Welcome to the NEPI Rockcastle 2023 full-year results. All participants will be in listen-only mode. There will be an opportunity to ask questions later during the conference. If you should need assistance during the call, please signal an operator by pressing star, then zero. Please note that this call is being recorded. I would now like to turn the conference over to Chief Executive Officer Rüdiger Dany. Please go ahead, sir.
Thank you. Thank you. Welcome, everybody. Welcome to the results presentation of NEPI Rockcastle for the year 2023. I have to say the team is a little bit more excited maybe than usual because we have the pleasure here to present you actually the best set of results for the company throughout the history of the company. So that's why we may be a little bit more excited. Let me also say that our dear CFO, Eliza, could not join us today here in Johannesburg, but she's with us online. Hello. Hello, Eliza. The reason why is she just gave birth to a very young gentleman, obviously, named Tudor. So that's why she couldn't join us on the trip. So we are happy to have her with us, and she will take over online if you don't mind.
But let's come actually to these, as we believe, very good results for NEPI Rockcastle and for our shareholders, which is obviously driven by the fact that we are located at the right spot in Europe. I know that there is a lot of negative sentiment ongoing currently on generally real estate in Europe. I heard that also recently at a conference here that was a topic. But when you look at actually the growth story of NEPI Rockcastle, when you look at GDP growth, purchasing power, and confidence of customers within our region, that is a totally different story than in Western Europe. And that's, I think, what is really important to understand.
You see that is also predicted for the year of 2024 when you look at the predictions of our main markets in Poland or main market in Romania with 2.9%, 2.7%, while the rest of Europe is creeping around somewhere at 1%. That describes obviously as well that we have a fair chance to repeat actually our results and maybe even to grow further in the near future. What does it mean in numbers? First time in the history, we're reaching almost EUR 0.57 per share on distributable earnings, which is an uplift of 9.2% versus the year 2022, which already was quite a good year of growth.
What is for management even, I think, more significant is because we had the scrip dividend, and that was diluting, and we have much more shares in the market, which means that we are actually increasing here the distributable earnings up all the way to almost EUR 370 million, which is an increase of 17% towards the year 2022. Operationally, and my dear colleague Marek will come to this more in depth in a minute, but the basic KPIs of our operations have been steadily improving or kept at the very high good levels that we had already reached in 2022. But for example, occupancy here stands currently at close to 98%. We have a very good demand here by retailers.
Also when you look at the rent reversion, so the uplift here, and Marek will explain later, we see here not only that we have a lot of retailers, especially coming from the rest of Western Europe, but also the ones that are locally in the region. There is a high demand by retailers to invest into their brick-and-mortar portfolio. They like to come to, obviously, to NEPI Rockcastle because we are the number one in the region. We are facing now, again, like last year, 99% collection rate. Why is this important? You've all seen, and obviously also, our results are driven by inflation that has hit retailers in the year of 2023. Costs have been going up.
But at the same time, we see that our collection rate is 99%, which means we have healthy retailers that are able to pay their rent, and they pay their rent in time. That's super important. On top of this, obviously, through the fact that our turnover of retailers has been increasing, and it's actually a like-for-like growth of 13%. This 13% growth actually keeps, increases even the turnover per sq m, so the efficiency of our GLA on one side. On the other side, obviously, it allows retailers to stay at the cost levels as they have been before in comparison to their turnover. Our total OCR stays flat at 12.2%. Please feel free to compare this to the rest of our peers in Europe, and you will see that there is a reason.
There's another reason, I think, why retailers love to come to Central Eastern Europe and deal with us. But not only operationally, I think we could improve the company's results. What I think is very important to mention is the strong balance sheet. So all of this is rock solid. I heard a comment today where somebody said, "It's Rockcastle solid. It's NEPI Rockcastle solid." So we're looking now actually at a decrease of our loan-to-value to 32.2%. I think that's pretty rare to find within Europe for a company of that size. And that means a -3.5 percentage points versus 2022, so it has even more, let's say, I think, improved in the right direction. At the same time, we saw an uplift in our fair valuation. That is, again, pretty rare at the moment when you compare.
That was another EUR 165 million that we could raise actually the property value of the portfolio for our shareholders, which mainly stems, obviously, from countries like Bulgaria and Romania. But across the portfolio, we're seeing here an increase of 165, which, of course, had an influence here on the 32% of the loan-to-value ratio. Unencumbered assets, they stay, I think, at a very high number, 84%, so very much, I think, here on the safe side. That led as well to the EPRA NRV per share of almost EUR 7 per share. Maturities, that's a very interesting topic because you all know that we also have expiring bonds, green bond that is expiring by the end of 2024, which is a EUR 500 million bond.
It was the task here of management to replace this, to be able to replace it already very early this year. We all know how debt markets were, let's say, very tightened over the next, let's say, six to eight months for sure, with high interest rates. It was even the question here and there, do we have the possibility actually to tap any of any markets? What we can say here, and Eliza will guide you through this definitely more in detail than I do, but we have been able to tap markets, and we have been able to find a closing here with the IFC, where we actually have signed a deal on EUR 380 million, more than EUR 380 million, EUR 387 million, which is also supported by banks. That deal has already been closed, and the money has already been disbursed.
In February, it got already on our bank accounts. I think we are very much on the safe side also when you look at our liquidity, and also when you look at the fact that for the next two years, there are no major maturities coming up unless, of course, the bond that still needs to be repaid by the end of the year, but the money is in the house. Operational results. It's part of, of course, the presentation of my dear colleague Marek, but let me take at least this one slide just to give a little bit of flavor where does this all come from? I think a big driver here, obviously, is first of all the income-producing assets, the turnovers that our retailers did.
When you look at it on a like-for-like basis, we have a 13% increase on turnovers of our retailers. That tells you a lot about, let's say, the mood in the market in Central Eastern Europe when it comes to our customers that come to the shopping centre every day. We have an increase of footfall, which is also helping us, obviously, here in many fields. So it's not only that our rents went up due to indexation, also our turnover rents went up, our overage went up, our specialty leasing went up, our parking fee income went up. So all of this obviously has helped to grow on the revenue side.
But at the same time, and I think that's really important to mention, a driver of this as well was actually bringing down the costs, bringing down the costs, and we have increased now our operational ratio to 93%. So costs down, income up, of course, that helps the results. And that is driven very much by asset management activities. So not sit still and wait, but to actively manage the portfolio. And that's what Marek and the team is very much about. And we take money in our hands in order to do that, but as you can see, it really pays off. And we will show a couple of examples, I think, later in the presentation to give you a little bit of feeling what is management actually doing here to improve our assets and to get more out of each asset.
Acquisitions, of course, we said 13% growth like-for-like, but we had three major, as we believe, major acquisitions in the end of 2022, which moved into that year now from a result perspective. And that was Forum Gdańsk, and that was the acquisition of Toruń, and of course, the 50% stake of Carrefour in the asset of Ploiești in Romania. You will see later on in the presentation that we think that was very well spent money and the right acquisition of the right asset at the right time because these three assets have already been, when we look at turnover growth, they have been already outperforming all the rest of the portfolio with growing more than 20%. And I think that we will see over the period of time that this will even improve in the future on these assets. And of course, developments.
So we are very happy, and you saw, of course, our announcements here, and you saw the press that we were able to deliver our more than 60,000 sq m scheme in Craiova, Romania, to the market. I think you could take the asset and actually put it right next to into Warsaw or Budapest or whatever. So the quality and the class of the asset, you will see a movie a little bit later on, I think that showcases that also our development department is moving forward and what we deliver to the market is extraordinary. And that's also proven by when you look at the lineup, and Marek will talk about it later on a bit more in detail, but when you look at the lineup of retailers, we've got all the Inditex brands. We've got the Peek & Cloppenburg. We've got the Carrefour.
We've got the Lefties, brand new concept that comes first time actually to Romania, comes to NEPI Rockcastle. And the next one actually in Ploiești is already, let's say, under negotiation. So I think, obviously, when we open Craiova, you have three months of the NOI of Craiova, but in 2024, obviously, we will see that the asset will deliver its full potential first time for an annual result. So that's from my side at the moment as a start. And I would like to hand over to Marek, who will guide you a bit more in detail of where these results come from. Thank you so much.
Good morning. Welcome to our presentation. And I'm delighted to and actually happy to unpack a bit what Rudi just said as being the exceptional results. Actually, last year was the best year in the history of NEPI Rockcastle.
I'm fully aware. I said I used the very same sentence 12 months ago, talking about 2022. I'm sure next year when we meet here, I will be able to say the same about 2024. Let me give you some breakdown of the numbers, how we actually made 2023 an exceptional year for NEPI. This is 21% growth in NOI total. I think this is the number of the day. Of course, one needs to take into consideration where 21% comes from. This is for all of the portfolio. Of course, it does include non-like-for-like assets, which is new acquisitions we made. But should one look only at like-for-like performance of comparable year-to-year properties, we have been able to grow the NOI as high as 13%, which is exceptional.
For the first time in our history, we showed the breakdown per country. You can see how individual countries performed. There is no mistake. I mean, Lithuania did increase 22%. Our two biggest geographies, Romania and Poland, they respectively grown 16% and 14%. This is what the team did manage to extract from the existing portfolio. That added a lot, of course, to the growth because that enabled us to actually increase the base rental by 18%. As Rudi said, it's not only the income side of our business. Yes, it was a good year for our tenants and Justyna and Ramona running the leasing teams. They did an amazing job. I will tell you more about base rental uplifts.
But at the same time, Marius and the team, they did a humongous job to actually decrease the consumption of the media, but at the same time, increasing from 91-93 recoverability of our operational costs, which is exceptional in the year of such a high inflation. So we had these engines from both sides, on income and on cost side. And I think this is how we want to run the business going forward. And of course, what is rental income for NEPI is cost to our tenants because they pay for the premises. And one would have asked the question, okay, so how do tenants react to that? We have had no pushbacks on indexation. We have had no pushbacks on reconciliations because, as you can see, the occupancy ratio remained at the stable level of 12.2%. And last year, we reported 12.1%, very similar level.
So of course, if the costs for tenants increase, there must be an element in their business that makes up for the difference. The next slide explains that. That is an increase in the sales of our tenants. 12.6% is the increase of the sales of the tenants in like-for-like properties. So we excluded here Toruń, Gdańsk, and Ploiești, which did better than average. So the number for the group would look better. But I think the most important message that you can take from this slide is that all the retail segments have been increasing year-on-year. None of our retail segments is under any pressure. None of our tenants has any issues with their operations. It's a healthy and stable tenant mix. And I think well-managed and positions us very well into 2024. Going further, where is this increase of turnover coming from?
We are very happy to see that not only have our clients returned to shopping centers, but they keep on spending money, and then they spend more. You would notice Q1, almost 16% increase year-on-year in footfall, but that was mainly driven by a low base of Q1 2022. It seems like ancient history, but yes, in Q1 2022, we still had soft lockdowns. Hope those days will never come back. But then Q2, Q3, Q4 has proven to be very strong. Customers returned, and 4.6% is the annual increase of turnovers. But more importantly, our customers spend more money. It's the average ticket per visit increased by almost 8%. And there are reasons for that because the question has been very often asked, how is that possible? Where we still record the lowest ever unemployment in the region where we operate.
The inflation went to between 3%-5% in local currency where we operate, while there is still pressure on the increases on wages, meaning that the delta between the inflation and the increases in wages is making the disposable income increase in the regions where we operate. Whenever you read any economic study about the region, so the consumption is to be the most important driver for the economic growth in CEE in the year of 2024. We are very lucky to be actually in that business. That really, again, positions us very well to extract the value from the properties we manage and maybe potential acquisition in the future. Who knows? Of course, clients coming back to shopping centers turns to better turnover of our tenants. That, of course, helps us with the leasing.
We have achieved the record low retail vacancy, which is at 2.1%. And I can tell you by now, by the end of January, it's sub 2%. We did some leasing already in January, February. So this number will only improve. But we are slowly, but surely getting to a level where the retail EPRA vacancy will achieve what we like to call the natural level because there's always some changes happening in actively managed shopping centers, which is good because we do have options. We have this competitive environment of tenants, and we have always more than one option for any premises that is to be released, which is fine. And I like to use this quote of previous Ferrari CEO who was once asked, "How many cars would you produce next year?" by the analyst.
And he says, "We will get all the orders, and we will produce 1 car less than we have the orders." This is kind of the luxurious problem to have, to have less space that actually demands for the modern retail space. That took us to signing over 1,300 lease agreements, which was almost 300,000 sq m of GLA. But more importantly, we did manage to, on top of indexation, which was 9%, we did manage to increase the base rental of about 8% on a blended manner. Let me unpack what blended means. You can see there are two categories, which is like-for-like BRU. This is defined as units which expired, the leases for which expired, and we haven't physically changed the units. So either signed with the same tenant or changed the name. This is where we got the uplift of 7.2%.
But whenever we have an option, we would always go for more, which means whenever we can merge the units or change it physically, with that, of course, comes CapEx. But the gain is much higher because we did manage to increase the rentals as high as 14% on top of indexation, which is amazing. Unfortunately, the balance between the two is like 90% of job comes from here and 10% comes from the latter one. But this is purely a function of what we can or cannot do to our properties. But overall, super good results. And that brings additional income and value to the managed properties. And of course, this is the best part of our job, which is opening new shopping centers, opening new stores with our beloved tenants. This is only a fraction of the openings we have had last year.
This is just to prove that we move with our tenants across the portfolio. They constitute the main partners in our business. I can tell you for sure today that 2024 will not be any much boring. I mean, we just opened a super regional Nike store in Bonarka. We'll be opening very soon Primark in Arena Mall. We'll open in Craiova. So there is still a lot to come this year. So we keep our teams very busy in the coming year. This slide hasn't really changed. This is just to showcase to you that top 10 of our tenants measured by the rental income are investment grade, a lot of them public companies, international. And 10 of them stand for 25% of the income, which shows as well that we are not overexposed to any particular group or retail segment.
Looking at the expiries of 2024, I think it's very important to look at this 10% number in relation to what we have reported in June last year. Back then, we have shown over 19% leases expiring. Since June until the end of December, we did manage to prolong release 9%. Intentionally, we don't go too fast. The closer to expiry, the more the leverage, the more we can gain from our tenants. Don't take these numbers as anything wrong. It actually positions us very well going towards the end of the year. Just some examples of what Rudi said. We never forget our existing portfolio.
Our teams are incentivized for identifying, approving the CapEx for, and then executing all those small to medium-sized CapEx works, which may be a bit under the radar because they are not tens of millions of EUR. But if you multiplied them by almost 60 shopping centers that we run, then those little, highly actually lucrative or earnings-enhancing small works, they move the needle. So this is what keeps us busy. I will not go into the details of any of those works, but I can just tell you the lease is much longer. And the pipeline for the year is just as exciting. And as Rudi mentioned, maybe a few words about having now full year results for the new acquisitions, which is Gdańsk, Copernicus, and Ploiești. When we did underwriting, we were sure that those properties will outperform the average portfolio.
You can see that with the numbers. I mean, turnover of Gdańsk, Toruń, Ploiești, better than average for the portfolio. Not only that. There is still growth potential within those properties. In Gdańsk, we are in advanced negotiations with the neighbours, which is National Railway Station Authority, to long lease the site from them because we can develop about 25,000 sq m of mixed-use project, which will be great supplementary to our shopping centre. So why not? Similarly, in Copernicus, we are working on changing the master plan to add between 5,000 sq m-6,000 sq m of GLA, for which we already have secured or lined up tenants that want to grow with us in Toruń. Similarly, in Ploiești, we have now full control of the project. All the decisions are solely ours. There is another opportunity to extend the property.
Should that make financial sense, we will execute the works. All in all, those three acquisitions have improved the overall quality and KPI results for the group. Now, if I may ask, I would like to invite you to see the two-minute movie of Promenada. I will give you some details about the project as we go. Of the demand for the space we have recorded. It went over our expectations. The vacancy is close to zero. We will open cinema towards the second quarter of this year. As you can see in the picture, or you will see in a second, or you can see now that we have installed PV panels. Luckily, in that property, we could install a lot.
As much as 70% of our consumption comes from PV panels production, which, again, is very important for us from ESG perspective. You would notice about 20 tenants out of over 150 are new to the region. And some of them are new to the actually to CEE. If you think about Lefties, this is the Inditex brand. It's a newcomer to not only Romania, but actually to all of CEE. And given the success of the opening, we are already talking to Inditex about opening elsewhere in our portfolio more Lefties stores, adding to the already very successful Inditex portfolio. Carrefour is the hypermarket, I think, one of the most successful, if not the most successful hypermarket in the region.
I think the project proves that there are still white spots on the retail map of, let's say, southern Central Europe, where we can still develop and enjoy being the first to develop and open shopping centers. The northern we move in our portfolio, the less development opportunities there are, but there would be acquisition opportunities. Our strategy is to balance and mix the two engines of the growth. It's too early to say about any KPIs of Promenada because we've been operating the shopping center for three or four months. But as you can see, parking is full. We are happy with footfall. We are happy with the initial feedback from tenants. The first year is always the year where people get used to new shopping center. But we have high hopes that the property will, in a year, can report very solid numbers for year 2024.
Now, with that being said, let's connect to Bucharest, to Eliza. Eliza, over to you.
Thank you, Marek. Congratulations on the great set of operational results. Good morning, everyone. Today, I'm not present in South Africa, but the distance won't keep us apart because I'm here online. It's a pleasure again for me to be talking to you about our performance and how we deliver value to you as shareholders and stakeholders. Last year, I started my presentation telling you that my pride in being part of NEPI Rockcastle is that we are a team that always delivers. This year, we deliver once again on our commitments. Reiterating what Rüdiger said at the beginning of the presentation, we went a bit further, and we delivered the best results for NEPI Rockcastle ever.
I am really proud of the management team making this happen because we did that through agility, boldness, entrepreneurial spirit, and consistent efforts. Having said that, I will move to share with you the achievements from the financial perspective. Here, I will work as a team with Marek, but because he will help me with the slides. Today, I will keep my three sections, subsections, so to say. I will talk to you about the best distributable earnings ever beyond the 2019 level. Then, I will show you in full transparency our funding and liquidity position, which is a very healthy and sound one. Then, I will guide you through our valuation, which continues to be up and ahead of the market.
So let me start with the distributable earnings: EUR 56.98, which is not only a growth by 9.3% relative to the previous year, but it's derived mainly on the grounds of strong operational results from the existing properties and from the acquisitions and developments. As you may see, one year down the road, the acquisitions made in 2022 brought an upside in our VPS of 9.2%. And an equal performance, an upside of 9.2%, was brought by the existing properties through indexation, through asset management, and better recoveries of the operational cost. We are a European-based business, an international one. And obviously, that we incur expenses. Among the most important expenses are taxation, which is not optional, but also funding costs and administrative expenses. Without funding costs and administrative expenses, we cannot fuel the growth of this entity.
As you may see, they are coming with an off-site effect of 2.3% because, despite the inflationary context and the tightening of the credit market, we work hard to keep the cost under control. And we managed to do so. The last element affecting the DPS of this year is a non-recurring one relating to the litigation that we had in 2021 and 2022. In 2022, as you remember, we had a reversal of the provision, which positively impacted the distribution of 2022, but with a 6.7% negative effect of this year. Moving forward, if we can go back because the bottom of the page also has an importance that Rüdiger mentioned, that if we take a look at the entire pool of distributable earnings, you can notice that the increase in the value was 17%.
Nevertheless, the gap between 17% and 9.3% relates to the scrip distribution and the increase in the number of shares. But nevertheless, 17% more money goes to you as supporting shareholders. And with this occasion, I would like to thank the 80% of the shareholders that trusted the company and took the scrip in the last two rounds. And now, I think that we can move forward. Here, it's a simple slide, which has as a purpose only to say that we are paying our distribution from the cash generating from the operating activities, which shows that we are a stable and healthy entity because we don't borrow money to support our dividend. Moving forward and coming to the mechanics of the dividends, we are going to keep the 90% payout ratio. Everything is going to be settled in cash.
We are the gift that continues to give, as somebody quoted in the South African press, because we are well above the average of the European peers that have a maximum 70% payout. The settlement options, as you may know, are the repayment of capital, which is the default option. You may also opt for cash dividend out of profits. In short, EUR 56.98, it's a 17% increase in the distributable earnings overall affected by the increase in the number of shares. Everything is delivered from operational activities. Now, I will move to my second part, which relates to the funding strategy. Last time, I was sharing with you the fact that we are managing the maturity of 2024 bond.
I am very pleased to say that we implemented the action that is going to support us in the management of this maturity because we signed an unsecured green loan with IFC, equaling almost EUR 390 million. We kept in-house EUR 265 million from the scrip dividend. On top of that, we extended the RCFs and other secured loans maturing in 2024 or 2025. Up until 2026, we don't have any maturities. We are going to advance our development pipeline in the way in which we plan to do. The prudent finance strategy that we have is highlighted in the five key boxes at the bottom of the page. We are an investment-grade credit-rated company, BBB by S&P and BBB+ by Fitch. This is reiterated and reaffirmed every year on the grounds of our good operational and finance strategy.
Then, we have a liquidity of over EUR 950 million. This doesn't take into account the IFC loan because this is separately put in a box for managing the maturity in November. We have 32.2% LTV, which is below the 35% upper strategic threshold. And because of a good hedging strategy, the cost of debt this year, we managed to keep it at 2.5%. And everything, as I said, was 100% of the interest was hedged. So here, after covering the funding strategy in only one page, the key message that I want to convey is that despite the challenging market with inflationary context and high interest rates, the situation of our liquidity is a very good one. And we proved once again that we have good access to liquidity.
Going forward, we are monitoring the market because we want to be able to act at any given moment and fuel the growth of the company. Moving to the last part of the finance section, in the valuation uplift, we are ahead of the market with EUR 165 million Fair Value Gain. This is very important because starting 2021, we are only on an upward trend. What's also very important is that this valuation uplift comes from the performance of our property, which is offsetting the widening of the valuation yield. Once again, yeah, the picture was not chosen by coincidence. These are the driving forces of our valuation: something going up and something going down, as the elevators in the image. As you know, our portfolio is valued by international reputable valuers, which shows once again that externally, our portfolio is strongly recognized by these companies.
Now that I'm done with the finance part, I will move to the ESG, which together with Rüdiger and Marek, we informed you that it's an important strategic aspect of our it's an important strategic aspect for us. And here, I would like to emphasize three messages: that our efforts in the area of ESG do not stay unnoticed. This year, we managed to have an improved rating for Sustainalytics. We are assessed as being a company with a negligible risk from the point of view of the ESG. And another achievement was that in terms of CDP rating, we managed to get an additional one notch, being now at a management level with strong aspirations in medium term to become a leader in the area. In addition, we also took intended action in Romania using Romania as a pilot. And we placed a EUR 37 million investment in photovoltaics.
Now, substantially, all the portfolio in Romania has these photovoltaics, covering 25% of the needs. This is helping us to provide green energy to our tenants and reduce our carbon footprint. It's also a profitable side of business. Last but not least, we are focused on governance and standards. We are committed on implementing the science-based targets. The implementation is actually ongoing. This is going to show a lot of transparency in the way in which we are computing our ESG KPIs. We work on aligning to the relevant European ESG standards because lately, there have been a lot of standards being developed. And last but not least, for our green funding going forward, we launched a sustainability-linked financing framework, which incorporates sustainability performance targets linked to our commitment to reduce the greenhouse gas emissions and to show an efficient energy consumption.
So it's only one slide, but it's important and the strategic direction for us. We have multiple internal ESG projects. These are going to translate in the improvement of the quality of our portfolio and in more and broader sources of sustainable funding. All from my side for the moment. Rüdiger, over to you.
Last but not least, let's look a little bit into the future of the company. Of course, one of the drivers of this company and the growth driver is not only the portfolio that we're currently operating, but also the one that we currently actually have in phases of permitting and construction, so our development side.
In total, we are currently looking at a development pipeline of EUR 652 million that is mainly related to those projects that are either already in a permitting phase or that are in a construction phase. You've heard from Marek that we're looking for more. There is potential, for example, to extend Ploiești further. There is potential to extend Forum Gdańsk. These are not in this list because we only present to you actually those, let's say, as a potential pipeline, what is really close to come. These are under evaluation, but they are not shown in the list here. What is here in the list is, obviously, the big investments here into our project in Promenada Bucharest. There, we are currently actually finalizing the first phase, which means we have been digging 28 m into the ground and creating seven levels of parking.
This will be finished by around April. And then we will start with the second phase where we're actually building up the structure. That is, as you know, a multi-use project where we're extending the asset in total by 55,000 sq m, out of which 30,000 is going to be the extension of retail. And on top of this, we are planning offices and hotels. So that's well underway. And it's in time. We have Bonarka City Center. You know, this is operation on an open heart. So we are refurbishing here the asset already since two years. And it will take a while until we are finished because we are doing this while the asset is operating. So we can only work in the nighttimes. And that's why it takes so long to be delivered, therefore, in Q225. Ploiești Shopping Center, we've already started here with the extension.
We bought, as you remember, 50% from Carrefour. We're adding here only 7,400 sq m. I think what is important to understand here is, and that's one of the reasons why we bought the 50% from Carrefour, this asset is, how to say, the footfall is amazing. We simply don't have the parking. An essential part of this extension is to provide the asset with more parking. We have customers that park all over the place, and they walk for like 10 minutes to get to the asset. That's not convenient. We could do much better turnovers if we would provide the right parking services. It's an extension on the retail side, but it's also, I think, fostering the turnovers of the existing park because we have here a better situation. Galeria Wołomin is a small investment.
It's already more or less completed. We extended it a little bit. We've already had the tenants lined up. So that's done. Pogoria Shopping Center is a bit new on the list. Pogoria is one of our shopping centers in Poland where we see here demand by retailers and where we think we can have here an extension of this asset by around 4,800 sq m. Could be delivered in Q2 2025. Arena Mall in Hungary, that's also maybe new on the list for you. That's our top-notch asset. It belongs to the top 10 within our portfolio when you look at NOI. But the asset is one of the best in the country and in Budapest. But here, we are thinking of refurbishing, retenanting the asset. And we want to spend some money here to keep it actually at this quality level that it has always been.
Obviously, here, we have already, let's say, agreed terms with the most important tenants because we want to improve at the same time the whole branch and tenant mix. So all Inditex Group, all LPP Group, everything is already LPP already signed. Inditex is going to be signed. So that's already done even before we spend a penny on this refurbishment. And then, of course, we have a bigger development coming out, which is Promenada Plovdiv, which has been on the list before, around EUR 170 million investment. We are very close to obtaining here the building permit. And we will start construction by the end of the second quarter this year. That is in the second biggest city in Romania. So Plovdiv is a very interesting city for us because it's as well a bit of a white spot when it comes to retail.
We have here such a high demand by our retailers that are already with us in Paradise and in Serdica. The turnover growth, actually, and you saw this, the growth actually in Bulgaria is one of the strongest that we see throughout the portfolio. You can imagine, retailers would like to do more with us. Therefore, also for Plovdiv, already since, I don't know, two months, we have with the main retailers, with the anchor retailers, we have already agreed on terms and locations. Galați Retail Park, we do have already operating. We're operating a shopping center in Galați, which is operating very well. There is simply the opportunity to build a retail park, not right next to the asset. It's in the south of the city.
And here, we have a lot of demand from retailers that would, let's say, add on to our offer currently in the shopping center, but as a low price, on the low price side with a retail park. So that comprises in total currently of EUR 650 million. And I think the number will grow over time. You heard it from Eliza. We have invested, starting at the end of 2022, around this EUR 27 million into our energy business. Let me call it energy business because it's not only the fact that we are reducing here our CO2 footprint, but we're selling this energy with a very good margin, let's say, to our retailers. And that is a very profitable add-on business to NEPI Rockcastle, as we see it now materializing and doing the first footsteps there.
We are now evaluating also together with our investment committee on whether we should and how we should actually deploy this as well into all the other countries. So we have nine countries to go. We've got 60 assets. We have 27 only done. So I think there is a lot of potential for us to do good for the profit and loss and do good as well for the planet. And therefore, we are exploring here to invest more money in the future. And that will be definitely more than EUR 30 million. So that's maybe just as a little bit of a forecast on the development pipeline. At the same time, looking into this way forward, of course, we are maintaining this strong position that we have in the market with the portfolio that we have.
But at the same time, we're looking at where can we optimize, always optimize the portfolio. And that also means rotation of assets. That also means that we have assets for sale, hold for sale at the moment. And you will see it in our statements. And because simply here, the better is the good of the better is the enemy of the good. So meaning we have very good assets that are performing very well. But we believe that in one or the other case, by rotating it, selling it, moving into maybe another bigger asset where we see more, let's say, juice in the future to create more return, that's what we're looking at currently. So optimization of the portfolio will be a driver or has been a driver and will stay to be a driver in the future.
Then, of course, we will keep to be prudent. You heard our CFO, Eliza. I think you can also feel that she keeps us on the right track, definitely, when it comes to the rock-solid balance sheet and our funding. So that will stay in place. And I think how it has been managed in the past has been proven, especially now in these times when interest rates were hiking. It has been proven that we had the right strategy here to be, let's say, more conservative maybe than others in the market. And we will continue with the ESG, with this focus on ESG asset. We're looking here to invest more into that in the near future. And that all lines up to an expectation of growth for the year 2024 of 4%.
We believe that is still a strong growth number because we're coming, we're climbing the Everest. The more higher you get, the air gets a bit thinner. With the base effect of delivering 9.2% this year, I think that is still a strong commitment here of management to grow the company and not stand still. You have seen that most of the developments will only come in actually starting 2027, the big ones that will really deliver additional NOI. For this year, 2024, 2025, we need to get this growth out of the existing portfolio mainly. But we feel very confident to do so. One of the reasons I said was very much in the beginning. We are simply also at the right place at the right time. We will take advantage of this. Okay. From our side at the moment, that is it.
I would like to thank you all for staying tuned, especially also everybody who is on the webcast today, not only you here in the room. Now we are absolutely happy if you have questions to answer those. Feel free. I think it's coordinated by the team here. Please.
Good morning, everybody. First, we'll start with the questions in the room, if there are any.
Hi. Good morning. Regarding your development projects, what yield are you looking at achieving? And how are you going to find them? And then the second question is around your solar projects or energy projects. In terms of returns, are you able to give us numbers around that?
Well, we are in principle, and you know this, and I'm sorry to repeat myself and to answer actually a bit negative on the first question.
But we are not, let's say, communicating actually the yields of single projects. The reason for this is simply that in the past, we did not make only good experiences, especially with our competitors, on sharing this information. What I can tell you, though, is that especially on the development projects, and we have some board members here that could answer this at the same time, that our investment committee is pretty prudent. If we drive a development project, then obviously, we take into consideration our cost of capital. What we take into consideration, that it is a development project. A development project bears more risk than buying an asset. So if you buy an asset currently in the market, it might be somewhere around seven-ish or so. We need to definitely be far above that. Why? As given. We use your capital.
We need to make better, let's say, than just operating already a standing income-producing proven asset. That's maybe for you to get a little bit the logic to get a little if this answers your question. But thank you for the question. Any other questions in the room? Yes, sir.
Solar projects?
Excuse me? Same on solar projects. I can tell you, this is a very interesting business. I think you could also just look a little bit, do a little bit of research. You will see that we're talking here a pretty high double-digit yields. In this case, actually, we are producing the energy ourselves. We are not only selling, let's say, the production of the energy, but we also are the distributor. So we also have income from the distributing side, from the production side.
That makes it quite interesting, especially when you do this already on your own floor plate, let's say, as you saw in Craiova. It's amazing. 70% of the energy is to our tenants and to the common areas, is produced on-site. We sell it to the tenants. This makes it, of course, very, very interesting. By the way, just maybe to mention, our retailers love the idea. Inditex is knocking the door and is asking us, "Could you please do this at every shopping center we are working with you?" How many do we have now? How many shopping centers? I think out of the 60 we are operating, at least how much with Inditex? How much Inditex assets we have? Almost everything. Almost everywhere. So you can imagine the demand here from retailers.
They have the same, let's say, challenges that we are facing in Europe. ESG is an extreme topic on the funding side. We just, as Eliza was explaining, we just actually signed with the IFC on a EUR 387 million loan. You know what was the biggest topic for us? It was not the commercial conditions. The biggest topic is ESG. Do you fulfill? Will you deliver over time the reduction of your CO2? These are the big topics. As a real estate company, or maybe even any company, but I can tell you at least from a real estate perspective, you will not have access to funding at the same price and same level at the future if you are not top-notch in that level. That is a reality that we're seeing. This is not a nice-to-have.
This is a must-have if a company wants to stay competitive in the market. So that's why, on one side, it helps us tremendously also with negotiations with debt holders, with banks. And on the other side, it makes sufficient money for us and assets. This is, at the moment, on the current market prices that we see, that's double-digit. And actually, what is also a matter of fact that, as I said, retailers are super happy because they need green energy as we do. And the second thing is, of course, we are charging your price with a wholesale price. So we are looking at a total consumption of the portfolio of 680, around 680 gigawatt. We buy this energy currently mostly, obviously, outside. And that gives us a different pricing as if even a bigger company like Carrefour or somebody would negotiate a price for an asset.
So there is also a price benefit for our retailers. And that's why it's, I think, mutually a good business for everybody who is involved so far. And that's why we are thinking to consider to roll it out through the rest of the portfolio and to create more income here also for our shareholders.
Thank you.
Welcome.
Just Camila from Mazi here. Yeah, thank you for your time and the opportunity to ask a question. Just on your development, sticking with the development project. So I think I may have written the names wrong, but the one from Promenada project and Plovdiv saying it wrong. But the difference is more than EUR 100 million for fairly similar GLA. What's causing that difference between the two projects? Thanks for that question.
Yeah. I mean, well, we would need to go a little bit more into detail.
But to make it a bit more maybe simple is, when we look at Promenada in Bucharest, then we are talking here about the extension of an existing shopping center, which is a different topic as if you look into Plovdiv. Plovdiv is a greenfield development. There is nothing, okay? We just start from the scratch. In Bucharest, we have an existing scheme that we are extending. And on top of this existing scheme, so structural-wise, it's very different because we are putting actually another around 25,000 sq m of offices and hotels on top of the shopping center. In order to be able to do this, we needed to dig 28 m into the ground and build seven parking layers.
That in total is a different, let's say, cost structure than if you would look at, let's say, in comparison. Let me put it this way, and I don't—most likely Andrei, our head of development, will kill me for the sentence. But it's a more simple approach to do something in Plovdiv than, let's say, to work on an existing scheme. And when you see the plot that we're building on, it's surrounded by streets. We have very, very little space. It's a very, let's say, challenging construction environment for our development team and for our constructors. And that makes it more expensive. And it makes it more intense, let's say, as a shopping center as we've just built it. You could also compare it to the investment we did in Craiova, 60,000 sq m. I mean, yeah. But that's the main difference.
It's inherent in the difference of a brand new development in a greenfield or something right in the middle of the city with an existing scheme and a multi-use project. That drives the difference. Well, thank you very much. Then lastly, just on your decision to still keep the scrip dividend option, what's the thinking behind that? I mean, given that it looks like your debt situation is resolved, or at least for the 2024 refinance. We simply believe that, in principle, that to give investors, let's say, options is, in principle, good. But at the moment, we are just distributing to a 90% the cash, which I think is also good.
Hi, Rüdiger.
Hi.
Ruan from Nedbank . So just on the scrip dividend alternative, NEPI is trading at a higher share price.
So from a dilution perspective, would it not make sense to issue scrip now, keep some capital back, improve liquidity, and potentially look for acquisitions in the region?
Well, we are definitely, let's say, start with the end of your question. We're definitely looking into further acquisitions in the region. The market is changing. And I can tell you that within Central Eastern Europe, especially Poland, there is more product now coming to the market than we have seen over the last, I don't know, couple of years. We were very, let's say, lucky maybe at the same time that we could buy something like Forum Gdańsk for a 6.5 around at the end of 2022. That was a EUR 250 million deal. And just to tell you, this asset got revalued now from the valuation perspective. Now it's at EUR 296 million.
So I think a pretty good deal for our investors. And when you just look at the uplift on fair value on this one asset, while Poland was not doing so well. So that's, I think, the kind of assets we are currently looking at. And that is the kind these are the kinds of assets that are currently, let's say, coming to the market. About the scrip dividend and the options here, maybe, Eliza, because I need to have you also having a stake here in the conversation. Please go ahead.
Yes, thank you. So for the time being, as you mentioned, we have enough liquidity also considering the IFC loan. And looking also at the development pipeline, we can source the necessary money so that to fund this development pipeline. As soon as we are going to have concrete action on.
I mean, you've seen actually our liquidity position. You have seen actually how well we are currently able actually to raise additional liquidity if we wanted to. The bond markets are coming back. And I'm coming back again a little bit to what we said in the beginning. Central Eastern Europe is a different animal at the moment than if you would look at Western Europe. It's just very different. Even though if you look at the last bond issuing of Unibail-Rodamco-Westfield, which was oversubscribed many times, was a, I think, a 4.4 all-in. I mean, that is very promising, Camila. So we had a couple of CPI. So we had a couple of bond raises throughout the last months, which went, I have to say, very positive in the sense that there is money in the market that would like to put debt into there.
So that's, in principle, a good, I think, a good momentum currently. We are all expecting in Europe that interest rates will further decrease as they have already decreased, but will further decrease after the summer. That's at least the expectation. So maybe to move for a new bond would be we need to also see the right momentum. But a Scrip dividend is not necessary at the moment. I think that we feel very comfortable with, let's say, the resources that we have. And it depends very much, obviously, on what we would do in the near future on the acquisition side, whether we see there opportunities. And that might change the mind of management and the board maybe in what, mid-year or so to come back to a Scrip dividend. So that's how we see currently in the moment.
And then just last question for me.
Around the finance cost of the weighted average cost of debt, setting it 2.5%, you've got the IFC funding. In your assumptions for 4% growth this year, what is your estimate or assumptions you're using for cost of debt for 2024?
We had a small dropout. So we got very good commercial terms with IFC. And this is on the back of Euribor. So it's a margin over Euribor. The margin is not publicly disclosed because year after year, we have negotiation with various funding partners. And such a disclosure would be detrimental to us. Yet we are considering of not hedging now the IFC funding. So leave it a bit floating because Euribor is still very high. But the cost of funding is going to increase by 60-80 basis points for 2024. So this is what we assumed in our guidance.
Perfect. Thank you.
Which I believe is still—I mean, we are currently at 2.5. So I think it's still very healthy. But you're right. Obviously, operationally, we need to make up for it. Costs on that side are increasing. And this is not an excuse, if I may say it this way. So management has to make sure that we find ways to, let's say, stabilize our distributable earnings. And that means we need to find a way to compensate for it and some of the topics we have just discussed, right? Further questions?
Hi. Yeah. Thank you. Firstly, congratulations on a great set of results. If I can ask on income tax, to the actual cash tax paid, I mean, where does that number evolve over the next three years?
Related, we have the current tax expense represents 6% of the EBIT.
Nevertheless, the effective tax rate is in the range of 13%, including the deferred tax expense. So considering that there are no longer tax losses in our portfolio, I would go for the maintenance of the same, let's say, percentage of the current tax expense in the range of 6%-8% relative to EBIT. Thank you. But yeah, the effective tax rate gradually is going to move towards a 16%. It won't stay at 13%. But I'm speaking about the next three to five years.
If there are no further questions in the room, maybe we have questions here from the phone or from participants that are on webcast, so. At the stage, there are no questions on the conference call. Okay.
So we are going to take the questions which came on the platform. So one question for Eliza.
Eliza, given your 2024 and 2025 debt maturities are covered, does it mean that you are not looking to come to the unsecured bond market, or you would still consider it? So basically, if we still consider the bonds.
We are considering also financing because we are looking for growth opportunities. So the fact that we don't have any maturities in 2024 and 2025, this leaves us time to strategically prepare how to finance the growth opportunities that we have.
The general question on the margin in CE, can you comment on the evolution on the funding margin for new debt in CE? Eliza, could you hear us? Okay. Maybe then we'll move forward until she reconnects with a question for Marek. Can you comment on the trend of tenants in groceries and fashion?
What evolution do you see in their market shares according to the trending densities that we have access to?
Thank you for the question. The trend that we observe and that I'm commenting now on fashion is nothing different in CE than we observed in the rest of the world, meaning that and you could see that on a relative basis, the fashion increase was, I think, 8% or 9%. So it was less than average for the portfolio. And this is what we see across the world. It's not bad information. It is just the information. In the very beginning of shopping centers era, it was hypermarkets driving the footfall, then it was fashion. Now we can see it moving more towards entertainment, cinemas, proper dining offering, fashion being just as important. You have seen in top 10 of our tenants, fashion plays an important role.
So we see it gradually changing. But at the same time, our strategy follows the trends. And we are observing that any leasing decision or strategy that we prepare is a function of the performance of tenants. And we always seek for those who can do the best production per square meter. But as well, it assumes as well what should be the share of fashion versus groceries versus entertainment. So yes, the market is changing. But we love retail because this is forever changing. And the demand comes from different sources. And we need to make sure that we satisfy the demand.
Thank you, Marek. One question for Rüdiger. Actually, two will be in a row. Do we expect any disposals in 2023? I think he means 2024. We have held for sale assets at EUR 152 million. Would that be a good indication of expected disposals?
So basically, a question about if we intend to dispose of something.
Yeah. I mean, we've said we are always looking for optimization of the portfolio. And that also means that we would dispose if we then get the right pricing, obviously. We have assets for sale currently. One of them is in Serbia, Novi Sad. It's one of the assets we would be looking at. And reason here is it's a very good asset. It's actually only a couple of years in the market. But we had the re-leasing cycle just last year. So we could lift up actually the base rents. And we're currently thinking of disposing it because Serbia, as a country, has no investment rate in Europe, number one. Number two, that is a market for us where we can grow. Serbia has actually two cities. One is the capital, Belgrade. And then it's Novi Sad.
And then there's a long gap. And then you have a lot of, let's say, very smaller cities. We have the top-notch asset in Novi Sad. There is literally not really a competition. But at the same time, we cannot grow in the country because Belgrade is totally over-retailed. There is a 100,000 sq m scheme called Waterfront that opened some years ago, two, three years ago. And still has a lot of vacancy. But they will fill it up over time. And other assets that are already existing longer in that city, like Ušće Shopping Center, an asset that actually opened years ago, obviously now are facing difficulties here. So that is for us a market that is maybe not as interesting as, obviously, our core markets in Bulgaria, Romania, Poland.
So if we can replace this asset with an asset in one of our core markets and with an asset that promises us actually a better return, then this is something we will consider.
Okay. Second question also for you, Rüdiger, around development. So when constructing a retail development, what would be the pre-lease percentage that we target before we start construction?
The pre-leasing actually concentrates very much on the first and obviously on the anchor tenants. If you don't have the anchor tenants on board, the others won't come. So that's pretty easy. And these anchor tenants comprise already somewhere around 20% that you would need only on anchor tenants. And on top of this, we are looking at least some, it depends on the asset, obviously, on the risk level, let's say.
But we always go into and we don't get a positive investment decision if we don't have a pre-let at least somewhere of 40%. 30%-40% is the absolute minimum.
Okay. And since we have Eliza back, I think she's back. Yeah? He's back. The question related to the funding margins. So could you comment on the funding margins for new debt in CE market and how do you see it going forward?
The margins are in the range of 250-300 basis points over Euribor. This is in general for a secure funding. Having the power that NEPI has, we may secure a similar margin for an unsecured one. I'm expecting these margins to drop in line with Euribor dropping.
Nevertheless, they are going to be always higher than the margins for the Western European countries because it's a matter of country risk and a matter of other risk which can be faced by developing countries such as CE and not necessarily by Western countries.
At the same time, if I may add here, Eliza, it also has its advantages to be in Central Eastern Europe one more time because a comparable company in Western Europe cannot even ask the IFC for a loan. So just to understand. So that's, of course, something very positive for us, which, let's say, if you operate a shopping center company in Spain or in Germany or whatever, you don't have access to any IFC loans. That's a reality. Okay.
Again for Eliza, could you provide more color on the EUR 9.8 million contingent tax liability raised due to the difference in opinion with the Romanian tax authorities?
Yes, of course. So in Romania, we are the largest real estate investor. We are a large taxpayer as well. It's absolutely normal that after years of consistent growth, to have the tax authorities and to have tax controls. Now, for the Romanian authorities, we are a relatively new business with a group structure, with a listing. It's our duty to be transparent and to explain to the authorities our business model and our group structure. What I can add is that we are facing tax controls in all the jurisdiction in which we are. This year, we had a similar tax control in Poland, which is also governed by the same European directives as Romania is.
To finish it, and the outcome of this tax control in Poland was zero, just to make it simple. We have tax controls throughout our jurisdiction, which is a normal case. Here in Romania, currently, as she said, we have more tax controls than in the past. It also has to do with the fact, if I maybe go a little bit to another side, that when you look at the state deficit of Romania, there is a lot of pressure currently on the authorities. Especially when you look at international companies operating in Romania, then this is the focus of the tax authorities. That's just how it is. Any further questions?
No, we don't have any further questions. I think we need to thank everybody for coming in. Over to you, Rüdiger, for the closing word.
For the closing word.
As said, we were pretty excited today. I would like to thank you all for joining. I would like to thank you also for the very relevant questions. I'm happy and looking forward to meet a lot of you actually in the one-to-one meetings that we have over the next couple of days to obviously go here and there a bit more into detail. But I would like to thank as well the team of NEPI Rockcastle. I think my team is an outstanding team, which I rely on. They've done an amazing job in 2023. We are very much aligned. We would like to repeat this, obviously, in the future.
I would also like to give a thanks to not only my team, but also to the trust and the support that this management team has the pleasure to get from our non-executive board members who are following us closely and are helping us and supporting us to let this company further on be healthy and further on grow. Thanks, everybody.