Annex 4: External appraisers

Appraisal process for investment properties

The purpose of the appraisal is to gain an accurate and independent valuation of the assets by the end of each quarter. The valuation of the residential properties in the investment portfolio complies with the relevant legislation and regulations (AIFM Directive, IFRS and Dutch legislation and regulations).

The appraisal is conducted in accordance with the guidelines and regulations of the Nederlands Register Vastgoed Taxateurs (Dutch Register of Real Estate Appraisers), NRVT, the prevailing valuation guidelines and valuation models as laid down by the Dutch property index, IPD, and the RICS Appraisal and Valuation Standards, or the Red Book (including the International Valuation Standards, IVS). The valuations of the residential properties are conducted using the Reaturn TM valuation system.

Basis of the appraisal is the fair value calculated using the Discounted Cash Flow method. Two possible future scenarios for each asset are appraised and the highest value is recorded as the value of the asset. The first scenario assumes a continuation of letting for the next 10 years and then selling the asset in one piece to a third party. The second scenario also assumes a continuation of letting for the next 10 years, but takes into account that individual houses or apartments that become vacant are sold to houseowners (individual unit sales); after 10 years, the remainder is sold to a third party. The appraisals are corrected for the fact that buyers pay transfer taxes and other costs to acquire a property. Capital expenditures on the assets are also taken into account in the cash flow by the appraisers. Capital expenditures are reported to the appraiser and used as a basis to determine normalised cash flows. Appraisers decide on the appraisal assumptions, taking into account the specific property, comparable properties, market transactions and standard references.

In 2016, the valuations of the properties in the portfolio were conducted by: CBRE Valuation Advisory, Dynamis Taxaties, MVGM Vastgoedtaxaties, Colliers International Consultants, Cushman & Wakefield and DTZ Zadelhoff v.o.f. Valuations are conducted by qualified appraisers of these agencies; the appraisers are registered in the NRVT, which guarantees the initial qualification of the appraiser and his/her continuous training, and preferably also in RICS. Vesteda regularly changes the appraisers it uses to guarantee their independence. On 1 October 2016, DTZ Zadelhoff v.o.f. started acting as appraiser, replacing Dynamis Taxaties. On 15 October, the merger of Cushman & Wakefield and DTZ Zadelhoff v.o.f. was announced. The original team of DTZ appraisers finished the valuation of their sub portfolio in Q4. A new appraiser appointed to replace DTZ Zadelhoff v.o.f. will start in 2017.

For the purpose of the valuations, Vesteda divides the portfolio properties into four equal sub portfolios, each with its own appraiser. Once a property has been valued by the same appraiser for 3 years, it is assigned a different appraiser, to guarantee the objectivity of the appraisal. The appraisers value the properties that Vesteda assigns them at least once a year. For this valuation, the appraiser visits the property in question and incorporates, substantiates and records all the factors relevant to the value of the property in the appraisal. In the remaining quarters, the valuation is an update of the previously conducted (full) appraisal. For this update, the appraiser does not need to visit the property and will update data and references and adjust the value on the basis of market developments relevant to the property.