Management agenda 2018

Portfolio Strategy

In the years ahead, our strategic targets will focus on:

  • Strengthening focus on (potential) tenants

  • Outperforming MSCI three-year average Netherlands “All Residential” benchmark – Total Return

  • Increasing the size and improving the quality of our portfolio

Strengthening focus on (potential) tenants

Thanks to our focus on (future) developments in the Dutch residential market, such as the severe shortage of mid-rental segment homes, the declining size of households, changing housing demands and the rise of the sharing economy, we are in a better position to offer our tenants lifetime housing opportunities that meet their demands. Our revised Programme of Requirements also improves our ability to align our PMCs with the (future) demands of our tenant groups. And our unique, integrated business model means we can do this effectively and efficiently. Thanks to the growth of our portfolio through the addition of lifecycle-proof homes and the fact that we will offer new and innovative solutions that meet the needs of our tenants more effectively, we will create additional value for both our tenants and our shareholders.

Outperforming MSCI three-year average Netherlands “All Residential” benchmark - Total Return

The growth and management of our portfolio is aimed at the maximisation of performance, while maintaining a focus in the mid-rental segment. By pro-actively responding to trends in the Dutch real estate market, we will create additional rental and value growth. We will also make more and more 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.

Increasing the size and improving the quality of our portfolio

We have set our sights firmly on value-enhancing and sustainable investments in our portfolio, targeting significant improvements in rental income and value. We will introduce alternative strategies and tactics for underperforming properties and we may consider block sales of underperforming properties. We will accelerate investments in energy-saving upgrades and we will manage these measures to outperform the targets set in the government’s energy agreement 2020. We will improve the sustainability of our portfolio by introducing new and future-proof investments based on our defined 10 sustainability rules (e.g. no gas connections or the termination of gas connections and improvements to the sustainability of common areas). We will also install solar panels whenever and wherever possible, to generate energy for the common areas in our properties.

Vesteda will only acquire new buildings when they exceed the regulatory energy standards as required under the terms of the national building decree (“Bouwbesluit"). If needed, we will make additional investments to outperform the standards laid down in the decree and we will include these additional measures in our investment proposals.

Operations

The Operations department has set out a number of clear priorities for the years ahead. These include improving tenant satisfaction, the focus on process standardisation, embedding sustainability and optimising net rental income.

In terms of our plans for 2018, this means that among other things, we will focus on the continued development of tenant segmentation and custom-made services (e.g. rewarding loyalty) and the optimal use of social media platforms. 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 2018, the Operations department will also play an important role in the implementation of the new ERP system. This new ERP system will generate a range of major synergies right across the organisation once it is up and running in 2019. For the Operations department, this means that among other things it will be able to improve the services we provide for our tenants and speed up the delivery of those services.

Acquisitions

Vesteda’s target for the year ahead is to continue expanding the investment portfolio. We are looking to add more than 1,000 homes to our pipeline this year, both new build and existing properties, but quality will always take precedence over volume. We will take full advantage of our entrepreneurship and operational excellence in sourcing, selecting and executing transactions to acquire attractive projects in which we have relatively large influence on the design, life-cycle costs and sustainability of the product. We will continue to be selective in terms of the tender procedures we participate in. In addition, we will continue with our disciplined approach to development risk, but we do aim to invest more frequently in the early stages of the development process.

Our primary focus remains on the Randstad, the Brabant metropolitan area and the strong cities in the peripheral regions of the Netherlands. In these regions, Vesteda targets high-quality residential units in the mid-rental price segment of the liberalised rental market. The foundation of our growth strategy remains the acquisition of new build projects, but we will also acquire existing real estate, residential buildings or entire portfolios, which we can add to our investment portfolio and generate immediate returns.

Portfolio acquisition

In February 2018, Vesteda announced that it is in exclusive negotiations with NN Group to acquire a Dutch residential real estate portfolio of approximately 7,000 units. Closing of the transaction is subject to certain conditions being met.

Portfolio sale

During the course of 2017, Vesteda initiated a portfolio sale of 19 complexes consisting of approx. 1,900 residential units. The sale of these complexes will lead to our portfolio having a better fit with our strategy and our future ambitions. The transaction is expected to lead to a substantial book profit. Closing of the transaction is subject to certain conditions being met and is expected around the publication date of this annual report.

Corporate

New ERP platform

In 2018, we will continue with our company-wide culture and organisation change programme called ‘Vesteda Verbetert’ (Vesteda Improves), with the aim of transforming Vesteda into a High Performance Organisation (HPO). As part of this programme, it was concluded that the current IT architecture and (ERP) systems need to be replaced in order to support our integrated business model. After a thorough vendor selection process in 2017, we will implement a new ERP system in 2018, with Operations, Finance & Reporting, and Investment Management to be fully integrated. The new ERP platform is expected to be up and running in early 2019 and will act as the basis for the realisation of operational excellence, support growth and increase our competitive advantage.

CSSR

Our CSSR targets are an integral part of our business plan and are therefore firmly embedded in our business operations. In 2018, we will continue with our programme to reduce resource consumption and focus on alternative energy sources instead of non-renewable energy sources such as natural gas. Furthermore, we will continue to improve the sustainability of our portfolio. In addition, we aim to achieve the highest GRESB Rating, the Green Star rating with five out of five stars, in 2018.

Funding

Vesteda has no refinancing obligations for 2018. We will continue to actively manage the headroom under Vesteda’s Revolving Credit Facility to ensure adequate headroom to cover our future refinancing commitments for 2019.

The focus in 2018 is on further optimisation of Vesteda’s financing structure. Our debt funding strategy will be subject to an extensive benchmarking and strategic review to validate or adjust our existing funding targets. Optimisation of our existing loan portfolio could include the renegotiation of the terms of existing debt or pre-payment of debt capital and the replacement with new facilities with longer maturity at relatively lower interest costs.