Good afternoon, welcome to the presentation of Vukile's Interim Financial Results for the six months ended 30 September 2022. We appreciate you making the time to join us. As always, I'll do a brief introduction and then pass over to Itu and Alfonso to talk you through the operating performance in Spain and South Africa. Laurence Cohen will then run through the financials before I end up on the strategy and the prospects. Really, it's my absolute pleasure to present a very strong set of results for the first six months of the financial year, driven by an exceptional operating performance in South Africa and a very strong market-leading performance by Castellana in Spain. I'm gonna leave it to Itu and Alfonso to talk you through the detail of what they produce in those two respective markets.
The balance sheet remains exceptionally strong and very defensively positioned, especially in a rising interest rate cycle, with a long expiry profile in Spain, as well as a very high hedging percentage of nearly 96% of our debt being hedged in Spain. 87% at a group level. I think really what it means is that Vukile is very, very well positioned into a rising interest rate cycle, and that is another strong part of our business going forward. The last six months has been quite active in terms of our ongoing strategy of active asset rotation. We've sold a further ZAR 280 million worth of non-core assets in South Africa, and that money will be deployed together with previous sales into making two acquisitions in the local SA market.
One being the Pan Africa Mall deal, which we've already spoken about, and then just recently, we've made an acquisition, rather signed agreements to acquire 50% of BT Ngebs City Mall for ZAR 400 million per our share on a yield of 9.25%. Over the period, we've increased our stake in Lar España, spent nearly EUR 16 million increasing that stake to now 25.7%. Overall, dividend for the period up nearly 17% to ZAR 0.4732 per share, and a very strong set of numbers that we are very proud and pleased to present to the market.
Just looking at the group structure, I think what you can see is that whilst the assets are slightly tilted towards Spain, the fact that we've now committed to two very large acquisitions in South Africa really shows a deep commitment that we still have to our strategy in South Africa and to investing in the country. I think we've been able to get exceptional results out of our portfolio. Where we find assets that meet that same strategic focus, we are very keen to try and find ways in order to recycle, to buy those assets. Really, at the moment, we are getting the benefit of the macroeconomic diversification across both Spain and South Africa. I think our retail specialization strategy is paying significant dividends.
With that, I'm going to hand over to Itu to start talking through the South African portfolio and going through the detail of how he has produced an exceptional result in the past six months. Itu, please.
Yeah. Thank you, Lawrence. Good day, everyone. It gives me a great pleasure to present the South African results for the period, end of 30th of September 2022. It has been a period that's been characterized by continued improvement in the majority of our key operating metrics. The overall performance of the portfolio is now trending ahead of pre-COVID, which is extremely encouraging. We've seen significant space demand across the portfolio with lots of new store openings, and I think all of this augurs well for sustained growth into the second half of the year. With regards to the key operating metrics, the portfolio is currently valued at ZAR 14 billion. It's seen a like-for-like increase in valuations over the past six months of 3%.
Our average asset size in the portfolio has now exceeded ZAR 400 million, which underscores and emphasizes the nodal dominance of the properties in which we hold in the portfolio. The like for like net income growth is up by 4%, which is higher than where it was at this point last year. Our vacancies have improved from 2.6% - 2.3%, with significant deals in the pipeline to decrease the vacancy further looking ahead. We've seen a turn in the reversionary cycle. Our reversions have moved from -2.4% to +1.6%, with 79% of all of our renewals either positive or flat.
Our contractual escalations are at 6.4%. I think what's pleasing is with the recent transactions that we've concluded, those escalations are now starting to trend upwards at 6.5%. With regards to our efficiency measures, we've seen an improvement in our rent to sales ratio from 6.16. We've seen an increase in our annual, annualized trading densities from 6.1 to 7. Also we found that, you know, we've contained our cost to income ratio at 16.9 over the period. With regards to our tenant profile, our weighted average lease expiry profile is at 3.4 years. In recent transaction, that's increased to 3.7 years.
If one looks at our current WALE, our escalations where they are, and our vacancies, you can clearly see how vibrant the leasing environment is at the moment. We've seen an improvement in our tenant retention ratio, and our collections are still strong at 99%. The key operating metrics in the portfolio are sound and the trajectory is encouraging, which is something that we'll keep monitoring leading up to the second half of the year. With regards to our portfolio metrics over time, portfolio has shown sound and consistent operating metrics over time. In this slide, I'll compare the year 2020 with September 2022. 2020 was a period before COVID.
What we've seen is an environment that is better than pre-COVID. If we look at our vacancies, 2020 we were at 2.9%, we're now at 2.3%. We've seen a steady increase in our base rentals from 2020 up until now. With regards to our retail reversions, our reversions are positive 1.6%. At 2020 we were at 1.1%, so an improvement there. The trajectory of our escalations in 2020 was downwards. We've now, as of September, started seeing those escalations look to increase. What you're seeing is, you know, this result over a period of time emphasizes that this portfolio does well over cycles.
With regards to our portfolio composition, 75% of our portfolio remains in the defensive township, rural value and commuter portfolios. The township and rural portfolio continue to be the best performing with regards to performance and growth prospects. The interplay between our trading stats, our rental sales and our occupancy levels really show that this portfolio still has significant growth potential into the future. Geographically, Limpopo, Northwest and the Western Cape have shown strong performance over the past six months. We've also seen the KZN portfolio rebound, which has been very encouraging, particularly coming out of the challenges that we saw with the riots in July last year. In terms of our tenant exposure and category space absorption over the past five years, we observed a change in shopper behavior a while ago, which necessitated that we look at our tenant category allocation across the portfolio.
What we then did a couple of years ago is decrease our exposure to discretionary spend categories while increasing our exposure to non-discretionary spend categories. What you now find in our portfolio, if you look at the comparison over the past five years, is that discretionary spend categories such as restaurants, coffee shops, jewelry, and what we call disrupted categories such as department stores, electronics and banks, where shopper behavior has changed, all of those categories have decreased in terms of exposure in the portfolio by 17%. We've also seen an environment where categories that are strong and performing, that are defensive, such as groceries, food, basic fashion and bottle stores, those have increased within the portfolio. Tenants that we've introduced over the past six months have been Boxer, OBC, that have done particularly well.
Studio 88 is also performing well from a fashion perspective on the value side. PEP Home, in terms of home furnishings, has also been a very good performer that we've seen across the spectrum, and we've been very impressed with the performance of Sportscene around the athlete category. Furthermore, we've seen a significant support of our portfolio from our top three retailers, which are TFG, PEPCO and Mr Price. They've opened 40 stores over the past six months in the portfolio. The movement in the list of fashion retailers has been driven by two items predominantly. One has been corporate activity, and then the second one has been significant growth in the rural and township portfolio, which is predominantly what we hold at Vukile.
We've seen TFG increase exposure in our portfolio, with regards to Relay Jeans, Sneaker Factory, Sportscene and G-Star. We've also worked very closely with TFG to decrease exposure to underperforming categories such as Exact and Foschini. We've also seen some growth around PEPCO and Mr. Price. Mr. Price, not only in the Studio 88 stable, they've also started to increase exposure to different categories such as PEP's, Mr. Price Cell, Mr. Price Baby, which are categories that have been growing over the past 12 months. With regards to trading densities, our trading densities grew by 7%, with annual turnover growing at 7.8%. Fashion and groceries, which are the two biggest categories, within the portfolio, have grown by 6.8% and 8.4% respectively.
We've seen 11 of our 13 categories trend upwards, both in terms of turnover and trading densities. With regards to fashion and athleisure, it's been very interesting to note the change of performance of the athleisure and the increase there from 6.6% - 9.1%. Women's wear, accessories, shoes and beauty over the past 12 months have been slow to recover. We've now seen that they've grown by growth exceeding 10%, which has been encouraging. With regards to footfall and sales year to date, from April until September, we've seen an 8%, 8.2% increase in turnover. Our trading density has grown across all of our segments. In our township, we've seen a 12.5% growth. Our commuter malls have grown by 9.3%.
The rural portfolio has grown by 7.3%, the urban has grown by 5.5%. We've seen a significant growth across all of our segments. With regards to footfall, we've seen an 11% increase in footfall when you compare the current period to a comparable period last year. That growth has been most prevalent in the commuter category, we've also seen that our township and rural portfolio has grown by 13% and 9% respectively. Our rural and township centers are showing consistent growth, both in terms of sales and footfall, which is a portfolio that has been performing admirably over the past six months. With regards to the impact of load shedding in the portfolio over the past six months, we've seen a limited impact on footfall within the portfolio.
We've also seen limited impact on trade, we've definitely seen that there is increased total cost of occupancy as a result of the downtime of load shedding. With regards to national load shedding hours, we've had downtime nationally of 1,754 hours. The impact on average per mall during trading hours has been 174 hours within the portfolio, which equates to seven full days of downtime over the past six months that we've experienced due to load shedding. The biggest impact on our portfolio has been common area diesel charges, which are now forecasted to be ahead by ZAR 5.1 million relative to a budget of ZAR 2.2 million. I think to contextualize this increase in expenses, our overall expense budget within the portfolio is circa ZAR 850 million.
This is a high percentage growth, but really low impact on our portfolio. For tenants, there has been a significant impact on total cost of occupancy. Generator power costs you ZAR 8 per kWh , whereas power from the grid costs you ZAR 2.1 per kWh . For the periods where especially our essential tenants have used generator power, they've seen the utility charges increase by between 20%-30%. With regards to footfall, particularly over September, which was the most load shed month over the past six months, we've seen that our footfall has increased by 11%. The township portfolio increased by 13%. In fact, all of our segments increased over the period.
A further look into the actual turnovers over September shows that our takeaways increased by 11%, groceries increased by 8%, health and beauty was up by 28% over that period, and our restaurants were also up by 13%. We've seen an environment where we had the most load shedding, but we've seen an increase in footfall, also an increase in turnover, which signifies, particularly in the areas in which we operate in, we are generally, whenever there's load shedding, we are the one asset that has backup power, therefore you find people coming into the mall. We have, you know, planned a lot of risk mitigation strategies. Primarily is our solar PV strategy to try and combat the challenges that we have around load shedding.
Currently, we have 9% of the portfolio that is generated in terms of energy via renewables. We're currently busy with a further 3.9 MW which are in progress for this financial year. We aim to double our solar PV exposure by 2026, at that point, 68% of all of our assets will have solar PV installed, which equates to about 80% of our value. The returns on solar PV are still very much yield accretive and they range between 15%-25%. The challenge with PV is you need to augment it with something because PV requires grid connectivity to be operational during load shedding. We're running a pilot project at Maluti Crescent which is a combination of PV batteries and generators.
We've had discussions with our retailers to look to partially recover some of these expenses. Feedback that we receive from our retailers is that the property owner solution to load shedding is preferable because it enables the entire mall to trade, whereas, if it's tenant-specific, you may find that not the entire mall trades, if those are the interventions that are put in place. With regards to water is indeed the next big supply challenge that we are investigating. Currently, 91% of our total portfolio has partial to full water backup. We've identified KZN as a particular focus area. Our rural portfolio, 100% of our rural portfolio has backup water, and 98% of all of those rural malls have borehole water, so we've adequately covered in terms of our rural portfolio.
We will continue putting forward water-saving projects to make sure that the forthcoming challenge of water is well managed within the portfolio. With regards to our cost-to-income ratio, there's been significant cost pressures over the past year. If you look at the slide on the far right-hand side, you'll see that our net cost-to-income ratio is at 16.9% in financial year 2023. If you compare that with where we were in financial year 2013, we were 25.9%, so we've seen a significant decrease in our cost-to-income ratio. That's been driven predominantly by our PV strategy. Our recoveries on the PV front were at 83% in 2013. We now over-recover by 20%, so our recovery ratio is 120%, driven predominantly by our PV strategy.
One key area of concern that we continuously monitor is our rates and taxes. Our rates and taxes account for 18% of all of our expenses in the portfolio. If you look at the bar chart on the right-hand side, you'll see that that gray bar has grown on average by 17% over the past 10 years. We will continue objecting where appropriate, and we're also placing a significant amount of pressure at an industry level to make sure that the rates and taxes are utilized effectively to make sure that our malls are sustainable. I think another key observation on this slide is every other expense on the bar chart has been tightly managed over the past 10 years.
We have strategies for every line item, within our expense base and, you know, part of what we drive in the business is operational efficiencies, and we'll continue to do so. With regards to valuations, we currently have 34 properties valued at ZAR 14 billion, as I said, with a 3% increase, and a very conservative value density of ZAR 18,400. This portfolio has seen a 3.4% organic growth over the past six months, which has been pulled back by some income profile adjustments, as well as some discount rate movements. The forward yield on the portfolio is now at 8.7%. Our township and rural portfolio at 8.6%, while the commuter portfolio has a forward yield of 9.8%.
The forward yield and the value density as well as the disposals that we've undertaken, that have been sold at book, reinforce our sentiment that our portfolio is conservatively valued. With regards to our acquisition update, we shared at pre-close that we assigned agreements in July to acquire Pan Africa Mall, subject to 4 CPs. Three of the four have now been fulfilled. The only one that hasn't been fulfilled is the consent from the City of Joburg to the cession of the leasehold rights to Vukile. We anticipate that consent will be granted in quarter one next year, after which we will see the transfer of Pan Africa Mall, and then we will start with the redevelopment, which will run until April 2024. This is an exciting acquisition. It's in a top 10 township.
It will be a top 10 asset in our portfolio. It's one that we are looking forward to, you know, to bearing fruits. The funding is in place, and all the funding has been generated through prior asset sales. Secondly, we're pleased to announce that we've entered into formal agreements to purchase BT Ngebs City. BT Ngebs City is a 57,000 square mall, dominant mall in Mthatha in the Eastern Cape. We have signed agreements of sale jointly with Flanagan & Gerard. We will look to own this mall at a 50% share and the capital outlay will be ZAR 400 million at an initial yield of 9.25%. This will be a great addition to our township, I mean, township and rural portfolio.
We have investigated and have seen that there's significant upside potential in terms of asset management interventions that we can put into place as soon as we transfer this asset. We anticipate that transfer will also happen in quarter one next year. Once again, funding is in place for this acquisition based on prior asset sales. With regards to our portfolio disposals, we've disposed of three assets over the period. Total value of the disposals has been circa ZAR 280 million at a yield of 10.5%. These assets have been sold in line with their book values, all of these proceeds will be used to reinvest into our core strategies, some of which I mentioned in the prior slide.
I'd like to give you an update on a very exciting initiative, which is our retail incubation program. We selected nine candidates at the beginning of the year to give access to our malls. We've allocated about 1,000 sqm and spent about ZAR 10 million in TI and rent-free periods for them. Eight of them are successfully trading within the portfolio. To me, I think one of the biggest contributors to opening up markets is, you know, programs such as these. This also adds to enterprise development. It increases the pipeline of future tenants. It also adds value to supporting local in terms of our portfolio makeup.
Lastly, from my side, in terms of our short-term focus areas, we will continue focusing on tenant relationships. We would want to continue being the partner of choice, incubate new retailers. We'll use customer insights, a lot of the accumulated data that we have within the portfolio to look to drive alternative revenue sources. Our core competence within the portfolio's operational excellence, we'll continue managing our cost tightly, continue executing on our PV strategy and ensuring that our tenants have sustainable energy so that they can trade. Lastly, in terms of people and communities, we'll continue in terms of how we manage our portfolio, look to make a difference in the communities in which we operate in.
With that, I'd like to then hand over to Alfonso to give you an operational review of Castellana.
Thank you, Itumeleng, and congratulations once again for a great performance in the South African portfolio. Buenos días a todos. Good morning, everybody. I'm so happy to be back in South Africa again and to have the opportunity to meet most of the people face to face. Well, let me go through the very solid and positive Spanish results, as Lawrence said in his intro. As an introduction, and we will see it through the presentation, I want to highlight the good operational data that confirms the consolidation of the recovery of the retail sector, despite the negative macro factors that we are experiencing at the moment. Commercial real estate sector has remained robust in the recent months.
In our particular case, thanks to our active management and the hard work of the team, we can say that we continue to lead with the best indicators in the Spanish retail real estate market. Yeah, as a, as an economic update, just to say that the black clouds that we were seeing since summer are taking their time to pass through. Consumption is still strong and all retailers we speak to are projecting a good Black Friday and Christmas campaigns. However, it is expected that high inflationary pressures and tighter monetary policy will have an impact in the family economies in due course and hence limit consumer spending. Now, under the assumption of shortages of gas ceasing and inflation moderating, analysts expect for the downturn to be short and growth to start picking back up by Q3 2023.
It is a fundamental factor for this that Spain is in a much better position than that one of the GFC. Debt within the businesses and families is much lower. Unemployment has been kept at variable levels and is still decreasing. Our main driver of the economy, tourism, is climbing back to figures of 2019. Now, moving on to the key portfolio metrics. Here I want to highlight the recurrent net operating income growth of 7.5% versus H1 last year. This income growth is being the main driver to keep growing also GAV, as despite valuers increased discount rates on 50 basis points throughout the portfolio, values have grown 1.1% at portfolio level.
Still, we keep a very defensive and healthy tenant profile, with 94% of our tenant base being national and international prestigious brands, with a very solid WALE of 12.1 years and still a low average base rentals. Occupancy surpasses 98%, and the collection rate is over 99%, both ratios way above the sector benchmarks. As you can see, all very positive growth indicators, which allow us to keep signing leases and increase reversions, as well as facing 2023 in a position of strength. Let's fully enter into operations and focus on the fundamental indicators of our business, which are footfall and sales. As in previous occasions, we are showing here the recovery index against 2019 of our portfolio. As can be seen, the firm's shopping centers continue to exceed pre-pandemic figures.
Specifically, since April of this year, sales have been increasing at double-digit, reaching a growth of 12% until September. The latest data continues to reflect this growth. Regarding footfall, they maintain the upward trend, reaching pre-pandemic figures in the period and exceeding 2019 data already in September 2022. Both footfall and sales of our portfolio are consistently above the industry benchmark, demonstrating the strength of the company's portfolio and the great work of the management team. By sectors, we see sales recovery of pretty much every category. On year-to-date, from April till September, compared to 2019 figures, the growth is very significant, 12.1%, being almost 19% in retail parks or value centers, as you call them here, and almost 10% in shopping centers.
Leisure is still not catching up, mainly influenced by cinemas, which, releases during all this period have been very limited. We see this as no longer a COVID issue, but a lack of content issue. The proof of that is, when Top Gun: Maverick, the film, was released, cinemas got full. With Avatar Two and some other releases coming up this Christmas, we expect for those numbers to grow exponentially as our cinemas in the portfolio are keeping the largest market shares in their towns, all of them above 50%. The sectors with largest growth are those related to DIY and pets.
If we compare the data from April to September of 2019 and those of the same period in 2022, DIY has registered an increase of 66%, and pets an increase of 61%. Regarding fashion and F&B, two categories were highly impacted during COVID in the last two years, they have been recovering consistently in the last months and already exceed the pre-pandemic figures with 1% and 5.7% respectively versus 2019.
At leasing level, between April first and September thirtieth of this year, 105 rental transactions, 49 new contracts, and 56 renewals have been signed, involving an area of more than 17,000 sqm , which have led to a new rent signed for a value of EUR 4.6 million per year, and which results in a 4.6% increase in the average rent per sqm of the entire portfolio. As said before, we maintain an enviable portfolio occupancy at almost full occupancy, and we continue to improve the collection ratio already close to 100%, well above the industry average. With all these strong indicators on the company, we wanted just to make a summary of metrics showing the strength of the business and its great positioning towards the immediate challenging future.
Hence, we highlight the growth in income now that the value-added projects have been consolidated. We see also the healthy balance sheet with a net LTV of 43.7%, with an overall covenant of 65%, and with 95.5% of such debt fixed in terms of interest rates going forward. Operationally, the portfolio could not perform better, with such occupancy and collections, rates, ratios. We keep on investing on innovation to excel in our obsession with the customer and keep driving our customer-centric approach with more insightful data. We think we are in a very strong position for whatever is to come, related to the economy. Here's, here we can see the gross rental income bridge.
In a pure like-for-like basis of some of the same portfolio and same period of time, gross rental income have grown 11.8% in comparative terms with respect to H1 FY 2022. However, we wanted to show here the recurrent like-for-like income growth, discarding the rental relieves still given in H1 FY 2022. The growth, excluding such concessions, results in 7.6%, which is what you see over there. H1 FY 2023 have reached a total revenues of EUR 31.2 million. By the end of this fiscal year, that is by end of March, total rental income should be reaching EUR 64 million as a result of the consolidation of the value-added projects worked during the last two years.
As for the gross asset value of the portfolio, direct property values grew by 1.1%, mainly driven by two factors. One is the CapEx invested in the period, and the other is the like-for-like growth in values, which is driven by different factors as follows. Firstly, higher discount rates are pulling values down. Independent valuers, Colliers, are of the opinion that discount rates should increase 50 basis points to cater for interest rates hikes. This negative effect in values is being offset by two positive factors. One is inflation and its embedment into the lease agreements through indexation, and the other is the consolidation of the ECI projects that have resulted in better NOI projected by valuers that now becomes evident.
Despite the fact of increasing discount rates in the portfolio, the income performance have been able to not only offset the negative effect of increasing discount rates, but also have produced an increase in value to EUR 1.012 billion, which now, taking into account our investment in Lar España, the gross value of the portfolio sums EUR 1.105 billion, which implies a growth of 1.3% since we started the financial year. Once the repositioning ECI projects of El Faro, Bahía Azul, and Los Arcos have been completed, we can see the real results out of them, which are undoubtedly very significant in terms of their economic indicators, as we can see there.
I wanted to bring back this slide to point out that two out of the three projects have received awards in their categories at the awards gala of the Spanish Shopping Centers Association that was held in June this year and that recognized the Los Arcos project as the best small transformation of a shopping center. The Bahía Azul project, which received a special mention in the category of best major renovation of a shopping center, which without any doubt, the whole team, we are very proud of achievements like this one that recognize the hard work and a job well done. That we have shown our capabilities and that we are able to implement, enhance, and acquitive value-added projects, we have the next two new transformations in the pipeline.
One, on one hand, we have Los Arcos phase II, which will solidify the leading position in Seville by increasing and improving leisure and F&B area and completely transform its look and feel to become the reference in town for shopping and entertainment. The project itself will generate an extra 1.1 million annual NOI. On the other hand, Valsur first floor reconfiguration to reinforce as well experiential leisure and F&B offering, which will differentiate Valsur from its competition in town. On top, the project will generate extra annual NOI of EUR 1 million. We have increased our share in Lar España to 25.7% during this period. The good results reported for the nine-month period up to September proves the retail recovery story and our investment thesis.
Operationally, Lar is in a very good shape with low vacancies below 5%, high collections circa 97%, and double-digit growths in sales compared to 2019. Lar has also a very conservative balance sheet with net loan-to-value of 39% and very low cost on debt with no major maturities until 2026. In total, we have invested a total EUR 113 million at an average price of EUR 5.25 per share, which implies a discount to EPRA NTA of 52%. We remain long-term investors in Lar España and expect an attractive income yield and potential for capital growth through the narrowing of the discount NAV once market stabilizes. From the point of view of digitalization and innovation and further embedding our customer-centric approach, we continue on our path towards a greater knowledge of the users of our centers.
In recent months, we have launched a new sentiment analysis digital tool in conjunction with the Google My Business management platform. It is about improving the customer experience through the comments they leave us on Google. With more than 1,000 comments per month in the portfolio, we can now manage, categorize, and react to them by answering and analyzing the results. This tool helps us to know the demands of the clients and make more informed decisions regarding the customer journey through our centers. To finalize, where are we focusing our efforts in the following months? Well, operationally, we will continue to excel in our operations, keep focused on increasing income as much as we can, while taking care of all of the other metrics to keep beating the market.
Also embed our data insights for better decision-making and creating new valuable services. We keep the business well-positioned, to face, the potential macro challenging, challenges arising, maintaining our already strong relationship with our tenants to drive a partnership mindset. On the funding part, we have a stable funding position with no refinancing until, needed, until, 2025. Continue to work on the diversification of equity funding sources, and prepare to, take advantage of opportunities in the market. On the investment side, continue to secure deals, on the direct market and find more opportunities to take advantage of the dislocation in pricing of the listed market and continue to look for, ways to extract maximum value of our Lar España shareholding.
To end up with ESG and innovation, we continue developing and implementing our ESG strategy to comply with our objectives set already and keep developing and our innovation strategy to ensure core business improvement and create new disruptive initiatives, all leveraged by technology. With this, many thanks for your attention. Now I pass it over to Laurence Cohen for treasury and financials. Thank you.
Thanks, Alfonso. Good afternoon, everyone. As outlined by Itu and Alfonso, we continue to see positive momentum in Vukile's financial operating and trading metrics during the interim period, all of which flows through to the numbers and supports the year-on-year growth in income. FFO per share increased by 1.3% compared to the corresponding period in FY 2022, while dividends per share were up 16.8%. The higher than anticipated increase in dividends per share can be attributed to an increase in interim payout ratio from 51% last year to 59% this year.
We increased the interim payout ratio with a view to normalizing the split between first half and second half, following a number of one-off income and expenses in the prior year that effectively netted each other off, but which led to a distortion in the H1, H2 split of FFO and dividends in the period following COVID. We anticipate a full year payout ratio of between 75% and 80% of total group FFO. At this level, we can achieve zero tax leakage while still retaining a reasonable amount of cash. When comparing this period to the prior period, a number of items affected the year-on-year growth in FFO. Some of these include a reduction in net interest from cross currencies following the settlement of the last remaining cross currency interest rate swaps in June this year.
The conversion of South African EUR debt to ZAR debt, resulting in higher net interest costs in the current period. The sale of non-core assets in South Africa and Spain, including the sale of additional shares in Fairvest. Finally, the issue of 24 million new Vukile shares in February this year, which were issued to partially fund the acquisition of shares in Lar España. The simplified income statement has been prepared based on IFRS numbers. On the slide that follows, we have included non-IFRS adjustments to arrive at total group FFO. COVID rent concessions of about ZAR 26 million granted in the prior period contributed to an increase of 13% and just under 11% in revenue and net property income, respectively, in the stable portfolio.
During the period, Vukile reduced its shareholding in Fairvest to 6.2%, receiving sell proceeds of just under ZAR 47 million. As a result, dividends received from Fairvest were ZAR 23 million, compared to ZAR 60 million in the prior period. The proceeds from the sale of Fairvest shares were redeployed to the acquisition of additional shares in Lar España. Income from listed investments was also higher in the prior period due to ZAR 101 million that was received from the termination of FECs. Although this amount was included in full in IFRS income in the prior period, the amount was split in terms of SA REIT best practice and brought into FFO pro rata in the current and prior periods.
The Mereo top-up payment reduced relative to the prior period, both due to an increase in dividends from Castellana and hence the yield on the dividend, and due to a reduction in Mereo's shareholding in Castellana. Taxation for the period of ZAR 6 million relates to dividend withholding tax in respect of the Castellana dividend. Profits attributable to non-controlling interests was lower in the current period due to Vukile's shareholding in Castellana increasing from 82.5% - 89.6%. Non-IFRS adjustments includes ZAR 96 million relating to accrued dividends. ZAR 65 million of this amount relates to dividends accrued in respect of Castellana's investment in Lar España. The amount accrued is based on Lar España's historical dividend per share declared for the Lar España year ended December 21, thus reducing the forecast risk in Castellana.
EUR 6.6 million was received by Castellana as a dividend from Lar España in May this year. This amount was treated as a pre-ac dividend and reduced the carrying value of the investment. Accrued dividends also includes an amount of ZAR 32 million relating to FECs for the hedged component of the Castellana dividend. In the appendices to the presentation, we have included a reconciliation from Castellana's Spanish GAAP income to Castellana IFRS income and from Castellana's published FFO to the income from Castellana that is included in Vukile's FFO. Total group cash increased by just under ZAR 300 million over the period. Cash generated from operating activities of ZAR 965 million more than covered the dividend paid during the period. The dividend paid of ZAR 672 million was the final dividend for FY 2022.
The net cash outflow from the acquisition of additional shares in Lar España, offset by the sale of shares in Fairvest, was ZAR 111 million. The NAV per share increased by 6.6% to ZAR 19.10. Significantly, organic growth from property income was the biggest contributor to growth in the NAV per share in the period. An increase in the valuation of investment property, as well as rand weakness against the euro, also contributed to the increase in NAV per share. A reduction in the Lar España share price from EUR 4.9- EUR 4.32 over the period placed downward pressure on the NAV per share. I will elaborate later in the presentation on Vukile's NAV and LTV sensitivity to the Lar España share price. The past six months has continued to demonstrate the defensive nature of Vukile's balance sheet.
88% of FY 2023 maturing debt has already been repaid or refinanced. Undrawn debt facilities increased to R3.6 billion, providing us with more than sufficient cash and undrawn facilities to cover debt expiring over the next 12 months. We continue to refinance debt with three and five-year tenors to maintain or increase the debt maturity profile. Following the refinance of Castellana's €185 million syndicated loan into a new seven-year facility in March this year, Castellana's debt maturity profile increased to an aggregate 4.3 years. Castellana's next debt maturity is in FY 2026. After entering into further interest rate derivatives in SA, we increased the overall hedging such that interest rates in respect of 87% of total group debt is hedged.
Although the group cost of funding was largely unchanged over the last six months, we anticipate that interest costs will increase as recent interest rate hikes have only partially impacted the aggregate cost of funding in the interim period. Higher base rates in South Africa were partially offset by reduced credit margins following a successful debt capital market auction in August, together with a recent long-term credit rating upgrade to Double A. Total euro debt on the South African balance sheet remains low at €30 million, and the remaining cross-currency interest rate swaps were settled on maturity in June this year. 98% of Castellana's FY 23 dividends have been hedged at an average FX rate of R20.33 to the euro. We have included the Castellana dividend hedging profile over the next five years in the appendices to the presentation.
Unencumbered assets at year-end increased to R10.7 billion, with the unsecured debt to unencumbered assets ratio at 20%. The group interest cover ratio is a healthy 2.9x, with stress testing indicating that the portfolio would need to undergo a 30% reduction in group EBITDA before reaching the bank covenant level of 2x. The reduction in group ICR is largely as a result of the cross currencies maturing, as well as the increase in SA base rates. The group liquidity ratio, calculated as the sum of cash and undrawn facilities over debt expiring in the next 12 months, is a healthy 2.8x. Stress testing of Castellana's valuations indicates that the Spanish portfolio has a 33% headroom, or €362 million, before reaching Castellana's group LTV covenant level of 65%.
The debt expiry profile in South Africa is well spread over the next five years. In the early part of COVID, we had some short-dated facilities in South Africa. These are now being replaced with three and five-year facilities, which will continue to increase the overall group expiry profile. We issued ZAR 767 million in unsecured corporate bonds in August this year across three and five-year tenors, both at margins better than guidance. The auction was 4.6 times oversubscribed, attracting bids from 16 investors. We achieved margins of 139 basis points for the three-year tenor and 159 basis points for the five-year tenor.
This was tighter pricing than the auction that we did immediately pre-COVID in February 2020, when we issued at margins of 141 basis points for three years and 161 basis points for five years. 14% of total group debt is in the debt capital market. The LTV ratio remained largely unchanged at 43.2%. When we report LTV, we follow the bank's definitions for LTV, which excludes derivative assets and liabilities from the calculation of interest-bearing debt. Our SA REIT LTV ratio, which includes the impact of derivative assets and liabilities, was 41.8% at 30 September. The LTV benefited from a 3% increase in property valuations in South Africa over the period and a 1% increase in Spain.
The effect of the material reduction in South African euro debt is evident from this slide, with the currency movement during the period having had little impact on the LTV. The increase in LTV from the acquisition of EUR 3.4 million additional Lar España shares was offset by the cash inflow from asset sales and Fairvest shares during the period. In the absence of any reduction in the Lar España share price over the period, the LTV would have reduced to 42.9%. The table illustrates that Vukile's LTV, and more importantly, the NAV per share, is very sensitive to movements in the Lar España share price.
As an example, should the Lar España share price strengthen to Vukile's original cost per share for the initial tranche at EUR 5.35, then Vukile's NAV would increase by ZAR 0.40 per share, and the LTV would reduce by 50 basis points to 42.7%. Taking the sensitivity analysis a bit further, should the Lar España share price strengthen to its EPRA tangible NAV per share of EUR 10.72, then Vukile's NAV per share would increase by a very significant ZAR 2.49 per share, and the LTV would reduce by 2.8% - 40.4%. In terms of the way forward, we will continue to prioritize the excellent relationships we have with our banking partners, an essential component of proactive and effective debt management.
As regards interest rates in South Africa, we are cognizant of the fact that we are in the midst of a hiking cycle. We will continue to proactively hedge our interest rate exposure while always seeking to balance interest rate risk with the cost of hedging. As previously communicated, we've adopted a layered approach to hedging dividends from Castellana. This means we hedge 100% of Castellana dividends over the next 12 months, 80% in year two, 60% in year three, et cetera, resulting in an aggregate 60% of dividends hedged over a five-year period. This approach achieves a predictable dividend income stream in the short term, while still benefiting from a weaker rand over the longer term. The debt capital market remains an important component of our overall debt strategy.
We are encouraged by the continued support by and positive engagement with debt investors. We continue to have annual auctions to match our DCM maturities. Finally, we continue to explore green bonds and sustainability-linked bank funding. We are committed to achieving meaningful long-term ESG outcomes. This concludes the financial section. I will now hand back to Lawrence to provide an update on transactions and strategy. Thank you.
Thanks, Laurence. Turning to our strategy, it really is a very clear, very consistent retail-focused strategy of owning a portfolio of diversified retail assets, notably dominant and really dominating the catchment area that they are trading in. If I were to put this, the strategy on one page, this is what it would look like. We really have the group balance sheet that sits across everything that we do, making sure capital allocation decisions are primary and that we are managing a conservative, strong balance sheet across the various metrics that Laurence has just taken you through. We've got our two key portfolios, South AfricaAnd, Spain and Castellana. Alfonso and Itu have just spoken you through the detail there.
The nascent strategy in our business is really the third party asset management, and that is something that we are now trying to see whether we can grow. The idea really being that we've got all the retail expertise that we feel we can leverage into other markets, other opportunities, and also as a source of capital. It's very clear that in the international markets, property private equity is a well-established asset class. South Africa, it really is at the beginning stage of its existence, and we'd like to try and tap into that and try to grow it. We already have our exposure in Namibia, where we're managing the portfolio we used to own, that we've now sold the majority of.
We've recently done a deal in South Africa, taking a stake in the REimagine Fund, which I'm gonna talk through in a bit more detail. In Spain, we have started engagements with various players to see whether or not Castellana can do third-party asset management for them. That is really the beginning of a potentially new business line, going forward, but still sticking very much to our knitting of retail asset management, in the markets that we know and understand. We drop a bit below in the presentation, the picture, and we have the operational excellence, which is really the key driver of what we do. At the end of the day, Vukile is about bottom up property management.
That has delivered the excellent results that we've just been through in detail, and that will continue to be the focus in both South Africa and Spain going forward. Always looking for ways to do things better, to drive earnings, and I think it's building off that platform that we have to get further value. In terms of the capital allocation, I think we've got a very clear focus on what we're doing in South Africa. It's trying to close both the Pan Africa and BT Ngebs City deals. It's getting them closed and then integrating those assets into the portfolio, and I think demonstrating a very strong commitment to South Africa and our very clear strategy of dominant assets in township and rural areas. In Spain, it's about trying to unlock value in the Lar España investment.
As Laurence Cohen has taken you through, you can see the very significant value that is inherent just in the current 25.7% stake we have, where if that were to be accounted for at its tangible net asset value, that adds approximately ZAR 2 billion worth of value in Vukile. There's the two new value add projects that Alfonso has spoken about. Just turning to our private equity ambitions in South Africa and the REimagine Social Impact Retail Fund. This is a new investment for us, recently closed. It's still fairly small. We have got two components to it.
Number one, we've taken a 33% stake in ALT Capital Partners, which is the asset management business, and that is sort of really for us where we start learning about property private equity management and how to grow in that area. We are obviously also investors in the fund, where we've committed a ZAR 200 million investment to the fund that will be funded through the sale of two assets to the fund for a combined value of ZAR 172 million, and then we'll top that up with ZAR 28 million worth of cash. All in all, not a big investment for us and really about recycling of capital into that. It's about backing our partners in this particular market.
Ben Coetzer has got tremendous experience and is well-known in the industry, and we feel that Ben will be able to deliver on the strategy. Already, he's raised ZAR 800 million for the first closing of the fund, of which we have put in ZAR 200 million. We expect that to grow by another ZAR 500 million in the first quarter of next year. This now becomes a fund potentially of around ZAR 2.6 billion of focused assets in the convenience retail segments, aiming mainly at township and rural areas. That is really why we've taken a stake in the business. We believe that convenience retail is a growth area. We are sticking to our knitting in township and rural.
Generally, the types of assets that Reimagine will be focusing on are going to be smaller assets of below 12,000 sqm , which generally become too small on their own in a Vukile portfolio. If Ben and his team are able to build the size of the fund, as we believe they will do, then Vukile has also secured a right of first refusal to buy that portfolio in due course. To be very clear, there is no obligation on us to buy that. It's purely a right of first refusal. If we feel we want to bring that in at a later stage, it becomes, in a sense, a ready-made portfolio of convenience assets in the markets we know and understand. It also allows us to build expertise in private equity.
As we said, we believe this is an area of the market that is gonna grow, and I think this is a way of us starting to build track record. Also allows us, as Vukile, to attract alternative sources of income, and furthermore, supports our BE rating through enterprise development. Turning to our stake in Lar España, as Alfonso has taken you through, they really are performing well. I think our investment thesis has been proven to be correct. That really, just to reiterate, we're saying on the most important part, it's a very good investment, buying assets that are high yielding, we know and understand.
It also brings strategic optionality and potential capital appreciation to us, again, to reiterate, at its current tangible net asset value, that's about ZAR 2 billion worth of value for Vukile that we now need to try and unlock. To that extent, we're engaging actively with the Lar España team to find ways in which to do that. Discussions really center around three main areas. Number one being, how do they plan on deploying their very strong cash pile of EUR 200 million? Second is, are there benefits of scale, which we believe there are? Thirdly, making sure that the dividend policy is generous and rewards shareholders. Turning to ESG, which really is an embedded key driver in our business, I think we've made some very good progress over the last six months.
On the environmental side, we continue to invest in our PV capability. Itu has taken you through that in detail and what our plans are over the next few years. In Spain, we've recently concluded agreements to develop 2.5 MW of PV in the Spanish market. Both Vukile and Castellana have completed their first verified carbon footprint calculations during the first half of this current financial year. Again, as Itu highlighted, we've already taken some very significant steps in ensuring water preservation throughout our portfolio. On the Port Castellana side, all the assets are BREEAM certified, and we are currently investigating BREEAM certification for the South African assets, which whilst that would bring benefits, does come at quite a significant cost, and we are currently evaluating the pros and cons of going down that route.
Turning to the social side of ESG, we continue to be exceptionally proud of the Vukile Academy. Our class of 23 is nearly finalized. We're at final interview stage. Our class of 22, we already have secured jobs for a third of the participants, and we believe offers are coming in for some of our other colleagues. We are tremendously proud of what they have achieved in working with us for the past year and look forward to them taking their place in the industry as part of the broader Vukile family. The Vukile Retail Academy is a tremendously exciting initiative. Again, Itu has spoken you through that. The retailers are now up and trading, we believe that that has got tremendous potential going forward.
On the governance side, one of the areas we're focusing on, obviously, is cybersecurity, continue to run campaigns, educate our staff also make sure that we are as well protected against the threat as possible. In terms of ESG certifications, both Vukile and Castellana submitted their first GRESB submissions, and Vukile also submitted its first CDP submission. In terms of quality of reporting, very proud to announce that Castellana has once again achieved EPRA Gold for financial reporting, on its first submission of a sustainability report, also achieved EPRA Gold, as well as the Most Improved award. We're really very proud of what the team has done in Spain. Looking forward, what do we continue doing? As I said, the strategy is very clear. We're very focused. There are no big moving parts in what we are doing.
We continue to focus on our people. We truly believe that our people are the differentiating factor that deliver the results that we've been through and continue to make sure that Vukile and Castellana remain employers of choice. Our customers really sit at the heart of what we do, and we've spent a lot of time building that capability. I'm now confident that it is an embedded core competence in what we do, and we continue to see the benefits of how we understand and engage with our customers in both markets to get the trading results that we are delivering. Turning to our tenants, obviously the lifeblood of what we do, and importantly our partners in how we run our business, and that's essential to the way we think about our relationship with our tenants.
We're partners. I think we saw that come to the fore during COVID. I think during this difficult time equally, we will see that happen. It's really a symbiotic relationship, and we continue to make sure that we are their landlord of choice. Balance sheet strength remains a key focal area for us. We have our balanced scorecard approach. Lawrence has taken you through that in detail. We continue to make sure we have a diversified source of funding, long expiry profile. What we can manage in an upwards trending cycle is really interest rate hedging as well as debt expiry. Operational excellence, as I said, is the driver of everything that we do. Continue to look for opportunities in that area to do things better and drive higher earnings throughout.
ESG, as you can see, has really become embedded in our very being. You've seen what we're doing. We'll continue to invest in PV and further CSI initiatives. In terms of growth, I think at the moment it really is three main areas. Number one, closing those two deals in South Africa, making sure we bring those assets into the portfolio and extract the value we believe we can. Number two, it's on Lar España to see how we unlock value there. Thirdly, that growth in the private equity model, third-party asset management, but remaining very much focused in our core retail expertise.
Turning towards prospects and guidance, a very interesting and difficult set of results to synthesize, because on the one hand, we're exceptionally upbeat about what we have delivered, about how the portfolio is performing, and I think you can just see the defensive nature of the portfolio really coming to the fore. We've navigated COVID exceptionally well. We are navigating the recession, the headwinds at the moment, exceptionally well. Anecdotal evidence from our tenants and from the portfolio over the last two months, in other words, post-reporting period, the trends are continuing. However, we are very mindful of what the macro picture looks like. We are concerned about that, and therefore, we need to balance the optimism of the operational and financial and strategic strength of the business with the broader macro environment, which is challenging. I think it's bringing that level of caution.
Saying that, Vukile is in the strongest possible position to navigate through those headwinds going forward. I believe just as we navigated so well through COVID, we will navigate equally well through the period that we are currently in. To end off with, just to say that we are happy to maintain our guidance unchanged for the full year of growth in both FFO per share and dividends per share of between 5% and 7%, and that will be a dividend of between ZAR 1.11 and ZAR 1.13.
For the year. I'd like to just conclude by thanking you all for your, for attending. We are gonna turn now to questions, and we'll take them as a team. Thank you.
Thank you, Laurence. Just a reminder to the participants to please submit your questions on the webcast tab. The first question comes from Nati Msimango of Peregrine Capital. I believe you have largely responded to it or may have largely addressed it during your presentation, Laurence Cohen, but if you may and you want to add anything to it. Nati has asked if you could give details on the non-IFRS adjustments that positively impacted the FFO, one being early termination of which derivatives, and then two, the closed cross currency swaps, and then FEC accrual of ZAR 32 million in the period. Three, would you say these were once off or could be recurring?
Yes. Thanks for the question. The non-IFRS adjustments comprise, first of all, as was mentioned in the question, the determination of the foreign exchange contracts, FECs. From previous results announcements, one may recall that at the beginning of COVID, from the inception of Castellana was distributing 100% of FFO. At the time that we went into COVID, we took a decision to reduce the payout ratio in Castellana. As a consequence of that, Castellana's dividends were overhedged. The FECs were over. We had too much in the way of FECs, and we terminated some of that overhedged position. In terms of IFRS, the gain that the REIT earns on termination of a derivative must come into IFRS earnings up front.
However, in terms of SA REIT best practice, that gain that comes into IFRS earnings up front needs to be spread in a manner over time in accordance with the life of the derivative that was terminated. That is why we had ZAR 101 million coming into earnings, into IFRS earnings in the previous period. We took ZAR 76 million of that out in the prior period, and we brought ZAR 58 million of that into the current period. Regarding the accrued dividends of ZAR 96 million, that is made up of two parts, ZAR 65 million relating to an accrual of dividends from Lar España.
The reason we need to accrue for that as a non-IFRS adjustment is because when a REIT has an investment in another REIT, in terms of IFRS, it can only bring in the dividends or the income from that REIT when the dividend in the underlying REIT is declared. Castellana will only bring in the income from Lar España for the year end of December 2022, when Lar España declares that dividend in mid-next year, around May next year. On a monthly basis, Castellana is accruing a certain amount of income based on the historical dividend from Lar España, and that is that amount that we've brought in at ZAR 65 million. The remaining amount in that accrued dividend of ZAR 96 million is ZAR 32 million relating to dividends, the FECs from Castellana.
Those that FEC will be the dividend that Castellana declares as its interim dividend now in the next two weeks for the year ended FY March 2023. Because there's a timing difference, that dividend is declared in the FY23 period, but it relates to the period ended September 2022. We have to bring it in now as a non-IFRS adjustment.
Thank you, Laurence. In keeping with the financial questions, the first question from Mwaiso Nyirane of SBG Securities. He says that 87% of debt is hedged and 96% in Spain, but this is via combo of swaps and caps. Can you give us a sense of where, and in brackets, how many pips these caps are for the euro debt? Put differently, is there a portion of that cost of debt that may still increase?
Okay. In South Africa, debt is hedged with a combination of interest rate swaps, caps, and cap spreads. In Castellana, we don't have any swaps, caps or cap spreads. The debt is all hedged with fixed rate loans. As regards our euro debt in South Africa, in South Africa, we have about EUR 30 million of euro debt. EUR 20 million of that is hedged with a fixed rate loan, and there's EUR 10 million that is floating in a euro RCF. In Spain, we have about just over EUR 20 million of debt that is floating, that is unhedged. As regards the caps and the cap spreads that we have in South Africa, we've hedged about ZAR 2.4 billion nominal with caps and cap spreads. Of that, ZAR 900 million is hedged at a cap of 5%.
If the base rate goes above 5%, which it has, then we are hedged. ZAR 1.5 billion was hedged with cap spreads, with a spread of 7.5%-8.5%.
Thank you, Laurence. Another question from Mwaiso. Did the percentage or proportion of turnover-based rentals increase since or from pre-COVID levels? At a high level, what portion of the rental is turnover based?
Hasn't increased. At a percentage level, 0.6% of our total rental comes from turnover rental. We haven't seen a change in terms of our turnover rental that we've generated in the portfolio.
Thank you.
At Spanish level, because I guess that Mauricio also asks of what is the percentage in the Spanish portfolio, is something around 2%. The important part is that 2% is a top up over the minimum guaranteed rent that tenants are paying. There's no tenants paying only turnover rent, but it's that they top up their minimum guaranteed rent when the sales go over a hurdle. It's an extra rent paid by the tenants on top of the minimum guarantee rent.
Thank you both. The next question comes from Paulo de Almeida from Clearance Capital. Is there a first right or option to take out the 50% of Flanagan & Gerard on the BT Ngebs City down the road?
Yeah. All deals that we do would have preemptive rights. Yes, in due course, we'll get there, but I think let's first get the deal closed before we worry about buying anybody out. Yes, it is standard practice that in these deals you would have a preemptive right on the partner shares.
Thank you, Lawrence. Just a reminder again to the participants to submit any questions that you may have. I'll give you a couple of minutes just to see if any more come through.
Also, I would say to complete the answer to Mauricio is to say that Covid didn't imply any structural changes into the lease agreements. I mean, we just gave rent reliefs to those tenants that need it. At the end of the day, the main structure of the lease agreements were intact during the period. It's not that Covid has provoked to have more turnover rent-based leases. It's not the case. All right.
Thank you, Alfonso. There don't appear to be any further questions.
Great. Well, just to end off then, once again, thank you all very much for attending. We really appreciate it. We come to the end of our calendar year in a very positive position, notwithstanding the macro picture. Really all that remains is to wish all of you a wonderful holiday period, a great festive season. Please drive safely, and we certainly look forward to seeing you all in person next time we report full year results. Thank you very much.