You'll be connected to an operator. I will now hand you over to your host, Alex Morar, CEO of NEPI Rockcastle, to begin today's conference. Thank you.
Hello. Good day, everyone. Good morning, depending on your time zone. I'm Alex. Thank you for the introduction. I welcome you all to our 2020 interim results presentation. I'm actually in one of our meeting rooms in our Bucharest office. The meeting room is called Stone. As you can see, the wall's made of stone in this particular one. We're actually in a very interesting circumstance. I'm now actually closer to our team than ever during a presentation. Quite a few of our team is in the next door social area. Thank you for all the help with this presentation. Together with Mirela Covașă, our CFO, and Marek Noetzel , our Retail Executive Director, we'll be doing this presentation. I trust that you can see both our video as well as the slides simultaneously.
Please excuse if there will be a small delay between how we click through the slides and how you see them. If you prefer, you can also look at the PDF available on our website, and I will try to mention the number of the slides as we're going through them. With that, let's begin our presentation. I would like to first start with the broader context. In the last six months, I can safely say that it's been the most economically challenging period since I've been at NEPI Rockcastle more recently. This is the first time in recent history we're reporting a decline in earnings or NOI. Nevertheless, we have quite a bit of good news and good numbers to share with you, as well as positive prospects in our view.
I would also like to mention that the measures taken by governments in the fight against the spread of COVID-19 have led to temporary closures of a significant amount of GLA in all the countries where we operate. This, of course, had a significant adverse impact on our results. As the various aspects which have made us the leading owner, developer, operator of commercial retail property in the CEE in the past years, these same aspects will see us through this more challenging period. With this, I move to the next slide, which shows the contents of this presentation, and I move on to slide number four, the first of two slides showing the key business figures of this H1. As you can see, we have some decreases. Nevertheless, the decrease in property value is a very modest one.
This is in light of cautiousness by the valuators, of course. The expected decline in income had a role to play in this. Mirela will put our portfolio yields in the context of the broader market later on in the presentation. As far as our occupancy decreased to a still very respectable 96%. This is partially due to COVID as well as a large tenant who left our office portfolio, which, by the way, we're in the process of disposing. Also, recent opening of Târgu Mureș, which did not open at 100% occupancy, dilutes a bit our high occupancy rate. Sorry, the slide moved. You can see also on this slide four on which we are, that our remaining term to maturity of our debt was 3.6 at the end of the period. However, the subsequent bond issue extended this to 4.5.
I think this is a very good debt management outcome for the company. Moving on to slide five. We see here probably the two figures that are of most interest to those of us on this call, specifically our distributable earnings and NOI. These have decreased with 31%, respectively 20%. The reason why earnings is lower decrease in percentage than NOI is, of course, the gearing effect. I would like to point out that this decrease in NOI fully reflects all the concessions or rental reliefs that we have granted during H1. Mirela will walk you through the exact accounting treatments, Marek will, of course, give you more color on how processes with the tenants happened during this period. Our cost of debt slightly decreased, excuse me.
Our visitors, of course, had a significant decrease due to the lockdown periods. Last but not least, in this first half-year, we have completed and opened another 45,000 sq m, approximately, of greenfield as well as redevelopment projects. Marek will give you more details on these. Moving on to the next slide, number six. We have here three slides in which I want to give you a very broad overview of how things have developed over the eight months or so during this year in relation to COVID. In the period January to February, we experienced growth in our retail sales as expected, despite COVID already being present in other parts of the world. You can see a roughly 4.3% increase in footfall, sales up 8.5%, and the collection rate was as usually high.
We move to slide seven, the period March through April, or March through May, we began seeing the effects of COVID-19. Infections increased, we started seeing a cascade of lockdowns across our portfolio. The peak of the lockdowns, about 30% of our portfolio by GLA remained operational. This was key retailers that remained operational in each one of the properties. At no point during this period were any of our properties not functional, it's just that a large portion of their GLA was not open to trading. In this period, our primary focus was to maintain the safety of our tenants, customers, and inherently, we invested into our properties to implement these safety measures, as well as to optimize costs and preserving liquidity. We will talk about these priorities in a minute.
As far as the approach that we took towards tenants beginning in this period, was first to defer invoicing of a large proportion of our income, collect data, understand what is going on, and not overreact to the events that were unfolding. As we move into the next period, the post-reopening period, and I'm switching now to slide eight, we, of course, began negotiating the necessary amendments with a large number of our tenants. We did not take any drastic approach immediately as we saw the lockdowns, but we preferred to take a cautious and informed decision-making route. As our properties began reopening, with Lithuania being the first one to reopen in May, we started seeing an increase in tenant sales and footfall, of course, and we began the negotiations with tenants.
We stand today, about 96% of our GLA is operational or available to operate because this 96% includes about a 4% vacancy. We have gotten to about 30% of our lease base to have signed amendments, and more than double that figure in terms agreed with various tenants, which will be signed over the course of the next couple of months. In this period, we managed to issue a green inaugural bond, and we've also taken up again the sale of the office portfolio. At the end of July, so it's just shortly after the end of the period, our liquidity position was quite strong at over EUR 800 million. Mirela will give you more details on this. Moving on to the next slide. I would like to put the overall numbers that we have here in the CEE in the context of the broader Europe.
The point I want to make is that the CEE has implemented probably more drastic measures than Western Europe, partly because of the less strong healthcare system that exists in this region. These measures have actually worked better than in Western Europe. You can see that the infections per capita and the deaths per capita in our CEE countries are significantly lower than Western Europe. Although lockdown measures have been relatively comparable, the human impact has probably been lower, and I expect this to result in a more favorable future recovery period of our industry. I will move on to the next slide now, slide number 10. On this slide, we tried to depict graphically the time impact of our operations. You see here all our nine countries, and the duration of total lockdown is reflected by the dark blue.
You can see that Romania stands out with the most dark blue, and it still has Romania, Serbia, and Croatia still have ongoing partial restrictions. The lines that show the very light blue color indicate that those countries no longer have specific restrictions imposed. On the next slide 11, we show a similar information, but in relation to GLA. Each country, how much GLA was operational during its respective lockdown period versus how much GLA we had operational after June 15th, when Romania was last to reopen properties. During lockdown, we had on average about 34% operational, and now we're at the 96%, which, as I said, includes the approximately 4% of vacancy. By the way, any questions I will take at the end of the presentation, either via audio or please use the text box or the chat box to provide some questions. Moving on to slide 12.
We show here the footfall recovery post-lockdown. You can see that there have been different trends across the different countries. I can also mention that secondary cities have shown better trends than our primary cities. The trend converges at approximately a 25% decline versus the same period the previous year. It should be kept in mind that a significant portion of this decline is attributable to the continuing partial restrictions related to certain leisure and entertainment components. These are still not functional or fully functional in several of our locations. All our locations with outdoor space have, of course, been favored in this period. On the following slide, 13, we try to give you similar information, however, related to tenant sales. Ignoring the leisure and entertainment and hypermarket segments, the operating tenants are now at approximately 88% of the previous June sales figures.
You can see here some outliers like Serbia, which actually shows a significant increase, but this is because our Novi Sad property had just recently opened last year, so it was in the ramp-up phase. You can also see Czech Republic at just a 5% decrease year-on-year versus 2019, and Poland is just at under 8% decrease. Moving to the next slide. This is a very broad diagram of our areas of focus in this period. As we've been mentioning in previous announcements as well, safety, liquidity, and engaging with our communities have been at the core of our focus. Of course, tenant support was a core activity for our asset management team during this period. I start with just a few words on liquidity on slide 15.
Mirela will give you more details, but the main point is that we have reduced significantly operating expenses during the period, so everything that was service charge related and so on, by about 40%. This led to us retaining more cash in our accounts to counteract any potential crisis situation that could have arisen. All was fared through smoothly from an operational and financing point of view. We've, of course, deferred all non-committed development projects, and we have also drawn down partially on available RCFs and I'm glad to say that all our financing partners have been very cooperative and supportive during this period. We've also, as I mentioned before, issued the first green bond. As you have noted in the earlier announcement of today, we are not declaring a cash dividend for June 2020.
How about we will provide a capitalization issue for shareholders should they wish to get some cash that way. This is in a view to maintain as safe a balance sheet as possible in this still relatively uncertain period. Apologies for a second. My slide just changed back to the first one. I will now jump back to slide 16. I hope everybody's still on track with the presentation. On slide 16, we touch a bit on safety. As I've mentioned before, safety of our customers as well as our staff has been a key priority for us. We have taken numerous measures in line with the best practices that we looked for throughout the world, as well as, of course, adhered to local imposed regulations. We have also obtained a COVID-19 compliance certifications from the SAFE Shopping Center Company .
We already have this for about 16 of our properties, and we'll have more in the future. This is not to say that the other properties are not as compliant, it's just that the certification process has not yet been completed. Some of the specific measures that we are taking are listed here on this slide. Of course, we've spent a bit of money on this, but it is immaterial compared to the overall effect. Moving to the next slide. It should be slide 17 on your screens. In relation to tenant support measures. As briefly mentioned earlier, our broad strategy was to wait and defer as COVID-19 set on. As we were able to get more information on what is actually the result of this towards tenants, we've analyzed footfall and turnover information, as well as all information available from tenants, and then we began negotiations.
We have taken a fair and balanced criteria approach. We have a slew of analysis models. We've also taken into account whatever support was being granted by the various governments, which I'll touch on in a second. On the next slide 18. One second, because it's not on my screen yet. Okay. On slide 18, we break it down into the during lockdown period as well as the post-lockdown period. You can see that most negotiations, of course, took place post the lockdown period, and any rental reliefs for the lockdown period were granted after lockdown ended. In general, we have obtained something in exchange for the concessions that we have given to our tenants. This includes things such as extension of lease period, increase of the turnover rent %, introduction of step rents.
In some cases, we even obtained cancellation of some future unilateral extension options by tenants. We've, of course, improved certain service charge contribution clauses. I again repeat that we signed about 30% of the leases, lease addendums to date, and we have well in excess of 66% as end of July, and this figure actually a bit higher already. Moving on to slide 19. Let me do something because I think that you were not seeing slide 19. Now everybody should be seeing slide 19. We break down here the support that we have received from authorities across the nine countries that we operate in. These can be broken down into three very broad categories. We have Poland, where the government imposed a rental relief on the landlord.
Basically, the landlords were forced to suspend all obligations under lease agreements towards tenants, rent, service charge, marketing and all, for the duration of the lockdown, in exchange for the tenants providing a six-month extension to the lease agreements plus the duration of the lockdown. In essence, we got seven and a half months or so extension for all the leases there. Nevertheless, of course, this full rent reduction for the period was partially taken into account when agreeing any further discounts for the remainder of the year. I would also point out that, as of now, the quantum of reductions or concessions that impact 2021 is virtually immaterial. All concessions have been focused on the 2020 year. The second category of countries, as far as government support, is Slovakia, Czech Republic, and Lithuania, which account for about 14% by market value of our portfolio.
In these countries, the authorities took a more balanced approach in the sense that landlords were forced to provide a concession. However, the state also contributed with assistance to the tenants. All third parties shared in the pain of this period. The last category, Romania, Bulgaria, Hungary, Croatia, and Serbia, which is most of our portfolio, had no specific legislation enforced in relation to concessions that landlords must give. It should be noted, however, that there have been numerous tax incentives provided in this period in all the regions. However, these are not significant. It should not be omitted that future legislation may be put in place which may affect the current period in any of these countries. That's not in our control. Moving on to the next slide 20, we give a brief picture of collections.
You can see in Q1, our usual 99.9 collection rate was already started to be affected. Q2 was severely affected at about 50%, going to aggregate of 72% for the full half year. I want to point out that tenants are usually much more inclined to pay the amounts due, just shortly after an agreement is reached for some sort of a relief in relation to the lockdown period. Mirela will detail later on that the 72% reflects the collection amount from the initially agreed receivables. This is a EUR 48 million decrease versus what we had initially contracted. As I mentioned, this is fully reflected in our P&L. This is roughly the 17% that you see in the chart on the right side. Moving on to slide 21. Just a few words on how we have engaged with our communities across the nine countries of our operation.
Our team has been very active during this period despite the social distancing. We've done many things from donating to setting up temporary hospitals, to initiating a food collection campaign for elderly isolated people, to setting up an online donation platform, donating ourselves to the Red Cross, and providing actual safety equipment to medical staff and clinics, and so on. The last slide, which I will be talking to is slide 22, and this is the disposal of the office portfolio. With AFI, we have signed a new SPA. We have received a EUR 50 million cash advance a couple of weeks ago, and we expect the closing to occur shortly. The pricing of the transaction is the same as initially agreed several months ago. The cash proceeds will be very welcome to further boost our available liquidity and LTV.
With this, I would like to hand it over to Marek, who will take you through our various asset management initiatives. Thank you.
Thank you, Alex. Good afternoon, everyone. It's my pleasure to do this presentation once again, although not as convenient as it used to be, which is live. I sincerely hope in a half year from now, we will be able to do that presentation in live. I can just tell you, this is just as stressful talking to camera as to a number of people, but I prefer live presentations. Without further ado, let me take you through what we have achieved over the last half of the year. It was not easy, but we based our strategy on three important pillars, which is active management, combined with quick adaptation of new retail environment and focusing on the developments which were ongoing to complete them and make sure that we deliver quality products to the market. When we look at the active management, that's slide 25.
There are two dimensions to it. It's environmental responsibility and efficiency of everyday operations. Alex already mentioned how focused we were and how quickly overnight we changed our focus to health and safety measures, that we are busy certifying our properties to ensure all of them meet the highest standards of health and safety, going beyond what would be required by local laws. On top of that, we are very much focused on further progressing with our renewable energy initiatives, reducing waste, working on green energy and production, and making our places safe. All of those lead us to making the world a better place to live, and we want to contribute as much as we can to that worldwide initiative. The other dimension is most efficient operations, which refers to everyday operations. We are busy making our buildings and parking smarter than they were before.
We are introducing now a number of automation initiatives. We are developing further applications, concierge application, loyalty applications, to engage more with our clients. We are very much focused on making use of our scale. Being owner of over 50 properties, we are working on efficient procurement of various services and products to our malls, because we are a big buyer of various services. Hence, we have a new procurement procedure, making sure we make most of it. We are working on unifying property management model. We have different models in various countries, and we are very busy reviewing that model to make it optimum, but important to us, value-adding functions are kept in-house. The leasing, asset management, developing, marketing, all the functions that bring value and the know-how that we have developed internally will stay internal.
Where we need to focus on efficiencies as we grow is on the functions which are much more admin-driven, less value generating. Moving on to next slide, 26. I would like to touch a bit on tenants. We have always been very proud about our relations with tenants and how active we are with them. Nothing has changed in the first half of 2020. We have signed over 200 lease agreements, and just to name few, Pepco in City Park, eMAG in Bulgaria, SMYK in Romania, Sizeer, two agreements in Romania, more to come in Bulgaria, Bigotti. The point I would like to make here, that if you look at the origins of those tenants, if you look at eMAG, this is Romanian-born brand we took to Bulgaria. When you look at SMYK, this is Polish-born tenant that we are busy expanding in the whole of region.
Sizeer, another Polish brand that we are actively dealing in various geographies. The point here is to make that we have a system of flawless information between countries. Leasing teams are aligned. The information is quick. Access to tenants, high-level decision-making people is quick, so we can transact quickly despite the environment around us. We are able, and we keep on effective and efficient leasing process. Little has changed over COVID period to our strategic lease agreement provisions. They are still long agreements of five years. They are still based on fixed base rent and service charges and additional fees, most of them reconciled or recoverable. There are no additional incentives required. There are no additional break options, and all the leases are in euros.
We kept the value of the lease agreements as they were before COVID, and that required effort, but I think that's an achievement worth mentioning. Moving to slide 27. On top of the agreements we have signed, there was a lot of new openings. Again, I can mention brand by brand. You would recognize a lot of them. Some of them are multinational, some of them are local, and we are very busy taking them around the geography. The point I would like to make here is that the process of filling out the unit is a long one, and there was no a single lease agreement that was signed pre-COVID or during COVID that would have not been executed.
Some of them were delayed for obvious reasons, but we were happy to say that our tenants behaved very professionally, and we did manage to execute what was there to be executed. On the other side, we can say as well that lockdown helped us to actually speed up some of the processes. Normally, you would do your work during night shifts, which is of course, slower and more expensive. We took this opportunity to do the day shifts to deliver premises to our tenants faster and at lower cost. Moving to slide 28. This is a slide where we would like to tell you a bit how we adapted to new reality. As the lockdown took us by surprise, we had to revise our priorities, and we had to team up with our tenants and customers to deliver to them the services that we normally did.
As you can see, we have been always very busy delivering our large outdoor terraces. This is very important even today as the lockdown referred to interior or indoor properties, outdoor were still open. We allowed our customers and our tenants to stay open as long as they could use the terraces. We helped local communities, we helped customers and our tenants to go through this difficult period. Cinemas were one of the first to be closed. You will notice there is a picture showing outdoor cinema. We have immediately after lockdown identified number of properties where we could have put outdoor cinemas to let the cinema operator operate with, of course, obeying all the health and safety measures. Clients could actually come and sit in their cars, tune their radios and watch and see the movies, rather than staying at home and using Netflix.
Of course, with that comes leasing. We have noticed there is various new leads, some local tenants and some pop-up stores that are not used to the structure of the deals that we work on, which are long, et cetera. Those are the tenants who've never had any experience in shopping centers. We have opened to them. We offer them shorter agreements, more flexible, to test the waters, to help them understand how a shopping center works. As long as they prove to be successful, we transfer those lease agreements into long-term agreements. That is another important source of new demand for our properties. You would notice the last point, integration of last mile delivery system. The good examples are eMAG and LPP. LPP actually made it one of their strategic changeover to move from central warehousing, e-commerce delivery to last mile delivery and using physical stores.
It's a proper statement. We can see more tenants moving towards that direction because omni-channel is the word, and is the crucial element for each tenant to expand further. As we speak about adaptive retail, needless to say that e-commerce, this is page number 29, e-commerce was the big word. Let me start with some statistics. We have shown that to you over a year and a half ago. It was quite similar statistics. We are talking about penetration of online share of about 2%, which is in 2019, expected to grow to as high as 7% in 2023. We still are believers that Eastern Europe is resilient to the dynamic expansion of e-commerce. There are some reasons for that. First of all, the shopping centers in our part of the world play bigger role.
There are no high streets, and the shopping centers are the places for communities to socialize. There is much less GLA in Eastern Europe compared to Western Europe, and not to mention even the United States. If you look at 2,000 sqm per 1,000 capita in the States and compare it to roughly 200 - 300 in Eastern Europe, that will explain a lot that the revolution in the States has had solid grounds to be happening. We believe we are more resilient to that. Another important point, our shopping centers are much younger, so to say. They are designed in different way, in such a way that they are much easier to active asset manage them, anchored by hypermarkets, unlike in the United States where we have department stores that were anchoring shopping centers. This is changing.
You might have noticed the big shift in the U.S. There were lots of announcements by American landlords saying they will introduce for the first time ever, grocery stores to their properties. This is already for tens of years in Europe. This makes us, we are resilient to the changes coming. If anybody would wanted to test how online can work without offline, well, last couple of months have proven that. We are actually forced to use online only. We face the situation where offline was almost totally switched off. With that comes convenience. I mean, it's very easy to, within two or three clicks, do your purchase. Inconvenience came with that as well. An inconvenience by the means of managing the returns, managing the refunds, being able to actually adapt to longer delivery times.
This all shows that there are two sides to each of the models. In our view, what has happened accelerated the change, but opened eyes to those who didn't see that omni-channel is the key model. This is the only model where convenience of shopping online and offline is combined with financial efficiency for tenants to make proper margins in their sales and show proper returns to their investors. Online only does not simply work. Moving on to slide 30. An interesting study by McKinsey & Company. The darker part of the chart shows how many respondents had interacted via various digital tools in the online world. That includes not only shopping, but services, banking, insurance, et cetera. It has increased from 81%- 94%. It's very good. I mean, it's a technology revolution.
What was meant to happen over the next three years happened over three months. Those who were skeptic about digital tools are less skeptic, and a lot of those people will stay online. We will have to make sure we make best use of that. How do we do that? Page 31. Of course, we have to change ourselves. We have been talking about digital transformation. We have had various initiatives. Nothing changed here. We will actually accelerate that with adjusting our corporate structure with new senior person that joins us very soon that will lead the digital transformation of NEPI Rockcastle. I mean, one person will run this initiatives. We need to bridge physical online and offline. We need to get use of artificial intelligence, and we are very busy analyzing online data to improve our performance. We are improving the digital marketing.
We are enhancing the tools that help us to get involved with our customers and our tenants online. Online means more frequently. This is all aimed at increasing convenience, engagement, and loyalty of our properties. I think that a lot of change we will be able to see on that dimension of NEPI Rockcastle going further. Page 32, where we proudly say that we said in the past, that's still relevant. We have been one of the most active landlords in terms of how we asset manage our properties. Nothing has changed in that respect. You can see in that picture there are four developments that we have successfully delivered. The first half of 2020, there are three ongoing, I will take you through some more details of what we have achieved.
To start with Shopping City Târgu Mureș, I would ask Sebastian, if you could please turn on the movie so we can see Târgu Mureș. Thank you, Sebastian. This is great example of what's in DNA of NEPI Rockcastle. They delivered high quality product, very well leased, including entertainment, high class fashion tenants making Shopping City Târgu Mureș the best leading shopping center destination within the catchment of over half million people. It opens in July with slight delay, but since the opening we can record very good results and they shall continue improving. Moving on to slide 34. This is an example of Ozas Shopping Center, where we were busy. As you might remember, some of you, joining our presentation half year ago, we were talking about dungeon project. We can now report it's done and flying. It commenced to open on the April 1st.
Due to COVID-19, we had to postpone it. It was opened on the June 18th, the day after the restrictions were lifted. What we have done, you can see in the left upper corner picture what that was before. It's a corridor taking us to underground parking. What it is today to your right, unbelievable change. We have not only took it to very friendly lit, modern space, but we have commercialized unused space of over 6,000 sq m. Below you can see pictures of Adventica that opened on the June 18th. We were very skeptic, maybe too big a word to say, but we were very curious to see the results of the operation with all the social distancing measure in place.
We thought it would take longer for Adventica to get to where it should, but we were very surprised to hear that what was planned between 8,000 - 10,000 visitors a month goes to 13,000, which is much more than expected. Over 300 birthday parties already organized. It proves that leisure entertainment is the way for Ozas and other of our properties to go. You will see us developing more of those initiatives as we move forward. Another similar examples of what we are doing to our properties at Bonarka and Buzău. To the left-hand side upper, you can see Bonarka before and in the making. It will be opened brand new, shining very soon. What we have done, we have relocated the escalators to the middle. We have changed the common area. We converted that into GLA. We have refurbished and extended tenants. That's Costa Coffee.
Douglas opening the biggest store in the region. Pandora, Peek & Cloppenburg , who have signed highest rental level, close to EUR 100 for new jewelry store at the corner of the newly added GLA. All of that signing happened during lockdown, proving that those locations attract tenants and they will maintain their value, and we will be busy doing what we do because COVID-19 has proven that this is our answer to the changing environment. Similar changes in Buzău. This is a great example of changing the second-generation shopping center into the fourth-generation. You can see picture before and after. We were busy adding new tenants, extending entertainment. Cinema City will open the day where the restrictions in Romania will be lifted. We have extended and relocated and upsized CCC, Deichmann, New Yorker, and added new tenants, making Buzău the best property shopping center in the catchment.
That's all. I'll be happy to answer all the questions. Mirela, over to you. Thank you.
Thank you, Marek. I hope you can hear me. Hello, everyone. I'm happy to know that we have such a large audience today, and I hope that this form of presentation will still be interactive. Let's dive in, and I'll be happy to take your questions at the end. We first go to slide 37. I'll be speaking about the portfolio and how it looks today. It is important to reiterate that we are diversified, and even for the countries are affected by such a global event, such as the pandemic, the recovery will likely be different because of the measures taken. This is positive for us as we are not overweight of specific markets that might be more heavily impacted than others by either large infection numbers such as Italy or Spain, or by adverse regulatory measures such as Poland.
I will also speak about EU aid packages in more detail just a bit later. Let me preempt this by saying that EU support should also indirectly help the communities where we are present in with 97% of our portfolio, and we expect them to recover more quickly. Moving to slide 38. Taking a closer look at our portfolio, we believe that our assets are the best in the region. The portfolio is very new, as most of you know, and you've seen the assets. The portfolio covers large catchment areas, and we generally have the vast majority of it super regional and regional malls. These are representing 91% of the asset value. This last statistic is particularly relevant because regional malls depend much less on office related footfall, and they have generally shown better tenant sales and faster recovery from the effect of the pandemic.
Moving to slide 39. Looking at our portfolio in comparison with our peers, I reiterate that we are the largest retail real estate company in the CEE, and among the top five in continental Europe. More importantly, even after the recent valuation adjustments performed across the industry, we have still retained our market position in terms of asset value. Obviously, all property companies have taken value adjustments in rather similar proportions in June. These were mostly driven by a blanket approach applied by the appraisers, simply due to lack of comparable transactions since the start of the pandemic. In the long run, we expect that the value of the portfolio of NEPI Rockcastle will be more resilient as the average yields of our valuations is extremely prudent compared to the market as the 6.10 net initial yields on the top of the page indicate. Moving to slide 40.
Judging by the latest macro estimates, which take into account also the effect of the pandemic, our CEE-focused investment strategy remains valid. Both in terms of real GDP growth and private consumption growth, the economies of the countries we operate in have been, and are expected to remain stronger in the near term. Also, supporting the private consumption growth in CEE is the fact that job markets in the region are expected to be less impacted by the pandemic than the rest of the EU, as you can see in the unemployment chart. These stronger macro fundamentals are also expected to translate into higher prime retail rents, already returning to pre-pandemic levels by the end of 2021. Going to page 41. I touched briefly on this earlier.
As you probably know, the EU set up a fund aiming to help with economic recovery, and about a quarter of it will be allocated to the team region. Alongside other funds which had been already earmarked to this region until 2027, this recovery plan funding represents up to a third of some of the countries' GDP. This is a very significant figure. You can see in the chart the exact numbers for the countries in our portfolio. These funds are indeed earmarked for large scale infrastructure or green projects, but they are expected to have a positive knock-on effect on the entire economies of these countries, including stimulating private consumption. Okay. I will move to the financing section. Some of the information was already mentioned briefly by Alex.
I will reiterate that regarding our LTV target of 35%, over the past years, we have successfully maintained a balance between profitability and prudence, and we generally kept LTV in the region of 28%-33%. The recent decrease in asset values resulted in a temporary increase to LTV to 36%. We are still committed to our 35% target, and we expect to meet it by year-end, assuming that the sale of the Romanian office portfolio proceeds as planned. Our priority through this challenging period has been to maintain an adequate liquidity, and to that end, as Alex mentioned, we have taken many measures to preserve liquidity and also took active steps to raise funding. In July, we have successfully issued a seven-year, EUR 500 million bond, which was oversubscribed even in this market condition.
As it was our first green bond, it also attracted significant support from ESG investors. The transaction was LTV neutral and focused on improving liquidity and extending debt maturities. On the rating side, S&P and Fitch have reconfirmed our BBB ratings in April. As you have probably seen, S&P also changed the outlook to negative as a general position taken for the retail real estate sector. Since S&P's report, which was issued right in the beginning of the pandemic, our business performance has actually performed much better than it was expected at the time, if you look at the assumptions in that report. At the moment, we don't foresee any adverse changes to our rating. Actually, our commitment, as always, is to maintain and improve our investment-grade rating.
On slide 44, we show that as a result of our recent bond issue, the remaining weighted average debt increased to 4.5 years, and the next bond repayment is due only in 2023. Thanks to liability management initiatives that we have implemented since October 2019, we are observing a decrease in our cost of debt for the first half of the year. We actually expect a small increase in the cost of debt in the second part of the year because the impact of the recently issued bond will be felt for this period. As always, the interest rate risk is fully hedged. I will add that, as Alex mentioned, the decision to do a capitalization issue further supports our balance sheet safety while also supporting our shareholders in these difficult times.
On the next slide, 45, on the right-hand side, we show that we have significant headroom across all the unsecured debt covenants. Looking at the left-hand side of the page, we show the differences in computation between our main gearing ratios. On one hand, we have LTV, which is a business metric, and we have the solvency ratio, which is computed based on exact formulas that are given by the bonds and loan agreements. To address potential concerns about further asset devaluations, we have computed that the yield expansion that would be needed in order to lead to a covenant breach on the solvency ratio side is 438 basis points. We believe that this level is highly unlikely to happen. On the next slide, ESG. In June 2020, we have launched our green framework, and this is focused on asset efficiency and renewable energy.
At the moment, approximately half of our portfolio is green certified, and the goal is to have the entire portfolio certified by the end of 2022. As Marek mentioned, we have launched also many other initiatives aimed at supporting the communities, and the communities that we are present in through this challenging period. I would also mention that we have significantly improved our Sustainalytics rating, and we are now one of the top five rated companies in the real estate management sector. I will move to the next section. Last but not least, the most exciting part, the accounting and the valuation. On slide 48, it's quite important to address, let's say, the most significant new matter, which is the accounting for the tenant concessions.
As you may expect, as all other real estate companies, we have granted various concessions for our tenants to support them through the pandemic-induced lockdown. As you probably saw in most of the peers' reporting, the applicable accounting treatment for tenant concessions is driven usually by IFRS 16. The standard defines lease modifications as concessions which are contractually agreed and signed between the parties. Now, as of June 30th, the number of concessions we had contractually agreed and signed was insignificant. It was below 5%. However, at the time, there were already many tenant negotiations that were ongoing, and these were expected to result in significant concessions granted.
If we had only considered IFRS 16, that would have resulted in recognizing income for the second quarter as per the contract, whereas it was quite clear to us that much of that income was going to be subject to concessions. In order to make the reporting more meaningful and more transparent to reflect clearly the impact of these concessions, we took the view that we can apply IFRS 9, and we fully recognized in the income statement for the period the expected income of concessions under negotiation as of 30th of June. We have also fully recognized the impact of the government's mandated tenant reliefs in Poland. Concretely, this resulted in a EUR 48 million decrease in income and also in accounts receivable, if you look at these financial results.
A very important thing to mention here is that we expect that most of the revenue income from the pandemic-related concessions will be recognized in 2020, and Alex also touched on this before. I wanted to mention that this accounting treatment will not be reversed after the disagreements are signed. Just to draw your attention that this is a much more prudent approach compared to our peers, which have fully straight-lined the concession. Our, let's say, full-blown recognition in the income statement leads to having 2020 impacted instead of several years impacted. We should therefore take into account that we will expect to have variant impact on the income statement over the next years. On the next slide, we go to valuations. As noted in our financial statements, the value of the property portfolio decreased by 3.4%, and the decrease is directly attributable to the pandemic.
The table on the left of the slide shows the variance in exit rates and discount rates by country over the six-month period. This leads to a 1.1% value decrease, which is shown on the right-hand side as the market effect. The remaining assumption, the -2.3%, is derived from lower cash flows, which are driven by more prudent valuation assumptions considering the negotiations with tenants regarding concessions. Moving to slide 50, also continuing to discuss the valuation. Our properties are valued twice per year. We have shown here the split between the appraisers' mandates for this period. It's important to note that the valuers made detailed assumptions about the impact of the COVID-19 pandemic, and most of the cash flow impact assumes concerns over the shorter period, so until 2021.
The long-term income was assumed to be largely unaffected, which is in line with our expectations as well.
Please stand by while we reconnect the host line. Thank you. Thank you for your patience. Please stand by while we reconnect the host line. Thank you for your patience. Please stand by while we reconnect the host line. Thank you.
To cash from operating activities. I trust everybody can hear me. I think I am not on mute. Yeah. With that, we would go back to my slides. I will reintroduce myself to conclude. We have, in our view, in management's view, a relatively good set of results given this context. Of course, the situation has been very tense and very demanding on our team. Of course, we have tried to optimize as much as possible the long-term sustainability of our business. Some of the decisions we took may have been in very short-term detriment of income, but in the long-term interest of NRP and its stakeholders. The resulting impact on the short term is this EUR 48 million in concessions granted to tenants, which we have fully recognized in the P&L in the first half.
We remain focused on safety, both from a balance sheet point of view, from a property point of view, as well as that of our customers and tenants. I think the slides have jumped. One second. Of course, liquidity is going to remain for the foreseeable future, a key focus for us. I will recap that on developments. We have spent roughly EUR 80 million to date this year on projects and operating CapEx that was already committed to or was needed in H1, and we have a similar amount envisaged for the remainder of the year. Again, a combination of already committed development CapEx as well as operating CapEx to keep our properties in top shape, safe and functional at international standards. As far as the interim dividend, as said, a cash dividend will not be declared.
However, this capitalization issue will be provided, which will have a small impact on NAV per share. However, I'm sure that we will continue to generate value and increase value for shareholders in the medium long term. As far as outlook, as per our announcement earlier today, we envisage that we will reach approximately a 30% contraction of expected distributable earnings per share. Our two very broad assumptions here are that there's not going to be another blanket lockdown across our region, and two, that the trends that we have seen in the last couple of months will continue towards the end of the year. With that, the last thing I want to mention is a big thank you to our team, a lot of which is in the room next door and in the nearby countries. Many of us have a mask on hand somewhere.
I encourage that we stay healthy and fit and that should keep us well on our way to achieving our personal and professional objectives, of which we'll have plenty over the next period. With that, I'd like to go to the Q&A, and we'll take any questions on the call if anybody's on audio with us.
Thank you. As a reminder, if you are connected by phone and you'd like to ask a question, please press star one on your telephone keypad. Please ensure your line remains unmuted locally. You will be advised when to ask your question. Alternatively, you may submit your questions via the webcast. Again, for audio questions, it's star one on your keypad.
Mirela, are you?
Yes
Are you back on the call? Okay.
Yes, I'm back. Apologies. I was speaking continuously, so I have no idea where I got cut off.
The slide right before the first bridge.
Okay. More or less everything was covered.
I see that we don't have any questions by audio, but we have quite a few questions on the website or on the chat interface.
Apologies for the interruption. We actually do have a question that's registered for the audio, if you'd like to take that.
Yes.
Thank you. The first question from the audio comes from the line of Francois du Toit from Renaissance Capital. Please go ahead.
Hi, guys. Thank you for the opportunity. Just first question relates to your green bond that you've issued. Can you give us a sense of what you expect the return on investments related to green bond projects will be? Second question relates to the guidance you've given to us for 30% distributable earnings contraction this year. Given that you've had 32% contraction this half of the year, and the concessions given, and given without those concessions, you would've had a slight increase in distributable earnings, given debt cost movements and the like-for-like growth that we've seen up to February. How do you square that? It implies a fairly significant reduction in the second half of the year as well.
You did mention that you do not expect concessions still to run into 2021, but it does suggest that you're expecting some concessions for the second half of this year still. Maybe you can quantify those expected concessions for us. In other words, just give a bit of color in terms of how you arrived at that 30% expected reduction. Obviously, the new share issue can account for a little bit of that, but I still don't get to much more than 20% reduction if there aren't meaningful concessions in the second half of the year. Yeah, those two questions. I think maybe also just give us a sense of what you've seen in terms of vacancies since the June 30th. In other words, the level that you've seen at June 30th, do you expect that to be maintained till year-end?
Mirela, will you address the first question and then Marek and I will take the second one? The third.
The first question was related to the use of the green bond. For the moment, the proceeds have been used to extend maturities and also part of it remained as cash. We are still considering whether we will make significant investments in the next period. Yes, generally, the use of funds will be allocated to green projects. The way the green framework works, and we have it available on our website, is that we allocate this funding to a pool of eligible assets, which are the green certified assets, and at the moment, this represents about half of the portfolio. In other words, it is not necessary that we buy a green assets tomorrow with this money in order for the bond to be considered green, because we have a very large pool of green assets already existing.
I hope this answers the question.
Yes. Thank you.
To move on to the second part of your question, why the 30% overall? If you look at the first half of the year, the concessions during the lockdown we expect to be more significant than this 30%. Taking, for example, a case in point, Poland, which accounts for about a quarter of our portfolio. Over there, the concessions for the lockdown period that were imposed on us by the state were 100% of all cost base. That means that even service charge could not be recovered during the respective period. In essence, the second half of the year still will see some concessions, of course, not as deep as for the lockdown period, but there will be some additional tangible concessions. Also, we expect actual operating costs due to additional safety measures to just increase a little bit.
In relation to vacancies, if I understood correctly, you were asking how this has evolved since the end of June to date. I can say that not much has materialized yet. Although we expect some bankruptcies amongst the smaller tenants, I don't think it will be significant. We are, of course, being very mindful to try and assist as many key tenants as possible to be able to maintain a functional mix within our properties. Marek, do you want to add anything? Do you have a different sensation, more from the hands-on asset management in terms of vacancy?
Yeah, in terms of vacancy, I can't talk more, but maybe on this NOI calculation and how it moves to next year. In our computation, we include what we have agreed with tenants and what our estimates toward the end of the year. What we say, we don't envisage that it will go beyond what we estimate, and given the results of the operations of tenants are better than we envisaged back in May. We stay fairly positive. Of course, there's lots of things that may happen in due course, but assuming that it will progress as of today. That should bring us to the number. There is very little to almost nothing for the next year. When it comes to vacancy, we haven't really noticed any bankruptcies and the corporate level issues of any of the tenants. That does not mean it will not happen.
As we see it today, the governmental supports measurements that were targeted at especially small and medium enterprises did help to preserve a lot of employment and helped a lot of the companies to keep afloat. Liquidity was a big issue. Seems to be not that much of turnovers coming back. That's my two cents on that topic.
Thank you very much.
Thank you. There are currently no further questions coming from the audio line. Just as a further reminder, please press star one if you'd like to ask a question via the audio line. I'd like to hand now over to the webcast questions. Thank you.
Okay. I will try to go through these webcast questions starting from the earliest, received. I propose that we set a deadline of, let's say 15, 20 minutes from now. Mirela, I'm not sure you can still hear, of course. Will you cover this one about ownership structure of the new shares following the capitalization issue?
Can you hear me? Hello?
Yeah.
Actually, I wanted to add something to the earlier question about the impact on the second half of the distributable earnings. We should also add that we have assumed the disposal of our Romanian offices, which also impacts this, and that we'll also have the full impact of the newly issued bonds because that was issued in July, so it didn't impact the first half of the year. Alex, can you please
Yeah.
The question is related to the ownership structure. The way it works is that all shareholders will receive a proportion of new shares, which considers their current shareholding. I can take a side note about the beneficial ownership question because this is actually a very legal issue regarding how the shares are registered. It doesn't impact the economic value of the transaction. It's something related to our Isle of Man registration and the fact that the shares are not held directly, but through an institution that registered these shares. Economically, there are no implications.
There's another question on if we can elaborate on tenant discussions to date and unpack the percent of tenants who we have agreements with. The percentages varies from country to country, but is in this 30% range that's signed and about 70% agreed. Very common terms is a reduction in base rent for a number of months, usually a higher percentage for the lockdown period and a lower percentage for a few months moving thereafter. In exchange, an extension of the lease term and for larger, more dominant tenants, usually some sort of other non-monetary advantage, such as adjustment in break options and perhaps some monetary adjustments in the computation of service charges.
I think, Alex, we may add here as well that one of the provisions we have with tenants that we grant discounts to it, that we have implied the return of the discount mechanism, which is linked to the performance. Looking back at the three months operation backwards, we already see that there are tenants who are doing better than they have envisaged than we have envisaged . A lot of those would entitle to actually for us to receive the money back. This is not shown in our numbers yet. We are still busy calculating. We can see there would be quite a sum that we will see coming back. This is based on both the turnover threshold comparison to last year numbers and OCR as such overall.
We can see this was worth the effort because some of the cash contribution will flow back.
Thank you, Marek. There are some questions on our slides here, from a Desmond de Beer, but it's not spelled correctly. I suspect it's not Des that we know. Nevertheless, I'll try to comment. The question relates to admin costs in recent years and how these have increased despite big falls in revenue. Our admin costs have actually decreased on a pro rata to size of business or a GLA-managed basis. That's my comment, and that will become more efficient, not less efficient, in the medium to long term. The next question is, At what yields have transactions been happening? I can say and at what yields would the, one second. And how this relates to our disclosed fair value of properties in the balance sheet. Well, first, I do not know of any quality assets that have traded, but Mirela, maybe you can comment a bit on our valuation yields.
It's the question at 12:57 [on down].
Yeah. Overall, I'm trying to find the slide. I think it was around 47. We have shown on slide 49. The valuation decrease was 3.4%, out of which about 1.1% came from the changes in yields. Overall, the change in yields has been quite insignificant. Most of the impact came from the lower cash flows assumed for the short-term period. These were driven by more prudent valuation assumptions considering the ongoing tenant negotiations. Our yield is now, I think, 6.83%. It has a very small change compared to the prior period. This is according to our expectations because if you look at our peers, the yields that our portfolio has for comparable assets, the yield is much more prudent. It makes sense that the yield suffered less expansion through this period.
Thank you. There's another question on insurance, whether we can make any claim or whether we have business interruption insurance. We've analyzed this in quite a lot of detail, and unfortunately, insurance in general does not cover a pandemic. No, there is not a possibility for a claim to succeed on this. The next question is, will there be opportunities for us to buy distressed assets at distressed prices? My personal view is that it is unlikely for top assets, which would improve our portfolio quality, to be available at discount prices. I think good assets will retain their value for the long term. I'm not yet hopeful on that kind of opportunity. I would also be mindful of our own cost of capital when investing any further capital into operating properties in the short term.
There is a question on our strategic intent behind the Unibail investment. Unfortunately, I don't have anything very clever to comment on this. To us, it was a mechanism to hold some cash. You may remember it was part of the listed portfolio that arose out of the merger with Rockcastle. Unfortunately, the share price of Unibail took quite a hit, and at the moment, we don't consider it a selling opportunity. We don't have any other strategic intents behind that. There's a question on what level of property valuation declines we expect in H2 and over 2021. I think this is as much the market's estimate as our own, so I don't have a expectation or provision to make this. One second. There is a question. Mirela, can you answer the question at 1:40?
It may show up at 12:40, depending on how it shows up on your screen, about fair value loss. Mirela, can you hear us?
Yeah. Can you hear me?
Yes, now we can hear you. Yeah.
Yeah
If you consider adequate? Yeah. Please.
Yeah, sure. This is a decrease in the fair value of the Unibail shares, the thing that you mentioned earlier. This is the legacy portfolio that came from the Rockcastle merger. As our shareholders know, we have divested gradually this portfolio. We are only left with this small portion of Unibail shares because we had many other stocks. The Unibail shares have suffered a significant decrease in share price, and this is reflected in this fair value decline. Also the question about the EUR 45 million, this is a cash collateral. This is actually cash collateral that was posted because we have a loan attached to the Unibail shares. Due to the decrease, we had a margin call, and we posted this cash collateral. This is our cash, which is currently held as a collateral for this loan.
The next question is whether we'll use some of the cash to repay debt from the likely office transaction. The answer is, we will decide after we get the cash. Over the last six months, we actually signed some 240 new leases. I believe Marek mentioned that. Yes, there are new deals being signed, and one good example is the recent opening of Trmice, where tenants were willing to go into a brand-new shopping center. They could have decided not to, but that's not what happened. Mirela, can you comment on the one at 143, the cost of debt reduction?
Sure. This is actually related to the buyback of our 2021 bond. We had bought back EUR 200 million in Q4 last year, and the remaining EUR 200 million in January this year. Because we had replaced that bond with cheaper funding, this was reflected in the average cost of debt.
Okay. The next one, you've already commented on. On the next one, the question is about straight-lining and what we'll do in H2 2020. I think we will, evidently, we need to abide by IFRS, and probably we'll need to do some straight-lining. As far as disclosure, we'll provide a transparent disclosure as to what we do. The EUR 15 million, yes, is non-refundable on the office sale transaction. There is a question, why are we showing scrip at a discount to value? The main explanation here is that priority number one was to ensure balance sheet safety and liquidity in the business. At the same time, we wanted to offer shareholders something, and after long discussions in our board, we concluded that this was the most adequate compromise given the current context.
There's a question on what opportunities we see, if we see any large ticket transactions. I'm confident that opportunities will arise. For the moment, as I said before, I think it's unlikely for top assets to come available at distressed pricing. Our view is that the best use of capital at the moment is in optimizing our current operations, improving our omni-channel approach, more technology in the business so that we can provide safety and convenience to our customers. All which are things that are relatively low CapEx, but high value add to our overall portfolio. There's a question on our approach on leisure and entertainment. Of course, cinemas are taking quite the hit in this period. Nevertheless, all the spaces that have outdoor seating or sufficient, well-ventilated areas in the countries where indoor restaurants are not closed, is performing well.
For the moment, we do not have a significant shift in our approach to leisure. But time will tell. We consider we have a very adaptable team, and we've always managed to make the most of the situations that we're in. There is a question, if in the next three to six months things get worse, would we have enough liquidity to go through it? Mirela, I think this is to you. There's just a couple of more questions, and I think we can get through them.
Mirela, you're on mute. Now can you-
Now?
Yeah.
Yeah, we can hear you now.
We have more than EUR 800 million in liquidity, and this will be sufficient for quite a long time. We are not concerned about getting through the next period.
Thank you. Would you be able to answer the next question on degree of comfort in valuations and how we've done them? Perhaps number of valuers and comparatives.
Yes. Obviously, the valuations are all done by external appraisers. I think we get the comfort knowing that these are very large companies, experienced appraisers that follow the international rules and guidance. We can say that we consider that they are quite strict in their approach. We are fairly comfortable that based on the, let's say, information that is available at the moment, which is not ideal given the limited market transactions, but we are comfortable that the value of the assets as recorded reflects the current situation.
Okay. Then there is a number of questions that amount to basically asking what we believe about 2021. We will not be able to comment on this. All I can say is that overall, we are better placed than our competitors in this market. We do not believe that our retail business will die away as a result of this. We can only see it in the turnovers and footfall that is evidently returning to our properties. We are optimistic about the potential to reach back previous COVID-19 levels in the next periods. With that, unless there are further questions by audio, I would like to thank all the participants to this call. Again, our team for producing this presentation and results. We'll be in touch with some of you in the meetings in the coming days, the virtual meetings, that is.
Thank you very much.
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