Performance

Rental income

The total theoretical rent stood at €362 million at year-end 2021, an increase of €11 million compared with year-end 2020. This was mainly driven by the inflow of new-build homes into the portfolio, the annual rent increase in July, and by rent increases due to investments in quality and sustainability in selected assets in the portfolio. The total market rent at year-end 2021 was 6.5% higher than the theoretical rent and leads to an increase of reversionary potential in comparison with the previous year.

Market rent and theoretical rent

The average monthly rent at year-end (residential only) increased by 2.6% in 2021, due to the like-for-like growth of our standing portfolio and changes in composition of the portfolio due to new inflow.

Average monthly rent per unit

The table below shows the impact of the rent increase, reletting and portfolio inflow/outflow on the like-for-like rental growth.^[1]

Development of total theoretical rent of residential units

Occupancy

The occupancy rate (in units) increased to 98.8%. Because of more challenging market conditions, mainly in the high rental segment, we made additional efforts in reletting, and as a result we saw vacancy levels decrease. Tenant turnover in the residential portfolio increased to 14.5% in 2021, compared with 13.6% in the previous year.

Occupancy (%, year-end) and tenant turnover (%)

Rental income

The gross rental income and net rental income of the portfolio increased last year, driven by inflow of new build homes, which more than offset higher vacancy levels. We experienced higher operating expenses, largely caused by higher costs of tenant renewals and higher letting fees due to increased tenant turnover, and a general increase of maintenance costs. This resulted in an increase of the gross/net ratio to 25.4% in 2021, compared with 24.9% in 2020.

Rental income

Market value

The table below shows the market value development of the investment portfolio. The value increased to €9.5 billion at year-end 2021 (including IFRS 16). This is 16.2% higher than at year-end 2020, driven by high revaluations of the residential portfolio due to strong market conditions and the inflow of six new residential buildings. Despite COVID-19 uncertainties, the market values of the residential portfolio kept on rising, in line with the increase of vacant possession values. The expected effects of the increased Real Estate Transfer Tax (RETT) did not occur, and the residential investment market remained an attractive investment. This strong market development was noticeable across the whole portfolio.

Changes in market value in 2021 (€ million)

Revaluation in 2021

Average value per residential unit

The average value per residential unit in the portfolio had increased by 16.3% to €340 thousand at year-end 2021. This increase was largely driven by the strong revaluation and inflow of residential units in primary regions.

Average market value per unit

Gross initial yield

The gross initial yield on the portfolio, defined as the theoretical rent at year-end divided by the value of the portfolio at year-end (excl. IFRS 16), changed significantly from 4.4% in 2020 to 3.8% in 2021. The strong market resulted in a drop, with several investment transactions that underwrite this development. The development of vacant possession values was an important driver. The ratio between market values and vacant possession values remained broadly in line.

Gross initial yield

• 1 Theoretical rent is measured at a single point in time (year-end) and therefore does not correspond with the increase in theoretical rent in 2021 compared with 2020, which you will find in Note 5 of the consolidated financial statements in this report.