Management agenda 2019

Tenants

We have drawn up a number of clear plans for 2019 for our tenants. This means that among other things, we will focus on the continued development of tenant segmentation and custom-made services. We are planning to launch a dedicated community platform as a pilot aimed at improving the social cohesion between tenants. As part of the environmental goals in our renewed CSSR plan, we have decided to help tenants reduce their energy costs. We will start a pilot project for an energy management app, to give our tenants the opportunity to gain insight into and manage their energy use.

On top of these efforts, we are planning a complete renewal of the Vesteda website and we will continue with the roll-out and optimisation of our digital rental process. In 2019, the Operations department will also play an important role in the implementation of the new ERP system. This new system will generate a range of major synergies right across the organisation once it is up and running mid-year. This will enable the Operations department to improve the services we provide for our tenants and speed up the delivery of those services.

In connection with the acquisition of the 6,777 units in the Delta Lloyd portfolio, for which we have not yet assumed property management (except for the inflow from the pipeline), in 2019 we will initiate a redistribution of the entire portfolio, which will effectively complete the insourcing of the property management of the Delta Lloyd homes.

In terms of increasing the sustainability of the portfolio, over the next two years Operations will focus on the large-scale renovation of residential complexes that still have E, F or G energy labels.

The ‘Aan de Rijn’ complex in Arnhem has all the features of a WELL building. The assessment process for WELL certification looks at the number of factors that promote the well-being of a building’s tenants. Healthy and safe living are important factors on this front and we aim at becoming the first Dutch residential real estate investor to obtain a WELL certificate. What is more important, however is that this pilot will give us the insight and knowledge we need to develop or adjust our homes to make them better and more comfortable for our tenants.

Portfolio

In line with the last couple of years, in the coming years our strategic targets will focus on:

  • Improving the quality and sustainability of our portfolio

  • Outperforming the MSCI three-year IPD Netherlands Residential Benchmark total return

Improve the quality and sustainability of our portfolio

Our goal is to have a mid-market portfolio located in our primary regions that consists of sustainable and future-proof properties; attractive, well designed houses, tailored to specific target groups but flexible in terms of future use. We strive for residential properties that meet Vesteda’s spatial, functional and technical programme of requirements. This focus on the quality of our portfolio is the best protection for potential economic downturns. We identify opportunities to optimise or add value to standing assets on an ongoing basis. We invest in the quality of our standing assets and improve the sustainability of our standing portfolio in line with our long-term targets.

In 2018, the government announced its ambition to make all housing gas-free by 2050. As part of this plan, it wants 75% of new housing stock built between 2018 and 2021 to be gas free. We constantly explore and apply new innovations on a limited scale to offer safe, comfortable and energy-efficient homes. We strive for a combination of improved sustainability, the operational efficiency of our homes and increased comfort for our tenants. To realise this, we are constantly looking for the latest innovations, but we will only apply them when they have shown sufficient proof of added value. We only make large investments in our portfolio on the basis of proven concepts. As from 2019, we will no longer install gas ovens and burners in our newly installed kitchens in existing homes. This operation will involve virtually no extra costs, as all current kitchens are due for replacement within the next 17 years and long before the deadline. We maintain our goal of outperforming the Dutch government’s Energy Agreement in 2020.

Outperforming MSCI three-year average IPD Netherlands Residential Benchmark - Total Return

Our continuous focus on the quality and structure of Vesteda’s portfolio is the basis for outperformance and stable growth of rental income. We are targeting annual rental income growth of inflation plus a maximum of 2.0% (on the condition that the mid-rental market is not regulated). This should contribute to our ambition to outperform the MSCI Dutch residential total return index. We continuously monitor the performance of our assets and portfolio to ensure compliance with our desired risk/return profile. We will also make increasing use of internal and external data sources to support our research and decision-making, which will improve our ability to take well informed decisions with regard to our investments.

Acquisitions and property sales

Due to the current market conditions, our primary focus is on continuing to improve the quality of the portfolio through the divestment of non-core assets, while simultaneously investing in new high-quality assets, both new-build and existing properties. Our target is to add approximately 1,000 new homes to our pipeline in 2019, but we continue to prefer quality above volume.

We will increase our focus on acquisitions in urban expansion areas and easily accessible urban regions around large Dutch cities, but we will also devote attention to the deprived inner-city neighbourhoods of large cities where gentrification is pending, together with the smaller - easily accessible - cities in the peripheral regions of the Netherlands.

We also actively explore opportunities for redevelopments within our existing portfolio, combining densification with renewal and improving the sustainability of the buildings we already own. We maintain a disciplined approach to development risk, but we do aim to invest earlier in the development process more often to increase our influence on the quality of the developed product.

Participants

Vesteda will always strive to provide its investors with optimal service. In this light, we seek to continuously improve the dialogue with all our investors but also with potential new investors.

A topic that has really gained in importance in recent years is socially responsible investing. This has led to Vesteda setting clear and ambitious CSSR targets, including a target for the GRESB benchmark score. Investors are also embracing other goals and initiatives, such as UN SDG and UN PRI. Vesteda endorses the importance of these initiatives and is currently determining how we can best implement these initiatives and objectives in our strategy. For more information, please see the CSSR section of this report. 

Funding

We also aim to further improve our funding profile through a combination of actions. 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). We envisage issuing another €500 million bond in 2019, to refinance the maturing €300 million bond. Vesteda’s focus on CSSR puts the company in a good position to issue “green bonds”. A green bond not only underpins our CSSR strategy but also attracts a wider investor community, both in terms of types of investor and geography.

Organisation and staff

Vesteda’s High Performance Organisation (HPO) score increased from 6.7 in 2015 to 7.1 in 2017. To become a HPO, we need to achieve a score of 8.5 or higher. We will score our organisation in Q4 2019 and aim for a significant improvement.

The planned implementation of the ERP system in 2019 is an important milestone on the road to achieving the higher score, as the ERP system will improve efficiency. It will also improve collaboration within Vesteda by integrating processes that were previously performed by separate departments. It will also serve as the basis for further improvements and innovations, such as data science, artificial intelligence, augmented and virtual reality, etc.

Simultaneously with the implementation of the ERP system, we will renew our website and enable automatic matching of tenant leads with our vacant properties. These new solutions and applications will give us the opportunity to improve our customer service and facilitate the work of our employees.

In 2019, the tenures of two members of the Supervisory Committee will end. For more information about the search process for their successors and the composition of the Supervisory Committee and its committees, please see the report of the Supervisory Committee.

CSSR

To increase our ESG and health and well-being performance, we are aiming for another GRESB 5-star rating, which would put us among the best 20% of investors globally. We will initiate the certification of our portfolio by participating in pilots and share our knowledge to create a certificate that will truly help us to improve the sustainability of our portfolio. Our decision not to 'buy' certificates for our entire portfolio, has the consequence that we have to postpone our goal to achieve the number one position.

We will increase our green labels in line with our ambition to comply with the Dutch government’s Energy Agreement in 2020 and execute the major sustainability improvements that are required.

We will increase our knowledge of the future transition from natural gas and perform pilot studies on a limited scale.