Leading institutional residential investor
Vesteda invests the pension savings and insurance premiums entrusted to it by institutional investors, such as pension funds and insurance companies, in sustainable Dutch homes for middle-income tenants.
Vesteda is an entrepreneurial and service-oriented institutional residential investor with a sizeable and varied portfolio of homes in attractive neighbourhoods in the Netherlands. With an investment portfolio of more than 28,000 homes, representing a total value of €7.9 billion at the end of the first half of 2019, Vesteda manages the largest Dutch residential fund. Vesteda is internally managed, is cost-efficient and has in-house property management.
As such, Vesteda contributes to future income security for retirees, affordable living for Dutch middle-income households and to the continued improvement of the quality of urban communities.
• Established in 1998 as Vesteda Woningen (Vesteda Residential Fund) as a spin-off of the residential portfolio of Dutch pension fund ABP
• Single fund manager
• Internally managed: no management fee structures and carried interest arrangements
• Open-end core residential real estate fund
• Broad institutional investor base with a long-term horizon
• Attractive risk profile
• Limited use of leverage (target <30%)
• Active investor relations policy
• In-house property management
• Governance in accordance with best practice guidelines, including INREV, with the emphasis on transparency and alignment of interests
• AIFMD (Alternative Investment Fund Managers Directive) Licence obtained in 2014
• Transparent for tax purposes (fund for the joint account of participants; FGR fund structure)
• GRESB score of five out of five stars and second ranking in the peer group of 13 (top 20% performers globally)
•2018 GRESB score of five out of five stars and second ranking in the peer group of 13 (top 20% performers globally)
• Vesteda offers sustainable housing and operates in a socially responsible manner
• All in the Netherlands, all in residential and related properties
• Well-diversified portfolio consisting of more than 500 residential complexes
• Focus on economically strong regions
• Focus on the mid-rental segment: monthly rents of between €711 and approximately €1,000 (€1,200 for G4 cities)
• Tenant satisfaction score of at least 7.0
• Improve sustainability of portfolio; outperform the Energy Agreement: 80% green energy ratings (A, B or C) and maximum 20% rating D (2020)
• Stable annual distributions to participants of realised return, excluding proceeds from property sales
• Outperformance of the three-year MSCI IPD/ROZ Netherlands 'All Residential' benchmark
Economic growth set to continue, but less strong than in 2018
The forecasts for 2019 are favourable, but Dutch economic growth will flatten out in 2019 to 1.5% (CPB – March estimate 2019). Low interest rates and stimulating budget policies will support economic growth.
Uncertainty about Brexit, international trade tensions and unrest in the Eurozone (due among other things to the Italian government’s budget policy and the yellow vests in France) are putting a brake on economic growth. One risk specific to the Netherlands is a potential downturn in the housing market (after the sharp price increases in previous years).
Lagging supply keeps pressure on owner-occupier and rental markets
Despite a slight flattening of house prices rises, the pressure in the housing market is expected to continue in 2019. Due to the limited capacity of the Dutch construction industry and consequently the sharp increase in construction costs (due in turn to the shortage of qualified workers), supply will continue to lag demand. This means that house prices are likely to continue to rise, but at a lower level.
Potential interest rate rises could put a brake on declining initial yields
The Dutch investment market for residential real estate is expected to remain attractive in 2019. The structural demand for liberalised sector rental homes from consumers, in combination with the relatively limited supply, allows for relatively stable returns for investors. The winding down of the ECB’s government debt purchasing programme and interest rate increases may put upward pressure on return requirements (alternative asset categories, such as bonds, will be more attractive in relative terms).
On top of this, there are bound to be too few investment opportunities in the year ahead, especially in the large Dutch cities. This might put even more downward pressure on initial yields. This will make medium-sized cities increasingly attractive to residential real estate investors.
Local authorities are increasingly looking to increase the regulation of government-regulated and mid-rental segment homes in new-build projects in order to keep homes affordable. These stricter rules could make it more difficult to develop suitable locations in land development. On a national level, the Dutch government is considering implementing legislation that would give municipalities with tight housing markets the power to cap prices for new rental contracts at a certain percentage of a government-set property value, the so-called emergency button.
Investment principles & strategy
The profile of Vesteda is that of a ‘core’ investment fund. Investment is only in Dutch residential and housing-related properties.
At home with Vesteda. Our mission is to make sure that all our stakeholders feel at home with us. That is especially true for our tenants, the investors who invest in our fund and our employees.
Vesteda is the expert in residential living. We have direct contact with our tenants. This is why we know their current and future living requirements better than anyone. We use our knowledge to constantly improve our services and our existing residential portfolio. And we also add residential complexes that are tailored to the living requirements of our tenants now and in the future. We do so in sustainable and innovative ways. Together with our tenants, we create an environment in which they feel at home.
Vesteda’s mission and vision are translated into strategic and portfolio objectives.
Tenants: “Provide high-quality and convenient housing to mid-rental segment tenants in urbanised areas at affordable prices”
Participants: “Provide long-term investors with an attractive risk-return profile in a pure play Dutch core residential property fund”
Portfolio: “Improve the quality and sustainability of our portfolio to ensure the stable growth of rental income and MSCI outperformance”
Organisation & staff: “Enhance a collaborative, service-oriented mentality, supported by smart technology, while being the employer of choice in our market”
Funding: “Provide a robust and well-diversified, flexible funding structure with low leverage and low cost of largely fixed-rate debt”
Vesteda Residential Fund is a contractual investment fund (beleggingsfonds) as defined in section 1:1 of the Dutch Financial Supervision Act (AFS).
The manager, in its capacity as manager and operator of Vesteda Residential Fund, is subject to regulation by the Dutch Financial Markets Authority (Autoriteit Financiële Markten) and the Dutch Central Bank (De Nederlandsche Bank). The manager obtained a license to act as manager of alternative investment funds in accordance with article 2:67 of the AFS on 17 February 2014. The participation rights can only be acquired by professional investors as defined in section 1:1 of the AFS.
This presentation may contain forward-looking statements. These forward-looking statements are based on current assumptions about future activities and are subject to known and unknown factors and other uncertainties, many of which are beyond Vesteda’s control, and so actual results in the future may differ materially from these expectations.
News from Vesteda (Real Estate)
Vesteda half-year report 2019 download
In the period under review, the developments on the Dutch housing market became more volatile than we have seen in recent years. The strong price rises of recent years are no longer just a given fact in every region of the country.
Residential investor Vesteda has signed two turnkey contracts for 34 apartments in Veenendaal and 39 family houses in Oosterhout. Vesteda acquired the homes in Veenendaal from property developer Frank van Woerden Vastgoed BV, and acquired the homes in Oosterhout from a well-known construction company in the province of Brabant. Construction on the two projects is set to start in June and September 2019 respectively. Delivery is expected in the second half of 2020.
Vesteda has signed an agreement with Van Wijnen for the acquisition of the new-build residential development project The Ox in Amsterdam. NSI N.V. has sold its existing office building Osdorper Ban 2 to Vesteda. Vesteda and Van Wijnen have signed a contract for the development, demolition and realisation of new apartments and parking spaces at the location.
Today Vesteda successfully issued its inaugural green bond. This is the second benchmark size bond under its €2.5 billion EMTN programme and the first EUR green bond by a residential fund. The €500 million bond has a term of 8 years and a coupon of 1.5%. The bond was more than 6 times oversubscribed. ABN AMRO acted as the sole Green Bond Structuring Advisor, together with BNP Paribas, ING, Rabobank and SMBC Nikko as Joint Bookrunners. The bond will be listed on Euronext Amsterdam.
Residential real estate investor Vesteda has signed a contract with project developer Meacasa from Nijkerk for the turnkey acquisition of 31 energy-neutral all-electric houses. The homes will be built in the new neighbourhood development De Draai in Heerhugowaard. Construction has already started and delivery is expected in the first half of 2019.
News from IPE Real Assets
Valada to asset manage 25 properties
Real estate arm of German insurer backs Dutch residential firm
Första AP-fonden (AP1), BMO, Pramerica, Vonovia, LGIM Infrastructure, Vesteda
Replaces Matthew Ryall to drive expansion outside direct markets
BPF Zoetwaren allocates to property and invests €30m in residential fund
White Papers / Research from Vesteda (Real Estate)
Vesteda Review 2018: bolstered position in core regions and mid-market segment of the Dutch residential market download
Last year was in many ways a very dynamic year. It was a year in which we took major steps towards the realisation of our strategic objectives. For example, we have considerably increased the size of our portfolio and our exposure to the mid-rental segment and core regions and slightly improved the overall tenant satisfaction.
Vesteda Review H1 2018 download
There is currently a great deal of pressure on the housing market. The number of homes for sale has fallen steadily, which resulted in a further increase in house prices in the first half of this year. The continuing rise in house prices has put even more pressure on the affordability of homes.
Vesteda Update H1 2017 download
Growth in the Dutch housing market was once again considerable in the first half of the year, on the back of the strong economy, confidence in the housing market and low mortgage interest rates.
Vesteda Update: H1 2016 download
Housing market at full steam
Vesteda Annual Report 2015 download
2015 rocked the house. We saw the total return more than double to 14.0% and we raised €600 million in equity; an exceptionally high return for a low-risk core residential fund and a record amount of funding.
Analysis from IPE Real Assets
Foreign investors have flocked to a housing market that has opened up – but they would like more
Dutch pension funds are some of the most active global investors. However, the recovering home market is prompting them to increase domestic exposure. Rachel Fixsen reports
The Dutch residential sector is attracting overseas attention as market fundamentals improve following a shake-up in housing policy, writes Jaap van der Bijl