Good morning, everyone. Thank you for joining our 2023 half year results presentation. What you see coming through in these results is the strength and attractiveness of the core portfolio. Adjusted earnings are up 15% year-on-year, driven by last year's positive operational momentum that has continued into the first half of 2023. After two years of portfolio simplification, generating GBP 843 million in disposal proceeds, we have repositioned the business for growth. We now have a portfolio that is focused on our prime city center estates in high-growth cities in Europe. Our estates are thriving, attractive, and they are in demand by occupiers and communities. Since full year 2020, we have also undertaken a transformation of our operating model.
In doing so, we are further reducing our cost base and are in line to deliver our full year 2024 cost reduction target of 20%. This will result in a cumulative reduction of 30% since full year 2020. We are not done, and we are working to exceed this. As a result of the streamlining and simplification of our portfolio and our operational improvement, our financial position is significantly strengthened. After two years of strategic delivery, I am pleased to announce that we are returning to a cash dividend. We have a robust outlook on earnings and cash flow for the second half. We have a broad opportunity set ahead, which I will run through. Before that, over to Himanshu for the numbers.
Thank you, Rita-Rose. Good morning, everyone. Our half year results continue to build on the strong momentum from 2022. Let's jump right into the highlights. Adjusted earnings were GBP 56 million, up 15% year-on-year, benefiting from like-for-like NRI growth, lower administration costs, and a reduction in finance costs. Our total portfolio value is GBP 4.7 billion, with our managed portfolio at GBP 2.8 billion. Our managed portfolio is down a net 13% during the six months, which is largely a function of disposals. Valuations for the six months of 2023 have remained relatively stable. Our total return was a positive 2.5%, driven by an income return that was up 2.8% and offset by a capital return of only -0.3%.
Our NTA per share has reduced 1 pence during the last six months to 52 pence. Net debt stands at GBP 1.3 billion, down 24% since the year end. Our resulting headline LTV is 33%, a reduction of six points since the year end. Whilst net debt to EBITDA stands at 7.7 x. That's a good number in the current economic climate. LTV on a fully proportional basis is 43%. This half, we return to a cash dividend of GBP 36 million, or 0.72 pence per share. Let's look at the rest of the numbers in a bit more detail. Turning first to the adjusted earnings walk.
Starting with the GBP 51.1 million reported earnings for half year 2022, consistent with the treatment we had at year-end, we see a GBP 2.7 million reduction in the opening balance due to the IASB change in accounting in relation to concessions, on which we provided more information in our release on the 5th of July. Our starting point for restated earnings was therefore GBP 48.4 million. NRI grew by GBP 5.8 million, excluding disposals. Of this, as we show in the call-out box, GBP 1.5 million was from like-for-like NRI growth from the flow-through of the strong leasing performance in 2022 and in the first half of 2023. Our development and non-like-for-like NRI increased GBP 4.3 million, largely due to the opening of the Cergy extension in March 2022.
Moving across the page, net finance costs reduced by GBP 3.9 million, benefiting from the 24% reduction in net debt and from the active management of cash balances to take advantage of higher interest rates. Gross administration costs were down GBP 3.4 million, or 12%, as we continue to reset our platform. FY 2022, we've committed to reduce our operating costs by a further 20% by FY 2024, we remain very much on track to deliver this, and indeed, we are working to exceed it. Value Retail saw strong top line and operational performance in the first half. I'll come back and unpeel the GBP 0.3 million movement year-on-year in VR very shortly.
To conclude the adjusted earnings walk, there was a loss of NRI and associated property income of GBP 4.5 million and GBP 1.1 million, respectively, from disposals in the period. That brings home the earnings to GBP 55.9 million and the growth of 15% year-on-year. Now, looking at Value Retail in more detail. Value Retail continues to perform well. Footfall was up 13% year-on-year, and brand sales up 14% year-on-year, and spend per visit was up 8% on 2019 levels. Occupier demand for space remains high, with 156 leases signed in half. Occupancy is unchanged at 94%. The resulting GRI and NRI at our share were up 13% and up 16%, respectively.
Looking at the earnings walk, you will see the strong growth in gross rental income of GBP 8.7 million. This was offset by higher costs of GBP 6.4 million, reflecting operating cost investment in the period and higher refinancing costs. To close on Value Retail, yields are in the range of 5.25%-6.5%, and in 2023, the valuation of our share of the VR portfolio increased by GBP 26 million. We see GBP 43 million in the first half, which reflected some catch up for 2022. Turning now to valuations on our flagship portfolio. The chart shows the recent changes in yields and rental incomes. Let me first cover yields in the top chart. Yields for prime shopping centers in the U.K. have been stable for the first six months of the year.
French yields also remain stable, there's been very little outward movement in France in the past 18 months. Of course, we had the Italie Deux transaction in France as a reference point to support French yields. Ireland has seen a modest outward yield shift of 20 basis points in the half. ERVs have remained stable, with like-for-like ERV up 0.1% across the destinations, with France and Ireland rising slightly and the U.K. remaining flat. Lastly, to remind you of our peak to trough. In the U.K., we've seen a 330 basis points outward movement in net equivalent yields to around 8%, with valuations down 64% from their peak and ERVs rebased 34%.
In France, we've seen outward yield shift of 80 basis points to net equivalent yields of 5%. Since the peak, values are down 29% and ERV is down 4%. In Ireland, the outward yield shift from peak is 130 basis points to net equivalents of 5.6%. Capital value is down 33% and ERV is down 14%. Comparing the yields across the territories, you will know that we are still seeing some of the greatest spreads to the five-year swap in the U.K. that we've seen for some time, with the spreads in France and Ireland being much narrower. Before I talk to net debt, let me cover off disposals. When we set out on our strategy, the aim was to simplify the portfolio and strengthen the balance sheet at the same time.
Since the beginning of 2021, we have generated GBP 843 million in disposal proceeds. At the beginning of 2022, we guided to an additional GBP 500 million of disposals to be completed by the end of 2023. We did GBP 195 million in 2022, disposing of Italie Deux and Croydon earlier this year, and have delivered GBP 410 million of our GBP 500 million target. We remain confident on achieving the balance. The disposals naturally serve to reduce net debt, which decreased by 24% or GBP 414 million, since the year-end, to GBP 1.3 billion. Proceeds from the sale of Italie Deux and Croydon generated GBP 215 million.
In the half, after a prolonged period of working constructively with the lenders to find a way forward on the secured debt on both Highcross and O'Parinor, the lenders enforced their security and took control of the JVs, resulting in the derecognition of joint venture secured debt, reducing net debt by a further GBP 125 million. Cash generated from operations reduced net debt by a further GBP 60 million, with operating profit at GBP 65 million. Distributions from Value Retail were GBP 43 million, and we expect to receive further distributions in the second half of the year of around GBP 15 million. We saw gains on FX, partially offset the net interest costs of GBP 39 million and GBP 16 million of capital expenditure in the period, bringing home the closing debt of GBP 1.318 billion.
Now, moving on to the obligatory NTA per share walk. In the first half of 2023, we saw 1 pence per share growth from the increase in adjusted earnings, offset by 1 pence reduction relating to the valuation and disposal losses. The additional 1 pence reduction is due to the derecognition of O'Parinor and Highcross. Overall, these movements result in NTA reducing from 53 pence to 52 pence per share. Let's now look at our liquidity and debt profile in more detail. This chart shows the group's debt maturity profile. Our debt is 24% lower since the year-end, at GBP 1.3 billion. We have no group refinancing until 2025, with our 2024 and 2025 unsecured debt maturities more than covered by the available cash.
That leaves only the secured debt on Dundrum, which we expect to refinance in the ordinary course in 2024. LTV at 33% and net debt to EBITDA at 7.7 times are good numbers. The FPC LTV at 43%, of course, reflects the effect of the VR debt. VR's overall leverage is 37%, and of course, it is non-recourse to the group. We have ample liquidity in undrawn and committed facilities of over GBP 1.2 billion. We also maintained our IG credit rating, we're only one of four issuers not to receive negative movement of the 41 rating actions in the sector since May 2022. Let me now move to my closing slide, which sets out our dividend policy. The board recognizes the importance of cash dividends for shareholders.
Our commitment is to pay a sustainable dividend in the range of 60%-70% of adjusted earnings. This policy is based on a disciplined approach to capital allocation, balancing returns to shareholders while continuing to invest in our core assets, as well as considering the impact of disposals, acquisitions, loan to value, and changes in financing operating conditions. I can confirm that the Hammerson board has declared an interim dividend of GBP 36 million, or 0.72 pence per share. The board will continue to keep the policy under review over the coming years as the group continues to execute its strategy. Rita-Rose Gagné will talk further on our dividend policy in her section.
Thank you, Himanshu. Let me jump straight into the strong operational trends behind the numbers. Our core portfolio continues to benefit from polarization and a flight to quality. Occupancy is up year-on-year at 95%. Footfall is up 4% year-on-year and is closing the gap on full year 2019. Sales are growing, reflective of our proactive asset management as we create exceptional destinations and more relevant mix. Our largest city center estates have benefited significantly from the continued return of visitors for work and leisure, with Birmingham up 6%, Marseille up 8%, and central Dublin up 13%. July footfall is also up year-on-year. Over the summer, many of our destinations are seeing footfall in excess of 1 million visitors a month, with Bullring welcoming around 2.5 million visitors in July.
Despite the uncertain macroeconomic background, consumer spending continues to be resilient, with like-for-like sales up year-on-year 3% in the U.K., 2% up in Ireland, and 7% up in France. Dwell time is also up 5%, as consumers do spend more time in our assets. All this is driven by our leasing momentum. Now turning to leasing. Following full year 2022's best performance since 2018, our leasing momentum has continued. We signed 134 leases in the first half. This represents GBP 18 million of headline rent, up 13% year-on-year on a like-for-like basis. 70% of volume were principal deals at more than 90% of value. For principal deals, headline rent was 20% ahead of previous passing rent. On a net effective basis, principal deals were 8% ahead of ERV.
This compares with ERVs up 1% a year ago and 2% for the full year 2022, so there is progress there. The trend of long leases has continued with a WAULB of 7.1 years and a WAULT of 9.4 years. In terms of leasing mix, just under half of the principal leases were best-in-class occupiers and new fashion concepts, with the balance being to non-fashion, services, leisure, food, and workspace. Whilst demand continued through the period, June was particularly strong, with 46 leases signed. That momentum has continued into July, with a further 12 leases signed through last Friday, all above ERV and above previous passing. Looking ahead, we have a strong pipeline with GBP 15 million in solicitors' hands at around 35% ahead of previous passing and 15 ahead of ERV. What underpins this strong operational performance?
Today, we are focused on a core portfolio of high-quality assets with unique exposure to some of the fastest-growing cities in Europe. On the left-hand side of this slide, you can see our current geographic footprint, and on the right, the data points that illustrate their strength. 11 city center estates with significant complementary opportunities and two standalone development sites. We welcome over 175 million visitors each year from large affluent catchments. We support almost GBP 4 billion of sales per year and over 23,000 jobs. There is a clear demand from occupiers and customers who are attracted to our destinations. After all, we operate in cities that are the engines of economic growth, with young, growing populations, strong infrastructure, and evolving communities. Consumers are increasingly evolving their lifestyles where they want to do everything in one quality place.
Our locations and spaces are well suited to meet that demand for the best living spaces. That is the opportunity. Let's now turn to our current strategic framework. We are a cities business. We are investing in our portfolio of core assets. We combine targeted leasing and placemaking with integral and complementary repurposing and redevelopment opportunities. We are evolving the mix to create exceptional destinations, attracting new customers, concepts, best-in-class occupiers and partners, and ultimately, new income streams. This asset focus and customer journey is underpinned by the continuing transformation of our platform. We are committed to maintaining a sustainable and resilient capital structure and an IG rating.
Of course, more and more, we put ESG at the heart of everything we do, with clear net zero asset plans for each and every estate of our portfolio, and a culture committed to making a difference for all our stakeholders, but in particularly, for the communities in which we operate. Let's talk about the first of those strategic elements, which is investing in our assets. In the last two years, we made significant progress on repurposing obsolete, low-yielding, and underutilized department store space. We have now completed the conversion of House of Fraser in Dundrum to Brown Thomas, that's Selfridges in Ireland, and to Penneys, which is Primark in the U.K., both upsizing and now operating with really exciting and new concepts. I'll come back to this particular project as part of the overall Dundrum estate in a moment.
In the former Debenhams unit at Bullring, we have completed our physical works to transform and revitalize the space. M&S are on site, fitting out around half the space to consolidate in Birmingham. This is for their latest concept store, including a premium food hall, which will open by the end of the year. A further level of the space will shortly be handed over to TOCA Social, a football-led social and entertainment operation. This is another example of what we call a truly integral opportunity to the transformation of our destinations, not only to fill vacant space, but to create an entirely new proposition, which in turn attracts additional brands. You will see a raft of new openings in Bullring in the autumn. We will have invested over GBP 25 million in this repositioning and are on course to exceed our own underwrite of around 18% IRR.
That does not take into account the positive impact to the surrounding asset and wider Birmingham estate. In the former John Lewis space above Birmingham New Street, we have planning consent for Drum, an amenity-rich, workspace-led proposal with strip-out works nearly complete. In Reading, we are working closely with the local council to transform The Oracle. We are awaiting planning permission for a 450-unit residential scheme in place of the former Debenhams. We are also in discussions with occupiers for the other department store space at The Oracle. Overall, since full year 2020, we have exited around a third of department store space. We have repurposed and have in train around a further third, and we are actively considering options for the remainder. These are excellent capital allocation opportunities, income producing for our assets, drive further interest and vibrancy, and will deliver attractive returns for shareholders.
We also have plans to invest in ongoing upgrades and enhancements to the common areas of our assets to attract the right occupiers and enhance the customer experience. This drives, in turn, new revenue and commercialization opportunities. Finally, we are investing in new technologies to increase our data capabilities and understanding of our catchments and customer behavior. For example, we are rolling out AI CCTV in three core assets and have reshaped our digital team and capability. Alongside the investments in our assets, we are growing our focus on placemaking, advertising, and commercialization. There's lots of examples on this slide, let me highlight a few. Of course, alongside the new, we continue to secure deals with and renewals with key best-in-class brands, such as Printemps at Les Terrasses du Port, and Bershka and Pull&Bear coming into Bullring directly due to the revitalization of the former Debenhams unit.
In terms of new concepts and uses, Nike Live opened in Dundrum, the first live concept in Ireland, and Nike Rise is due to open in Bullring in the second half. This is an example where we have worked closely with a key brand partner as they plan their physical expansion programs. In Birmingham, we let underutilized space to Lane7 to create a new bowling and entertainment destination. This has critical mass alongside the new TOCA Social and the Sandbox VR experience, which opened earlier this month. In France, we welcomed Olympique de Marseille to Les Terrasses du Port, opening their largest flagship store in the region. Last week in Cergy, we signed Smile World to bring in a new 3,000 sq m leisure concept. With this, our like-for-like commercialization income was also up 15%.
Some key highlights included further success in bringing digitally native brands to our physical space, most notably, Shein to Birmingham and Westquay. Charity Super.Mkt, the U.K.'s first multi-charity retail store, launched at Brent Cross. Following this success, it has come to The Oracle and is now at Cabot Circus. This new concept increased footfall and created significant media coverage. It has now raised over GBP 600,000 for the charities and has attracted significant new customer footfall. In France, we introduced a boutique pop-up for Marseille-born rapper, Jul, to Terrasses du Port, which saw footfall increase by 5% year-over-year over the period. We continue to explore underutilized car parking space with new uses, occupiers, and events. This includes a Tesla collection point and Florescenza Garden Centre at Brent Cross, and a pop-up skate park with Red Bull at Cabot Circus.
We are doing more engagement, increasing our social media presence and partnerships with local influencers, contributing to increased visibility and customer engagement with our destinations. A great example would be the buzz created around Late Night Out, our first out-of-hours ticketed event at Bullring. We also have opportunities that are integral to our core assets. At the moment, we have one committed project, which is the Ironworks at Dundrum, a 122 unit residential project, which includes affordable housing. This remains on schedule. On completion, this will become the largest income contributor than any other single tenant at the Dundrum estate. We also have opportunities that are complementary to our core estates and two standalone projects. Our focus is to continue to undertake enabling works and site preparedness in order to de-risk the projects and create value and optionality.
We are committed to working closely with local authorities and key stakeholders through the planning processes. At certain projects, we have started discussions with potential end users. We also took opportunity in the half to exit our standalone development interest in Croydon to our JV partner, further focusing the portfolio and creating liquidity for value-enhancing, recycling into other shorter-term projects. Let me try and bring this all together holistically by way of an example at one of our core estates, Dundrum. Dundrum is Ireland's only super prime retail-led destination, with a broad and affluent catchment and well-connected transport links. We have invested EUR 31 million over the two years to repurpose the former House of Fraser, broaden the mix of uses by bringing in best-in-class operators with new concepts, Brown Thomas, Penneys, Dunnes Stores, Nike, while also enhancing the environment and increasing income streams.
The overall IRR for the project was around 19%, with an incremental yield on cost of around 15%. We are also bringing new uses and income streams with the introduction of residential at the Ironworks, new workspace with Western Union, and food and leisure around Pembroke Square. All this is driving incremental footfall, spend, and diversifying income. We also have a significant opportunity for another 900 or so residential units on brownfield land adjacent to the estate. For now, we are awaiting the outcome of planning submissions before considering our options. In the meantime, it provides a yield from the existing assets on the site. Dundrum effectively serves as a microcosm for the potential we see across our core city center estates. Today, we have a transformed platform with an investor mindset.
Over the last two years, we have reshaped our organization to put more emphasis on strategic capital allocation, portfolio and asset management, placemaking, and repositioning of our assets. Launched earlier this year, property management and associated accounting are currently being consolidated to quality providers of scale, with specialist expertise in the U.K. and France. We are building a high-performance, high-engagement culture with an emphasis on career development. These changes result in headcount being down 57% since full year 2020, and 30% since full year 2022, as the organization and portfolio has been reshaped. This is a net number, which includes additional hires as we continue to invest in and promote key talent to be fit for future. We also maintain a relentless focus on hard costs.
For example, including further reducing office space, both in the U.K. and France, and working to reduce our insurance premiums, professional fees, and IT costs. Overall, we have reduced our gross administration costs by 12% year-over-year. We are in line with our target of a further 20% reduction off the full year 2022 base by full year 2024. This will therefore be a cumulative 30% reduction since full year 2020. There is more to do, however, and we are working hard to exceed our target. Our capital allocation is based upon a disciplined approach, balancing returns to shareholders while continuing to invest in our core assets. We will continue to deliver and maintain our IG credit rating.
At the same time, we will continue to invest in our destinations to maintain and enhance their attractiveness for occupiers and customers, and consider selective consolidation, all within our IG guide rails. Indeed, we have invested over GBP 100 million in our destinations, excluding development in the last 2.5 years, while making material improvements to our balance sheet and putting ourselves in a position to return to a cash dividend. In returning to a cash dividend, the board has set a sustainable policy where we are able to invest in the business for growth and attractive returns, but also pay a dividend which is covered by free cash to equity. The board will keep the dividend policy under review over the coming years as the group continues to execute its strategy. In summary, it's been a strong half year for Hammerson.
... We are well positioned to deliver another year of robust underlying earnings growth and cash flow. We will deliver our cost guidance. We are confident in concluding our GBP 500 million disposal program by the end of the year. Today, we have reported further strategic progress, growth in earnings, and a return to cash dividend. We look to the future with confidence. Let me finish by talking about the Hammerson investment proposition at the end of this. We see Hammerson as a value-generating platform with more opportunities ahead, a platform that is lean and simple, with optionality to source and deploy capital and drive further value through disciplined investment.
We see a future platform that consists of core city center estates with more consolidation, ownership, with integral redevelopment opportunities being delivered that enhance the proposition and asset quality of the wider estate and complementary standalone developments progressed, underwritten, and de-risked for value and optionality. As for Value Retail, it is not part of our core long-term proposition. We will look to realize value from our investment at the right time.
To close, our investment proposition is a platform with attractive, growing financial metrics, resilient earnings and cash flow, supporting a sustainable cash dividend with a balance sheet, maintaining our IG credit rating and capacity for investment. This is all underpinned by a lean, more agile organization with an investor mindset. Ultimately, we are focused on further growth by recycling capital from the non-core to our city center estates. More consolidation and selective complementary development over time. Think of us as a cities business with living spaces at the heart of large communities. Thank you, over to you.
Thank you very much, ma'am. Ladies and gentlemen, if you'd like to ask an audio question, please press star one on your telephone keypad. That's star one to ask a question. Our very first question today is coming from Colm Lauder, calling from Goodbody. Please go ahead. Your line is open.
Good morning, Rita- Rose and Himanshu. Thank you for taking my question. I'll get straight to the point, really, on what I think is the main sort of news item from our perspective with the Hammerson results, and that's the return to the cash dividend. It's perhaps something you could perhaps lay out a bit better for me to understand, you know, what to expect for the full year. Obviously, 0.72p declared today for the interim dividend cash, with a guide of 60% to 70% of underlying earnings to be paid out over the full year.
Could you perhaps sort of give me a bit more understanding of how that aligns with the U.K. REIT rules in terms of the 90% property income distributions? Again, just assuming, you know, broadly steady underlying earnings for the second half, you know, what does that get us to in terms of expectations around a dividend for the full year? That's my first question.
Great. Hi, Colm, and thank you for the question. Good morning, everybody. As you just mentioned, this is the big item news, amongst, and standing on a very solid, strong and robust performance in H1 this year, but that was the result of a constant progress over the last two years. The board recognizes the importance of cash dividends for shareholders, first of all. Our policy, as you say, is indeed a payout of 60%-70% of annual adjusted earnings. As I said in my presentation, we see opportunities to invest in our assets that deliver attractive returns.
It's about taking a balanced approach, and an approach that is about a disciplined capital allocation, to give us the flexibility to continue to invest in our assets for growth, while taking a prudent approach to the balance sheet and returning value to the shareholders. These were the main consideration that tie up with the REIT rules. Importantly, we believe this is a sustainable, dividend, and it's covered by free cash flow to equity.
Okay. Thank you. Then just maybe just moving on then to, you know, developments or sort of general CapEx. The one I really sort of wanted to pick up on is The Goodsyard. You know, obviously there have been some, you know, value changes on those assets and those non-core land deals. I just want to sort of pick you up on a comment as well in the text, which is sort of saying, you'll be taking capital light steps to continue to create value and optionality at sites like The Goodsyard, and obviously then thinking about what happened in the Croydon partnership. What are your thoughts in terms of sort of the more land bank approach for schemes like The Goodsyard? Is this something you want to progress towards planning or... Obviously then value enhancement works, or are these are sites you're looking to dispose of as well?
Yeah. A few elements in your question there, Colm. Just to remind everybody, and I just touched on that in the presentation. When we look at the, what we call development and land bank at the moment, it's really separated in buckets. You have the integral opportunities that are the redevelopment and repositioning in the assets, and we give examples of that in Dundrum and in the Bullring. You have the complementary sites, which are, you know, surrounding the assets, and have a potential to densify the estate. You have the standalones, of which Goodsyard is.
Our approach to that, obviously, the integral opportunities are faster and efficient, as you can see, and do deliver value and attractive returns. In terms of the complementary and even ultimately the standalone, these are all sites that we are progressing at the moment. Obviously, they're not all progressing at the same pace, they'll not come to be ready at the same time. What we're doing at the moment is light capital investments to do enabling work and site preparedness. As that continues to create more value on those sites and bring them to a point of decision and optionality for Hammerson. When you look at what we call the standalone, the developments, which are the Goodsyard, and which were the Croydon development opportunities, those are really long-term.
In the case of Croydon, you saw us dispose of that. It was just too long term for Hammerson. For The Goodsyard, we continue to do the planning, the light capital work, and progress to a value point to enable us to take the best value-enhancing decision. It's really about keeping key properties and making sure we're maximizing value and keeping, you know, keeping the potential for Hammerson all at the same time.
Okay, thanks very much, Rita-Rose. That's very helpful. That's all for me.
Thank you, Mr. Lauder. Our next question is coming from Max Nimmo calling from Numis. Your line is open.
Good morning, team. Thank you for that presentation. Well done on the operational turnaround of the business. It seems to be moving in the right direction. One question I did have, however, is on the disposals. Clearly, a lot has changed since you set that disposal target. Do you think a further GBP 90 million by the end of the year is enough for the market to be comfortable with where your leverage will be, assuming that, you know, Value Retail stays in the portfolio, and we're looking at this FPC LTV? That's obviously notwithstanding any further moves in valuation. I just wanted to pick up on one thing you mentioned, that the U.K., obviously, the spreads versus five-year swaps have blown out a lot more than they have on the continent.
Sounds like from what you're saying, you feel that the U.K. has oversold rather than the likes of France, who's only moved out 80 basis points versus risk-free rate, moving out 300 basis points. It feels like you feel that the U.K. is oversold rather than sort of France and Ireland needing to reset more. Just interested to get your thoughts on that. Thank you.
Thanks, Max. There are sort of two questions in here. First of all, the disposal program and how we're thinking about where the leverage is, and then secondly, you're asking me about what I think of basically, where are the values going in our different geographies. For the first question, with regards to the disposal target of GBP 500 million, we are indeed guiding with confidence that we will reach that this year. That's a GBP 90 or GBP 90 million that's there, and that does have, you know, the possibility of getting our leverage even to a better place.
When you look at the leverage at the moment, I mean, we're really committed, and we will stay committed to a resilient and stable balance sheet and to maintain our IG rating. The LTV, the headline LTV at the moment, at 33%, will improve further, as I just said, and our net debt to EBITDA at 7.7x is a really good number and a prudent number to be at this stage of the cycle. If you look at values, as you point out, we do think that the values are stable with yields broadly flat, and we are leasing at positive to ERV. We're right about there, but again, a bit of progress due to us finishing our disposal program.
As far as LTV is concerned, that's the view. If you look at valuations, the overall valuations were stable. What we're starting to see in the portfolio, some positive movement on the ERVs. If you look at the U.K., yes, we think that the yields have stabilized now, and, you know, they've been stable for some time, actually, since last year, since H1 2021. It's just last year, Q4, that there was a change of shift in yield related to the political instability. I think that's, as you say, it's a very wide spread, and we are seeing liquidity come back to the market.
We believe that that's no crystal ball, but that's pretty buttoned up. In terms of, you know, again, peak to swap, we're at 65% lower values and 34% ERVs. I mean, when you think about the ERVs, we are, our leasing activity is showing that we're leasing in the U.K. in a significantly, you know, at significantly way and more and more over ERVs. The ERVs at 1 point will have to catch up, so we think there's an opportunity to the upside. In terms of the French yields remaining stable at the moment, we've had a positive shift in income, as you saw in all the KPIs in France in terms of footfall sales, leasing. It's very positive.
We've had a transaction in H1, as you know, on the Italy deal transaction, with a very attractive net equivalent yield of 5%, which was supporting our values, and it's a quality asset. We don't see any reason, considering the dynamic in France, the ERVs has shifted very little, and, you know, different dynamics in that market. We think that we've rebased the portfolio 30% down since peak. We think, again, there's no reason why there would be material shifts there, as we see it. In Ireland, you did see a modest outward yield shift related to the investment environment. You know, again, in Ireland, the capital values are down 33%, so that's a significant drop there.
We think there's no material movement there. When you compare the yields across all territories, you do see attractive spreads to the five-year swap. That's why we're starting to see now investors in an environment where they ultimately have some visibility on underwriting. You see investors coming back to the sectors, considering those attractive yields, and considering in the best property, again, we can't paint one picture for everything, but for the best properties, there's attractive demand, occupier demand. I think this will support pretty stable values.
That's great, thank you. Just one quick follow-up. Would you be willing to commit to an LTV target on a fully proportionate basis at this point, or is it more just we want to get it down? Do you have a number in your mind?
It's, again, our reference is the investment grade, so that's the reference point. I think I gave you-
[crosstalk]
... I gave you a pretty specific view on how we view ourselves now and with our disposal progress. I think that's the view.
Okay. Thank you.
Thank you much, sir. Our next question is coming from Pranava Boyidapu, calling from Barclays. Please go ahead.
Hi, morning, everyone. This is Niraj on behalf of Pranava. Apologies if this has been asked already, there are some technical issues with my line. We would like to get a bit more information on how you're tackling your near-term debt maturities, particularly Dundrum, which is due to close soon, right? I remember there was a cash drop on that last year. Could you tell us how that asset is currently performing against its covenants? Is there any debt coming due at Value Retail? Any comments on that?
Well, I'm not sure I necessarily got all the aspects of your questions, but you're talking about financing. On the near term, well, relatively near-term maturities, we do have Dundrum, but that's gonna be refinanced in the normal course of things, rather a later part of 2024. When you look at our refinancing more generally, I think, when you look at, there's three points to remember. At the moment, we're still in the business of returning debt, there's nothing due for the rest of 2023. There's maturities in 2024 and 2025 that are well covered by existing cash, and with further asset disposals to come to complete our GBP 500 million target.
We continue to monitor markets, and we'll be prepared and ready to access whenever we feel acceptable. Eventually, we do have to refinance the longer-dated maturities, remember that the 2026 and the 2028 sterling legacy bonds are at rates of 6.25% and 7% coupons respectively. The 2027 is at 1.75%, so we think we should be able to do better than that. You know, there's likely going to be some overall impact, but it's hard to quantify now. Swap rates are moving at 20 basis points a day, let's see where interest rates settle, say by late 2024 or early 2025, when we might be out in the market.
The last point I think you asked, if I understood well, was around Value Retail. As you know, they have done their major refinancings last year. That's out of the way, and there are some remaining smaller financings on three of their assets that are going to be getting done in the normal course of business. That's the update there.
That's very helpful. Thank you.
Thank you, sir. Our next question is coming from... He just withdrew his question. Sorry about that. Our next question is coming from Paul May of Barclays. Please go ahead.
Hi there, just a couple of quick ones from me. First one should be very easy. Our second one, retailer profitability. I appreciate there's a focus on OCRs, which I think we can probably agree are slightly meaningless across geographies. I just wondered, what is retailer profitability in your centers looking like? I think in the past, the U.K. tended to be a more profitable region to do business. Just given the rent declines that we've seen there, is that now more the case, or has France taken over on that retailer profitability? Thank you.
Well, the way, the way we look at retailer profitability, as you say, the environment at the moment, there's a lot of things converging towards the physical space and the omni-channel in the physical space. The OCRs, although not perfect, because at the moment, you know, the way the sector is shifting towards more omni-channel and physical space, it's not only about the, the sales per square foot and rent, it's really about what a physical given location gives to the overall profitability of the companies and of the overall sales. I think the profitability at the moment, for the retailers that are, you know, going towards the best properties, is looking good and better. It, it's, you know, ultimately the rent, if you look at the cost of doing business in the physical space, is actually quite low.
Okay, just to follow up, I suppose, to take two examples. If a retailer was occupying space in Bullring, and the same retailer was occupying space in Terrasses du Port, would they be likely more profitable in the Bullring or Terrasses du Port? I think in the past it would have been the Bullring, I just wanted to check whether that's still the case.
It's still, you know, broadly Bullring. Again, Yes, it's Bullring. I just make the caveat that it's about, it's more and more about the overall profitability than the specific... The physical cost in a given location is benefiting not only profitability in that said location, but in the overall brand of the retailers. Short answer, I think Bullring still is in the right, the better spot.
Perfect. Sorry, my second question. I think the returns that you're going to or talking about on capital investment assumptions look very attractive, and I think getting closer to being able to be executed, given sort of planning and various things as we move through. At what point does it make sense to raise capital? I think debt capital probably not attractive, so probably equity capital, to fund this investment, given the returns on that new equity would be probably far in excess of the returns on the existing equity. I just wonder how you're thinking about that in terms of a return profile on equity investment. Thank you.
Well, for now, we consider that we have the opportunity, and we're able to reinvest and recycle, and that's where we want our capital to be recycled. Well, you never say no to equity, eventually, if the circumstances are right. Our goal here is to recycle, grow the company, reduce NTA gap, and eventually, as I say, never say no. For the time being, we're able to recycle our capitals with our current capabilities.
Perfect. Thank you.
Thank you very much, sir. Once again, ladies and gentlemen, if you have any questions, please press star one at this time. We'll now go back to Jaap Kuin, calling from Kempen. Please go ahead, sir.
Hi, good morning. Thanks for taking my question. I hope someone else didn't already ask this, but could you maybe go into the increase in net admin at Value Retail? Just to provide some color on the big increase there. While we're at VR, yeah, any additional insights on the medium to long-term strategic orientation towards your ownership of that stake? Secondly, on disposals and/or debt derecognition, obviously the O'Parinor and Highcross foreclosures basically help you. Are there any other situations where you consider this to be a viable strategy? Thank you.
Thank you. First questions around VR, the cost, you know, the VR has increased its GRI of 13%, and there's been an increase of cost to do that, basically. That's where that comes from. They are, as I said, working extremely hard and well for their recovery and putting all the efforts that they need to do to really deliver these great results. In terms of our mid to long-term strategy with VR, I did mention in the presentation that again, VR is a best-in-class platform, it's not part of our long-term strategy due to the fact that it's an investment, and we're rather owners, operators of our assets.
you know, we will seek liquidity options at the right time, at the right price. With regards to the disposals more generally, and you referred to specifically O'Parinor and Highcross and those circumstances, we don't see. The only remaining secured financing we have is on Dundrum, and as I said, this will be refinanced in the normal course of business, and it's a very strong and strategic asset, long-term asset for Hammerson.
Okay, clear. Yeah, I think I'll follow up on the net admin for VR, but thanks a lot. Thanks.
Thank you much, Mr. Kuin. As we have no further audio questions at this time, let me turn the call over to questions that were submitted by the web in writing.
Thank you. The first one comes from [audio distortion ], from SPG Securities, who asks: What is the like-for-like NRI growth for each of the three flagship regions, U.K., France, and Ireland?
That is actually in the RNS in the financial statements, page 56. You will see that the U.K. has a 1.1% growth. France is -2.5%, and Ireland is 8.6%. Be mindful of the fact that U.K. and France still have some impact relating to bad debt. Actually, the U.K. NRI, without that, is quite strong. Himanshu, do you want to add anything on that?
I'd just simply point to, you know, the overall group, gross to net conversion is at 80%, and as you rightly said, Rita-Rose , you do get kind of volatility in that number just based on bad debt provisions or charges. Overall, our bad debt provisions came down, reflecting the strong collections rates that we see with 2022 now at 98%, and 2023 collections also remaining very strong.
Thank you. The next questions come from Thomas at Goldman Sachs. The first one is: How much of the GBP 43 million VR cash distribution was a catch-up payment for FY 2022, and is the GBP 15 million you expect in H2 broadly the amount we should expect on an ongoing basis? The second question is: Can you help me square the circle between principal leasing plus 8% ahead of ERV, but the portfolio becoming more over-rented?
Yes. For the first question, Himanshu, do you want to give the split on the GBP 43 million of cash dividends for VR?
Yes. The split was GBP 36 million catch up in respect of 2022, and GBP 6 million in respect of 2023. You'll see, I guided in my presentation for a further GBP 15 million to come, you know, the rest of this year. That brings around GBP 21 million for this year. Look, as Value Retail go through the remaining financings for Fidenza, Wertheim and Ingolstadt, they, you know, take a conservative view, as they did last year when they refinanced, you know, La Vallée and Bicester. If you're looking to forward projecting your model, I think a GBP 20 million-GBP 25 million distribution is about right on a go-forward basis.
Thanks, Himanshu. The second question is about our activity of leasing over and above ERV versus the overrenting we're seeing. I mean, on that point, first of all, it's not a material number, and that is spread over many years. The point I would want to make on the reversion is that, you know, this is, this is tracked versus ERV and, you know, the ERVs are, as you can see, are proving to be quite low versus what we are achieving more and more. It becomes a bit of a theoretical key KPI.
We think that that reversion will eventually, you know, will be reducing as we go, as we more and more lease over and above ERV. As the valuers pick this up, because it's just starting to be picked up. You know, there's evidence that it might have been. The ERVs might have overshot downwards a bit too much here.
Thank you. A couple of questions, which I'll combine, all similar theme on Value Retail from Ben Richford at Soc Gen and [Cabello], from Mazi, which is effectively thinking about the future of Value Retail, what are the key KPIs that might have to change? What might circumstance change that would make a disposal more attractive or choose you to dispose of the asset more quickly?
I think, we, you know, as I said, it's always about seeing the recovery, so the typical KPIs on, you know, footfall, sales, the return to cash dividend, you know, Hammerson getting back that benefit. we're going to see increased performance still, we're tracking that, and then it's a question of being in the market at the right time, once, you know, we feel these KPIs are at the right place and being at the market at the right time and get the right price. That's how we're looking at Value Retail.
Thank you. Just one clarification question from John Cahill at Stifel. Can you please discuss how you reconcile your 60%-70% payout ratio with the 90% U.K. REIT requirement?
Himanshu, do you want to take that one up?
Yes. quite simply, if you look at the mix of our U.K. income, obviously the U.K. PID is on U.K. qualifying income. For Hammerson, obviously, our income streams are a mix of U.K. and non-U.K. We've previously guided that a fair estimate on the U.K. qualifying PID is around 55%. In setting a dividend policy, the board considered that 60%-70% to be at the right level, which is above our PID minimum, and as Rita-Rose said, really gives us, you know, the flexibility to both reward shareholders and to continue to invest in our portfolio going forward.
Thank you.
Thank you. One other slight clarification from Hemant Kotak at Kolytics, which is: Can you please just recover what are the levels that the rating agencies are looking for in terms of net debt to EBITDA, LTV, and ICR, and so on, which you need to maintain to your investment credit?
Sure. That's a great one for you, Himanshu.
Again, great question. Thank you. Actually, the credit agencies don't, you know, put specific measures in place. Again, I refer you to my script. As we went through the half year, we were one of only four rating actions that retained our IG rating against some 40+ rating actions in the half. We've always said we're committed to maintaining an IG rating, and the two guide rails that we've always given is net debt to EBITDA, you know, being in mid sort of single digits. We've said today that 7.7, in that context, is a really good number. And the LTV, as we complete our remaining GBP 90 million disposals, will be around, you know, 31.5. At this stage in the cycle, we feel those are good numbers.
Overall, Rita-Rose has reinforced, you know, our commitment to maintain that IG rating.
Thank you. There are no further questions that we haven't covered elsewhere, so we'll return you to the operator at that time. Thank you all very much for your time.
Thank you very much, everybody.