19 Apr 2018
Dutch institutional real estate investment manager Bouwinvest achieved a new record total investment return of 12.4% over its portfolio in 2017, slightly above the 12.1% seen the previous year, as the performance of the international portfolio nearly doubled over the 12-month period to 10.0% from 5.3% in 2016.
Bouwinvest is targeting a 40% growth in its total portfolio to €13 billion between 2018 – 2020, from € 9.4 billion at the end of last year. An estimated €1.5 billion of this new equity will be placed in its three international regional mandates: Europe (ex-Netherlands), North America and Asia-Pacific to expand these holdings to a 60-40 Dutch/international ratio, the company said in the outlook of its 2017 Annual Report.
Bouwinvest Chairman, Dick van Hal, said: “Bouwinvest achieved its third successive year of double-digit returns in 2017 and it is clear that our strategy of risk diversification through growing our core-style real estate investment portfolio in the Netherlands and across a wide spread of international markets and property sectors is paying off. While there is very strong global institutional investor appetite for the income yield of bricks and mortar, these results weren’t simply a matter of a ‘rising tide lifting all ships,’ as we have consistently outperformed the main investment benchmarks in most markets and sectors.”
But Van Hal also cautioned that: “all that glitters is not gold” and transparency levels are not where they should be in some real estate markets, pro-cyclical valuation risk is lurking on the horizon as interest rates tick upwards and geopolitical risks are also growing. He said it was crucial to protect the value of Bouwinvest’s investments against rapidly evolving social and market trends, by maximising the future liveability and sustainability of its portfolio. For example, rising urbanisation doesn’t have to lead to the ugly and ill-planned densification of cities, he concluded.
Within the three international mandates, the €1.0 billion European portfolio achieved a total return of 10.9% in 2017, sharply up on 2.7% in 2016. The fund invested a total of €115 million in the offices, retail, logistics and residential sectors last year and around 35% of the portfolio has the highest categories four or five-star labels from real estate sustainability ratings agency GRESB. Looking forward, Bouwinvest sees very attractive future potential investment opportunities in the residential and student accommodation property sectors in the French, German, UK and Irish markets.
The €1.02 billion North American portfolio saw a total return of 6.2% in 2017 (2016: 8.8%). Over the past year, the fund invested €145 million in High Street retail properties, grocery stores, logistics centres and residential real estate. Some 32% of the portfolio has either a GRESB four or five star label.
In the Asia-Pacific region, returns leapt to 16.2% last year from 2.7% over the previous 12 months on a €629 million portfolio which has a 36% four or five-start GRESB rating. A total of €102 million was invested in offices, retail and student accommodation. For the period ahead, Bouwinvest sees excellent opportunities for investments in family homes (Japan, Australia and China) and student accommodation in Australia. The Asia-Pacific investment team is now setting its sights on both non-listed and listed prime logistics real estate in selected emerging markets.
Bouwinvest’s €4.8 billion AUM flagship Dutch Residential Fund recorded a total return of 15.6% in 2017 (2016: 20.5%). The direct rental income component of the total return, at 2.8%, was lower than the previous year because the fund has a substantial supply pipeline, which isn’t yet generating rents.
The €0.9 billion Dutch Retail Fund saw a total return of 7.8% in 2017 (2016: 8.5%) as it increased its exposure to convenience -- supermarket-anchored -- shopping centres for daily necessities.
The Dutch Office Fund, which has AUM of €0.6 billion, achieved a sharp rise in total returns to 13.1% last year (2016 5.5%), thanks largely to the indirect valuation component stemming mainly from the buoyant Amsterdam office market.
The Hotel Fund had a portfolio of four assets in The Hague and Amsterdam with 1,200 rooms and valued at €0.2 billion at end-2017. The fund’s forward pipeline includes three projects in Amsterdam (Hourglass, Boot&Co and AmstelTower), with a total of 383 rooms, and where lease agreements of between 20 and 25 years have been signed.
Bouwinvest’s Healthcare Fund comprised of seven assets with a total value of €112 million at the end of 2017. The fund stepped up its investments considerably last year, signing transactions with a value of €73 million related to independent assisted care apartments and intramural care properties in Apeldoorn, Leidschendam, Almere, Heiloo, Amsterdam and Groningen.