I will now hand you over to your host, Alex Mora, CEO of NebiroCastle 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.
And 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 is made of stone in this particular one. And we're actually in a very interesting circumstance.
I'm now actually closer to our team than ever during the presentation. So quite a few of our team is in the next mixed door social area. So thank you for all the help with this presentation. Together with Mirella Kovalasa, our CFO and Marek Nozil, our Retail Executive Director, will be doing this presentation. And 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. So with that, let's begin our presentation. And I would like to first start with the broader context.
In the last 6 months, I can safely say that it's been the most economically challenging period since I've been at NEPI, NEPI Rock Castle more recently. And 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-nineteen 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.
And as the various aspects which have made us the leading owner, developer, operator of commercial retail property in the CE 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 4, the first of 2 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 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.
And also recent opening of Turbomores, 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 4 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 5, 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. But I would like to point out that this decrease in NOI fully reflects all the concessions that we or rental reliefs that we have granted during H1. Mirela will walk you through the exact accounting treatments and Marek will of course give you more color on how processes with the tenants happened during this period.
Our cost of debt slightly increased slightly decreased, excuse me. And 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 square meters approximately of greenfield as well as redevelopment projects. Marek will give you more details on these. Moving on to the next slide, number 6.
We have here 3 slides in which I want to give you a very broad overview of how things have developed over the 8 months or so during this year in relation to COVID-nineteen. So 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. As we move to Slide 7, the period March through April or March through May, we began seeing the effects of COVID-nineteen. As infections increased, we started seeing a cascade of lockdowns across our portfolio.
And the peak of the lockdowns, about 30% of our portfolio by GLA remained operational. So this is this was key retailers that remained operational in each one of the properties. So at no point during this period where 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 properties sorry, 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. And as we move into the next period, the post reopening period, and I'm switching now to Slide 8, we of course began negotiating the necessary amendments with a large number of our tenants. So we did not take any drastic approach immediately as we saw the lockdowns, but we prefer 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.
As we stand today, about 96% of our GLA is operational or available to operate because this 90 6% includes about a 4% vacancy. And 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. Also in this period, we managed to issue a green inaugural bond. And we've also taken up again the sale of the office portfolio. As at the end of July, so just shortly after the end of the period, our liquidity position was quite strong at over 800 rmb1000000.
Virdala 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 CE in the context of the broader Europe. And the point I wanted to make is that the CE has implemented probably more drastic measures than Western Europe, partly because of the less strong health care system that exists in this region. And these measures have actually worked better than in Western Europe.
So you can see that the infections per capita and the deaths per capita in RC countries are significantly lower than Western Europe. So 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 10. On this slide, we tried to depict graphically the time impact of our operations.
So you see here all our 9 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, Romania, Serbia and Croatia still have ongoing partial restrictions. The lines that show the lighter 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.
So each country, how much GLA was operational during the respect during its respective lockdown period versus how much GLA we had operational after June 15 when Romania was last to reopen properties. So during lockdown, we had on average about 34% operational and now we're at the 96%, which as I said, includes 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. And I can also mention that secondary cities have shown better trends than our primary cities. However, 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 in the 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.
But you can also see Czech Republic adjust 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. So 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.
And of course, tenant support was a core activity for our asset management team during this period. So I start with just a few words on liquidity on Slide 15. And of course, Nirella 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. However, 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 1st green bond. And as you have noted in the previous or in the earlier announcement of today, we are not declaring a cash dividend for June 2020. However, 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 balance sheet as possible in this still relatively uncertain period. Apologies for a second.
My slides just changed back to the first one. I will now jump back to Slide 16. I hope everybody is still on track with the presentation. So 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 look for throughout the world as well as, of course, adhered to local imposed regulations. We have also obtained a COVID-nineteen compliance certifications from the Safe Shopping Centers 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.
So as briefly mentioned earlier, our broad strategy was to wait and defer as COVID set on. Then 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.
And 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, 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. And this includes things such as extension of lease period, increase of the turnover rent percentage, introduction of step rents. In some cases, we even obtained cancellation of some future unilateral extension options by tenants. And we've, of course, improved certain service charge contribution clauses. I again repeat that we signed about 30% of the leases lease addendments 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 are not seeing Slide 19. Okay. So now everybody should be seeing Slide 19.
We break down here the support that we have received from authorities across the 9 countries that we operate in. And this can be broken down into 3 very broad categories. We have Poland, where the government imposed a rental relief on the landlord. So basically, the landlords were forced to suspend obligate 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 6 month extension to the lease agreements plus the duration of the lockdown. So in essence, we got 7.5 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. So 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 accounts 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. So 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 permitted that future legislation may be put in place, which may affect the current period in any of these countries. So that's not in our control. Moving on to the next slide, 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.
And Q2 was severely affected at about 50%, going to an 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 relief in relation to the lockdown period. Mirela will detail later on that this 72% reflects the collection amount from the initially agreed receivables. So this is a $48,000,000 decrease versus what we had initially contracted. And as I mentioned, this is fully reflected in our P and 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. So we've done many things from donating to setting up temporary hospitals to initiating 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 in 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 €50,000,000 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. And 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 business asset management initiatives. Thank you.
Thank you, Alex, and 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 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 3 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 2 dimensions to it. It's environmental responsibility and efficiency of everyday operations. But 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 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 or parking smarter than they were before. We are introducing a number of automatization 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 only 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 and 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, 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, under 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 Tenoz. We have always been very proud about our relations with tenants and how active you are with them. Nothing has changed in the first half of twenty twenty. We have signed over 200 lease agreements.
And just to name few, Perko in City Park, Amark in Bulgaria, Smig in Romania, Sizer, the 2 agreements in Romania, more to come in Bulgaria, Bigoti. But the point I would like to make here that if you look at the origins of those tenants, if you look at AMAG, this is Romanian born brand we took to Bulgaria. When you look at Smig, this is Polish born tenant that we are busy expanding in the Khaluf region. Saizer, another Polish brand that we are actively dealing in various geographies. But 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 5 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 initiatives incentives required. There are no additional break options and all the leases are in euros. So 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.
And 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. And 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 have not been executed.
Some of them were delayed for obvious reasons, but we were happy to say that our tenants behave very professionally and we did manage to execute what was there to be executed. On the other side, we can say, I saw 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 toward and as 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. And as the lockdown took us by surprise, we had to revise our priorities and we had to team up with our tenants, with customers to deliver to them the services that we normally did. And as you can see, we have been always very busy delivering our light, large outdoor terraces and 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 telehealth.
So we have local communities, we have customers and our tenants to go through this difficult periods here. Cinemas were one of the first to be closed. You will notice there's a picture showing outdoor cinema. We have immediately after lockdown identified number of properties where we could have put out of the door cinemas to let the cinema operator operate and we've, of course, come and sitting in their cars, tune their radios and watch and see their movies rather than staying at home and using Netflix. Of course, with that conflicting, we have noticed there is various of 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, etcetera.
And 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 shopping center works. And as long as they prove to be successful, we transfer those lease agreements into long term agreements. So that is another important source of new demand for our properties.
And you would notice the last point integration of last mile delivery system. The good examples are AMAG and LPP. LPP actually made it one of the strategic change over 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 world 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 29, E commerce was the big world. But 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.
And we still are believers that Eastern Europe is resilient to the dynamic expansion of e commerce. And there are some reasons for that. First of all, our 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 square meters per 1,000 capital in the States and compare it to roughly 200 to 300 in Eastern Europe. That will explain a lot that the revolution in the States is has a 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, and they are designed in different way, in such a way that it's much easier to active asset manage them, anchored by hypermarkets unlike the United States where we have department stores that were anchoring shopping centers, this is changing. You might have noticed that the big shift in the United States and there were lots of announcements by American landlords saying they will introduce the first time ever grocery stores to their properties.
This is already for tens of years in Europe. So 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 and we faced the situation where offline was almost totally switched off. With that comes convenience.
I mean, it's very easy to within 2 or 3 clicks, do your purchase, but unconvenience came with that as well. And unconvenience by the means of managing the returns, managing the refunds, being able to actually adopt to longer delivery times. This all shows that there are 2 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. And this is the only model where convenience of shopping online and offline is combined with financial efficiency for tenants to make proper margins and their sales and show proper returns to the investors.
Online only does not simply work. Moving on to Slide 30, an interesting study by McKinsey, the company. The darker part of the chart shows how many respondents had interacted via various digital tools in the online world. And that includes not only shopping, but services, banking, insurance, etcetera. And it has increased from 81 to 94.
And it's very good. I mean, it's a technology revolution, what's meant to happen over the next 3 years, happen over 3 months. And it's those who were skeptic about digital tools are less skeptic and a lot of those people will stay online. And we have to make sure we make best use of that. And 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 of 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 an EPI around Kansl. 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 in online means more frequently. This is all aimed at increasing convenience, engagement and loyalty of our properties. And I think that a lot of change we will be able to see on that dimension of LEPI and ROCASO going further. Page 32, where we proudly say that we said in the past and 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 4 developments that we have successfully delivered in the first half of twenty 20, and they are 3 ongoing. And I will take you through some more details of what we have achieved. To start with shopping city, Targum Motors, I would ask Sebastian, if you could please turn on the movie so we can see Targum Motors. Thank you, Bastian.
So this is great example of DNA of Nephiro Castle. That they delivered high quality product, very well leased with the including entertainment, high class fashion tenants making shopping city, the best leading shopping center destination within the catchment of over 500,000 people. It opens in July with slight delays, 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 On-site shopping center where we were busy.
As you might remember, some of you joining our presentation half year ago, we're talking about Dhanjan project. We can now report it's done and flying. We commenced to open in the 1st April due to COVID. We had to post it. It was opened on the 18th June.
Those days after the restrictions were lifted. And what we have done, you can see in the left upper corner picture what that was before. It's a corridor taking us to 100 round parking. And 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 square meters.
And below, you can see pictures of Advertica that opened on the 18th June. And we were very skeptic, maybe to be 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 Adentika to get to where it should, but we were very surprised to hear that what was planned between 8000 to 10000 visitors a month, it goes to 13,000, which is much more than expected. Over 300 birthday parties already organized. This proves that leisure entertainment is the way for OZAS and other of our properties to go, and you will see us developing more of those initiatives as we move forward.
Another similar examples of what we are doing to our properties, that's Bonaarqa and Bussaud. The left hand side upper, you can see Bonarca before and in the making to be opened brand new shining very soon what we have done. We have relocated escalators to the middle. We have changed the common area. We moved, converted that into GLA.
We have referred to an extended tenants, that's Kosta Coffee, Douglas opening the biggest store in the region. Pandora, Toppenbruck, PINKO, we have signed highest rental level close to €100,000 of 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-nineteen has proven that this is our answer to the changing environment. Similar changes in Busao, this is a great example of changing the 2nd generation shopping center into the 4th 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, have extended and relocated and upsized CCC, Deutschland, New York and other new tenants making Bauxhall the best property shopping center in the catchment. That's all. I'll be happy to answer all the questions. Gabriela, over to you. Thank you.
Thank you, Maher. I hope you can hear me. So 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. So let's dive in, and I'll be happy to take your questions at the end.
We first go to Slide 37. So I'll be speaking about the portfolio and how it looks today. And 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 to be will likely be different because of the measures taken. So this is positive for us as we are not overweight to 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. But let me preempt this by saying that EU support should also indirectly help the communities where we are presenting 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. So this last statistic is particularly irrelevant 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 and real estate company in the CEE and among the top 5 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. And this was mostly driven by a blanket approach applied by the appraisers simply due to lack of comparable transactions since the start of the pandemic. But in the long run, we expect that the value of the portfolio of NetErogaCastle will be more resilient as the average yields of our valuations is extremely prudent compared to the market as the 6 point percent net initial on the top of the page indicate. Moving to Slide 40.
So judging by the latest macro estimates, which take into account also the effect of the pandemic, our CE focused investment strategy remains valid. So both in terms of full year 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 PE 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. And 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, they use a type of funds aiming to help with the economic recovery and about a quarter of it will be allocated to the TME region. And alongside other funds, which have been already earmarked to this region until 2027. This recovery plan funding represent up to onethree of some of the country's GDP. So this is a very significant figure.
You can see in the chart the exact numbers for the countries in our portfolio. And this fund are indeed earmarked for large scale infrastructure of 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 our LTG target of 30 5% regarding our LTV target of 35%, over the past years, we have successfully maintained a balance between profitability and prudence, and we generally kept that within the region of 28% to 33%. The recent decrease in asset values resulted in a temporary increase to LTV to 36%, but 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 will meet that plan. Our priorities through this challenging period have been to maintain another capacity. And to that end, as Alex mentioned, we have taken many measures to preserve liquidity and also took active steps to raise funding.
So we have in July, we have successfully issued a 7 year €500,000,000 bond, which was oversubscribed even in this market condition. And as it was our 1st green bond, it also attracted significant support from ESG investors. The transaction was therefore neutral and focused on improving liquidity and extending that maturity. On the rating side, S and P and Fitch have reconfirmed our triple G rate international. As you have probably seen, S and P also changed the outlook to negative as general position taken for the retail real estate sector.
So 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 this time, if you look at the assumption in that report. So at the moment, we don't foresee any adverse changes to our ratings. 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 result for this period. As always, the interest rate risk is fully hedged. And I will add to 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, we show that on the right hand side, we show that we have significant headroom across all the unsecured debt covenants.
And looking at the left hand side of the page, we show the differences in computation between our main gearing ratios. So 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. So 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 4 38 basis points. And we believe that this level is highly unlikely to happen. On the next slide, ETG ESG, sorry.
In June 2020, we have launched our green framework, and this is focused on asset efficiency and renewable energy. And 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. And I would also mention that we have significantly improved our Sustainalytics rating, and we are now one of the top 5 rated companies in the real estate management sector.
So I will move to the next section, last but not least, the most exciting part, the accounting and the valuation. So on Slide 48, it's quite important to address this, let's say, the most significant new matter, which is the accounting for the tenant concession. So 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. And as you probably saw in most of the peers reporting, the applicable accounting treatment for tenant completions is driven usually by IFRS 16. So the standard defines these modifications as concessions which are contractually agreed and signed between the parties.
Now as of 30th June, the number of concessions we had contractually agreed and signed was insignificant. It was below 5%. So however, at that time, were already many tenant negotiations that were ongoing, and these were expected to result in significant concessions granted. So if we have only considered IFRS 16, that would have resulted in recognizing income for the Q2 as per the contract, whereas it was quite clear to us that much of that income was going to be subject to transactions. So in order to make the reporting more meaningful and to 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 concession under negotiation as of 30th June. And we have also fully recognized the impact of the government's mandated tenant relief in Poland. So concretely, this resulted in a €48,000,000 decrease in income and also in accounts receivable if we 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 around 2019 2020. And Alex also touched on this before.
So I wanted to mention that this accounting treatment will not be reversed after the disagreement first time. And just to draw your attention that this is a much more prudent approach compared to our peers, which have fully straight line the foundation. Our full blown recognition in the income statement leads to having 2020 impacted instead of several years But we should therefore take into account that we will expect to have very impact on the impact statement over the next year. On the next slide, we go to valuation. So as noted in our financial statements, the value of the property portfolio decreased by 3.4 percent 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 6 month period. And this led to a 1.1% value decrease, which is shown on the right hand side as the market effect. The remaining assumption, the minus 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 tailings twice per year, and we have shown here the split between the operators' mandates for this period.
And the it's important to note that the valuers made detailed assumptions about the impact of the COVID-nineteen pandemic. And most of the cash flow impact assumes concerns over the short term period, so I'm here 2021. And the long term income was assumed to be largely unaffected, which is in line with our expectations as well. So
Thank you.
Cash from operating activities. I trust everybody can hear me. I think I'm not on mute. And with that, we would go back to my slide. So I'll reintroduce myself to conclude.
We have in our view and 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. So some of the decisions we took may have been in a very short term detriment of income, but in the long term interest of NRP and its stakeholders. The resulting impact the short term is this $48,000,000 in concessions granted to tenants, which we have fully recognized in the P and 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. 1 2nd. And of course, liquidity is going to remain for the foreseeable future a key focus for us. And I will recap that on developments.
We have spent the roughly 80,000,000 dollars 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 NAF per share.
However, I'm sure that we will continue to generate value and increased 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 percent contraction of expected distributable earnings per share. And our 2 very broad assumptions here are that there's not going to be another blanket lockdown across our region. And 2, 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, but 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 and A, and we'll take any questions on the call if anybody is on audio with us.
Thank you.
Mirela, are you on are you back on the call? Okay.
Yes, thanks. Apologies. I was speaking continuously, so I have no idea where I left CFO.
The slide right before the first bridge.
Okay. So it's more or less everything was covered.
So 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.
We actually do have apologies for the interruption. We actually do have a question that registered for the audio, if you'd like to take that.
Yes, yes.
Thank you. So the first question from the audio comes from the line of Francois Des Troyes from Renaissance Capital. Please go ahead.
Hi guys. Thank you for the opportunity. And 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 income contraction this year.
Given that you've had 32% contracts in this half of the year and the concessions given And given without those concessions, you would have had a slight increase in distributable income given debt cost movements and the like for like growth that we've seen up to February. How do you square that? And how do you it implies a fairly significant reduction in the second half of the year as well. So 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.
And 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. So, yes, those two questions, I think, Keith, maybe also maybe just give us a sense of what you've seen in terms of vacancies since the 30th June. In other words, the level that you've seen at 30th June, do you expect that to be maintained till year end?
Myra, will you address the first question and then Marek and I will take the second one and the third?
Yes. So 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. But yes, generally, the use of funds will be allocated to green projects.
Now 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. So in other words, this is not necessary that we buy green assets tomorrow with this money in order to for the bond to be considered green because we have a very large pool of green assets already existing. So I hope this answers the question.
Yes. Thank you.
To move on to the second part of your question, why the 30% overall? So if you look at the first half of the year, the concessions during the lockdown have or we expect to be more significant than this 30%. So 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. So that means that even service charge could not be recovered during the respective period. So 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. So 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?
Yes, I mean, debt of vacancy, we I can't talk more, but maybe on this NOI calculation and how it moves to next year. And now the computation we have we include what we have agreed with Tenhance and what were our estimates towards the end of the year. So what we say, we don't envisage that we will go beyond what we estimate. And given the results of the operations of Tenant are better than we envisioned back in May, we will 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. But as we see it today, the governmental supports measurements that were targeted, especially small and medium enterprises did help to preserve a lot of employment and helped a lot of the companies to kept afloat. Liquidity was a big issue, seems to be not that much of term numbers coming back.
So that's my few sense on that topic.
Thank you very much.
Thank you. There are currently no further questions coming from the I'd like to hand now over to the webcast questions. Thank you.
Okay. So I will go through 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. So, Mirala, 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? Yes. Okay. I just 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 will also have the full impact of the newly issued bonds because that was issued in July, so this impacted the first half of the year. Okay. Alex, can you please
Yes.
Okay. So the question is related to the ownership structure. So the way it works is that all shareholders will receive a proportion of new shares, which considers their current shareholding. So I can take aside a note about the beneficial ownership question because this is actually a very legal issue regarding how the shares are registered. But it doesn't impact the economic value of the transaction.
So 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. So economically, there are no implications.
Okay. There is another question on if we can elaborate on tenant discussions to date and unpack the percent of tenants we have agreements with. So the percentage is 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 thereafter. And 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. So looking back at the 3 months operation, because we already see that there are tenants who are doing better than they have envisaged and we have envisaged. And a lot of those would entitled to actually for us to receive the money back. This is not shown in our numbers yet. We are still busy calculating.
And but we can see there would be quite some that we will see coming back. This is based on both the turnover threshold comparison to last year numbers and OCR as such overall. And 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 Desmond De Beer, but it's not spelled correctly. So I suspect it's not DES that we know. But nevertheless, I'll try to comment. The question relates to admin costs in recent years and how these have increased despite the pause in revenue.
Our admin costs have actually decreased on a pro rata to size of business or GLA managed basis. So that's my comment to definitely become more efficient, not less efficient in the medium to long term. The next question is at what yields have the transactions been happening? And I can say and at what yields would 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 the on our valuation yields. It's the question at 12.57 on the
Yes. So overall, I think we I'm trying to find the slides. I think it was around 47. So we have shown on Slide 49. So the valuation decrease was 3.4%, out of which about 1.1% changed from the changes in yields.
So overall, the change in yields has been quite insignificant, and most of the impact came from the lower cash flows assumed for the short term period, and these are driven by more prudent valuation assumptions considering the ongoing tariff negotiations. So our yield is now, I think, 6.83%. It has a very small change compared to the prior periods. And this is according to our expectations because if you look at our peers, the years that our portfolio has for comparable assets, the yield is much more prudent. So it makes sense that the yield suffered less expansion through this period.
Thank you. There is 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 pandemic. So 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 from at distressed prices? My personal view is that it is unlikely for top assets, which would improve our portfolio quality, be available at discount prices. So I think good assets will retain their value for the long term. I'm not yet hopeful on that kind of opportunity. And 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 flow. You may remember it was part of the listed portfolio that arose out of the merger with Rockcastle. Unfortunately, the share price of Minnevale took quite a hit.
And at the moment, we don't consider it's a selling opportunity. We don't have any other strategic intent between that. There's a question on what level of property valuation declines we expect in H2 and over 21. I think this is as much the market's estimate as our own. So I don't have an expectation or provision to make for this.
One second. There is a question. Mirela, can you answer the question at 1:40 or it may show up or 12:40 depending on how it shows up on your screen about fair value loss. Can you hear us?
Yes. Can you hear me?
Yes. Now we can hear you. Yes. Can you answer if you can see it adequate?
Yes. This is a decrease in the fair value of the Unibail shares, the same that you mentioned earlier. This is the legacy for FOMO that came from the Rockcastle merger. And as our shareholders know, we have invest divested gradually in this portfolio. So we are only left with this small portion of Unipercharts because we have many other stocks.
So the impact shaft has suffered a significant decrease in share price. And this is reflected in this third annual dropdown. And also the question above about the €45,000,000 this is cash collateral. This is actually cash collateral that was posted because we had a long attach to the we have a long attach to the Unibail shares. And due to the decrease, we had margin cost and we posted this cash collateral.
So this is all cash, which we currently have as a collateral for this loan.
Okay. 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 6 months, we actually seen some 240 new leases. I believe Marek mentioned that.
So yes, there are new deals being signed. And one good example is the recent opening of Terremovych where tenants were willing to go into a brand new shopping center. So they could have decided not to, but that's not what happened. Nederla, can you comment on the one at 143,000,000,000, the cost of debt reduction?
Sure. So this is actually related to the buyback of our 2021 bond. We have bought back EUR 200,000,000 in Q4 last year and the remaining EUR 200,000,000 in January this year. So because we had replaced that bond with cheaper funding, this was reflected in the average cost of that.
Okay. The next one, I've already commented On the next one, the question is about straight mining 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. But as far as disclosure, we'll provide a transparent disclosure as to what we do. The $50,000,000 yes, is non refundable on the office sale transaction.
There is a question why are we doing script at a best to value. So the main explanation here is that priority number 1 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 am confident that opportunities will arise. For the moment, as I said before, I think it's unlikely for top assets to come available at this price pricing. Our view is that the best use of capital at the moment is in optimizing our current operations, improving our omnichannel 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 a 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. So for the moment, we do not have a long 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 3 to 6 months things get worse, would we have enough liquidity to go through it? Minimal, I think this is to you.
There's just a couple of more questions and I think we can get through them. Nao? Nao? Yes, we can hear Nao.
So we have more than 800,000,000 euros in liquidity, and this will be sufficient for quite a long time. So we are not concerned about getting through the next period.
Would you be able to answer the next question on degree of comfort in valuations and how we've done them, perhaps number of value orders and comparatives? Question at 148.
Yes. So obviously, the valuations are all done by external operators. I think we get the comfort knowing that these are very large companies, experienced appraisers that follow the international rules and guidance. So we can say that we consider that they are quite strict in their approach. And we are fairly comfortable that based on the, let's say, information that is available at the moment, which is not ideal on the limited market transactions, but we are comfortable that the value of the assets as reported reflects the current situation.
Okay. And then there is a number of questions that amount to basically asking what we believe about 2021. And 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.
I mean, we can only see it in the turnovers and footfall that is evidently returning to our properties. And we are optimistic about the potential to reach back previous COVID 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 and again our team for producing this presentation and results. And 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.
Thank you for joining today's call. You may now disconnect.