Annual tenant review 2020
We will once again publish an annual review for our tenants this year. The focus will be on a number of themes and will be summarised in a digital, illustrated and comprehensible overview. Tenants will be able to click through to a digital environment for more information on the chosen subjects.
Mapping the customer journey
We will continue to expand our knowledge of our target groups by adding in-depth profile knowledge. Feedback from our tenants combined with our in-house property management expertise enables us to continuously adapt and improve the mapping of the different customer journeys tenants go through with Vesteda. This outside-in perspective creates a solid feedback loop. It also makes us a self-learning organisation centred around our tenants’ expectations and needs.
A message that clearly resonated through the annual tenant satisfaction survey was the need for after sales. We will explore how we can implement after sales in the various customer journeys tenants go through.
We constantly focus on the availability and reachability of our customer service team. We noticed an increase in incoming calls over the past year. This is partly due to the effects of the implementation of the new ERP system, the new client portal My Vesteda and the insourcing of the property management of the Delta Lloyd portfolio. This increase was clearly reflected in the outcome of the Benchmark survey. We will therefore continue to explore possibilities of improving our overall availability and the service level for our tenants.
Affordability: calculation tool for (new) tenants
To encourage (future) tenants to take responsibility for their current and future financial situation, we will make use of the knowledge of the National Institute for Budget Information (Nibud). Nibud is a highly regarded organisation on financial budgeting data and advice. We will provide (future) tenants access to a calculation tool that can help them gain better insight into their total living expenses. The underlying data represents different households, which makes the tool a reliable source of information. We consider this a first step towards a deeper collaboration with Nibud to help make the cost of living more transparent and measurable for tenants.
Optimising dashboards and reporting
To provide the best customer experience, we need to know who our tenants are and what is important to them. Big data and data science developments offer us new ways of doing this. Gathering data is not a goal in itself, but advanced data analysis should help us to improve our tenant satisfaction. By analysing and sharing the results of our customer surveys and by making them easily accessible for all, we give our teams the insights they need to make improvements. The data will also become available in new dashboards for management purposes. This gives us the opportunity to optimise our knowledge about our complexes and to make better decisions.
Continued focus on improving the quality and sustainability of the portfolio
Our main objective is a mid-rental market portfolio in our selected primary regions, consisting of sustainable and future-proof, attractive, well-designed homes, tailored to specific target groups but flexible in terms of future use. This will enable us to continue to outperform the MSCI three-year IPD Dutch Residential Benchmark total return.
In our asset management process, we continuously identify opportunities for redevelopment and densification, or opportunities to optimise or add value to existing assets in our portfolio. We will develop data-driven models to support our decision-making in this regard.
Since the severity of the pandemic became clear in March 2020, we made impact analyses for three scenarios, based on the views of the CPB and large banks, to assist us in our decision making. We will continue to update these scenarios and monitor the impact on the housing market in 2021.
We currently have sufficient scale to manage our portfolio effectively at an attractive cost level. Quality over volume was already a key criteria in our acquisition process for a number of years, and continues to be a key principle in our acquisition policy. We still expect to achieve growth by adding new projects to our pipeline in the coming years.
The upcoming year we expect to finalise the decision regarding our response to the changes to the Amsterdam leasehold system. We are considering opting for perpetual leaseholds against the conditions that Amsterdam’s city council is offering in this respect.
The limited availability of affordable housing remains a challenge for middle-income households. We believe it is part of our responsibility to play an active role in addressing the affordability issue, for example by focusing on adding new homes for the mid-rental market and voluntarily capping the annual rent increase, as we have done in recent years. We take an active role in discussions with stakeholders, such as the IVBN and the government, and the public debate on this matter regarding increased government control over housing production and rent control measures, such as limits on initial rents and rental growth.
Acquisitions and property sales
In the third quarter, the Dutch government announced its plans to increase the Real Estate Transfer Tax (RETT) rate for residential investments to 8% from 2% as of 1 January 2021. This fuelled an increase in transaction volumes at high price levels in the second half of 2020.
The supply of new development locations remains limited. Making projects financially feasible and getting projects started is still challenging. The reasons for this include high construction costs and limited construction capacity, high land costs, high quality and sustainability requirements, rental regulation and challenges in communication and coordination between parties involved in the development process.
Increased regulation is a risk for Vesteda's existing portfolio. However, we also see this as an opportunity for new acquisitions. Therefore, Vesteda has conditionally embraced the regulated mid-rental segment in 2020 as a new investment category to provide middle-income tenants with affordable homes, while maintaining long-term value growth potential beyond the restrictive period. This ties in well with our social objectives and long-term investment horizon.
After large portfolio sales in 2018 and 2019, we do not foresee any residential portfolio sales in 2021, although our ongoing asset management process may lead to selective sales of individual assets from time to time.
We plan to add approximately 1,100 new homes to our pipeline in 2021. We handle development risks in a disciplined manner within the given frameworks. We explore investment opportunities earlier in the development process. This increases our influence on the quality and pricing of the developed product, as well as our access to the product. We will continue to actively seek and work on redevelopment opportunities within our existing portfolio, aimed at combining densification with renewal and improving the sustainability of our existing portfolio.
Vesteda strives to provide its participants with good returns, transparency and service. Participant satisfaction is one of our key performance indicators. We seek to continuously improve the dialogue with all our participants, and invest in establishing relationships with potential new participants.
A topic that has gained in importance in recent years is socially responsible investing. This prompted Vesteda to set ourselves clear and ambitious CSSR targets, including a target for the GRESB benchmark score. For more information, please see the CSSR section of this report.
We will continue with our strategy of diversifying our funding sources and improving our maturity profile, while maintaining low leverage and lowering our cost of debt and to make it more sustainable. To further strengthen our funding structure, we will continue to issue bonds and to explore other attractive longer-term funding opportunities. Our goal is to reduce our cost of debt and to use the proceeds to improve the sustainability of our portfolio. As a green bond issuer, Vesteda is subject to the EU Taxonomy Regulation. Vesteda will closely monitor the outcome of this Taxonomy implementation and its impact on Vesteda. We will then amend our Green Finance Framework, map out the impact on Vesteda’s reporting and make any necessary changes.
Organisation & staff
In 2021, our ambition is to become a High Performing Organisation (HPO), which will require us to focus on those elements that will make us elevate and ultimately outperform peer group companies. We will do so by further optimising our newly implemented ERP system, while further upskilling on our customer focus and service orientation in the coming year. Furthermore, we aim to find new hybrid ways to work together and to further build an inclusive culture with a diverse workforce. To ensure we continue to attract and retain talent, to be seen as Employer of Choice, we will also review our remuneration policy.
Corporate Sustainability and Social Responsibility
To increase our ESG and health and well-being performance, we are aiming for another GRESB 5-star rating, which puts us among the best 20% of investors globally. Our focus is on climate change, mitigation and adaptation. Due to the changing climate, we are faced with increasing physical climate risks, such as heat stress, frequent droughts, extreme rainfall and rising water levels. We have analysed our existing portfolio with regard to specific location risks and on the acquisition front we are using the findings as part of our project evaluation.
We continue to implement our sustainability improvement strategy to ensure that in 2024 ≥99% of our properties have green energy labels, and in 2021 we will align this with the new BENG standards. This is aimed at reducing greenhouse gas emissions and is a first step towards meeting the goals of the Paris Agreement. In 2021, we will continue our research into physical climate risks and look for opportunities to reduce the risks with sustainable investments that also have a positive impact on our tenants and other stakeholders. In 2030, we want to reduce our Carbon footprint by 49%, and in by 95% in 2050 compared with 1990.