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Funding

Vesteda has a well-diversified fully 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 and 2021, arranged a green private placement in 2020, and added EIB financing for affordable housing in 2020 and 2022. Vesteda has a sustainability-linked Revolving Facility Agreement (RFA) and recently arranged a green tokenised debt transaction. In 2023, Vesteda updated its Green Finance Framework and this is now fully aligned with EU Taxonomy regulation. 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

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 tenors 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.

In September 2023, Vesteda arranged a digital green bond on the public blockchain to gain experience with this technology. In this transaction, Vesteda raised a modest amount of €5 million from DekaBank, a German institutional investor. Vesteda used the proceeds of this transaction to (re)finance sustainable mid-rental housing. Vesteda is the first investor in the real estate sector in the Netherlands to raise institutional funds through a digital bond.

Vesteda closed a financing agreement for a committed standby facility of €250 million. It was provided by two of Vesteda’s relationship banks. The standby facility provides extra liquidity headroom and gives more financial flexibility. 

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 2023, we met all our funding targets.

Vesteda’s average weighted maturity of debt was 4.7 years, above our long-term minimum target of four years. The average total debt interest rate was 2.2% in 2023, compared with 1.8% in 2022. The loan-to-value ratio was 27.8% at year-end 2023, compared with 22.9% at year-end 2022. The interest cover ratio stood at 5.3 at year-end 2023, compared with 7.1 at year-end 2022.

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 2023. 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 2023

Committed instrument

Interest rate

Size
(€ million)

Drawn
(€ million)

Weight

Maturity

Tenor

Bond

2.00%

500

500

20.14%

2026

2.5 yr 

Green Bond

1.50%

500

500

20.14%

2027

3.4 yr 

Green Bond

0.75%

500

500

20.14%

2031

7.8 yr

EMTN PP

1.93%

35

35

1.41%

2027

4.0 yr

EMTN PP

2.50%

65

65

2.62%

2032

9.0 yr

Pricoa USPP

1.80%

100

100

4.03%

2026

4.0 yr 

AIG Private Placement

1.03%

50

50

2.01%

2030

7.0 yr

NYL Private Placement

1.38%

50

50

2.01%

2035

12.0 yr

Green Tokenized debt

 

5

5

0.20%

2024

0.7 yr

Syndicated RFA (including Ancillary)

 

700

120

4.83%

2025

1.4 yr 

Bridge Facility

 

250

-

0.00%

2025

1.8 tr

EIB Facility

 

150

150

6.04%

2032

8.8 yr

EIB 2 Facility

 

150

75

3.02%

2033

9.5 yr

Total

 

3,055

2,150

86.59%

  

Uncommitted instrument

 

Size
(€ million)

Drawn
(€ million)

Weight

x

x

SMBC Uncommitted Facility

 

200

47

1.89%

  

Euro Commercial Paper programme

 

1,000

286

11.52%

  

Total

 

1,200

333

13.41%