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Report of the Board of Directors

Financial performance in 2018

Total return

The Fund realised a total return of 11.5% (plan: 6.3%; 2017: 13.1%), consisting of a 2.3% income return (plan: 2.3%; 2017: 2.9%) and a 9.2% capital growth (plan: 4.0%; 2017: 10.2%). The total return in euros increased to € 76.0 million in 2018, from € 71.7 million in 2017 (plan: € 46.6 million). This increase was due to higher valuation movements partly offset by additional costs incurred on a redevelopment project.

The Fund's invested capital increased to € 771 million from € 631 million in 2017, an increase of € 140 million as a result of capital calls (€ 80 million), the addition of the net profit over 2018 to the equity (€ 76 million) and the payments of (interim) dividend to shareholders (€ -16 million).

Income return

The Fund realised an income return of 2.3% in 2018, equal to plan (2.3%) and 0.6% less than in 2017 (2.9%). The income return is the balance of increased net rental income from assets and increased fund and finance costs.

Higher occupancy rates in 2018 (89.2%) relative to both plan (86.5%) and 2017 (86.3%) led to an increased total rental income of € 43.3 million in 2018, € 1.5 million above plan and € 0.1 million higher than in 2017. The property operating expenses of € 24.2 million were € 1.8 million higher than planned in 2018, while this is € 0.3 million lower compared to 2017. This resulted in € 19.1 million net rental income for 2018, which was 1.2 million lower than the plan of € 20.3 million and € 0.4 million higher than in 2017 (€ 18.7 million).  

In 2018, administrative costs were € 0.1 million higher than planned due to additional consultancy fees related to pending legislation. Compared with 2017, these expenses were € 0.8 million higher, mainly due to the higher management fee expenses as a result of higher invested capital.

No new assets were put into operation in 2018 while the Fund called up € 80.0 million for investments in new-build and redevelopment projects. The higher invested capital combined with the stable income resulted in a 0.6% decline in income return to 2.3% from 2.9% in 2017.

Capital growth

The Fund realised a capital growth of 9.2% in 2018 compared with 4.0% in plan (2017: 10.2%).

The values of investment property generally shifted upwards in 2018, primarily a result of an improved office real estate investment market, with significant appreciations for Valina (Amsterdam), WTC The Hague (The Hague) and Centre Court (The Hague) as a result of new and renewed lease contracts.

Office Development

In 2018, Bouwinvest Development signed a settlement agreement with Lokhorst Bouw en Ontwikkeling, taking over the project development for the Olympics Amsterdam. Bouwinvest put together a task force and took over contracts with sub-contractors and suppliers. Assuming control over the redevelopment project put Bouwinvest in a better position to take timely decisions and improve the cooperation with sub-contractors. This enabled Bouwinvest to stick to the delivery schedule agreed upon with tenants and to avoid further delays. The additional costs involved in taking over the project management are estimated at € 18.0 million. In 2018, the Fund set aside a provision for this amount, which had a negative impact of 2.8% on the capital return.

Property performance

The total property return for 2018 came in at 13.3% (plan: 6.7%; 2017: 14.9%), consisting of a 3.0% direct property return (plan: 3.0%; 2017: 3.6%) and a 10.0% indirect property return (plan: 3.5%; 2017: 11.0%). The Fund fell 1.9% short of the MSCI Netherlands Property Index (all properties) in 2018. The underperformance was mainly attributable to redevelopment projects which have not yet generated rental income.

Forward funding related to new investments and a redevelopment project led to a 0.6% drop in the direct property return to 3.0% in 2018, from 3.6% in 2017.

The redevelopment project is scheduled to be commissioned in 2019, secured rent until 2021 (three-year horizon) at year-end 2018 was 81% of the gross rental income (year-end 2017: 55%) and in accordance with the market conditions, the like-for-like rent increased 2.0% (2017: -1.9%) giving the property performance a positive outlook.

The Fund return (INREV) and property return (MSCI) are different performance indicators. The Fund return is calculated according to the INREV Guidelines and puts net result as a percentage of the net asset value (INREV NAV) while according to the MSCI methodology the property return calculates the net rental income with valuation gain as a percentage of the value of the investment properties. INREV includes cash, management fee and administrative costs in the calculation of the income return (INREV). Furthermore, the amortisation of acquisition costs is treated differently by INREV and MSCI.

Capital Management


In accordance with the Information Memorandum, the Fund will be financed solely with equity and will have no leverage. It may borrow a maximum of 3% of the balance sheet total for liquidity management purposes.

In 2018, the Office Fund was financed solely with equity and did not use any loan capital for liquidity management purposes.

Treasury management

For treasury management purposes, the Fund acted according to its treasury policy to manage its liquidity and financial risks in 2018. The main objectives of the treasury management activities are to secure shareholders’ dividend pay-out and liquidity for redemptions, as well as managing the Fund’s cash position.

At year-end 2018, the Fund had € 16.9 million in freely available cash. In 2018, the Fund's cash position declined by € 23.6 million, when compared to year-end 2017.

In 2018, the Fund paid € 16.2 million in dividend to its shareholders and made two capital calls for a total amount of € 80 million.

Interest rate and currency exposure

In 2018, the Fund was subject to negative interest rates for its bank balances. In order to minimise the interest costs on its bank balances the Fund used 30-day bank deposits in 2018.

The Fund had no external loans or borrowings, nor any foreign currency exposure in 2018. As a result, the Fund had no exposure to interest rate risks or currency exposure risks. The interest rate risk related to bank balances is limited for the Office Fund.

Dividend and dividend policy

The Bouwinvest Board of Directors proposes to pay a dividend of € 52.98 per share for 2018 (2017: € 59.81 per share), which corresponds to a pay-out ratio of 100% of the Fund's distributable income. It is proposed that the dividend be paid in cash, within the constraints imposed by the company’s fiscal investment institution (FII) status. Of this total dividend, 86.8% was paid out in 2018, with the interim quarterly instalment paid out on 5 March 2019. The remainder of the distribution over 2018 will be paid out in a final instalment on 2 May 2019, following approval by the Annual General Meeting to be held on 24 April 2019.


The Fund qualifies as a fiscal investment institution (FII) under Dutch law and is as such subject to corporate tax at a rate of zero percent. Being an FII, the Fund is obliged by law to distribute one hundred percent of its distributable result annually.

The Fund met its obligations related to value added tax, transfer tax and other applicable taxes in their entirety in 2018.

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