20 April 2020
In an interview with PensioenPro, Dick van Hal, CEO of Bouwinvest, talks about the impact of the Covid-19 virus on the real estate sector and the company he leads. Dick discusses the expectations per real estate sector, the social responsibility of an institutional investor and the opportunities that may arise in the market after the pandemic passes.
Bouwinvest has drawn up various scenarios for the future trajectory of the Dutch economy with a base ‘realistic’ scenario of a 5%. contraction in GDP. "Real estate will continue to be a stable factor in the portfolio, certainly in the case of quality real estate with a low-risk profile, which institutional investors usually have in their portfolios where cashflows should remain stable. The greatest impact on returns will come from a decline in the capital value of real estate," Dick said.
Dick said Bouwinvest will be lenient with tenants who run into payment problems: "Our shareholders are also calling on us to be accommodating. Pension funds are well aware that we need to come out of this crisis together. They are giving us the leeway we need.”
As a member of the Dutch association of institutional investors IVBN, Bouwinvest has made sector-wide agreements on rental deferrals. “Together we have determined a framework for rent deferrals for residential occupiers. We have agreed we will not evict tenants who cannot pay the rent during this period and are flexible on rent deferrals. We will limit the annual rental increase to inflation +1% (this year). We have also made agreements with retailers. They are eligible for a three-month rent deferral. These are logical steps for us to take, because our objective is to foster long-term relationships with our tenants.”
Decline in property valuations represents a healthy correction
"Many investors have become more cautious and have adopted a wait-and-see stance. We have seen that as well. We are working now on the continuity of our business. If everybody is working from home, you need to make sure that goes well. But portfolio management and communication with our stakeholders is also our priority," Dick said on the company’s current acquisition strategy. At the same time, declining values also offer opportunities for pension funds, he added. "It's also healthy that real estate valuations will go down a bit. And that will present opportunities to expand the portfolio.”