Notes to the results

Income statement

(€ million)

FY 2019

FY 2018

Theoretical rent

339

290

Loss of rent

(10)

(9)

Gross rental income

329

281

Service charges income

9

10

Revenues

338

291

Property operating expenses (excluding service charges)

(72)

(65)

Service charges

(14)

(16)

Net rental income

252

210

Result on projects in progress

-

-

Result on property sales

13

44

Management expenses

(23)

(18)

Interest expenses (including amortisation of financing costs)

(40)

(29)

Realised result before tax

202

207

Unrealised result

653

825

Result before tax

855

1,032

Tax

(1)

-

Result after tax

854

1,032

Revaluation of Property Plant and Equipment (PPE)

1

2

Settlement pre-hedge contracts

(6)

-

Total comprehensive income

849

1,034

Gross rental income

The total theoretical rent increased by €49 million to €339 million in 2019. This increase was largely due to the former Delta Lloyd portfolio acquired in June 2018. Furthermore, the average monthly rent increased from €945 at year-end 2018 to €968 at year-end 2019. The like-for-like rent in 2019 was 3.6% in 2019, while the loss of rent improved from 3.2% in 2018 to 2.8% in 2019. Overall, this resulted in a gross rental income increase of €48 million to €329 million in 2019.

Net rental income

Property operating expenses amounted to €72 million in 2019, €7 million higher than the €65 million recorded in 2018, due to the increased size of the portfolio. Operating expenses, including non-recoverable charges, amounted to 23.3% of gross rental income in 2019 (2018: 25.6%). This resulted in a net rental income of €252 million in 2019, compared with €210 million in 2018.

Result on property sales

In 2019, Vesteda sold a total of 1,336 homes from its investment portfolio, with a net result of €13 million (2018: €44 million). Vesteda sold a total of 1,117 homes as a portfolio and 219 homes in individual unit sales.

Management expenses

Management expenses came in at €23 million, €5 million more than the €18 million recorded in 2018 due to lower recharged acquisition expenses, lower recharged property sales expenses, lower recharged property sales expenses and higher other operating expenses in 2019.

The Total Expense Ratio (TER) improved slightly from 31 basis points over GAV in 2018 to 30 basis points in 2019.

Interest expenses

Interest expenses increased by €11 million to €40 million in 2019, compared with €29 million in 2018, mainly due to a higher average debt position. The implementation of IFRS 16 as per 1 January 2019 also had a €4 million impact. The average cost of debt declined from 2.1% in 2018 to 2.0% in 2019. In May of 2019, Vesteda issued a €500 million green bond, and used part of this to repay the €300 million bond that matured in July 2019. In June 2019, Vesteda also repaid a committed €200 million SMBC facility and replaced this loan with an uncommitted facility of the same size. Through these transactions, Vesteda extended the weighted average term of its loan portfolio to 5.9 years and reduced its average interest rate.

Interest expenses and EBITDA

(€ million)

FY 2019

FY 2018

Interest expenses (excluding amortisation of financing costs)

37

28

Interest expenses (excluding amortisation of financing costs and IFRS16)

34

33

EBITDA

242

235

Realised result

Vesteda recorded a realised result of €201 million in 2019, €6 million lower than the realised result of €207 million recorded in 2018. A higher net rental income was more than offset by a lower result on property sales, higher management expenses and increased interest payments. The realised return as a percentage of time weighted average equity declined from 4.6% in 2018 to 3.6% in 2019.

Excluding result on property sales, realised result increased from €163 million in 2018 to €188 million in 2019. Excluding the return from property sales, the realised return was 3.3% in 2019, compared with 3.6% in 2018. This decline is the result of the increased value of the portfolio.

Unrealised result

The positive sentiment on the Dutch housing market led to a positive revaluation of 8.7% on the investment portfolio in 2019, compared with 13.5% in 2018. Appraisals of Vesteda’s investment portfolio showed a further decline of exit yields. The unrealised result amounted to €653 million in 2019, including a €3 million positive IFRS16 impact, compared with €825 million in 2018.

Total comprehensive income

Vesteda’s total comprehensive income declined from €1,034 million in 2018 to €849 million in 2019, primarily due to exceptionally high revaluation results in 2018. Total return on time weighted average equity (ROE) was 14.9% in 2019 (2018: 23.0%), 3.6% of which was realised return (2018: 4.6%), 11.4% of which was unrealised return (2018: 18.4%), and -0.1% due mainly to the settlement of pre-hedge contracts (2018: 0.0%).

Statement of financial position

(€ million)

31 December 2019

31 December 2018

Total assets

8,058

7,337

Equity

6,022

5,517

Debt capital

1,825

1,746

Leverage ratio (%)

22.5

23.7

At year-end 2019, the leverage ratio including IFRS16 was 22.5%. Excluding IFRS16, the leverage ratio at year-end 2019 was 22.9% (YE 2018: 23.7%).

Changes in equity

At 31 December 2019, group equity amounted to €6,022 million, compared with €5,517 million at 31 December 2018. The €505 million increase in equity was the balance of a realised result of €202 million, an unrealised result of €653 million, a €1 million income tax expense recognised in profit or loss, a €1 million revaluation gain on our head-office, a €6 million settlement on pre-hedge contracts, a capital repayment to participants related to a portfolio sale of €162 million, and a distribution to participants totalling €182 million.

Changes in equity (€ million)
Return on equity

(% of time weighted average equity)

FY 2019

FY 2018

Realised return

3.6

4.6

- return from letting

3.3

3.6

- return from property sales

0.2

1.0

Unrealised return

11.4

18.4

Total return

15.0

23.0

Return from other comprehensive income

(0.1)

0.0

Total comprehensive return

14.9

23.0

Total comprehensive income in € per participation right (based on number of participations at year-end)

23.8

28.8

Proposed distribution over the financial year (% of time weighted average equity, excluding capital repayment related to portfolio sale)

3.3

3.6

Performance compared with MSCI

In 2019, Vesteda outperformed the three-year MSCI IPD Netherlands Residential Benchmark both in terms of direct return (+0.1%) and capital growth (+0.3%).[1]

Vesteda Residential Fund versus MSCI residential benchmark
 

2019

2018

2017

2016

2015

 

3 yr average

5 yr average

Direct return

        

Vesteda Residential Fund

3.3

3.5

4.1

4.6

5.0

 

3.6

4.1

MSCI-benchmark

3.2

3.4

3.8

4.2

4.5

 

3.5

3.8

Outperformance

0.2

0.0

0.2

0.4

0.4

 

0.1

0.2

         

Capital growth

        

Vesteda Residential Fund

9.2

15.9

13.5

10.6

5.0

 

12.8

10.7

MSCI-benchmark

10.1

14.7

12.6

10.5

6.3

 

12.5

10.8

Outperformance

-0.8

1.0

0.8

0.0

(1.2)

 

0.3

-0.1

         

Total return

        

Vesteda Residential Fund

12.8

19.9

18.1

15.7

10.2

 

16.8

15.2

MSCI-benchmark

13.6

18.6

16.9

15.2

11.0

 

16.3

15.0

Outperformance

-0.7

1.1

1.0

0.4

(0.8)

 

0.4

0.1

Non-financial figures
 

31 December 2019

31 December 2018

Number of residential units

27,290

27,809

- apartments

14,959

15,135

- single family houses

12,331

12,674

Number of residential units inflow

817

7,584

Number of units outflow

1,336

2,229

- individual unit sales

219

322

- portfolio sales

1,117

1,872

- residential building sales

-

35

Occupancy rate (% of units)

98.4

97.5

Tenant satisfaction (rating out of 10)

6.9

6.8

Number of employees (FTE, at year-end)

194

188

For more information, please see the sections consolidated and company financial statements of this report.

  • 1 Direct return and indirect return might not add up to total return as a result of time weighted averages on a monthly basis.