Vesteda Residential Fund
Vesteda Residential Fund is a contractual investment fund as defined in section 1:1 of the Dutch Financial Supervision Act (FSA). It is an unlisted fund for the joint account of the participants. As such, the economic title to the fund assets is held by the participants pro rata to their participation rights. The purpose of the fund is to make investments, and in particular (but not limited to) to invest capital, directly or indirectly, in property mainly designated for residential purposes located in the Netherlands, for the account and at the risk of the participants. The strategy of the fund is further set out in the investment guidelines which form part of the fund’s Terms and Conditions.
The Terms and Conditions of Vesteda Residential Fund govern the fund and they can only be amended by a resolution of the participants. They have entrusted the manager, Vesteda Investment Management B.V., with the management and operation of the fund. The manager carries out its task solely in the interests of the participants and within the boundaries described in the fund’s Terms and Conditions. The manager, in its capacity as manager and operator of the fund, is subject to the supervision of the Dutch Financial Markets Authority (Autoriteit Financiële Markten - AFM) and the Dutch Central Bank (De Nederlandsche Bank - DNB). The manager obtained a licence to act as a manager of an alternative investment fund in accordance with article 2:67 of the FSA on 17 February 2014. The participation rights can only be acquired by professional investors as defined in section 1:1 of the FSA.
The participants do not take part in the operation of the fund or the management or control of its affairs and have no right or authority to bind the fund assets, or to vote on matters relating to the fund other than as set forth in or pursuant to the Terms and Conditions.
The manager convenes at least two participants’ meetings each year. If a participant or two or more participants jointly holding at least 10% of the total participation rights deem(s) any additional meeting of participants necessary, the manager is required to convene such a meeting. Participants shall be entitled to cast a number of votes pro rata to their respective participation rights.
A participant may request that its participation rights be redeemed by the manager in accordance with the Terms and Conditions.
Subject to the retention of reserves as reasonably deemed necessary by the manager to meet the current and anticipated expenses of the fund, the realised result, excluding any proceeds from property sales, shall be allocated for distribution to the participants pro rata to their respective participation rights.
The participants are the beneficiaries of the fund and, as such, have a final say in material matters regarding the fund, as specified in the fund’s Terms and Conditions.
Composition and governance
The Supervisory Committee supervises how the manager executes its task, as well as the general course of the fund, on behalf of the participants in the fund. The Supervisory Committee has established rules regarding the processes and governance in the By-Laws.
The Supervisory Committee shall have at least five members, with the exact number to be determined by the participants. At present, the Supervisory Committee comprises five members, who are listed in the section Members of the Supervisory Committee in this Annual Report.
The Supervisory Committee has an Audit Committee and a Nomination and Remuneration Committee, both of which are governed by by-laws. The Supervisory Committee shall meet as often as it deems necessary, but at least four times a year, to discuss the results of the fund, the quarterly un-audited financial statements and the valuation of the fund’s portfolio.
The members of the Supervisory Committee are appointed, suspended and dismissed by the participants with due observance of any nominations made and a profile as set forth in the Terms and Conditions. They are appointed for a period of four years, which term may be extended once by four years. Each participant that individually holds and each group of two or more participants that jointly holds at least 25% of the participation rights is entitled to nominate one member of the Supervisory Committee. The fund strives to achieve the best possible balance among its members in terms of gender, expertise and experience in the fields of management, compliance, risk management, financial reporting, finance and real estate and knowledge related to institutional investments. Every Supervisory Committee member is independent in the sense defined in the Dutch Corporate Governance Code.
All resolutions of the Supervisory Committee are adopted by a simple majority. Each member of the Supervisory Committee is entitled to one vote. In the event of a tied vote, the resolution at issue will be rejected. The Supervisory Committee may also pass resolutions in writing. A member of the Supervisory Committee will not participate in deliberations or decision-making within the Supervisory Committee, if they have a direct or indirect personal interest in the matter concerned that conflicts with the interests of the joint participants.
The Supervisory Committee supervises the policies and functioning of the manager and the general affairs of the fund. The manager is responsible for involving and informing the Supervisory Committee, ensuring that the fund is supervised in an optimal manner. The manager holds regular consultations, both formally and informally, with the Supervisory Committee and its sub-committees on the strategy and policies of Vesteda as a whole. By attending these meetings, the members of the Supervisory Committee have ample opportunities to interact with Vesteda’s executives. In addition, the members of the Supervisory Committee have individual meetings with Vesteda executives on an ad-hoc basis.
Remuneration of Supervisory Committee members
For the remuneration of the Supervisory Committee, please see Note 28 in the section ‘Notes to the consolidated financial statements’ of this report.
The Manager and its Managing Board
Composition and governance
The Terms and Conditions entrust the manager with the management and operation of the fund. The manager is a private company with limited liability, incorporated and existing under the laws of the Netherlands. As such, the manager has a Managing Board, which in 2018 comprised two managing directors, the CEO and the CFO. The managing directors have the responsibilities and liabilities that derive from the Dutch Civil Code and other related legislation. The two directors acting jointly may represent the manager.
Managing directors will be appointed, dismissed or suspended in accordance with the articles of association of the manager and the Terms and Conditions.
The Managing Board is supported by its Management Team, comprised of the director Operations, and the director Acquisitions.
The manager has been appointed as manager of the fund and is responsible for ensuring that the fund is always managed and operated, and that the fund assets are always managed, on a discretionary basis, in accordance with the Terms and Conditions and with due observance of the Investment Guidelines, the Business Plan and, on a best effort basis, the INREV Guidelines and the Dutch Corporate Governance Code (the latter to the extent applicable and practical in respect of the fund).
The manager shall, subject where relevant to the Terms and Conditions, the Business Plan, any finance documentation and the prior approval of the Supervisory Committee or participants, carry out the following functions, including:
(a) establish and implement the Investment Guidelines and the Business Plan;
(b) identify, evaluate and negotiate investment opportunities, to (or to agree to) purchase or otherwise acquire, alone or together with others (in a syndicate), investments within the scope of the Investment Guidelines and the Business Plan;
(c) sell, exchange or otherwise dispose of and refinance investments within the scope of the Investment Guidelines and the Business Plan.
In light of the above, the manager may enter into such legally binding agreements or other arrangements as the manager may, at its sole discretion, determine in respect of any investments and divestments by the fund, to the extent permitted under the Investment Guidelines, the Business Plan and the Terms and Conditions. A Managing Board member shall not take part in any discussion or decision-making that involves a subject or transaction in relation to which he or she has a conflict of interest with the joint participants. All costs incurred by the manager in its capacity as manager of the fund, all normal operating expenses incidental to the day-to-day management of the manager in its capacity as manager of the fund, including its own overheads, any costs relating to outsourcing and the Supervisory Committee, fees payable to its members and the reimbursement of any reasonable costs incurred by members of the Supervisory Committee are reimbursed out of the fund assets.
In the Manager Rules, the manager and the Supervisory Committee have established rules regarding decision-making processes and the working methods of the manager.
The amount of severance pay for members of the Managing Board will not exceed one year’s fixed salary. This is embedded in contract and/or regulations. Hence the severance pay is in line with Dutch Corporate Governance Code. The total remuneration of the Managing Board comprises the base salary, the variable bonus, pension expenses and other employer charges. For a detailed overview of the remuneration of the Managing Board, please see Note 27 in the section ‘Notes to the consolidated financial statements’ of this report.
At present, Vesteda has five custodian companies. The duty of each custodian is to be the legal owner of fund assets and acquire legal title of such fund assets for safekeeping for the account and at the risk of the participants. A custodian will always acquire assets for the purpose of management and custody on behalf of the participants and will only act in the interest of the participants and shall not acquire assets or assume any obligations for its own account and risk or for the account and risk of third parties (other than the participants) and shall not carry out any business and will not be involved in any other activity which may cause it to incur liabilities that are not directly related to the fund. A custodian shall act in accordance with all instructions in relation to the fund assets given by the manager, and shall only be entitled to acquire, dispose of, transfer or otherwise deal with any fund assets on the instructions of the manager. To safeguard this, the respective Managing Boards of the custodians comprise the manager only.
The manager set up five custodians in light of secured financing requirements. Given the fact that Vesteda is currently not planning to obtain secured financing in the future and the administrative burden that sustaining five custodian companies entails, the manager is planning to merge the five entities into one company in the course of 2019.
The manager has appointed Intertrust Depositary Services B.V. to act as depositary for the fund and has concluded a depositary services agreement with the depositary for the benefit of the fund and the participants in accordance with article 4:37f of the FSA. The depositary is responsible for the supervision of certain aspects of the fund’s business in accordance with applicable law and the depositary services agreement.
Dutch Corporate Governance Code
All listed companies with a statutory seat in the Netherlands are legally obliged to comply with the Dutch Corporate Governance Code (the “Code”), in accordance with the ‘apply or explain’ principle. As neither Vesteda Residential Fund nor the manager is a listed company, it is not mandatory for the fund or the manager to apply the Code. Nevertheless, the Managing Board and the Supervisory Committee endorse the Code in all material aspects, to the extent applicable and practical in respect of the fund.