Portfolio composition at year-end 2014:
- 41 properties across the Netherlands
- 196,537 m2 of lettable floor space
- Total value investment properties € 654 million
Diversification guidelines and investment restrictions
|Diversification guidelines||Current portfolio||Conclusion|
|≥ 80% of investments invested in core regions||92.3% in core regions||Compliant|
|≥ 90% of investments invested in low or medium risk categories. At portfolio level: ||96.9% in low and medium risk ||Compliant|
|50-75% low risk investments||76.2% low-risk investments||Temporarily not compliant|
|25-50% medium-risk investments||20.7% medium-risk investments||Temporarily not compliant|
| < 10% high-risk investments||3.1% high-risk investments||Compliant|
|Investment restrictions when the total investments of the Fund are > € 750 million|| || |
|< 15% invested in single investment property ||There is one investment property exceeding 15% (*) ||N/A|
|< 10% invested in non-core (non- retail) properties ||All the investments are in retail||Compliant|
|< 10% (re)development activities and:||Investments under construction are 32% (*)||N/A|
|- only assets that are part of the Fund ||The assets are property of the Fund||Compliant |
|- only assets that are optimising the quality of the portfolio||The investments will upgrade the streets as a shopping destination ||Compliant |
|- no negative impact on the diversification||Inrcrease of 6.6% to a total of 66.2% high street retail||Compliant |
|- signed intents relating to at least 60% of the rental income||> 80% singed intents||Compliant |
|No investments that will have a material adverse effect on the Fund’s diversification guidelines.||There have been no investments in 2014 that have a material adverse effect on the Fund's diversification guidelines||Compliant|
Investments, divestments and (re)developments
In line with the strategy, the Fund acquired turnkey assets for € 57 million. With our investment activities in new developments and redevelopments, the total investment activities ended up at € 76 million. All the acquisitions bolster either the ‘Experience’ or ‘Convenience’ portfolios.
Acquisitions high street retail (Experience)
Beurs-WTC retail units, Rotterdam
The Beurs-WTC Rotterdam on Coolsingel, with its 8,100 m2 of high-end retail space, is located in an excellent A1 location in the heart of the second shopping city in the Netherlands. It is well-positioned near major department stores and has strong (international) tenants, such as ZARA (home), WE fashion, Prenatal and Intertoys.
Acquisitions shopping centres (Convenience)
The Parkweide shopping centre in Ede-Noord is a retail development in a green area to the north of Ede, close to several smaller towns and to road and other transport links. The centre offers 5,400 m2 of gross lettable area and will be anchored by two large supermarkets (Albert Heijn and Aldi) and offer a range of retail outlets providing daily groceries and other necessities, plus catering outlets. Parkweide offers very generous parking facilities, with space for no less than 200 cars, adding another level of 'convenience' to the centre.
Acquisitions in 2014
New assets in the portfolio (Convenience)
The Zuid-Traverse shopping centre in Rotterdam opened fully let in April 2014. This 3,200-m2 retail development has helped breathe new life into the local area, adding much-needed convenience shopping to the existing retail offering in the city’s Zuider Boulevard. The seven new retail units include supermarket Dirk van den Broek.
Projects in development (Convenience)
Bouwinvest Development is developing an eye-catching multi-use complex in the historic district of Amsterdam-Zuid, near the 1928 Olympic Stadium. The new development will include 4,500 m2 of retail space for the Retail Fund and 100 apartments for the Bouwinvest Dutch Institutional Residential Fund. The Stadionplein complex will be a very distinctive addition to the neighbourhood, thanks to its much larger shops, especially the Albert Heijn supermarket, and its superb access by road and public transport. The shopping centre will open in 2016 and will focus primarily on healthy foods, anticipating the growing demand for this type of product in its high-end catchment area.
The Fund acquired the Mosveld shopping centre in the revitalised and restructured southern neighbourhood of Amsterdam-Noord. This centre has a substantial and growing catchment area, thanks to the ongoing transformation of this former harbour area, including numerous residential and cultural developments. The 7,700-m2 Mosveld shopping centre will focus on daily goods. With two modern supermarkets as anchor stores, a central location in the neighbourhood and its own parking area, the centre offers all the convenience the Fund demands. Opening is planned for 2016.
Redevelopment investments in high street retail (Experience)
Nieuwendijk 196, Amsterdam
The building activities at Nieuwendijk 196 were started in October 2013 and will be completed in the first half of 2015. The complex is a true eye-catcher, with its impressive new glass façade. The 5,200 m2 complex has been rented by two high-fashion department stores. The main tenant is Zara with a 3,000 m2 store. In 2014, the Fund signed a lease contract with JD Sports for the remaining 2,200 m2 of retail space. The redevelopment of Nieuwendijk 196 will further upgrade the street as a shopping destination.
Damrak 70, Amsterdam
In 2014, the Fund invested € 8 million in the redevelopment of Damrak 70, located in the heart of Amsterdam. The redevelopment has made substantial progress. The building permits have been obtained and leases have been signed with tenants C&A and Primark. C&A has signed a lease on over 8,000 m2 of retail space, while Primark has agreed to lease 8,800 m2. Starbucks has already opened a store at Damrak 80/81, which is also part of the redevelopment. In total, the Fund will invest some € 42 million. Building activities started in March 2014 and the renewed Damrak 70 is set to open in the fourth quarter of 2015.
Redevelopment investments in shopping centres (Convenience)
The Fund is investing in the upgrade and expansion of the Goverwelle shopping centre. The 1,000-m2 extension will create space for the expansion of the Albert Heijn supermarket and for a second supermarket, plus additional parking facilities for 235 cars. Bouwinvest expects to complete this redevelopment in mid-2016.
To maintain the high quality of this successful shopping centre for daily goods and reduce the risk of vacancy, the Fund is upgrading and updating the look and feel of this centre and adapting the division of retail spaces to the demands of the current tenants. The Albert Heijn supermarket will be adding over 400 m2 to its current retail space and we are improving the routing within the centre. Thanks to these changes, combined with the addition of extra parking spaces and the arrival of a second supermarket (Aldi) nearby, the Fund expects Molenhoekpassage to retain its strong market position in Rosmalen, part of the city of Den Bosch. Construction started in the first quarter of 2015 and Bouwinvest expects to complete the redevelopment in the third quarter of this year.
Redevelopment investments in other retail locations
A large-scale redevelopment will give new momentum to the Westerhaven shopping centre in Groningen. The current shopping centre includes over 14,000 m2 of retail space and a parking garage for 800 cars. Westerhaven comprises a traditional shopping street with tenants such as C&A, Hema and Kruidvat and a two-floor building with large-scale retail spaces. Over the past years, vacancies have risen in the centre, especially on the upper floors. The redevelopment of the Westerhaven asset entails a radical change of the concept of these large-scale stores. The current entrances on the first floor will be replaced by ground floor entrances and internal escalators will link the floors in each store. In addition, the architecture will be altered, resulting in a new, distinctive, two-floor high façade.
Assets that do not fit our strategic requirements regarding experience or convenience because of their location, size or economic outlook will be sold. Following these divestment criteria, we concluded a partial sale of Achterdoelen in Ede in 2014. The divestment involved approximately 11,000 m2, with 900 m2 of this office space.
Optimising the risk-return profile
In terms of risk diversification, at least 90% of the investments must be low or medium risk. On the portfolio level, we have identified bandwidths to budget the risk.
- 50 – 75% lower risk investment properties
- 25 – 50% medium risk investment properties
- 0 – 10% higher risk investment properties
The target and the actual risk allocation at year-end 2014 are shown in the figure below. In 2014, the proportion of low-risk investments increased from 70.7% to 76.2%. This is the result of the acquisition of the high street retail component of Beurs-WTC, the sale of a large part of the asset Achterdoelen in Ede and payment by instalments on committed acquisitions and redevelopments. In early 2015, we will again update the risk category of each asset. After this review, we expect the risk allocation to be within the bandwidths stated above.
Portfolio composition by risk category based on book value
Active asset management
The Fund once again had to deal with a difficult retail market in 2014, due to the obvious fragility of the modest economic recovery and continuing low consumer confidence. Nevertheless, thanks to highly active management of the portfolio, the Fund kept the occupancy at a high level last year. The average financial occupancy rate for 2014 was 94.4% (2013: 92.9%).
Financial occupancy rate
Lease contracts covering a total of 8,755 m2 expired in 2014, and the Fund closed and extended leases for a total of 32,590 m2 (€ 9.3 million per year). In addition, the Fund also closed new lease contracts for redevelopments totalling 27,616 m2. This included the lease with retailer Primark, which was the largest lease transaction in the Netherlands in 2014. Altogether, a record number of square metres in the history of the Fund.
As a result, the average remaining lease time increased significantly to 6.8 years, from 3.4 years at year-end 2013.
Expiry dates as a percentage of rental income
To keep yields stable and to optimise the occupancy rate, the Fund has also worked on initiatives to integrate social media in its shopping centres. In early 2014, Bouwinvest forged a close partnership with a social media specialist, mainly to support local entrepreneurs.
Bouwinvest also continued to improve the sustainability of the Fund, for example through the DUO energy labels for all the assets in the portfolio. These labels provide information and sustainability measures for both tenant and lessor. The improved sustainability of the Fund’s assets helps to maintain or increase their value and improves their letting potential. As a result of the improved sustainability, the Fund achieved a GRESB Green Star status in 2014. The next objective is to retain this Green Star status and to continue to implement initiatives to achieve our CSR ambitions.
Experience vs Convenience
Capitalising on key market developments, the Fund focuses on high street retail units in major shopping cities (Experience) and district shopping centres with a strong catchment area, easy access and a strong tenant mix (Convenience). The target portfolio is divided into 70% high street retail and 30% shopping centres. Following investments and divestments during 2014, the share of high street retail rose to 66.2% in 2014 from 59.6% in 2013 , in line with our diversification targets.
Portfolio composition by type of retail location based on book value
The Fund’s portfolio includes a wide range of tenants by segment type. In 2014, the segments fashion and luxury goods increased to 44.8%, mainly due to acquisitions. The segment ‘daily goods’ is also strongly represented, accounting for 26.9% of the total portfolio, in line with the Fund’s strategic focus on ‘high street retail’ and ‘district shopping centres’, or Experience and Convenience.
Portfolio composition by tenant sector as a percentage of rental income
Top 10 major tenants based on theoretical rent
The top ten tenants accounted for a total volume of 38.8% of the theoretical rent in 2014 (2013: 37.6%). Following the acquisition of the retail units of Beurs-WTC Rotterdam, WE Fashion became one of the Fund’s top-ten tenants (based on theoretical rent). The new leases in our redevelopment projects, such as the leases with major retailers Primark and Zara, are not included in these figures; these will be included at the effective date of the lease.