Report of the Supervisory Committee

Chairman’s Statement

Last year was an exciting year for Vesteda, one in which the hard work of many of our people resulted in the successful acquisition of the former Delta Lloyd portfolio of 6,777 residential units. This acquisition helped Vesteda to solidify its leading role in the Dutch residential market. The fact that Vesteda paid 70% of the purchase price in participation rights was a clear sign of the trust that institutional investors have in Vesteda, which gives us a solid foundation for the future.

With the acquisition of this portfolio, Vesteda has strengthened its position in the mid-rental segment in the Randstad. Vesteda will be able to manage the acquired portfolio in a cost-efficient manner, while it is expected to add overall value to Vesteda’s portfolio. The Supervisory Committee was closely involved in the acquisition process and is extremely pleased with the achieved result.

The strained housing market in the Netherlands in 2018 resulted in significant revaluations of Vesteda’s portfolio assets and an unrealised result of €825 million, representing an unrealised return on time weighted average equity of 18.4%. However, the Supervisory Committee would like to stress that Vesteda should keep a close eye on direct returns and prepare for the future by continuing to improve its organisation and maintaining its focus on developments such as sustainability requirements, preparing for the energy transition (gas-free homes) and the tightening national and local regulation of the mid-rental segment.

The implementation of the new ERP system will be fundamental to Vesteda’s continuous improvement on the organisational front. This system will enhance operational processes and facilitate data processing and reporting. Both the Supervisory Committee and its separate committees discussed the developments of the implementation process and the impact on the organisation on a regular basis in 2018 and will continue to monitor the process and its impact in 2019.

While the company was managing a number of major changes and projects, the acquisitions team worked hard on expanding Vesteda’s pipeline. This resulted in a number of successful acquisitions, some of which, such as the Schuytgraaf project in Arnhem, had to be approved by the Supervisory Committee due to the transaction size. In addition, as part of the acquisition of the former Delta Lloyd portfolio, Vesteda also managed to acquire a number of interesting pipeline projects. The Supervisory Committee finds the increasing regulation of the rental market at local level a worrisome development as it can have an impact on Vesteda’s investment decisions.

With a view to its permanent education, the Supervisory Committee conducted a deep dive into developments on the sustainability front, with a particular focus on the road to disconnecting homes from the gas grid. The Supervisory Committee will continue to monitor how management plans to anticipate and respond to this development. In doing so, management will have to find a fine balance between setting an example as the market leader and not taking too much risk by investing in experimental technologies.

At Supervisory Committee level, the search for two new members started in September 2018. They will replace Mr. De Die and myself, as our tenures are ending in April and July respectively. On behalf of both of us, I can say it has been an interesting ride. Vesteda has transformed itself, after the lows of the crisis, into a prime real estate fund with focus, commitment and a solid basis for the future.

I would like to conclude by thanking my fellow Supervisory Committee members for their hard work and dedication in 2018. On behalf of us all, I would also like to thank the company’s Managing Board, Management Team and all other Vesteda employees for making 2018 a year to remember.

Peter Kok, Chairman of the Supervisory Committee

Supervisory Committee

Focal Points

The main task of the Supervisory Committee is to supervise the management carried out by the manager and the general course of the fund’s business, as described in more detail in the Corporate governance and Risk management sections of this report.

In exercising its duties in 2018, the Supervisory Committee and its separate committees placed particular emphasis on the following topics:

  • The acquisition of the former Delta Lloyd portfolio

  • The sale of the Urban Core Portfolio

  • The preparations for and the implementation of the new ERP system

  • Vesteda’s debt funding strategy and financing

  • The search for new members of the Supervisory Committee

The above-mentioned topics will be set out below in more detail, together with additional matters addressed by the Supervisory Committee during the course of the year.

Meetings and Attendance Record

The Supervisory Committee comprises Mr. Kok (Chairman), Mr. Blokhuis, Mr. Copier, Mr. De Die and Mrs. Van den Herik, all of whom are deemed independent in the sense described in the Supervisory Committee’s by-laws.

In 2018, the Supervisory Committee met 18 times, 16 times in person and two times via conference call. Most of these meetings were attended by the Managing Board and by (members of) the Management Team. The Supervisory Committee met three times in the absence of the Managing Board, among other things to perform its self-assessment and to discuss the recruitment process of the new members of the Supervisory Committee. In addition, the Supervisory Committee met in the absence of the Managing Board ahead of regular scheduled meetings.

Below you will find an overview of the attendance record per member of the Supervisory Committee[1]:

Overview of attendance record Supervisory Committee


Supervisory Committee

Audit Committee

Nomination & Remuneration Committee

Jaap Blokhuis




Hans Copier




John de Die




Seada van den Herik




Peter Kok




The activities of the Supervisory Committee and its separate committees in 2018 are summarised in the following schedule:

Supervisory Committee activities 2018 (including Committees)








Acquisition of the former Delta Lloyd portfolio

Acquisition of the former Delta Lloyd portfolio and related financing

Q2 2018 report

Business Plan 2019-2023

Sale of Urban Core Portfolio

Investment proposal

Audit plan Deloitte

Q3 2018 report

Targets and bonus Managing Board and Management Team

Q1 2018 report

Debt financing

 IT implementation ERP system

Remuneration senior management

Post-mortem acquisition head office

Rent increase 2018

Tax update

Report external auditor

IT implementation ERP system

Evaluation of a previous acquisition

Meeting with representatives of Depositary

Financial statements and allocation of net income

Compliance, Risk and Internal Audit

Sale of portfolio

Meeting Works Council

Q4 2017 report

GDPR compliance

IT implementation ERP system

 Debt funding: liquidity headroom and issuance commercial paper

Amendment and extension Revolving Credit Facility


 IT security and contingency

Annual review of risk management framework

Debt funding strategy


Search new SC members

Insurance portfolio

Investment proposals


Compliance, Risk and Internal Audit

Merger custodian entities



Benchmark remuneration senior management

Search new SC members

Compliance, Risk and Internal Audit


Education Managing Board/ Management Team

Externally facilitated self-assessment


Impact implementation ERP system on organisation

Property tour

You will find additional information on the role and functioning of the Supervisory Committee and its committees in the Corporate governance section of this annual report.

The acquisition of the former Delta Lloyd portfolio

In February 2018, Vesteda announced that it was in negotiations with NN Group to acquire the former Delta Lloyd portfolio. In early 2018, management discussed Vesteda’s strategy and proposition with the Supervisory Committee ahead of consulting the fund’s participants. These discussions addressed topics such as tax consequences and the impact of the acquisition on Vesteda’s sustainability targets, the composition of its portfolio and the Business Plan. With the support of the Supervisory Committee, management entered into further discussions with NN Group. The Supervisory Committee was at some point informed of discussions regarding the exchange ratio and valuation of both Vesteda’s and the former Delta Lloyd portfolio, given the proposed partial payment in participation rights in the fund. The Supervisory Committee had extensive discussions with management on how to address this issue, in which it emphasised the importance of the due diligence process, independent appraisers and timing. The discussions also addressed the impact of an interim valuation of Vesteda’s portfolio. In the end, the outcome of the key parameters was positive and the Supervisory Committee unanimously approved the transaction. The Supervisory Committee is of the opinion that the former Delta Lloyd portfolio is a very good addition to Vesteda’s portfolio. On the other hand, the combination of Vesteda’s strong position in the Dutch residential market and an attractive proposition were the reasons why NN Group selected Vesteda as its preferred option.

The sale of the Urban Core Portfolio

Prior to the acquisition of the former Delta Lloyd portfolio, Vesteda closed the sale of its Urban Core Portfolio. Back in 2017, 19 complexes were earmarked for a potential portfolio sale, pursuant to Vesteda’s annual hold-sell analysis. The portfolio comprised mainly gallery flats from the 70s and 80s largely positioned in the regulated rental segment. The Supervisory Committee was presented with a divestment proposal and discussed the composition of the portfolio and the rationale for the transaction. The Supervisory Committee was satisfied that the proposed transaction would help Vesteda to optimise its portfolio in favourable market conditions. The Supervisory Committee was very pleased with the high-quality process that the management followed, which resulted in the successful closing of the transaction.

Preparations for and the implementation of the new ERP system

In 2017, the Supervisory Committee approved the investment in a new ERP system. This ERP system is aimed at optimising and aligning internal processes, resulting in more efficient asset management and reporting. In 2018, the Vesteda organisation dedicated considerable time and attention to the preparations for the implementation. Due to the importance of the project, the Supervisory Committee’s gave this topic its fullest attention. In addition, the Audit Committee discussed this topic on various occasions, focusing on the process, timing, and contracting process from a risk management perspective. The Remuneration Committee followed this project from an organisational perspective, focusing on the impact of the project on the workforce. Overall, the Supervisory Committee established that the implementation was being dealt with in a diligent manner, with clear steps and milestones and within the set budget, although timing between milestones was tight. As we speak, management is working towards the go-live phase, which is due later in 2019.

Vesteda’s debt funding strategy and financing

At the beginning of the year, the Audit Committee reviewed Vesteda’s debt funding strategy. 

The topics discussed included:

  • A comparison to peers’ actual ratios and objectives (to the extent publicly known) and Vesteda’s funding and financial strategic objectives in terms of status and realisation;

  • The assessment of Vesteda’s current credit rating and potential rating improvements taking into account Standard & Poor’s and Moody’s rating methodology;

  • The universe of debt instruments and the feasibility of Vesteda tapping a certain debt market at that time and in the future;

  • Observations and conclusions based on the sections above, as well as the principal choice to aim for predominantly secured or unsecured financing (pros, cons and consequences), resulting in recommendations for potential adjustments to Vesteda’s current funding targets;

  • Analysis of the ‘ideal’ leverage ratio and a proposed long-term financing structure following the acquisition of the former Delta Lloyd portfolio;

The Audit Committee established that Vesteda’s financing strategy is logical, well substantiated and adequate.

The acquisition of the former Delta Lloyd portfolio created the need to attract additional funding. As part of the approval of the transaction, the Supervisory Committee also approved a bridge facility of €300 million and the issuance of bonds under Vesteda’s EMTN programme to an amount of €500 million. Both transactions were closed successfully.

At the end of the year, the Audit Committee discussed two funding projects. Vesteda needed to make sure it would have sufficient headroom in its Revolving Credit Facility to cover the liquidity obligations for the next 12 months, which included material debt maturities. Anticipating a bond debt maturity of €300 million in July 2019 and taking into account Vesteda’s obligation to have liquidity of €50 million readily available for participants’ redemptions, Vesteda was advised to have at least €350 million of headroom through to July 2019 or the date for a new bond issue to refinance the 2019 bond. At the recommendation of the Audit Committee, the Supervisory Committee approved both setting up a commercial paper programme and obtaining additional liquidity headroom.

Search for new members of the Supervisory Committee

Reference is made to the tenure of the members of the Supervisory Committee, as set out in the schedule in the section Members of the Supervisory Committee. Mr. De Die’s tenure will end in April 2019 and the Chairman’s (extended) tenure will end in July. The Supervisory Committee has appointed Mr. Blokhuis as the successor to Mr. Kok as Chairman. As a result, the Committee needs to fill two positions, which, given the composition of the Supervisory Committee, requires at least one new member with a strong financial background. In September 2018, the Supervisory Committee started the search process, by updating the profile and engaging an executive recruitment agency to assist the Supervisory Committee. When updating the profile, the competencies of the individual members were assessed and taken into account, together with the need for diversity in the committee. The Supervisory Committee is confident it will be able to propose a candidate for appointment before the end of Mr. De Die's and Mr. Kok’s tenures.

Finance and reporting

In early 2018, the Supervisory Committee discussed the preliminary results for 2017 and audit matters with Deloitte. The 2017 financial statements and the 2017 annual report were discussed in the presence of Vesteda’s auditor. The auditor stated that, while there is always room for improvement, the audit process was satisfactory. The auditor explained the rationale for increasing the materiality threshold in respect of the financial statements 2017 and stated that there were no material audit findings.

The Supervisory Committee discussed the performance versus the budget on a quarterly basis. The overall trend was outperformance on most line items compared to 2017 and the budget. A key driver was the indirect result, due to positive revaluations throughout the year. However, despite the good results, the Supervisory Committee stressed that management should continue to pay close attention to sustaining Vesteda’s direct result. In doing so, management should remain critical when investing in new products and should, in these affluent times, focus on the continued improvement of its operation and organisation.

Given two extraordinary transactions in the year under review (the sale of the Urban Core portfolio and the acquisition of the former Delta Lloyd portfolio), both the Audit Committee and the Supervisory Committee stressed the importance of retaining adequate insight in the performance of the portfolio against Vesteda’s targets. The Committee therefore asked management to present the quarterly results with and without these transactions.

In the fourth quarter of the year, the Managing Board consulted the Supervisory Committee on the content of the Business Plan for 2019-2023. The Supervisory Committee was able to provide its advice on the strategy going forward and deemed this to be a very efficient process. The Supervisory Committee supported the Managing Board’s decision to give participants the opportunity to express their views on certain strategic topics at the informal Annual Participants’ Day. In December, the participants unanimously approving the Business Plan.

In general, the Supervisory Committee deemed the reporting of the Managing Board on ongoing issues and actions taken as proactive and adequate and had no reason to initiate further audits or investigations. The Supervisory Committee further appreciated the open interaction with the Managing Board.


One of the Supervisory Committee’s recurring tasks is determining the bonuses of the Managing Board and the Management Team and setting targets for the year ahead. In terms of the 2017 bonuses, the Supervisory Committee focused on ensuring a balanced remuneration for all relevant positions eligible for the bonus schemes. With regards to the targets for 2018, the Supervisory Committee decided to maintain the structure developed in 2017, which links strongly to Vesteda’s broad set of KPIs as set out in the Business Plan and gives the Supervisory Committee more discretion in assessing qualitative targets. Additionally the targets for the Managing Board and Management Team were adjusted to adequately measure the performance based upon quarterly results without transactions, and assign separate qualitative targets related to the transactions.

With a view to its ‘permanent education’, the Supervisory Committee met off-site with the Managing Board and the Management Team, focusing on developments in sustainable housing, the affordability of housing and the transition to gas-free homes. The Supervisory Committee performed a self-assessment at the beginning of 2018. In addition, the Supervisory Committee conducted a self-assessment later in the year, which was moderated by an external party. Every individual member of the Supervisory Committee filled in a questionnaire and had a personal coaching interview ahead of the group assessment. During the group assessment, the Supervisory Committee looked at its own functioning, the individual members’ drivers and the profile of the Supervisory Committee as a whole. Key topics were: the role of the Supervisory Committee, how to fulfil that role in view of the drivers and qualities of the individual members, and what does it take to provide optimum supervision. The Supervisory Committee will follow-up on this self-assessment in 2019, when two new members of the Supervisory Committee will be appointed. In addition, the Supervisory Committee will conduct a session with management with a view to the continued improvement of their cooperation.


The Supervisory Committee held meetings in the absence of the management, including meetings with the internal auditor and the external auditor. On various occasions, individual members of the Supervisory Committee met with senior officers of Vesteda to gain information on current matters.

The Supervisory Committee approved several investment proposals, such as Schuytgraaf project in Arnhem, and discussed a number of proposed investments in the pre-approval phase. The Supervisory Committee went on a property tour, visiting several properties in the Amsterdam area.

The Supervisory Committee periodically discussed matters related to the fund’s investor relations. In view of this, the Supervisory Committee joined the informal Annual Participants’ Day, which was attended by a large number of representatives of the fund’s participants.

On the whole, the Supervisory Committee and the Managing Board worked well together in 2018. Information was provided in a timely fashion and was clear and sufficient for the Supervisory Committee to perform its duties.

Audit Committee

The Audit Committee comprises Mr. De Die and Mr. Blokhuis and met six times in the year under review.

The Audit Committee discussed in detail the periodic statements and the 2017 annual financial statements and annual report in the presence of the fund’s CEO, CFO and external auditor. The committee discussed the audit process, preliminary and key audit findings and principal assumptions, judgments and valuations, and the external auditor reported its findings. The external auditor reported that despite the departure of some key employees in the finance department, Deloitte’s view of the quality and performance of the process was positive. The Audit Committee was informed of the unqualified auditor’s report on the implementation of Vesteda’s ISAE 3402 processes. The Audit Committee was pleased that the measures taken in 2017 led to this positive outcome.

In terms of reporting, the Audit Committee asked management to make sure that it continued to provide sufficient insight into results and forecasts of the day-to-day business, despite several large transactions (both the sale of the Urban Core Portfolio and the acquisition of the former Delta Lloyd portfolio) that closed during the year. Management ensured that changes were made to the reporting to achieve this goal.

The Audit Committee conducted extensive discussions on Vesteda’s debt funding strategy, as set out in more detail in section Debt capital of this report. As a result, management executed a stress test, focusing on interest coverage and leverage. The Audit Committee was informed of the outcome. The Audit Committee was also informed that Vesteda did not meet its own set interest risk threshold for a very limited period between drawing the bridge facility (floating interest) and the bond issue of €500 million (fixed interest) in connection with the acquisition of the former Delta Lloyd portfolio.

In addition, the Audit Committee discussed several funding projects, such as:

  • the amendment and extension of the Revolving Credit Facility: extension of current facility to 2023 and an increase of €100 million to €700 million on more favourable terms;

  • bridge loan: €300 million to finance the acquisition of the former Delta Lloyd portfolio;

  • bond issuance: €500 million under Vesteda’s Euro Medium Term Note programme;

  • liquidity headroom: short-term facility of up to €250 million;

  • commercial paper: for short-term liquidity.

The Audit Committee provided the Supervisory Committee with positive recommendations on all these projects.

Throughout the year under review, the Audit Committee closely monitored the preparations for the implementation of the new ERP system. The Audit Committee supported management’s decision to follow a due contracting process at the start of the project, even though this took longer than anticipated. In addition, the Audit Committee established that due project management was implemented for the project.

The Digital & Innovation manager attended a meeting and presented Vesteda’s IT contingency and data security measures. While the committee was assured that suitable backup is available, the dependency on outdated programmes in the day-to-day operations remains an area of attention until the go-live of the new ERP system.

The Audit Committee received quarterly updates from the Internal Auditor, who was present at all meetings. The Internal Auditor reported on items including the project to implement the General Data Protection Regulation (GDPR) and the ERP project. In addition, the Internal Auditor reported on the considerable amount of projects running in the company, which required a more structured approach. The Internal Auditor also reported on the audit conducted on the process of obtaining income statements used for rental increases. Even though the process was well documented, a human error led to Vesteda requesting certain income statements without being legally entitled to do so. The Chairman of the Audit Committee also had several one-on-one meetings with the Internal Auditor to further discuss her findings. The Chairman reported to the Audit Committee on this and found that there were no material internal audit findings that management had not shared with the Audit Committee.

The Audit Committee assessed the External Auditor, Deloitte, and approved Deloitte’s Audit Plan 2018, in which the acquisition of the former Delta Lloyd portfolio was qualified as a substantial risk. The auditor informed the committee that due to the level of controls in place, he did not identify significant fraud risks that would require increased attention. The Chairman of the Audit Committee met and spoke with the External Auditor on several occasions in the absence of the Managing Board, in order to remain directly informed.

The CFO reported on a quarterly basis on risk management and the activities of the Risk Committee, particularly the assessment of IT security risks. The Audit Committee was informed of the outcome of the annual update of the strategic risk assessment. IT risks notably decreased, while the risk of regulatory measures for the mid-rental segment increased substantially. The chairman of the Audit Committee further had two one-on-one meetings with the CFO on risk management. A partner of Vesteda’s tax advisor, PwC, gave an annual update on tax issues regarding the Fund.

The Audit Committee was periodically provided with reports drawn up by Intertrust Depositary Services, the mandatory depositary of the manager pursuant to the Alternative Investment Fund Managers Directive (AIFMD). On the basis of these reports, the Audit Committee ascertained that the content of the Intertrust reports is satisfactory. In Q4 2018, representatives of Intertrust Depositary Services attended a meeting of the committee and provided more insight into their activities for the fund. The depositary confirmed that it had not identified any errors in Vesteda’s procedures to date.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee (“NR Committee”) comprises Mrs. Van den Herik and Mr. Copier and met four times in 2018.

At the beginning of the year, the NR Committee was engaged in the evaluation of Management’s targets for 2017. It also worked closely with management to set the targets for the Managing Board and Management Team for 2018, in line with the target structure that was set up in 2017 (focusing on greater connection with Vesteda’s KPIs as set out in the Business Plan and more discretion for the Supervisory Committee in the assessment of whether qualitative targets have been met). The targets for 2018 were monitored throughout the year.

The CEO and HR manager periodically updated the NR Committee on their meetings with the Works Council. The committee met the Works Council and had an open discussion with its members.

The committee discussed the impact of the takeover of the former Delta Lloyd portfolio from the perspective of both Vesteda’s and Delta Lloyd’s employees. In addition, it monitored the progress of the ERP project and the impact of the project on Vesteda’s workforce.

The committee addressed the organisation’s efforts to become a High Performance Organisation (HPO) and the need to involve the company’s managers more in getting to the next level. In the light of same, the committee fully supported the proposal to set up a management development programme, which at the time of publishing this report had had its formal kick-off. In addition, the committee stimulated more extensive education plans for the Managing Board’s and Management Team as a positive reward for good work and in view of the committee’s belief that personal growth aligns with organisational growth.

Every quarter, the committee received an update on compliance matters. The committee was pleased with the openness of management on topics such as violations of Vesteda’s code of conduct and measures taken as a result thereof. The Compliance Officer gave a presentation on how compliance is set up at Vesteda and the compliance activities during 2018. The committee was informed that on the whole the Compliance Officer believes the organisation is open to compliance advice and guidance.

The committee engaged an external consultancy firm to provide a benchmark for the remuneration of management and senior staff. It concluded that the remuneration of almost all positions was in line with the Vesteda remuneration policy and with the benchmark, as was the case in 2017.

Meeting of Participants

Vesteda convened two regular Participants’ Meetings in the year under review. These included the annual meeting in April, in which the financial statements and the annual report were discussed and adopted, and the execution of the Business Plan was evaluated. In the bi-annual meeting in December, the participants discussed and approved the Business Plan 2019. Furthermore, Vesteda convened one extraordinary Participants’ Meetings for the approval of the acquisition of the former Delta Lloyd portfolio. The participants’ unanimous support for this transaction was a great success for management and the result of hard work and excellent preparation. In addition, participants attended the annual informal Participants’ Day in September, during which they were both informed on the progress of the company's plans and invited to provide input on several topics. Furthermore, ahead of the fund’s Liquidity Review Date of 1 February 2019, management had various discussions with participants on the process and their interest in participating in it.

Amsterdam, 15 March 2019

Supervisory Committee

Peter Kok, Chairman
Jaap Blokhuis
Hans Copier
John de Die
Seada van den Herik

  • 1 Attendance is expressed as the number of meetings (including conference calls) attended out of the number of meetings the members were eligible to attend.