Control of investment decisions
The Investment Committee (IC) is an important advisory body for the Board of Directors in terms of risk management. Supported by the Risk Controller, the Manager Corporate Control participates in the IC and tests the investment process, decision-making and investment proposals. He does so together with the Compliance Officer and several other of Bouwinvest’s specialists. Investment proposals are tested in advance against KPIs, the fundamentals of which are set annually in the investment plan. This includes looking at whether the investments are in line with the budgeted amounts of the various locations and whether the risk classification is correct and in line with the intended investment strategy and the goals for portfolio diversification.
After the IC has provided its advice, the proposal is presented to the Board of Directors. The Board will take the IC advice into consideration and makes the final decision. For investments above a certain threshold, an additional approval by the Supervisory Board is required. The exception to this are investments by Bouwinvest funds which have a shareholders' committee.
Using leverage is a well-known risk factor in the real estate world. Unlike many other real estate investors, Bouwinvest makes no use of leverage for Dutch investments. Bouwinvest’s international investments do involve leverage, but this accounts for a limited proportion of total investments and is continuously monitored in financial and risk reports.
In addition to leverage, extra risk factors in Dutch and international investments include business partners and related due diligence and fiscal matters, and all of these are monitored closely by the risk and compliance functions. In the case of international investments, Bouwinvest devotes extra attention to fee structures and their relation to a fund’s performance.