the first half of the year, we had an intense funding activity, again, proving our excellent access to capital. We extended two revolving credit facilities in total amount of EUR 220 million and also added sustainability-linked clauses. Actually, all our RCFs now are sustainability-linked and have expansion options. We also increased the principal in one of the other revolving facilities by EUR 25 million. We now have a total of EUR 570 million in RCFs, which are fully available. We concluded a new unsecured loan with the IFC. This was disbursed in July, so you won't see it on the June balance sheet. This marks a very good continuation of our cooperation with the IFC. This actually started in 2017 when they participated in our bond issue.
We repaid five secured loans in Poland and Slovakia, again, bringing down secured debt ratio to 89% of total debt, and this excludes the revolving facilities, which, as I was saying, are currently fully available. Through all these activities, we cleared all debt maturities until December 2022, when we have one secured loan expire in Slovakia, quite small. Actually the next largest maturity is in May 2023, when we have the first bond which is due. As you can see from the chart here, we have completely de-risked our debt maturity profile for almost two years going forward. On the debt covenants, we have significant headroom across all unsecured debt covenants. These apply to all revolving facilities and also bonds and more recently, the IFC loan.
To address potential concerns about further asset evaluations, the yield expansion that would lead to a covenant breach is 700 basis points, which we believe is highly unlikely, especially since valuation yields have been very stable during the first half of the year. I will now move to concession accounting, and we have discussed this in the past. The accounting is actually the same as what we have done in June and December 2020, but I will just recap the basics because we have taken a different, much more prudent approach compared to our peers. Like other retail real estate companies, we granted concessions to our tenants to support them throughout the pandemic. The applicable accounting treatment is driven by IFRS 16, which defines these modifications as concessions contractually agreed and signed between the parties.
We recognized in the income statement for the period the expected impact of the concessions under negotiation, as well as the impact of the government-mandated tenant relief in Poland. This was done as soon as we had estimates before the lease addenda were signed. The total impact of the discounts for the first six months of 2021 is EUR 36.3 million. This includes the estimates for those concessions where the lease addenda were not yet signed. Of this amount, EUR 36.1 million were recognized as decrease in income in H1. This leaves only about EUR 0.2 million to be deferred over approximately three years. In other words, almost the entire impact of the concessions granted in 2021 was recognized in the same period. The total balance of concessions from 2020 and 2021 subject to deferrals is EUR 2.8 million, so quite small.
This will be straight-lined over the remaining lease period, which is approximately three years. This is in any case, quite immaterial to our income statement. We included here on this slide the breakdown of the tenant concessions by accounting method, and you will see this also in our financial statement. The main difference is that concessions imposed by governments, which was the case for Poland, were recognized as a decrease in gross rental income and service charge, while concessions granted voluntarily were expensed and included in partial forgiveness of receivables. I will highlight once again that our accounting treatment is much more prudent compared to our peers, most of which have fully straight-lined the concessions impact, and therefore they expect a much more significant impact spread over several years. These differences in accounting treatment should be considered when comparing financial results and operational ratios.
In other words, our 2020 and 2021 ratios are technically more affected by the concessions granted, but we also expect that the ratios for the next years will have a much faster and stronger recovery. On the collection, this is actually one of the most important achievements of our team. There was significant progress made in finalizing tenant negotiations and in achieving this excellent collection rate. We reached 88% at the end of June, and this increased to 94% in August. We have also collected 99% of the revenues invoiced in 2020. As you can see in the chart, the net tenant receivable balance is low and quite in line with previous years. Very important, the net expected credit losses are only around EUR 100,000, which is again, highly immaterial.
On valuation, all properties in the portfolio, as you know, are valued twice a year. We have shown here the split between the appraiser's mandate. As noted in our financial statements, the value of the property portfolio increased by approximately 0.4% during H1, which is around EUR 25 million. This increase is directly attributable to NOI increases, so the good performance of the properties, because yields have been quite stable in the past six months. We have here in the table also the variance of the values by country. You can see that fair value gains apply to most countries in our portfolio. We are therefore quite hopeful that this upward valuation trend will continue in the second half of the year. Okay. I will now walk you through a couple of key reconciliations. We have here the EPRA NRV.
As you can see, this is largely unchanged compared to December, and there are very small fluctuations caused generally by fair value gains, profit for the period, and dividend payment, which are the usual factors. We have here a reconciliation between distributable earnings and cash flow from operating activities. As you can see, the difference is very small. This is to show that the distribution payment is fully supported by operating cash flows. Last but not least, probably the most expected slide in the presentation. The dividend declared for the first half of the year corresponds to 100% of the distributable earnings and will be paid in cash actually on 16 September. This is in line with our existing distribution policy of distributing at least 90% of the earnings.
This significant distribution reconfirms the strength of our balance sheet, which is driven by our prudent financial policy. Very important, the LTV is estimated to remain below 33% after the dividend payment, still very prudent. I will now hand over to Alex for the final part of the presentation.
Hello. Am I back? Okay. Thank you, Mirela, Marek, Rudi. I'll move to the few words on corporate governance. As you have seen in a recent announcement, we have appointed George Aase as Chairman, and with this occasion, I would like to thank on behalf of the team and the company to Robert Emslie for all his contribution in the past years. We've also appointed two independent non-executive directors, Ana-Maria Mihaescu and Jonathan Lurie. Very importantly, Rüdiger Dany, as I said at the beginning, he joined us actually at the beginning of July, so that's how he managed to know all those things for the presentation at the beginning. He's effectively on the board as of yesterday.
The last bit that I want to touch on is the management succession planning, which we've had some calls with you about, and an announcement was put out quite a while ago. Mirela and I have approached the board to implement a well-structured succession planning program. The board has already commenced this. I am closely involved. We are appointing a reputable headhunter that will assist us in this process. I will contribute to ensure a culture fit of the candidate into our team. I am very confident that we will maintain the current culture focus on excellence, most importantly, the strategy that this company has followed to date. The last thing that I want to mention on this is that I remain very aligned with the company given my direct interest in the company's wellbeing and the relationships I've formed here.
Moving on to the last and most exciting bit, the way forward, how we see the future. First, I would like to put everything into economic context. As I'm sure you are aware, the CEE is, as expected, in a strong position. The economic forecasts have kept getting revised upwards in the last couple of months. Recent numbers out in the last couple of days for the CEE indicate Romania with a growth of around 13% in Q2, Poland around 11%, Hungary around 17% or 18%. These are all very encouraging figures and indicative of a strong rebound. As you can see, the unemployment has remained very low throughout our region, while private consumption index is confirming the story that we've been saying for the last several years. Our countries are growing faster than the rest of Europe.
This is why we believe it's a good strategy to maintain our focus in these countries. On this slide, I just want to touch on the e-commerce aspect. This is something that we keep very close tabs on. The message from this graph is that, although the CEE has just as high of a internet usage penetration as Western Europe or other countries, the penetration of e-commerce or rather the degree to which internet users actually purchase things online is still much lower in the CEE. As we are working on our omni-channel strategy, we have the opportunity to grow both the online and the offline together. NEPI Rockcastle has a unique opportunity to make money out of that market.
As far as long-term opportunities or opportunities for long-term growth, we will be focusing on our development pipeline, of which we have in excess of EUR 1 billion. We believe in the continuation of our retail strategy as well as mixed-use developments. We, of course, will not be neglecting our existing portfolio. To the contrary, we think that strengthening it and continuing to invest in it will ensure even further growth and improving yields on cost. In parallel, we have started an asset recycling strategy. This is in line with what I've been saying, that one of our focuses is to continuously improve the average quality of the portfolio. That not only means adding things at the front end, but trying to dispose of the slower properties at the rear end. That has started and will continue.
On this slide, development projects, we just want to highlight the main things that we are already working on. I mentioned at the beginning, so Bonarka, Zielona Góra, and the residential project, and the top two projects here under permitting, Promenada Bucharest and Craiova. Those are under permitting and will commence construction this year. In closing, I would like to leave you with the general outlook. I think the company is in an excellent position today, primarily due to the very strong customer base that we have attracted in the CEE. It's a clear recovery in terms of footfall and especially turnover. The quality of our assets and the strong balance sheet, which pretty much opens the door to any opportunities that we see fit in our sectors. The asset management team will focus on growing this NOI. We're going to further develop properties.
Omnichannel remains a focus. We strongly believe that we need to attend to the customers' demand. The customers are now demanding a multi-channel approach to retail. We have already deployed a number of projects which are accommodating that. Of course, financial soundness of the business overall, which I think our numbers clearly confirm we have done well, and we will continue to do so as a company. Thank you. With that, we shall go to the Q&A section. Thank you.
We are now open for the Q&A session. We will take our first question from Inna Maslova from Bank Degroof. Please go ahead. Your line is open.
Hi. Good evening, everyone, and thank you very much for the presentation. I have a couple of questions, if I may. First, on the leasing activity you mentioned in the first half of the year, related to renewals and new leases signed. If you could provide any indication on the level of rents, especially compared to previous levels and to the pre-COVID levels, that would be great. Perhaps I'll continue with my additional questions afterwards. Thank you.
When we were preparing ourselves and thinking what could be the questions, this was one of the top. Thank you for that question. I think that we need to put this a bit into the context. We are in the bumpy road. It's not time to actually maximize the rental income from the tenants because we are a long-term player. It's more about long-term sustainability. My general comment to that is, and that we have had that question asked before, is that we have been always known for being very active asset managers. We work with tenants, and we want to team with those who are top performers. Before COVID, we had tenants who were clearly over-rented. OCRs were too high, not sustainable.
Whether it's pre-COVID, during COVID, or after COVID, we will continue to see those underperformers, which we will have to deal with. To answer the question directly, we are signing or prolonging the agreements at very similar levels to where the rentals were before expiry. That's a good sign. We haven't noticed any major change of contractual details of the agreement. They are still long-term, euro-denominated, with service charges being reconciled, et cetera. We have not seen any changes here. Most importantly, the vacancy is going down, and we will see this trend continuing. I hope that answers the question.
Yes. Certainly. Thanks a lot. An additional question from my side is related to the financial expenses and the cost of debt. Given that in H1 there has been an increase which had a stronger impact on your distributable earnings in relation to what you would expect to have in the second half. Of course, keeping in mind that last year, a green bond was issued at higher coupon levels than previously. If you could comment on the evolution that you would expect in relation to that and especially to cost of debt, that would be great.
On the cost of debt, we expect this to be fairly constant. Also now it's quite similar compared to 2020. On the evolution of financial expenses, indeed, in the first half of the year, we had higher expenses because we maintained quite a high level of liquidity, partly due to the bond last year and also the cost of keeping cash on account. We expect this to improve slightly in the second half of the year because part of the amount should be invested in development. As Alex mentioned during the presentation, we expect to invest more and more in development and maybe also in acquisitions if there are opportunities.
Okay, great. Thanks. If I may, the last question is related to the portfolio rotation. I believe Alex has mentioned that we can expect more disposals on the side of the assets that are performing not in line with your standards or there are better opportunities in the market. I appreciate that this is a very sensitive topic to discuss, especially from the perspective of competition. Is there any indication you could provide on the size of assets or the volume that you would be looking to achieve in disposals over the coming years? Anything in relation to that would be great. Thanks.
Sure. I'll take this one. As we stand now, we are not, let's say actively looking to divest from a further material amount of assets. We have one batch ongoing. As you know, our portfolio, it does not include a lot of these assets that we would like to dispose. The brief answer, this is not something to the tune of hundreds of millions. It's smaller things like the ones that we have just divested. It will need to be coupled with the rate at which we reinvest this money, either in our development pipeline or our potential acquisitions.
Understood. Thank you very much.
Thank you. Are there other questions on the phone, or shall we go to the email ones?
Again, if you would like to ask a question today, that is star and one.
I suggest.
It appears that we do not have any further questions in the queue. I will go ahead and turn it back over to the speakers.
Thank you. I will go to the questions that we received by email. The first one is: What type of opportunities are you looking to pursue with this conservative balance sheet? If possibly, please advise on the targeted initial yields on these opportunities.
The types of opportunities are, as per our presentation, the development of our existing pipeline, as well as the acquisition of operating properties. The simple metric is the yields on these properties versus our cost of capital. Of course, we need to find these accretive, otherwise, we don't do them. That's the all-encompassing answer.
The second question is: What drove the reduction in trade receivables, and will this unwind in the second half of the year? Actually, the trade receivables had a very small increase from 36 to EUR 43 million. This EUR 43 million is quite in line with our usual balances. Obviously we invoice quite a lot, so it's quite difficult to have a zero balance at all times. This balance, however, is very low and reflects the good collection that we had during the period. There is a question on CapEx. How much CapEx are you planning to spend for the rest of FY 2021? This is a number that I think we've disclosed. It's EUR 110 million.
This includes development CapEx, yeah?
Yes.
It's not just maintenance CapEx.
Perhaps what is the normalized CapEx for 2022 and 2023? I think it is quite early to tell at the moment. It really depends on how permitting for the other development projects proceeds in the next period. Based on this, we see what we can start. Maybe something for Rudi and Marek. Is the current vacancy rate structural, or can this be addressed over time?
Let me answer this. I think definitely there is room for improvement. We have now a very stable occupancy, but obviously, the moment where you are optimizing, let's say, your portfolio and the quality of assets, you have an improvement there. Of course, it's our leasing activities where we still believe that we have room for improvement here in the future. Getting closer to the 100 is obviously always a very important goal to achieve. It leads actually to a little bit the other questions I've been reading of how will this evolve now over the second half of the year. Of course, it's very much related to whether we will see additional lockdowns, which we do not necessarily see, but still you could have restrictions, trading restrictions to our assets.
There we obviously look into a glass ball how this will evolve, but looking at the current situation, the current numbers, I think we can be quite positive. That is related, and that's maybe also answering one of the questions to the concessions, to the discounts. I've said in the presentation that the team, I think, has been doing a great job already on reducing this by 25% for the first half of the year. We give this only short term, which means obviously that in May, June, that has dropped most of it. Looking now forward, there is obviously quite a chance to save some of these budgeted discounts for the rest half of the year. If so, the situation will proceed like it is at the very moment. That's true. That's what we've been looking for.
We are cautious, also with our budgeting, because we simply, I think none of us really knows what the next autumn and winter will bring. We are prepared for it, and therefore, hopeful. Hope this answers your question also on the discount strategy.
Thank you. Will you consider buying back shares as a means of allocating capital, or will most likely prefer a higher payout ratio going forward?
I'll take this one. The simple answer is that we have better opportunities than buying back our shares at the moment. Given the current balance between cost of capital and yields on our opportunities, it's not likely we'll be buying back shares. The payout ratio going forward is as we disclose. We like to keep it conservative. Given our current liquidity, I think it's adequate to pay out 100%.
Okay.
Next question.
Next one. How material is the risk of substantial write-downs of tenant receivables? Are you expecting to recover the EUR 46 million in tranches or bulks? Can you please provide timing of the potential cash flows? I don't think there is any substantial risk of write-downs here. We had also in the first half of the year, as I was saying, only about EUR 100,000 net movement in the expected credit losses. As you know, collection is going very well. We do expect this to recover slowly over the next period. The next question is from Tobie Lochner. Can you please elaborate on your omni strategies?
Sure. As I've said earlier, the approach is to provide our customers with a broader experience than just the physical retail space. This is via number of ongoing projects, including loyalty apps, including online stores, including additional services that we provide our tenants to have an online presence. Including things like partnerships with various digital companies to facilitate our tenants' sales via online channels. Finally, of course, negotiating with our tenants so that we get a share of the online sales that they do achieve as a result of our efforts and as a result of our properties' attraction to customers.
The next question, also from Tobie. Will the EUR 36 million COVID impact in H1 be zero in H2 if there are no further lockdowns? I believe there may still be some concessions granted to support tenants that have temporary difficulties, but if there are no trading restrictions, we should not see anything significant. Is that correct?
Correct.
Yeah. The next question: Is the company considering further buybacks or acquisitions with your strong balance sheets?
I think I answered this implicitly in the previous. Yes, we are looking. We have the ability to buy, and we certainly have some properties that we have our eyes on. The big question is, what is the most opportune allocation of capital? The final decision will be based on this versus our development yield that we can achieve or yields.
The next question is from Jakub from Wood. Actually, a set of questions. The 1st one regarding the Polish legislation. Do you have any visibility now on how many tenants have requested to have the extension voided?
I think I'll take that one. It's a bit more complex than only voiding the extension because we have had four lockdowns in Poland. What we've learned in the course of opening and closing is that tenants actually were not that keen to use this governmental law by which they could pay nothing for the lockdown period. They actually preferred to pay and contribute to the expenses we have had operating our properties, pay even some rentals and have shorter extensions because it made more sense. Therefore, in that spirit, we have had negotiations with most of the tenants. By the way, the deadline for tenants to send notifications about voiding extension just lapsed exactly a few days ago, so we don't have the latest statistics yet. The market got self-regulated, actually.
We did manage to find a solution outside of what the governmental regulations were, which is actually quite encouraging.
Okay. The next question is also related to acquisition opportunities. What volume of assets have you been seriously considering? Maybe walk us through the reasons why you have not pulled the trigger yet. Also, are you currently involved in any advanced discussions that might lead to an acquisition at some point this year or early next year, I think?
Well, that's quite easy. If we haven't announced it, then surely I can't disclose it now. We are simply looking, as I said a couple of minutes ago, at capital allocation logic. If our cost of capital is below what we can invest in, then sure. One should think in the tunes of EUR 200 million that we may invest in operating properties. I think that's all I can say at this moment.
Okay. The next question is, considering the strong rebound of turnovers, in case we had no further restrictions on non-essential stores this fall, winter, would you say it would be reasonable to expect the distributable earnings in 2022 could be in line with those reported in 2019 on a like-for-like basis, adjusting for the contribution of the disposals that took place in the meantime?
I think answering that question would equate guidance or a forecast.
Yeah
we can all do the numbers.
I would say that at least for NOI, assuming no significant lockdowns or restrictions, yes, on a like-for-like basis, looking at the same properties, it should be fairly similar to 2019, right, Marek?
Yes.
That's what we're heading for.
Yeah.
That's what we're hoping, and that's what we're heading for, and that's what we'll be fighting for.
Yeah.
I think this is really looking a little bit too far away and a little bit looking into the glass ball.
Yeah.
Although on that point, it's worth adding that we have revised our NOIs, and we are gladly surprised to see that the turnovers actually for Q2 were higher than we estimated after Q1, which added actually EUR 2 million to the income on top of what we thought we would get. Yeah, it's hard to predict, but should the things continue as we see them now, we stay fairly positive.
Thank you. The next question is from Francois du Toit. Can you comment on the impact of COVID-19 on operational costs and tax on distributions, where corporate costs and tax on distributions below normal levels? Yes, corporate expenses were about EUR 1 million lower compared to the first half of 2020. Taxes are also, let's say, substantially in line with 2020, but obviously adjusted down for the concessions that were granted. The next one, I think, was answered already. Can you give an indication of the expected net rental yields on developments in the pipeline? I think this was answered already. The next one is from Paul Duncan at Catalyst. I'm glad to see you reference H1 2019 as the benchmark to measure the recovery. What was the impact on distribution per share of the concessions for first half of 2021?
I don't have the per share number in mind, EUR 36 million. I think we can do the math a bit later. How much of this would you say is one-off and unlikely to reoccur, assuming no further lockdowns? I think we've answered this as well. Assuming no other restrictions, most of this should be one-off.
We have not given any long-term discounts, and it's a general recovery. You can't give tenants just help for that particular month, but in the course of a couple of months, they revert to the ability to pay fully.
Okay. The last question that I have by email, what do you consider to be your cost of capital currently? How do you arrive at this figure?
Let's just say that our own view is quite close to the figure on Bloomberg. I'm not going to say it on this call, but our cost of debt combined with our dividend yield plus some growth that we expect. Not too far from the publicly available figures.
Okay. Do we have any other questions on the phone?
As a reminder, if you would like to ask a question, please press the star and one on your touchtone phone. It appears that we do not have any further questions at this time. I will turn it back over again to the speakers.
Thank you.
Okay. Well, with that occasion, I thank everybody for participating. I once again thank the NEPI Rockcastle team from all the countries that we operate in. I wish everybody a great second half of the year. We have quite a bit of work to do.