Good afternoon, ladies and gentlemen. It is my pleasure to welcome you on our semi-annual 2023 results call. Today with me is Barbara Sikora, the CFO of the group, and we will start with the formal presentation as usual, and it will be followed by a Q&A, Q&A session. So please hold your questions until the end of the presentation. Let me now switch to Barbara.
Good afternoon, ladies and gentlemen. Let me start from the presentation from the snapshot of the financial results for the first half of 2023. The revenues from the rental activity amounted to EUR 90 million, which is an increase of about 6% as compared to EUR 85 million in the first half of 2022. I will come back to the reason to the setup and to the-- what factors influence the increase at the later stage in the financial part of the presentation. Just to mention at this very moment that the increase is results from the completions that we had over the period. The increases of approximately EUR 4 million.
As everybody remembers, we sold over the last year a couple of properties. The total decrease resulting from or due to the sale is EUR 4.6 million, and the inflation that we observed increased our results by approximately EUR 5 million. As mentioned, details of investment, this investment activity, we will come back to that later. Gross margin from rental activity amounted to EUR 63 million for the first half of 2023, versus EUR 62 million in the first half of 2022.
The difference that we would expect to be a little bit higher, but due to the fact that the completions haven't yet resulted in the full pickup of the gross margin, the shortage. The shortage results also from the fact that, as you remember, there is a big tenant, namely ExxonMobil, moving from one of our properties in Hungary to a newly built property, Pillar, the Pillar 1, which also results in some of the space being freed for the redevelopment purposes.
This also influenced the gross margin, as well as the Polish UBP property vacancies and Galeria Jurajska properties, which I also again refer to a little bit later. This also influenced gross margin as is. FFO I up 4%, up by 1.4% from EUR 35 million in the first half of 2023 from EUR 32 million for the comparable period. EPRA NTA at the level of EUR 1.2 billion as at the end of June 2023, versus nearly EUR 1.3 billion at the end of 2022.
This change, this decrease, results mainly from the fact that our properties have been revalued downwards, as well as the change in the valuation of the REIT values. Net LTV slightly up from 44.5 as at the end of December 2022 to 46.8 at the end of the first half of 2023. To that we will refer again later. Occupancy in our properties remained at the same level as at the end of 2022, with minor differences per country and per asset type. You were able to see the detail, some of the details in our financial statements as well in the presentation.
We added additional slide showing changes between the two periods with additional explanation given. The group shows strong cash position as at the end of the first half of 2023. The total cash on hand was at the level of EUR 120 million plus deposits of around 15, short-term deposits of approximately EUR 15 million, as well as we have still an undrawn available facility of approximately EUR 94 million. Now, I would like to switch to Małgorzata to give a little bit more dynamics to the presentation, and I will come back with the financial information in details.
Thank you, Barbara. So as we mentioned, the overall occupancy for the whole portfolio is at a pretty strong 87%. If you look at the office, it's around 84%. Again, it stays as it was in 2022. Average weighted lease term is up to 3.5 years. This is an improvement from what we had last year. This is mostly due to the fact that we signed during the first quarter, first half of 2023, we signed over 55,000 sq m of new leases and prolongations in our office portfolio. And you see the list, those are big leases. The largest one is MBH Bank in GTC Metro in Budapest, is almost 16,000 square meters. Then we have few more, few smaller leases. As you see, Budapest is overrepresented.
Our very strong leasing team there is doing a very good job. We additionally signed a number of significant leases in Q1 of 2023, which will be KPMG, Strabag, Aon, all of those were signed in Q1. If you look at what happened to the portfolio, to the office portfolio, we also disposed Forest Offices Debrecen. As you remember, it wasn't our core market, so we realized the disposal. The net proceeds were around EUR 49 million. They were reinvested in the real estate assets during the first half of the year. As you see, we completed two buildings in Rose Hill, the business campus. We also have a number of offices under construction, and Barbara will touch on upon those later on.
As you see, we treat our sustainability very seriously. We are upgrading our properties on a regular basis. Our aim is to have at least LEED Gold certificate for any new assets that we develop, or BREEAM recertification or certification, at least at the excellent level. We also decided to go for new certifications, which is Access 4 You, Buildings without Barriers, to make sure that all our buildings are accessible for everybody. Now, switching a little bit to the retail side. The occupancy at retail is very strong, at 95%. It's a little bit down on the Polish assets, as Barbara mentioned.
It's mostly due to the fact that in Galeria Północna, we are having temporary technical vacancy because we are cleaning up the space for two large tenants who will be moving into the shopping mall end of this year and beginning of next year. So this is on purpose. We had to clean up some space to make sure that we can accommodate the new tenants. Average lease term is still quite strong, 3.8%. We do see still an increase in footfall. That's really a very good results of around 12% compared to last year, and the turnovers, turnovers again, are much higher than they were a year ago. It's around 11% up from H1 2022. Leasing activity is a little bit weaker than it was a year ago.
A year ago, we were coming out of COVID, so everybody was prolonging the leases. That's where, after two years of COVID and no real activity on the leasing side, the retailers decided to have a little bit more clarity on their business and were prolonging the leases. Right now, around 13,000 sq m were signed. Again, one thing, which also needs to be added, the occupancy is very strong, so it's really hard to lease above this 95%. If you look at the new tenants, we have a number of new tenants. We have a number of prolongations. We are very happy to welcome Bershka in Galeria Jurajska, Stradivarius as well.
As you see, Inditex Group is developing with us, and we prolong a number of leases, including CCC lease and Terranova in Avenue Mall, also Calliope in Avenue Mall. So all of that happened during the second quarter of the year. Again, sustainability is treated seriously by us. We upgrade Mall of Sofia to LEED Gold. We did BREEAM certification for Galeria Jurajska under the new standard. Those are new requirements, much higher requirements. We had to do some adjustment in the shopping mall, some procedural adjustment as well. So, we improved the sustainability level of that property. And again, we decided to go for Access for You for the Hegyvidék Shopping Center in Budapest and Avenue Mall in Zagreb. Now, let me switch back to Barbara.
She will run you through the property.
Okay, so, gross assets value base and income producing amounts to 88%, and this remains unchanged. 64 of the recurring income-producing portfolio is our office portfolio. Active development projects amount to 3%, land reserves to almost 8%. This also shows our significant potential. 92% percent of our properties are located in the EU countries, and 89% of our assets is, are green certified. I propose not to go through details. There is no really significant change as compared to the previous periods. So, Małgosia, I propose to jump further. Really, that's not a lot of changes here. A little bit more detail on the development and redevelopment projects.
As mentioned before, our land reserves represent approximately 8% of the portfolio book value. This is approximately EUR 190 million. Further 3% are under redevelopment. The projects that we refer to, it's Matrix C, approximately 10,000 sq m , which is delivered actually currently already in Q3 2023. CP 1 and 2 still under redevelopment. We are refurbishing the space after ExxonMobil moved to Pillar. Then in Q4 2024, we expect further deliveries from the Rose Hill Business Campus.
In parallel, the redevelopment of our Andrássy office property should be completed, as well as our Center Point 3 development should be completed in Q3 2025. With overall office space of 36,000 sq m . As you can see, most of our developments and redevelopments are in Budapest, with just a part in Zagreb. All of the development and redevelopment projects are office projects. Jumping to the financial position and financial results. This time I would like to start with consolidated cash flow. Cash flow from operating activity remained at the same level as in the first half of 2022.
Maybe just to remind, in the first half of 2022, the entire of our Serbian portfolio has been sold. In the second half of 2022, on top, Cascade, Cascade Building and Matrix A and B have been sold. The total rental income from these properties amounted to approximately EUR 2.6 million in the first half of 2022. In 2023, on top, we exited from Forest Offices. This happened in January. So basically, this also influences the entire change in operating rental income and gross rental income decline as a result from the disposals. On the acquisition side, maybe then now jumping to the investment investing activities.
So we invested into the Matrix, the one that I already explained, so mainly Matrix C, Rose Hill Business Campus, Center Point 3, and Andrássy Budapest properties. On top, we acquired Lánchíd Hotel and Vörösmarty property, both located in Budapest. The sale in the first half of 2023 relates mainly to Forest Offices in Debrecen. And this is actually the financing activity, the investment activity. Now, looking at the financing activity, the main change, the main impact comes from the new loans acquired and drawn down on related to GTC X property and Matrix C property. We also repaid approximately EUR 17 million on...
This was the second tranche of the Polish bonds, with the last tranche to commence in November. We also, of course, serviced our normal amortization of the loans. The total repayments of loans and bonds amounted to approximately EUR 25 million. The net change over the first half of 2023 amounted to EUR 5 million. The group remained, retained a strong cash position of EUR 120 million. Let's jump, Małgosia, to the next slide. Analyzing the debt, the net debt metrics, the total net debt amounted at the end of the first half of 2023 to EUR 1.11 billion.
Weighted average debt maturity was at the level of 3.8 years, as compared to 4.4 years at the end of last year. With, of course, this results from the significant repayment of our green bonds approaching in the second quarter of 2026. Net LTV increase, and here we are comparing ourselves to the Adjusted LTV as at the end of 2022, where already our sale of Forest Offices in the Debrecen has been reflected. This, the change, the increase results mainly from the fact that we acquired new loans, repaid the bonds.
The cash is down, because as we said already, this Forest Offices has been reflected in the calculation of the ratio as at the end of 2022. The value of the properties remained more or less at the same level. Annualized consolidated coverage ratio remained unchanged. Consolidated secured leverage ratio increased by 2 percentage points due to the new loans drawn. The weighted average interest rate remained at very low level of 2.38%, as compared to 2.23% as at the end of the last year, which is really very low. Yeah, and of course, influences our results for the period.
The debt split remained at more or less the same level, with minor changes connected with the new loans drawn from 56% of unsecured debt. We landed at 54. The secured increased to 46 from 44 at the end of last year. The fixed interest or hedged loans amount to approximately 93% of the total loans. As for the debt maturity profile, again, this is important. Within the next 12 months, we expect the repayment of bonds, which I already mentioned, at the level of EUR 17 million.
There is just one loan to be refinanced over this period, related to one of our office properties. And in the following 12 months, another two refinancing, one of EUR 10 million, related to one of the office portfolios, and a bigger refinancing connected with one of our retail properties. Małgorzata, let's jump to the next slide, please. As for the consolidated financial position of the group, the value of investment properties, as compared to the end of last year, remained unchanged, or the increase is insignificant. The changes are of different nature.
There is a decrease of EUR 53 million related to the fair value adjustment. As compared to the market expectations and market consensus, it's still lower than expected. I will comment on it on the next slide. The value of investment properties increased by EUR 44 million as a result of our investments, which out of which 28 million were connected with new developments and 16 million were connected with our existing completed assets.
Actually, these EUR 16 million, they do not translate into increase in fair value due to the fact that this is mainly maintenance CapEx fit outs, and they do not directly transfer into increase in in in the value of properties. As we mentioned, the two acquisitions of EUR 13 million and some other minor movements at the level of EUR 3 million influenced the overall value increase of just EUR 1 million. Just to remind, the assets held for sale, line three, we see here the decrease connected with the sale of Forest Offices. On the liability side, I would like only draw your attention to only two lines: short and long-term financial debt.
As I already explained, this is the two loans drawn on GTC X and Matrix C, netted off to some extent by repayments, repayment of Polish bonds. There is a decrease resulting from the valuation of derivatives that we hold. All of them are connected with our Hungarian bonds, and the change relates to the interest rate and FX swaps valuations. This is a bigger slide, quite busy, but I believe everybody is interested in what's happening on the valuation side, what's happening in the market, basically, what influences the value of our properties. What is important is that 100% of our real estate assets are valued externally.
Thus, whatever we are showing, of course, is verified externally. What were the key drivers of the group valuation in the first half of 2023? The economies that we operate at still suffer from post-COVID change in work, meaning in work patterns, meaning the hybrid approach to work, or some of the companies simply send all their employees home, which results in tenants contacting the landlords with the request to leave the space. We face it as well. Of course, we try to address it, but we observe this as a very strong market trend.
And of course, especially Poland, and here, our central eastern block, we are still hit by the Russia-Ukraine crisis, significantly influencing our macroeconomic data. Another factor which influences tenants approach to rental is the increasing rents, inflation, inflation influences indexation of rents, and all the costs, the service charges costs increase. This further drives the approach to limiting the space, thus decreasing demand on rental. The financing cost increased over the last six months. This is both on the Euribor side with over 150 basis points increase in this period, as well as the five-year IRS on euro.
We observe over this period an increase of 36 basis points, which also shows what is the market expectation. It also shows that the expected timing of the increase in financing cost is different than we expected originally, meaning the expectation is that the increased costs will prolong over a longer period. For our group, we observed for this valuation an increase in cap rates by 21 basis points, which resulted in a devaluation of approximately 2 percentage points.
When discussing the markets, even before executing the valuation with our appraisers, we heard a consensus of, for 2023, for the entire 2023, of approximately 25 basis points-50 basis points. We, at the moment, as I mentioned, they applied on average, because of course, we are talking here about averages. The cap rates changes differ per asset type, per country, per type of property, office versus retail. And by the way, we have presented more details of this valuation in slide number 24. We have shown those splits, we believe this is quite valid and interesting to be presented.
So the market consensus, or the appraiser's consensus was, that over the year, the cap rates should increase by approximately 25 basis points-50 basis points. Whether we should expect further increases by the end of the year, this we cannot say. Of course, this will be influenced further by what is happening in the market. Just to give the full understanding, 25 basis points increase in the cap rates results in a decrease of approximately 5 percentage points of our portfolio. So we are better off than what has been expected for this for the end of the first half of 2023. Another important factor, average rents.
Of course, they increase, as we mentioned, there is a significant inflation, thus indexation of the rents commences. As compared to the end of last year, our average rent increased by EUR 0.7 per sq m. On top, I presented, we presented here average ERVs, which are approximately EUR 1 lower than our current average rent. This is again the expectations, this is the perception of our properties by external appraisers. It will, as this also can translate into lower some decrease upon retenanting and when renting the empty premises.
Although of course it is important or empty, maybe not premises but rather space in the premises that we hold. It is and what is important also that these ERVs hasn't, haven't, they haven't increased that significantly. They increase only by approximately EUR 0.1 per sq m . This again shows what's the expectations of the appraisers. It's important to mention that our leasing team is doing excellently. They are still leasing above the ERVs provided by the external appraisers, and it is not by EUR 1 per sq m as we see from the comparison.
The leases that they delivered, they were at least EUR 1 per sq m higher than what we see in the ERVs. The GTC's occupancy remained unchanged, while you can see again in the slide 24, a decrease in Poland and a decrease in occupancy in Poland, or not a, but increases in occupancy in other countries for nearly all of the asset classes. As Małgorzata already mentioned, the Polish retail, this is mainly Galeria Północna, and this is temporary adjustments in order to prepare the space for the newcomers, and for office, it's hopefully, again, this is also temporary.
We see the market talking about tenants coming back to the offices, about inefficiencies in work from home approach. But, of course, there will be always some lag in the observations and tenants really executing the comeback. But what is important is that there is also differences between capital cities and regional cities. And the decrease in office occupancy is mainly related to the Polish regional cities, mainly Łódź, where we have two quite big properties. And generally, when talking to our appraisers, they all talk about oversupply in regional cities.
With the in the same moment, in parallel, they are talking about decreasing occupancy, sorry, vacancy, decreasing occupancy in capital cities, which also may mean that we are coming back to increases in in occupancy. We, of course, count on this trend. Just to summarize the results of the valuation by type of assets and by country. As you can see, the overall decrease in properties value of EUR 53 million can be split into a decrease in the value of completed investment properties of 58 and increase in the value of our under construction offices and land bank by, in total, EUR 5 million.
And the completed investment properties, as you can see, there is higher decrease in revaluation on the office space, rather than in the retail. Of course, also, we own more office properties than retail ones. But, we see already retail coming back, to what was before the COVID, before the crisis, with offices still catching up, we believe in medium term. And the percentage, percentage-wise, as I mentioned, as compared to last year values, the overall decrease on the investment property level is about 2%. And the income statement summarizes what has already been said.
Gross margin increase of from EUR 62 million in the first half of 2022 to EUR 63 million in the first half of 2023. If you look at the chart on the right side, we can see the bridge that I already mentioned. So, the decrease in gross margin resulting from the sale of our properties is connected with Forest Offices, Matrix and A&P, Cascade, and Serbian portfolio sale, in fact, as well. Completions are connected with Pillar property coming to operations in the first half of 2022.
GTCX, just at the end of 2022, and Rose Hill Business Campus, completed in April 2023. The indexation resulted in increase of our rental income by EUR 5 million. The shortage, additional shortage and vacancies, they amounted to 3.7 million euros. Shortage, of course, on the service charges, so this was a shortage. So this is the main, the most important line here in the income statement.
Profit and loss from revaluation, as we have already mentioned, on overall, so from investment properties and other items on overall results in a drop of EUR 51 million in our income statement. The profit loss for the period amounted to. Okay, profit for the first half of 2022 at EUR 41 million. For the first half of 2022 2023, as a result of this of this revaluation change, we recognized a loss of EUR 12 million. Yes, and I think that's it, Małgorzata , right? On the explanation of our financial data.
For further information related, connected with our valuation results and some and those drivers which influence the valuations, I would like to somehow you to refer to slides number 24 and 25, where we presented additional explanations.
... Yes, that concludes our formal presentations. I'm happy to open the floor for Q&A. So please unmute yourself, ask your questions, and we will be happy to answer. Are there any questions coming in?
Yeah. Didn't seem to mention anything on the proposed Ultima acquisition. Could you give us an update on that, please?
Sorry. So I'm sorry, Stijn, could you please repeat? Because I, I couldn't hear the first part of the question.
So the proposed acquisition of Ultima, there doesn't seem to be any update on that. Could you, tell us where that's got to, please?
Well, we are still looking at this project, but there is actually no updates that we could share with you.
Do you have a timescale for when there might be an update?
Małgorzata , I believe there is really nothing that we could share. We are working if we are ready with anything that would be more precise, and if... when we are able to give, firstly, the feedback, what is the further plan with this project, what's the timeline, we will share with it, with you. Currently, we are also in the holiday season, so the project wasn't progressing as fast as what it was expected before.
Are there any other questions?
Hi, can you hear me?
Yes, I do.
Hi. Also a quick question from me. It would be also on the Ultima transaction. But should we be assuming that this is progressing with a view to for the transaction to be completed? Or is it that it could still be, you know, scrapped, could be canceled? Are there still kind of options like this on the table?
I mean, we are reviewing the transaction in order to acquire. However, of course, all the options are still on the table. So as Basia said, there are no new updates that we can share. As soon as the updates are available, we will share them with the market. So give us a little bit of time to work on the transaction and see its merits.
All right. Thank you.