Deutsche EuroShop AG
XETRA:DEQ
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Deutsche EuroShop AG
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Ladies and gentlemen, thank you for standing by. I'm Stuart, your Chorus Call operator. Welcome, and thank you for joining the Preliminary Results Full Year 2021 Call.
Business information transparency is very important for Deutsche EuroShop. For this reason, this conference call will be recorded and shared on the Internet. [Operator Instructions] I would now like to turn the conference over to the CEO of Deutsche EuroShop, Mr. Wilhelm Wellner. Please go ahead.
Ladies and gentlemen, good morning from the team of Deutsche EuroShop in Hamburg. With me in this call are our CFO, Olaf Borkers; and our Investor Relations team. Thank you for attending the presentation of our prelims of 2021 and an update on the situation in our centers and on the development of the Deutsche EuroShop group.
Before we start, one hint, you might hear from my voice that I caught a flu. I hope my voice is making it through the call. If not, I will hand over to my colleague Olaf Borkers, and he will then take over. This information is just that you're not confused if it's necessary to switch. So I hope my voice runs through.
And also before we get straight to the facts and financials and the operations, which look relatively promising given the ongoing corona situation, I would like to mention that we, as all people, are looking with sorrow and concerns towards the war in the Ukraine. And first of all, it's human tragedy and then also, to a much lesser extent but not unimportant, it's unknown commercial effect and also the impact on business and also our business. Now to our preliminary results.
2021 was hopefully the last year that has been substantially and directly impacted by corona. As you know, 2022 still bears some of the negative impacts of the ongoing pandemic, however, so far, to a much lesser extent. Therefore, talking about corona, we expect 2022 to be a transitionary year.
I want to start with a short look back on the last 3 years of the pandemic. This will be useful to put the numbers and information that are contained in this presentation in perspective.
Pandemic had, as reported, a strong impact on DES business. This impact is shown on Slide 5. Here you can see the long shop closing periods in our countries of operation. Our home mart in Germany, which account for approximately 80% of our income, was affected very hard with 187 days of a complete lockdown. The Czech Republic suffered from 235 days of closing; Poland, 159; Austria, 131; and Hungary, 68 days. These numbers include the full lockdown days for nonessential shops. Yet, it is important to mention that the period in between and right after the hard lockdowns were subject to limitations and impediments which had, depending on the segment, substantial influence on the business. With that hard lockdown, we experienced in Austria, where most of the shops in our centers had to close for more 3 weeks just as recently as last November, November of 2021.
In the recent weeks, we have seen a dynamic and somewhat pleasing improvement of the corona regulations in our foreign markets. As of today, as you can see on Slide 6, these measures are almost down to 0 in the Czech Republic and Hungary, where the restrictions were abolished in the past few days, including the obligation of wearing a mask. In Poland and Austria, the mask requirement remains in place for the time being. And in Germany, the situation is still somewhat different with various kinds of regulations and we are in a kind of transitional phase also here. However, let's hope that the abolition of mask-wearing obligations falls away -- sorry, the obligation of mask-wearing obligations falls away in spring when the weather is improving.
What are the developments in our centers? Since the reopenings, end of Q2 2021, we have seen a similar pattern in our operational numbers as we have seen in summer 2020 after the first lockdown. People enjoyed the newly regained shopping freedom and a certain kind of normality. What we see is that people return to the malls and shops even though there are still destructive restrictions in place, as I just mentioned.
In the third quarter, the footfall, please have a look on Slide 7, remained at approximately 75% of pre-corona levels. For October, the number improved slightly to further 77%. Unfortunately, at the end of November, we experienced again various restrictions in our main market Germany until around mid-February '21. Access to the retail, except basic supplies, was reserved for vaccinated or recovered visitors only. This deterred many current customers and created also extra expenses for our tenants who had to carry out the security checks by themselves.
The additional lockdown in Austria, I mentioned already. Naturally, all this had a detrimental impact on visitor numbers. Nevertheless, by end of February 2022, we had returned to a level of around 70% compared to pre-crisis levels.
The long closing period hedged, as also already reported, also had a dramatic impact on the tenant turnovers, as it is shown on Slide 8. Compared to their 2019 levels, the turnovers of our tenants decreased, on average, to 35% in Q1, 58% in Q2 of 2021. In the third quarter, the turnover level improved nicely to 90% for our total portfolio and to 88% for our German centers. In Q4 2021, the restrictions caused another decline in our retailer sales at 84% the level for the -- of the pre-corona level that was achieved for Germany compared to 85%. So a similar number for the entire portfolio. In January 2022, this figure then dropped to 67% for the German portfolio and 76% for the overall portfolio, once again caused by the newly introduced restrictions in Germany.
On Page 9, you can see our collection ratio since the start of the pandemic which initially follows the pattern of the customer footfall and is strongly dependent on the lockdown periods. The collection rates represent here the ratio of received to invoice trends, service charges and marketing contributions, all calculated after corona-related concessions. For 2021, the number was 95%. And since the third quarter of last year, the collection ratio improved further and it's now closely to normality. Early 2022, the collection ratio stands at 99%, with only very limited rent concession granted, resulting from some cleanup for 2021.
On the following 3 slides, I would like to give you a brief overview of our tenant structure and the composition of the contracts. Compared to the status of end of September 2021, our WALT, see please on Page 10, has nicely increased from 5 to 5.3 years. 46% of our contracts expire in 2027 or later. The occupancy ratio improved to 94.3% at the end of the year after its lowest level of 93.8% mid last year.
On Slide 11, you will find our top 10 tenants in comparison of size. This list had only some smaller shifts. TK Maxx entered the top 10 and Bestseller left the list.
The sector mix is shown on Slide 12. Here, the share of fashion has slightly increased, while the share of department stores and hypermarkets has decreased. On the fashion side, a very attractive retailer, TK Maxx, was one of the tenants with whom we were able to negotiate new contracts and, thus, additional space. The concept is currently one of the most successful tenants in this segment. Health and beauty is also still on the rise, and I will go into more detail of our letting performance in 2021 later.
So far, the update on the situation in our centers. I will now come to the financial results of 2021, and we'll start with the valuation of our shopping centers on Slide 13. The valuations of our shopping centers were, on average, slightly down in a changed market environment. Including investment costs, the valuation result before tax was minus EUR 54.7 million as of the end of last year. This corresponds to a slight average decrease of minus 1.5%.
The stabilized net initial yield for our portfolio is slightly up and now stands at 5.45%. And as usually, the sensitivity of the valuation results to changes of the main value drivers is provided on the page -- in the table at the lower part of the slide.
As reported, from the beginning of the pandemic and even the periods before, there was very little investment activity in the shopping center market, with a limited number of transactions comparable to the centers of our portfolio.
Looking at our specific segment, transaction activities could mainly be observed in regions which were less affected by the shop closings and corona or for very few landmark shopping centers.
In the course of 2020, the pandemic and the increased uncertainty already had an immediate impact on shopping center yields. In 2022, the yields and thereby the discounted cap rates have been rather stable. So the main impact on valuation for last year came from the adjustment of market rents and CapEx assumptions. We had experienced these effects already in our valuation as of end of 2020, which, according to our appraiser, Jones Lang LaSalle, only slight changes in the first 3 quarters of last year and, finally, also end of last year.
Let's now come to the P&L and the revenues, and they are shown on Page 14. Compared to prior year, 2021 was substantially more affected by the pandemic in the number of closing days. Again, most rents were invoiced according to their respective lease contracts. The major exception in that respect came from our Polish centers, where a specific legal situation led to temporary suspensions of rent for the lockdown periods. This accounted for minus EUR 2.4 million.
The overall decrease of rent, which amounts to a total of minus EUR 12.3 million, was also influenced by the reduction of marketing mall income, income from parking, the less of turnover-based rent and higher vacancy resulting from the insolvencies as well as lower shop rents. In total, revenues decreased by 5.5% year-on-year to now EUR 211.8 million.
On the next page, we'll show the development of the EBIT, and the major financial effect resulting from the pandemic is reflected in the allowance for rent receivables. These allowances were made in relation to realized and/or expected losses from rents in connection with tenant support measures, e.g., rent concessions or in relation to the de facto likely insolvencies. Such allowances amounted to EUR 25 million for 2021 after EUR 29.2 million in 2020. Overall, EBIT decreased by 5.4% to EUR 152.5 million.
The allowances for rent receivables have been determined based on the agreements with the tenants for the lockdowns starting end of 2020 and, in other cases, in which receivables were outstanding on the expected net rent reductions for the closing periods.
To cover some of the rent losses, the company also applied for the corona state aid in Germany, the so-called U3 program, which was introduced mid of 2021. Very complex calculation methods had to be employed and hurdle rates had to be achieved and documented. However, due to the mandatory very mechanical and not commercial way of looking at the damage incurred, Deutsche EuroShop was only eligible for an amount of EUR 2 million. This amount, which had been formally granted in February this year, is included in the other operating income of 2021.
I now come to Page 16 and also to the financial results. Such results improved by EUR 6.7 million. Interest savings of EUR 4.5 million due to several favorable refinancings and an increase in equity operating profit of plus EUR 2.6 million had a positive impact on the financial result. The minority profit share was nearly unchanged with minus EUR 13.4 million.
On the next page, you see the EBT adjusted for valuation, and that came down only slightly from EUR 127.6 million to EUR 125.6 million, which is a minus of 1.6%. The corona-related decline in revenues and the rent concessions were partly offset here by the interest savings realized in 2021.
Looking at the operating profit. The EPRA earnings on the next page that meant the following: EPRA earnings declined by EUR 2.5 million to now EUR 122 million; and on a per share basis, EPRA earnings decreased from EUR 2.02 to EUR 1.97.
Let me now come to the consolidated profit of the group on Slide 19. And the consolidated result increased from minus EUR 251.7 million to now plus EUR 59.6 million. The main impact here is, of course, the obvious change from the valuation result, that's a plus of EUR 309 million roughly, corresponding the earnings per share increase from minus EUR 4.07 to EUR 0.97 in '21.
And now let's look at the FFO on the next page. The FFO decreased slightly from EUR 123.3 million to now EUR 122.3 million or on a per share basis from EUR 2 to EUR 1.98. Again, as a reminder, the FFO is calculated earnings base, the number should therefore be analyzed by considering our cash collection ratio, which was, as mentioned before, 95% after rent concessions in 2021. However, as mentioned before, the collection ratio has improved a lot since autumn last year up to now currently 99% and to normality, with only very limited rent concessions being rented. The receivables are still on a more elevated level in comparison to pre-corona, also naturally, but we are working with our tenants to recover that.
I'm now coming to the balance sheet on Page 21. Our total assets amount to EUR 4.3 billion. This is just a small increase of EUR 41 million compared with the reporting date end of 2020. Our consolidated liquidity as of the end of last year stands now at EUR 328.8 million. This is a plus of EUR 62.8 million. And the buildup of cash was, besides of course the normalization of the payment behavior of the tenant, also influenced by substantially lower investments in our properties over the last 2 years as the works were largely stopped during the closing periods.
In 2021, our liquidity was also influenced, to some extent, by some drawings of CapEx loans at an amount of EUR 6.7 million. Total equity, including minorities, increased by -- sorry, EUR 63 million. And at the end of 2021, current and noncurrent financial liabilities stood at EUR 1.5 billion, which was EUR 39.3 million lower than at the end of 2020, and that was influenced by scheduled repayments, repayment of the credit line and the drawing of the CapEx loans, the ones I just mentioned.
Noncurrent deferred tax liabilities increased by EUR 8 million to EUR 333 million. Our equity ratio remains at a strong 55.6%, and the consolidated LTV now stands at 30.5%. A more reasonable number is the look-through, concerning the LTV, and that's the LTV calculated fully proportionally according to the group share in the assets and such LTV now stands at 33.3%, also continued very reasonable and low number.
On Page 22, you'll find the EPRA net tangible assets. EPRA NTA increased now -- to now EUR 38.43 per share, that's a plus of 2.8%. This is mainly due to higher liquidity, and that was just partly offset by lower property values. This number equals to still huge discount on the current share price. And that discount is roughly 59% mid of March this year.
In terms of return, our FFO yield is now at a record 12.5%, and that was a very reasonable low LTV level. The improved numbers, some are positive and stabilizing corona situation as well as the operational outlook, hopefully, should help to close that gap, even though, of course, the terrible Ukraine war is having its negative impact also on the capital markets.
On the next 2 pages, we give you some important -- some information on our debt. Approximately EUR 226 million of our consolidated bank loans expire in 2022. And currently, our consolidated debt is an average interest rate of 2.09%. Weighted maturity of our loan portfolio now stands at 4.7 years, Including our nonconsolidated loans, the weighted maturity of portfolio stands at 4.9 years with an average interest rate of 2.07%.
On the right side of Page 24, you will see that we have fixed loan of EUR 107 million already this year. After the presentation of such financials, I would like now take another look on our letting performance in the past year.
During the pandemic, we were able to extend these contracts with many tenants, including our top 10 tenants and other prime retailers, such as Apple, Kaufland but also, lately, H&M, Rossmann, Thalia or C&A. I also have talked about TK Maxx. A sample of such tenants is shown on Slide 25.
Additionally, renegotiations with other major and well-known anchor tenants to newly move into our shopping centers. In some cases, we were already successful in agreeing with them to relocate from other retail spaces in the neighborhood of our centers into our center. We made good progress even though we are just in the, hopefully, final stages of the pandemic.
Most retailers acknowledged and confirmed that stationary retail space, e.g., shops are and will be a very important and dominant part in their market presence. While online sales grew significantly for stationary retailers during corona, the cost of business and the return quarters, which we regularly hear, just leave room for little profit margins there. So the demand for stationary retail space is continuing to coming back, though not again on normal levels given the situation of the last 2 years.
In 2021, a total of 355 leases were concluded or extended for around 118,000 square meters of space. Of these, 103 leases or 28,000 square meter came from our foreign centers. In Germany, made up by the number of contracts, 46% of them were with terms of 1 to 4 years, 24% for terms of 5 to 9 years and a further 30% for terms above 10 years.
Abroad, the corresponding figures were 50%, 18% and 32%, respectively, for contracts that with a duration of longer than 10 years.
As mentioned before, our WALT improved nicely from 5 to now 5.3 years.
On Slide 26 to 30, we have put together a few examples of exciting new tenants that have opened in our centers in the recent months. These include, for example, a new shop concept from IKEA in Wolfsburg in our shopping center. The visitors can configure their kitchen or wall unit with the help of IKEA staff and then order it straight away in that shop.
In Rhein-Neckar-Zentrum, the new indoor skydive is very popular and is a strong addition to our center, which we would like to strengthen with even more highly attractive tenants soon. For example, right next to that spectacular entertainment facility, we just have signed up for the establishment of L'Osteria with a thrilling gastronomic concept in a modern, new, freestanding building, integrating the new entertainment and leisure part with our center. Another example, in Dresden, a new LEGO shop is attracting many new young and, you might not believe it, also old customers in our center.
And mainly most remarkably, in Dessau, the Scandinavian concept RUSTA will move into the former Karstadt space, bringing here many assortments that were lost in the city with the department store closing. Another international renowned anchor tenant could also be signed up in Dessau, and the name is to be announced soon. The signing up of new attractive anchors for Karstadt building in Dessau is a big and quick achievement so short after the space became vacant.
Leasing activities continue, of course, to be the main focus of our business in the current situation. Our occupancy ratio decreased during the long lockdown period of the first half of the year to 93.8%. However, as mentioned before, such number improved since summer by 0.5 percentage points to now 94.3%.
Besides the insolvenciessince the start of the pandemic, the occupancy ratio was also mainly influenced by regular replacements of larger tenants like the large Real market in our A10 Center close to Berlin. As reported before, a substantial part of this space could be handed over to Kaufland already last year, but there's still some considerable space to be filled with new attractive tenants in due course. Talks are progressing, and there is currently healthy interest for these larger spaces.
Furthermore, the leaving of Karstadt department stores in 2 of our centers contributed end of last year still to the high vacancy. For Rathaus-Center in Dessau, we found the solution already as just reported.
For the other center, our Main-Taunus-Zentrum, the demolition of the old Karstadt building is underway and there are various ideas for the newly created space, e.g., for attractive event, gastronomic concepts and inspiring in and outdoor environment, potentially accompanied by open platform to be used for entertainment, dance, music or other performances and creating a real new and attractive urban space for our customers.
Here, in the interim, for the rather lengthy planning, permitting and construction process, we'll provide an attractive collection of food trucks to serve our customers even better until the new concepts are being introduced. On slides 31 and 32, you can see some impressive simulation for these ideas.
Looking at the important topic of digitalization and the process here in the retail business, we connected also now our first international centers, the City-Arkaden Klagenfurt in Austria to the Digital Mall in 2021. Now 18 out of 21 of our shopping centers have this valuable link to the omnichannel world. And while the online availability check is now working for more than 1,000 shops and 3.7 million products in the ECE portfolio, now the setup and testing of deliveries out of the centers is an important but also complicated task, but important is preparation for the serving of the last mile delivery. The Digital Mall project is now ongoing in 65 centers live in total. You can see a summary of the participating partners on Page 33.
Finally, I would like to come to Slide 34 and look at the transaction market and the financing activities. Let me start with the financing first. As mentioned, we have already agreed with the bank on EUR 107 million loan with a maturity of 10 years and a fixed interest rate of 2.45% to refinance a loan for Altmarkt-Galerie in Dresden. And that loan is coming due -- or would have become due end of this month.
Currently, we are working on the refinancings of 3 additional loans with a total volume of almost EUR 120 million also becoming due this year. For the number of banks looking at retail financing or especially shopping centers has decreased, we have received good interest for our refinancings in the market and we'll follow up on that in due course. We continue the regular dialogue with our banks, as before, also about the still -- the impact in the part of the pandemic on our financial covenants. And until the reporting date, all of our financial governance were either met or they were under these extraordinary circumstances temporarily suspended by the banks.
As I elaborated before, the transaction market has seen, not surprisingly in the given situation, a rather dry period. However, there are signs that the transaction market is slowly coming back, even though it is currently again affected by the terrible Ukraine war. If such impact on investors and the financing bank stays limited, we may expect to see some transactions maybe also in Germany this year. As we hear from the market, some transactions are currently being prepared.
The yield differential between shopping center assets and other real estate asset classes, e.g., office, residential, logistics seem to be just too big to be ignored especially now with the stabilization. The spike of interest rates may also support the shift of demand among real estate asset classes.
Let me finally now look at our financial outlook on Page 35. We expect total funds from operation of EUR 1.95 to EUR 2.05 per share for 2021, which still will be in our expectation, a transitional year on a way to normality after corona. Accordingly, we have applied a bit more conservative assumptions on rent write-downs in comparison to pre-corona times. This forecast again assumes that the pandemic situation can be brought on a lasting control without further store closures or significant restrictions on center operation, a continued pickup of private consumer spending and an associated further recovery of the tenant turnovers, especially to the Easter sales coming up soon. And it also depends on the preservation of the recovered high collection ratios. This forecast is also based on the assumptions that the Ukraine war hopefully is peace soon and does not have a severe and/or enduring impact on business activities in general.
Ladies and gentlemen, remain optimistic as before even though there is still some way ahead of us to come. Some countries have abolished all major restrictions on customers and operations already concerning corona, and we hope that this will be also the case for our home market in Germany soon.
So for my presentation, thank you for listening, and I'm happy to take your questions now. Operator, please go ahead.
[Operator Instructions] First question is from the line of Thomas Rothaeusler from Deutsche Bank.
A couple of questions. Firstly, on the Russia, Ukraine crisis. I mean maybe we can get a rough idea of what could be the most relevant impact for your business.
Then the second question on rent growth outlook. What can we expect on rent growth given higher inflation rates? And what are the renewals and reletting levels you currently see?
The third question is on CapEx, CapEx budget. I mean wondering if you could provide a rough picture what CapEx level we should consider looking ahead?
And the fourth question is on current financing conditions. Maybe you can provide a rough idea what kind of indications you have from banks.
Yes, happy to answer. But first of all, somebody whispered to me Mr. Rothaeusler [indiscernible] birthday today. So my congratulations. I have a good intelligence service working for me here. But now I'll come back to your questions which are important.
Russia, Ukraine. I mean there is no direct impact in a sense if we all don't have in mind that Mr. Putin might touch European EU borders or NATO borders. What you have is indirect effects on -- potentially on consumption. So some of our retailers told us that they still already feel in the last 2 weeks that the numbers get a bit weaker because it's just another stimulus, negative stimulus going forward. So, so far, it's not dramatic, but it's feelable. It's a general mood. I mean if you want to consume, you also want to feel good.
We have some other effects. We hear that from our center in Poland, for example, that the people would rush to the hypermarkets, supermarkets, and we thought they would bring all those stuff at home because they were concerned of any -- whatever actions coming from Russia. But what they did is they really emptied the supermarkets to bring the food and stuff to the board of Ukraine.
So having said that, it's more general impact on consumption mood. That's what I would expect. Of course, there will be some impact on our retailers, maybe with supply chains that may also run through above or besides Russia, but it's hard to calculate for everybody. But no dramatic impact so far.
With -- coming to rent, I mean we're now after -- hopefully, after corona, on the final phase. And the rent income in comparison to pre corona is on a level around 10% lower. Such number resulting mainly from the insolvencies during and after the lockdowns that led to currently higher vacancy or rent concessions in support of -- to support the respective tenants and to avoid further short-term vacancies.
Furthermore, turnover rents, parking, mall and shop rents have been adjusted downwards. So this is a number visible but digestible and we expect the current level to be the base after corona. And we expect to grow our overall rent income slowly from there by reducing vacancy and including the effects from indexation. Having said that, demand for shops is recovering. However, the leasing market stays competitive.
Talking about inflation, yes, it's good in a sense because our contracts are indexed. And if we see 3%, 4%, 5% this year, or in Poland they are talking about 5%, this is a positive effect, but one would have to see that you really can channel that through into rents midterm also because it also has a negative effect on our tenants because supply for them is also getting more expensive. Yes, but there should be some effect be potentially coming out of that.
For our CapEx budget, yes, we have told you before that the run rate, and we haven't changed it, long term is rather EUR 30 million roughly. But usually, projects are planned front loaded and we're on the aftermath of, let's say, corona. And we haven't invested too much in the last 2 years just because we couldn't do it, wouldn't get planning from the governments for that, nobody was working and the tenants were at home also a bit. So we will have a higher elevated level. So we -- for the next years, we expect EUR 40 million CapEx. But this is the difference of having spent 2 years more or less nothing. So the long-term run rate is EUR 30 million. And the after corona over the next couple of years, it's maybe EUR 40 million, but just mentioned for that effect.
And then I think you had a question to financing, and I'll hand over to Olaf Borkers.
Yes. Thank you. Mr. Rothaeusler, also congratulations from my side and a short picture regarding to debt. Debt is much more expensive than half year ago. We see that our bank margins have increased by roughly 50 basis points between pre corona and post corona. So current bank margins are at 1.4% on average. That's still fine for us. The 10-year swap has increased dramatically from May 2021. At that point, it was just 15 bps. And now in March 2022, it is 110 bps. So at the end, we end up with this Dresden loan at an interest rate of 2.45%. And that is what we also have as indication for the 3 loans we are currently renegotiating starting in June and in September '22.
So I guess that the reduction of the average interest rate will slightly stop and will slightly increase in the terms of 2022, hopefully, standing slightly at this level.
Just to clarify, the Dresden loan is 2.45%.
Exactly.
[Operator Instructions] The next question is from the line of Paul [ Ruger ] from [ NQ ].
Can you hear me?
Yes.
Yes, just two questions on my side. Regarding your FFO per share pre COVID, what do you expect to be a normalized FFO per share in a post-COVID world assuming the COVID is behind us? Regarding the reset of the rent, which I understood was minus 10%, what would be your cash flow per share, a normalized one?
I mean we just started our forecast again for 2022, and I gave you the number and the hint that it contains some, let's say, reservations concerning our write-offs. But we are not in a position yet to give a mid- or long-term FFO per share. However, it should be then -- proving, of course, not having this extra reservations concerning write-offs going forward, if the situation improves. And you might have just heard, we still see some improvements from -- coming from the financing side, but we cannot give so far a mid- to long-term view on the FFO. But it should improve from there, of course.
Okay. But I mean you don't expect any catch back with the 2019 level at any time?
Again, we have a forecast of that so for the target to come back to that, but it's a lengthy process.
Okay. On the leasing activity -- or maybe I missed the part of the presentation, but how is the leasing activity today? We've seen a huge increase in your European peers post COVID. Do you experiment the same increase in leasing activity?
Yes. As I just mentioned, there is a good demand. It's coming back. It's, of course, not on pre-corona levels. We have mentioned, however, the 120,000 square meter we leased out last year. It's hundreds of contracts, has a good demand. But it's, of course, still a bit refrained, especially gastronomy. They were just hit again by those restrictions over Christmas and beginning of the year, for example, in Germany. They're a bit more hesitant. They want to see that the situation comes down. But we have just introduced in the last 1 -- maybe let's view in corona for TK Maxx, yes, well -- I have mentioned some of the names that we brought to our shopping centers' base demand for high-quality retail. And I expect that with -- the normalization of the situation even to become better. But of course, it stays competitive, as we said, looking at rents and terms. But I think the situation is improving.
Okay. Regarding the valuation of the asset in the investment market, I mean -- I guess it's stabilizing now. What could trigger, in your view, a buyback of your share so as to close the gap between the share price and the net asset value?
Yes. I think one very important equation is that -- first of all, the stability, which we see to come back now. And now, please leaving aside the Ukraine war which has its impact but it's really out of any control. It's just to get -- looking at our stock price, getting the phase back into, let's say, stationary retail.
I've just mentioned before that we now with a leverage of 30% -- roughly 35%, provide a yield of 12.5% with top-placed German and European inner city real estate locations. So I think if this comes down and the market is just applying normal FFO multiples or yields to our FFO, the stock price should be quickly up much, much higher. But if we can tell [indiscernible], we just can hint that stable. We can hint on the difference. But I think that's a major -- bigger part than looking at the valuations, which is also important.
Yes, and looking at the valuations, I think it's good to see more transactions. There were some transactions. They supported our valuation after the drop of 10% in 2020. But I think there needs to be more evidence. And then basically, the trust coming back into, let's say, this asset class. But I'm sure it will come, to be honest, because people love to shop. We see them coming back. It now takes a bit longer due to the new restrictions. But I'm not concerned that the phase is not coming back.
Okay. And just last question on your dividend. What do you expect to -- I mean in the future to -- in terms of level of distribution? Can you give some color on that?
As of today, and we have said that before, we plan to come back to a dividend strategy which is then sustainable and to pay as things -- as we look at it as of today, a substantial and visible dividend, yes. So we know that's important for the regular business case of that company. And we'll just discuss this end of next month with our Supervisory Board and will announce it end of April.
Next question is from the line of Kai Klose from Berenberg.
I got a quick question on the pages 8 and 9 of the presentation, where you show the rent collection rate comparison to the retail turnover. Is it fair to say that the rent collection rate in 2022 is maybe running a little bit ahead of retail turnover? Or the other way around, do your tenants need to still catch up in order to continue to afford the rents charged by EuroShop?
Yes, of course, they need to improve their turnovers, which are restricted by the mastering requirements and other things. However, there are help -- state aid programs in place. So -- and they have been prolonged until I think it's -- now mid of this year. So there are means for them to get other ways of cash and being able to pay the rents, obviously.
On the other hand, they also have now learned to live with the situation and to plan their stocking of their shops better. In the first lockdowns, they were full of, let's say, stock which they then had to write-off. And they are now, of course, a bit more cautious, knowing the volatile situation. So they have worked on the cost structures as well.
But of course, in the midterm or rather soon hopefully, the turnover has come back and that would be great if that would happen with the Easter sales in April starting.
And the second question on the lease activities you mentioned. Could you indicate if the portion of the turnover base rent has increased or it has been introduced for the first time for a certain group of tenants?
Yes. What we -- it's a bit intermingle because we have -- because of corona, agreed with some of the tenants for the period of corona and for some even the insolvency cases even a bit longer, to switch to turnover rent. On the other hand, the share of turnover rents is, as I just had mentioned, come down because the turnover now since 2 years are depressed by corona. So it's hard to give a precise share but it's not too much. It's maybe in the single digit -- low single-digit region what probably has shifted from fixed to more, let's say, turnover-based. It's mainly with some very, let's say, strong anchor tenants they prefer that model, they are willing to pay a higher proportion of rent, external rent, but rather lower fixed rent, which necessarily do not mean that we have less rent afterwards. So it's not a -- it's a trend, yes, but it's just a slight trend. So no dramatic shift so far.
And the last question maybe. Talking about the lease renewals or lease extensions with those tenants which were not materially affected by corona, like food anchor tenant, when you had the lease renewal there, could you indicate if -- and to which extent we had a rent uplift. So what was the rent reversion?
Yes. I mean there's -- average number. There's individual cases depending on individual profitability of a given shop. But we have mentioned that we have to replace one of the big hypermarkets in one of our centers. And we could, let's say, keep the rents where it was before and even the rent that we agreed before corona started. So for certain kind of tenants, yes, it's stable. For other kinds, the reversion is, of course, negative. And the average number is where we ended up, what I said before, that we are now roughly down by 10%, mainly vacancy but also -- and maybe lower turnover rents because there are -- the turnovers have to improve over time, but also maybe -- but also because of some shop rents have come down.
So overall, the impact is, as I said, visible, but adjustable and we work our way from there up according to our plans if things normalize, which we all hope and expect.
There are no further questions at this time. And I would like to hand back to Mr. Wilhelm Wellner for closing comments. Please go ahead.
Yes. Again, thank you for joining us. I hope you like some of the operating number that we see and that the trust is coming back, and that the multiples and price is putting on our cash flow hopefully adjusted to more normal levels. Remember, the stock price should improve quickly. And yes, we'll come back then with the dividend proposal end of April, according -- as of today, our planning. And yes, I wish you a good day. Thank you.
Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.