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Responsible investing

Being a responsible organisation

We believe that integrity, honesty and corporate responsibility are essential to ensuring we do our job properly and will, in turn, enable us to optimise returns for our clients. We are committed to upholding the highest ethical standards and compliance stewardship in all our business dealings and we avoid conflicting interests. To ensure accountability and transparency, we set targets, based on international sustainability standards, which allow us to monitor our progress.

In 2018, we devoted specific attention to making rental contracts ‘green’, our procurement more sustainable and investing in affordable (mid-rental segment) housing.

Green rental contracts

In the second half of 2018, part of our residential team worked on adding a sustainable focus to our standard lease contract. As a part of our drive to continue to enhance our existing sustainability for the long term, we think it is now time to also start addressing the “user effect”. By adding a separate appendix on the dos and don’ts in the use of our homes, we aim to accelerate the realisation of our goals and ambitions. We strongly believe that engaging our tenants in our sustainable endeavour will make us far more successful in the long run.

Sustainable procurement and business partner selection

Bouwinvest has Service Level Agreements with its property managers, who are assessed each quarter on topics related to administrative management, technical management (including sustainability), commercial management and tenant satisfaction.

To promote and increase sustainable procurement, we launched a project with the IVBN and a number of fellow fund managers to engage and assess the Fund’s suppliers using a sustainability web tool. Current and future suppliers will be assessed on their sustainable commitments, policies and behaviour.

Target on enhance responsible business operations

All new rental contracts include a sustainability clause

Work in progress.

All property managers procure according to sustainability declarations suppliers (IVBN)

Work in progress.

Tenants and business partners selected on the basis of integrity

No issues.

In addition to the targets mentioned above, another measure is aimed at improving the tenant's journey, which will result in a portal for all our tenants in 2021; this includes all information relevant to tenants, including sustainability performance, query tracking and other services.

Investing in affordable real estate

The Fund is currently involved in the ongoing national debate on affordable housing and we have looked at what we can do with our current housing stock. For instance, in 2018 we decided to raise the rents of our liberalised sector properties by no more than inflation plus 1%. We are also looking at lowering the income requirements for our rental properties, so more people will be eligible to live in them. Of course, limiting our rent increases does have a slight impact on returns, but we believe that everyone should have the opportunity to live in their city of choice. Limiting urban living to a select group will have a major impact on the vibrancy and liveability of cities in the long run. We have also noted that an increasing number of investors are taking this issue of affordability seriously and are looking to invest in ‘impactful’ residential projects. Given that the biggest challenge is to increase the supply, by building more affordable mid-market rental homes and investing more in housing across all sectors, the Fund will focus even more explicitly on the mid-rental segment when considering or making acquisitions in the future.

This takes us to one of the biggest challenges currently facing the residential real estate sector, the growing shortage of affordable homes, especially in the Netherlands’ most popular cities and urban centres across the country. Bouwinvest is very keen to be a part of the solution rather than part of the problem. But we are just one player in this sector and ultimately adding more homes across the board is the only way to ensure that there are sufficient affordable homes for people with an annual income of € 35,000 to € 52,000. Only when local authorities, housing corporations, institutional investors and project developers are prepared to join forces, will we be able to develop a structural solution to the serious shortage of mid-market rental properties in urban areas.

An increasing number of local authorities are now taking action to boost the production of affordable homes in and around major urban centres. Unfortunately, the increasing number of restrictions being imposed on new-build projects are actually proving counterproductive in the short term, as they are slowing down the development of new homes. Additional requirements, such as those related to maximum starting rents, minimum surface areas, lower rental indexing and mandatory operating periods, are also having an impact on investment cases and the feasibility of any targeted returns. However, we believe that given the persistent strong demand for mid-rental segment homes now and in the future there is virtually no rental risk. In addition, we expect these homes to continue to be a highly interesting investment long into the future, given the fact that a number of the above-mentioned restrictions (rent indexation and mandatory operating periods) are limited in time.

Adding affordable homes

In 2018, the Residential Fund added a large number (925) of affordable homes (rent of € 711-1,000 per month) to its portfolio. These included State II, which consists of 102 apartments. The land lease contract for this development puts a cap on the initial rent and a cap on the yearly indexation of the rent, which is meant to address the huge shortage of affordable rental apartments in Amsterdam. We also added 70 studios in the Ivens studios development, also in Amsterdam. All the apartments are between 47-50 m2, without parking spaces, but with bicycle storage. The development meets the high demand for small-scale housing in that area, with rental levels within the mid-rental segment. In cooperation with Amsterdam University, we reserved 14 units for future university lecturers and scientists. Both projects were massively oversubscribed and fully let on completion.

Target on investing in affordable real estate

Adding 1,500 mid-rental dwellings to the portfolio in 2018-2020 period

On track. 756 homes added in mid-rental segment (€ 711 - € 1,250) whereof 613 in mid-rental segment (€ 711 - € 1,000) .

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