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Message from the Management Board

Dear stakeholders,

We are pleased to present you with our 2023 annual report, in which we describe the key developments and account for our financial and ESG performance.

Let's first start with the fire that broke out in the De Enter apartment complex in Amsterdam on June 3rd. Fortunately, all 95 households were able to leave the complex unharmed. However, all apartments were declared uninhabitable after the fire, due to the damage caused by soot and the water used by the firefighters. We helped our tenants in the best way we could and, with great support from fellow landlords, we managed to find alternative accommodation within several weeks. Investigators were not able to determine the cause of the fire. A contractor will soon start rebuilding the complex, which is expected to take at least until the end of 2024.

Vesteda’s operational performance in 2023 has been strong and we met the majority of our KPIs. Also, our strategy of conservative debt financing paid off. Although we faced higher interest costs and negative revaluations, we comfortably met all our covenants and S&P affirmed our A- rating in July 2023.

We are proud that our continuous commitment on the ESG front was recognised, resulting in the global number one position in the 2023 Global Real Estate Sustainability Benchmark (GRESB). We now also have the largest BREEAM-certified real estate portfolio in the world, and we remain focused on further reducing the energy demand per housing unit and becoming Paris Proof by 2050 or earlier.

The outperformance of the tenant satisfaction score significantly increased. We believe this is the result of both our investments in sustainability and the ownership shown by our colleagues who are in direct contact with our tenants thanks to our in-house property management.

Our journey to become a High Performance Organisation continued and the latest survey score showed a further increase towards this goal. Furthermore, our employees consider working at Vesteda to be rewarding. Our first employee Net Promoter Score was exceptionally high. Vesteda employees are willing to recommend us as an employer, which has great value for us at a time when finding skilled and motivated people is challenging. 

We once again outperformed the three-year MSCI benchmark and again received a high score in the participant satisfaction survey. All the above scores are important for us, especially as we are in the process of finding new investors to service redemption requests. We achieved some positive results on redemptions, closing three secondary transactions and the entire payout of the Redemption Available Cash.

Caretaker Minister for Housing, Hugo de Jonge, sent the Affordable Rent Act to Parliament, with the aim to extend the regulated rental segment. Vesteda and other IVBN members and NEPROM are critical and suggested several changes, which were only partly incorporated. De Jonge urged Parliament to pass the bill as soon as possible, with the aim of implementing it by 1 July 2024. It is unclear whether he will succeed, since some political parties have been critical towards additional regulations for the housing market.

Apart from announced governmental regulations adding uncertainty in the housing market, several courts across the Netherlands have ruled that certain rent increase clauses are deemed unreasonable and therefor null and void. These verdicts, when held up on appeal, could have a material financial impact, not just for Vesteda but for the entire Dutch real estate market. Appeals have been halted pending prejudicial questions that have been asked by the Amsterdam court to the Dutch Supreme Court. An "interested party" statement will be submitted to the Supreme Court on behalf of institutional investors. We are closely monitoring the outcome and the potential impact on Vesteda.

The current market challenges motivate us to qualify even more as a sustainable investor in homes for middle-income households. We will sell more assets to stay within our already conservative debt ratios and we will continue to be cost conscious. Subject to our leverage target of below 30%, we will stay in the market with low volume and high-quality acquisitions, at renewed and increased required return rates.

We do expect markets to recover, maybe not in 2024, but certainly in the medium term, due to the continued scarcity of rental homes. This is a strong fundamental for the medium and long term. In the meantime, we will continue to strive to be an outperformer on both financial and ESG aspects.

We would like to thank our stakeholders for their continued support and we wish our colleague Astrid Schlüter all the best in her anticipated new role as CEO as per 3 April.

Vesteda Management Board

Gertjan van der Baan (CEO) and Frits Vervoort (CFO)

Amsterdam, 15 March 2024