Income from investment portfolio

Market rents and theoretical rent

The market rent was 1.5% above the theoretical rent at year-end 2017. Reversionary potential improved to +1.5% from -0.1% in 2016. The strong market rent growth underlines the quality of our portfolio.

Investment portfolio, market rent and theoretical rent

Year-end (€ million)

2017

2016

2015

2014

2013

Market rent

264

250

243

244

243

Theoretical rent

260

251

244

248

249

Rental income trends

In 2017, the average monthly rental income per unit rose by 3.2% to €910. The main driver of this increase was the average annual rent increase of 2.9% on 1 July 2017. Vesteda’s ability to successfully increase rents is a confirmation of the success of our strategy of focusing on primary regions and the mid-rental segment. The rental increase was slightly dampened by the impact of lower realised rents from re-lettings (-0.1%) and was positively impacted by the on average higher rents of residential units that were added to the investment portfolio compared to the homes that were sold (+0.7%).

Investment portfolio, average monthly rent

Year-end (€)

2017

2016

2015

2014

2013

Average monthly rent

910

882

856

843

827

Investment portfolio, average rental increase by source

Beginning of year compared with year-end

2017

2016

Like-for-like rental increase

2.8%

2.4%

-          Average rental increase for current tenants

2.9%

2.6%

-          Re-letting

(0.1%)

(0.2%)

Inflow and outflow of properties in the portfolio

0.7%

0.6%

Total increase in average rent

3.2%

3.0%

Total theoretical rent measured at year-end[1] increased by 2.6%, as the negative impact from the in-and outflow (-0.2%) was largely compensated by the like-for-like rental increase (+2.8%).

Investment portfolio, development of total theoretical rent at year-end 

Beginning of year compared with year-end

2017

2016

Like-for-like rental increase

2.8%

2.4%

-          Average rental increase for current tenants

2.9%

2.6%

-          Re-letting

(0.1%)

(0.2%)

Inflow and outflow of properties in the portfolio

(0.2%)

0.9%

Total increase in theoretical rent

2.6%

3.3%

The occupancy rate (in units, year-end) fell slightly to 97.6% in 2017, from 97.8% in 2016. This was due to a strong increase in the refurbishment of units to achieve higher rents, in line with our strategy of rent optimisation. This decrease was partly compensated by a decrease in vacancy as a result of individual unit sales and re-letting. Tenancy turnover increased to 13.2% from 12.8% in 2016.

Physical occupancy and tenancy turnover

Realised rental income

Investment portfolio, realised rental income

(€ million)

2017

2016

2015

2014

2013

Gross rental income

247

242

237

237

240

Net rental income

184

182

176

176

181

Gross/net ratio

25.7%

24.9%

25.5%

25.9%

24.8%

Gross/net ratio landlord excl. landlord levy

24.1%

23.3%

23.6%

24.7%

24.7%

In 2017, the gross/net ratio increased to 25.7% from 24.9% in 2016, due to an increase in planned maintenance costs and an increase in the landlord levy to 0.536% from 0.491%. The income-related rent increase for the regulated sector did not fully compensate for the additional costs resulting from the landlord levy.

  • 1 Theoretical rent is measured at one point in time (year-end) and therefore it does not correspond with the increase in theoretical rent in 2017 compared to 2016 which can be derived from Note 5 in the section Notes to the consolidated financial statements.