Debt capital

2018 in review

In 2018, Vesteda’s debt funding strategy was subjected to an extensive benchmarking and strategic review to validate or adjust its existing funding targets, taking also into account the envisaged (at the time) acquisition of the former Delta Lloyd portfolio. This (external) review concluded that the current financing strategy is logical, well substantiated and adequate.

Based on the outcome of the review, we will continue to implement our funding strategy. Our financing strategy is substantiated by seven funding targets:

  1. Leverage of ≤ 30%

  2. Total fixed-rate and hedged floating rate exposure of ≥ 70%

  3. Weighted average maturity of > four years

  4. Diversified funding profile, with at least three funding sources

  5. Sufficient liquidity headroom to refinance short-term debt (maturing bonds and private placements)

  6. Well-balanced maturity calendar

  7. Asset encumbrance of < 15%

At the end of 2018, we met all our funding targets.

In 2018, Vesteda further improved its funding profile through a combination of the following actions:

In March of 2018, Vesteda amended and restated its committed revolving credit facility, increasing this facility by €100 million to €700 million. Vesteda extended the maturity date by two years and managed to improve the margin and the conditions of the agreement.

Vesteda’s increased scale following the acquisition of the former Delta Lloyd portfolio, in combination with our leverage target, has enabled us to issue larger bond sizes (benchmark bonds of ≥ €500 million). Our first benchmark bond, issued in July 2018, was well received and more than two times oversubscribed.

In July 2019, €300 million of Vesteda's bonds will mature. To ensure sufficient headroom throughout the year, Vesteda therefore increased its headroom by attracting an additional €200 million in committed financing with one of its relationship banks. Consequently, Vesteda had a headroom of €554 million at year-end 2018.

Through these transactions, Vesteda increased its average weighted maturity profile to 4.8 years, above its long-term minimum target of four years. The average total debt interest rate improved to 2.1% at year-end 2018.

The acquisition of the former Delta Lloyd portfolio was financed through newly-issued participation rights and - to a lesser extent - by attracting new debt. This helped Vesteda to keep its leverage at the low level of 23.7%, despite the increase in its total debt position.

Vesteda's main financial covenants, as part of its financing agreements, are a maximum loan-to-value ratio of 50% and a minimum interest cover ratio of 2.0. We comfortably met all the financial covenants of our financing arrangements in 2018.

Vesteda debt portfolio at year-end 2018

Facility

Type

Security

Recourse

Committed (in € mln)

Drawn (in € mln)

Average Amortisation

Maturity Date

Interest

Revolving Credit Facility

Bank Facility

Unsecured

Guarantors

200

191

Bullet

10 December 2020

Floating

Revolving Credit Facility

Bank Facility

Unsecured

Guarantors

700

155

Bullet

01 June 2023

Floating

Private Placement Issue

Private Placement, issued under EMTN programme

Unsecured

Guarantors

35

35

Bullet

15 December 2027

1.93%

Private Placement Issue

Private Placement, issued under EMTN programme

Unsecured

Guarantors

65

65

Bullet

15 December 2032

2.48% 

Pricoa Private Placement

Private Placement Loan

Unsecured

Guarantors

100

100

Bullet

8 May 2021

3.18%

Pricoa Private Placement

Private Placement Loan

Unsecured

Guarantors

100

100

Bullet

16 December 2026

1.80%

Bond Issue 1.75% 2019

Bond, issued under EMTN programme

Unsecured

Guarantors

300

300

Bullet

22 July 2019

1.75%

Bond Issue 2.50% 2022

Bond, issued under EMTN programme

Unsecured

Guarantors

300

300

Bullet

27 October 2022

2.50%

Bond Issue 2.00% 2026

Bond, issued under EMTN programme

Unsecured

Guarantors

500

500

Bullet

10 July 2026

2.00%

Total

    

1,746

 

4.8 years

2.1%

For more information about the use of financial instruments, please see Note 25 ‘Financial risk management objectives and policies’  of this report.