Funding

Vesteda has a diversified unsecured funding structure, consisting of a combination of bank debt, Euro Commercial Paper (ECP), private placements, public bonds, and financing from the European Investment Bank (EIB). This unsecured debt profile enables Vesteda to secure debt funding through various debt markets at any point in time. This is supported by a strong investment grade credit rating by Standard & Poor’s.

Over the past few years, Vesteda has aligned its funding structure with its sustainable profile. Vesteda issued green bonds in 2019, 2021 and 2024, arranged a green private placement in 2020, and added EIB financing for affordable housing in 2020 and 2022. In 2024, Vesteda refinanced its sustainability-linked Revolving Facility Agreement (RFA). These transactions underpin Vesteda’s sustainable and social profile and help to diversify Vesteda’s funding structure and to improve its cost of debt.

Debt maturity schedule (€ million) 

Vesteda has two financing agreements in place with the European Investment Bank (EIB), each with a size of €150 million. Vesteda uses the proceeds of these financing facilities to fund projects in (regulated) mid-rental housing and to improve the sustainability of its existing portfolio, which accounts for up to 50% of total investments. The agreements have terms of 10 years and allow fixed-rate and floating-rate funding. The first EIB financing facility (2020) is fully drawn at a floating rate. Vesteda has drawn €75 million of the second EIB financing facility at a fixed rate, and we have another €75 million available.

Vesteda and its banks signed a new agreement for the refinancing of its Revolving Credit Facility that matured in 2025. The new facility has a size of €650 million and again is a Sustainability-linked Revolving Credit Facility.

The new facility embeds four KPI’s that will measure Vesteda’s sustainability performance: minimum GRESB score, installation of solar power capacity, the reduction of actual scope 1, 2, and 3 carbon emissions (through a carbon reduction of 55% in 2030 compared with 1990) by reducing the energy consumption and the outperformance of the IVBN benchmark on tenant satisfaction.

These KPIs match Vesteda’s sustainability goals and are embedded in Vesteda’s strategy. If Vesteda meets the majority of these KPIs, Vesteda will obtain a reduction in interest margin. On the other hand, the interest margin will increase if Vesteda fails to meet these KPI’s. This is an extra incentive for Vesteda to improve its sustainability performance.

In May 2024, Vesteda successfully issued its third green bond. The €500 million bond has a term of eight years and a coupon of 4%. The bond was three times oversubscribed, resulting in a negligible new issue premium. The proceeds of the green bond will be allocated to homes with a minimum EPC A label, homes that have made an improvement of primary energy demand of at least 30% (up to a minimum EPC C label), and new-build homes that have an energy performance at least 10% better than the threshold for Nearly Zero-Energy Buildings (‘NZEB’).

Our funding strategy is based on the following funding targets:

1. Leverage of ≤ 30%;

2. Total fixed-rate and hedged floating rate exposure of ≥ 70%;

3. Weighted average maturity of ≥ four years;

4. Diversified funding profile, with at least three funding sources;

5. Sufficient liquidity headroom: to refinance debt, finance committed pipeline, and to accommodate redemption requests (Redemption Available Cash);

6. Maturity calendar ≤ 35% maturing in a single year;

7. Asset encumbrance ≤ 15% long term.

At year-end 2024, we met all our funding targets.

Vesteda’s average weighted maturity of debt was 5.0 years, above our long-term minimum target of four years. The average total debt interest rate was 2.5% in 2024, compared with 2.2% in 2023. The loan-to-value ratio was 25.6% at year-end 2024, compared with 27.8% at year-end 2023. The interest cover ratio stood at 4.3 at year-end 2024, compared with 5.3 at year-end 2023.

Vesteda's main financial covenants, as part of its financing agreements, are a maximum loan-to-value ratio of 50% and a minimum interest cover ratio of 2.0. We comfortably met all the financial covenants of our financing arrangements in 2024. Vesteda’s funding targets contribute to its robust, well-diversified and flexible funding structure. Within this funding structure, Vesteda is always looking to further optimise its average cost of debt by making use of different funding instruments at different maturities, and through floating or fixed rate debt.

Debt portfolio at year-end 2024