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Annual Report 2023
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28. Capital management

The primary objective of the Vesteda Companies’ capital management is to ensure that the Fund remains within its banking covenants and maintains a strong credit rating. The Vesteda Companies monitor capital primarily using a loan-to-value (LTV) ratio, which is calculated as the amount of outstanding debt divided by the valuation of the investment property portfolio.

Vesteda’s loan facilities have LTV covenants of 50% at VRF level (corporate unsecured debt).

In the year under review, the Vesteda Companies did not breach any of their loan covenants, nor did they default on any other of their obligations under their loan agreements.

Capital management
 

31-12-2023

31-12-2022

Carrying amount of interest-bearing loans and borrowings

2,471

2,177

Capitalised financing costs

12

14

Principal amount of interest-bearing loans and borrowings

2,483

2,191

   

Cash and cash equivalents

4

11

Net debt principal amount of interest-bearing loans and borrowings

2,479

2,180

   

External valuation of completed investment property (excl. IFRS16)

8,547

9,302

External valuation of investment property under construction

381

225

Total valuation of investment property

8,928

9,527

   

Loan-to-value ratio

27.8%

22.9%

Vesteda has performed a sensitivity stress test with regard to changes in required gross yield in relation to the loan-to-value ratio. An increase of the required gross yield of 4.0 percentage points (from 4.6% to 8.6%) would lower the value of the investment property to such extent that an LTV of 50% would be reached.