Bouwinvest invests globally in metropolitan areas in 10 countries and in six sectors. This strategy enables Bouwinvest to derive the maximum benefit from trends and developments, such as population growth, urbanisation and globalisation. What is more, this international approach ensures that Bouwinvest can benefit from various economic cycles in the fastest-growing real estate markets. Given these trends, Bouwinvest expects to increase its invested capital to € 17 billion in 2022.
Although the world is globalising, we see real estate as a local business and believe long-term cooperation is essential to finding and making the right acquisitions. This is why we decided to open an office in Sydney and why we are planning to open an office in New York. We expect this to enable us to seize opportunities more quickly and to work more closely with our local network. In the Netherlands, Bouwinvest manages its own real estate portfolios, we work in close cooperation with our Dutch partners and we play an active role in a number of real estate sector platforms.
Bouwinvest manages three international mandates and five Dutch sector funds. Three of the funds – Residential, Retail and Office – are open to investors. We currently have 25 clients that have invested in our funds. We manage the other funds and the mandates exclusively for bpfBOUW, the pension fund for the construction industry.
To make sure we execute our strategy correctly, Bouwinvest has made our clients our number one priority. Clients entrust their capital to Bouwinvest for the long term. It goes without saying that they expect us to provide them with top-quality and all-inclusive service, which we believe requires proactive and transparent communications. The competition in our sector is also increasing. Clients are much more demanding in terms of social returns as a supplement to financial returns. What this means is that ‘we need to say what we do and we need to do what we say’ - in terms of investment exposure, returns, risks, costs, sustainability and liquidity.
To find out what our stakeholders think of us, in 2019 we conducted our first ever reputation survey. We conducted this survey in addition to our employee satisfaction and tenant satisfaction surveys. It replaced last year’s client satisfaction survey. For this new survey, we interviewed a total of 45 of our most important stakeholders, all of whom we work with on a regular basis. These are a representative selection of ambassadors and critics among our clients, consultants that advise pension funds, international partners and Dutch chain partners, such as construction firms and developers, plus municipal authorities. They gave us an average score of 7.8.
To maintain this score and preferably improve it, we want to continue to invest in close client relationships and proactive communications. We will look back and look forward and we will follow current affairs even more than we do right now. In 2019 and 2020, we were faced with various geopolitical developments, such as growing trade wars, the Brexit turmoil and unrest in the Middle East, as well bush fires in Australia and the coronavirus. All these developments required us to act proactively.
Bouwinvest considers the insights and expectations of the world around us as extremely important. This is why we are in constant dialogue with our stakeholders and why we incorporate current issues in our strategy policies and operations. To gain an understanding of the most important aspects, we update our materiality matrix on an annual basis. Last year we also conducted an extensive materiality analysis and opted to refine our materiality matrix on the basis of desk research and an internal review session. Following this review, we combined a number of aspects and broadend their scope. For instance, we added the aspect climate-neutral buildings, replacing energy-efficient buildings to widen the scope of this aspect. We also added the aspect Safety & Health to extend the scope of the aspects safety in the building process and healthy buildings.
You will find this materiality matrix in the appendices.
Integrity and transparency
Trust is crucial if we are to attract investors. This is why we see integrity, honesty and transparency as major priorities. Our management communicates openly regarding its decision-making and financial and non-financial business performance. Bouwinvest adheres to international reporting standards, such as the Global Reporting Initiative (GRI).
We have an independent compliance function that identifies, assesses and monitors the company’s compliance risks and provides advice and reports on same to the Executive Board of Directors. Our Compliance function uses the Bouwinvest Compliance Cycle to plan and execute the most important activities and to report on same.
The built environment uses some 40% of the world’s energy and potentially accounts for 30% of global CO2 emissions. This makes it very important to improve the energy performance of buildings and to target lower energy use per square metre. Climate-neutral buildings have an impact on energy use and therefore also on the goal to reduce global CO2 emissions.
Climate-neutral buildings have lower (service) costs, higher comfort levels and better occupancy rates. This makes them much more likely to retain their value, plus they are better prepared for the future tightening of laws and regulations driven by the likes of the Climate agreement. We will realise an energy-efficient ‘Paris-proof’ real estate portfolio by investing in buildings with highly insulated shells, the application of smart, modern heating, cooling and lighting systems and onsite renewable energy generation. This is how we help combat climate change and comply with the Paris climate agreement (COP21).
We see energy labels and the measurement of actual energy use per square metre (energy intensity) as methods to help us realise an energy-efficient portfolio. Our goal is to have a climate-neutral portfolio in the Netherlands by 2045. To achieve this, we will have to reduce energy use by around 5% each year.
Limiting the CO2 emissions of our real estate portfolio
The climate is changing due to the fact that earth’s temperature is rising. This is because more and more greenhouse gases such as CO2 are being emitted into the earth’s atmosphere. Real estate accounts for a significant share of these greenhouse gases. As an investor in buildings, we consider it our responsibility to make a contribution to the fight against climate change.
We want to help combat climate change by minimising the use of materials and energy, by investing in well-insulated buildings, the generation of renewable energy in and on our buildings and by working towards a fossil fuel-free real estate portfolio. We work to achieve this goal with a long-term ambition for 2045. Sustainable building certificates provide us with insight into the steps we still need to take. We are reducing our direct emissions (gas), ‘greenifying’ our electricity and we opt for renewable energy sources for our buildings, such as solar panels, heat pumps and thermal energy storage systems.
In addition to reducing our direct emissions by making use of sustainable energy sources, we also look for opportunities to use more sustainable materials and technologies to reduce the CO2 emissions from our real estate. We also engage the users of our real estate in these processes.
Satisfied tenants and users
The satisfaction levels of the tenants and users of our buildings is a good indicator of whether those buildings and the related services we offer are meeting their expectations. Bouwinvest listens to its tenants and users to gain a better understanding of their wishes and requirements, now and in the future. Satisfaction surveys and the questionnaires we submit to tenant panels provide us with useful insights on a regular basis. We use the results of these surveys to improve our processes and products.
Both Bouwinvest and its property managers maintain regular contact with tenants and users. Each quarter, they share their experiences with tenants and users with each other. To gain a better understanding of customer contacts and the quality of the services we provide for tenants and users, we digitalise the customer journey wherever this is possible.
We are convinced that satisfied tenants and users contribute to stable rental income and reduce the risk of vacancy. Bouwinvest strives for a minimum average tenant satisfaction score of 7.
Client focus and satisfaction
Retaining the trust of institutional investors, such as pension funds and insurance firms, is essential to Bouwinvest’s future growth. Clients entrust their capital to us for the long term. We safeguard Bouwinvest’s continuity by serving the interests of our clients. In cooperation with bpfBOUW, we have drawn up a policy document with respect to active share ownership in the listed portfolio.
We maintain a permanent dialogue with our clients regarding their wishes. Bouwinvest conducts regular satisfaction surveys among its clients and strives for a minimum client appreciation score of 7.5.
Satisfied and engaged employees
Bouwinvest’s success depends very heavily on its employees. It is thanks to their dedication and commitment that we are able to record such outstanding results and meet our targets. Satisfied and engaged employees act as our ambassadors and are vital to the continuity of our organisation.
Bouwinvest wants all its employees to be satisfied and engaged, and measures these indicators every two years via a survey. We strive for a minimum average satisfaction score of 7.5.
Cyber security and privacy
Bouwinvest considers data security as strategically important. Clients and tenants should be able to trust that their personal data is well protected. Bouwinvest has strict procedures in place to prevent cybercrime. All of our critical operating processes are backed up by IT applications. From a governance perspective, IT data security is an integral part of the risk management process. One of the defined risks in the scheduled IT Risk Assessment is the threat of a cyber-attack. To mitigate this risk, we have designed a number of control measures and we carry out regular tests.
Because we work with chain partners in real estate, we conduct annual surveys at our partners to check the effective operation of their control measures and IT security around Bouwinvest data. We measure our own cyber security on an annual basis via an assessment by an external partner. This shows that we are well protected. Our goal is to manage our data effectively, exclude substantial incidents on the personal data front and to have our cyber security defence and response in order.
In addition to data security measures, Bouwinvest has also designed policies and processes for the processing and correct handling of personal data, to meet our obligations pursuant to the General Data Protection Regulation (GDPR). We use the annual Systematic Integrity Risk Analysis (SIRA) to evaluate privacy and the processing of personal data. Bouwinvest has a privacy officer who oversees our compliance with requirements pursuant to the law and internal policies.
IT and data-related components inside a building in our real estate portfolio fall outside the management scope.
We consider the affordability of homes to be an important issue, as we have been investing in Dutch urban areas for 20 years or more. Liveable, affordable and inclusive cities offer a better guarantee for the attractiveness of an area and therefore the value retention of the buildings in that area. People want to live, work and stay in these areas now and in the future. This provides our clients with a long-term stable return on real estate.
Bouwinvest strives to offer sufficient homes for which there is an above-average demand, such as affordable rental homes and affordable homes in combination with healthcare. This is why we focus in particular on the addition of (care) homes in the mid-rental segment. Not only in the largest cities in the Netherlands, but also elsewhere in the world. The realisation of affordable (care) homes depends on a number of conditions: availability of building locations, feasible land prices and the room for an appropriate rental policy.
New technologies and innovation
The world around us is changing at an incredible pace. Technological changes could help improve our business, but could just as well threaten our business in the long run. This is why Bouwinvest keeps a very close eye on new technological developments.
We are actively involved in various platforms, such as Holland Contech & Proptech. This enables us to maintain contacts with entrepreneurs in the fields of artificial intelligence, blockchain, Internet of Things and other new technologies. We also exchange know-how and run pilots. Predictive analysis based on big data, process automation, digital communications platforms and innovations devised by new FinTech companies can help us to keep both our investments and our business operations future proof.
Innovations focus on user experience, circularity and sustainability and the way we work (all of which can help us improve the quality of our investment decisions). All three help us to record better results for our stakeholders.
Health & safety
People spend a good part of their days in a home, an office or a school. Despite this, the indoor climate of many buildings is still unhealthy. This is why the realisation of healthy buildings is currently on the rise. Bouwinvest works on the realisation of healthy buildings via the use of various green building certificates. By certifying buildings with broad-ranging sustainability labels, we make sure that these building are more than just energy-efficient and that they take the environment into account; first and foremost, they are a healthy living environment for their users.
Healthy buildings make a positive contribution to the productivity and the well-being of their users. This is why Bouwinvest takes a critical look at, among other things, the quality of the installations to be used and why we are committed to the use of natural materials. We focus on the health aspect via various green building certificates (BREEAM and GPR Building). We also devote attention to the safety of living environments. We plan to make all our Dutch real estate portfolios heart safe.
The impact of the buildings we invest in begins at the start of the construction process. After all, a building site has an impact on its immediate environment. Our priorities are the safety, health and working conditions of employees and limiting the inconvenience for the immediate environment. The Considerate Constructors (Dutch: Bewuste Bouwers) code of conduct offers concrete guidance, above and beyond all legal requirements, for consciously working with a view to the local surroundings, the environment, safety and minimising inconvenience. We advocate the use of the use of this code for all building sites.
The challenge we face on this front is that we have limited influence on the use of the code. In the case of new-build projects, we generally sign turnkey agreements with project developers, while only contractors can apply for Considerate Constructors certification. Despite this, we have set ourselves the goal of having at least 50% of the building sites we invest in (new-build and redevelopments) registered under the Considerate Constructors scheme every year.
The impact of climate change is becoming more and more visible. Physical risks are increasing, but transition risks are also growing as a result of additional legislation governments are introducing to put a brake on global climate change. This means we need to devote more attention to the risks stemming from climate change and the financial impact this will have.
Bouwinvest charts the exposure of the buildings in its Dutch portfolios to climate risks. We do this via a so-called climate stress test, which combines climate data and building information. This measures the likes of potential hindrance or damage due to flooding, heat stress inside and outside buildings and subsidence due to drought and soil compaction. We want a clear picture of whether our current – and future – investments are climate resilient, both in the short term and around 2050. At the same time, we are analysing which (control) measures we need to take to prevent damage to our buildings and to safeguard the safety and well-being of the users of those buildings.