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Report of Executive Board of Directors

Financial performance

Total return

The Fund realised a total return of 20.3% in 2019 (plan: 7.2%; 2018: 11.4%), almost entirely driven by a higher capital growth than forecast, which came in at 17.7% (plan: 4.5%; 2018: 9.1%), while the income return came in at 2.3% (plan: 2.7%; 2018: 2.2%). The total return in euros increased to € 172.6 million in 2019, from € 76.0 million in 2018 (plan: € 61.6 million). The higher capital growth was largely driven by the positive market conditions. High-quality office buildings are in high demand as an investment, while the supply is steadily declining and is pushing up market rents. This trend is particularly marked in Amsterdam and this is reflected in the revaluation of office buildings in the capital. Around two-thirds of the revaluations are related to the Fund’s Amsterdam assets, with The Garage and Hourglass seeing the most marked revaluations. The pressure on the investment market is also pressuring yields in the other major cities, including The Hague, and the Fund’s WTC The Hague and Centre Court assets in that city were major beneficiaries of this trend.

The Fund’s invested capital increased to € 1,077 million in 2019 from € 771 million in 2018, an increase of € 306 million, as a result of capital calls (€ 150 million), the addition of the net profit over 2019 to the equity (€ 173 million) and the payments of (interim) dividend to shareholders (€ 17 million).

Income return

The Fund realised an income return of 2.3% in 2019, which is 0.4% lower than plan (2.7%) and equal to 2018 (2.2%). The income return is the result of increased net rental income from assets and a strongly increased invested capital value.

The Fund put two new (redeveloped) assets into operation in 2019, Move and The Garage, adding to the rental result. The occupancy rate in 2019 (90.0%) was 0.9% lower than plan (90.9%) and 3.7% higher than in 2018 (86.3%). This led to a total rental income of € 48.4 million in 2019, € 2.1 million below plan and € 5.1 million higher than in 2018. The property operating expenses of € 22.7 million were € 0.8 million lower than planned in 2019, and € 1.5 million lower than in 2018. This resulted in a € 25.7 million net rental income for 2019, which was € 1.3 million lower than the plan of € 27.0 million and € 6.6 million higher than in 2018 (€ 19.1 million).

In 2019, administrative costs came in € 0.1 million lower than planned. Compared with 2018, these expenses were
€ 0.8 million higher, mainly due to the higher management fee expenses as a result of the higher invested capital.

The Fund called up € 150 million for investments in new-build and redevelopment projects. The higher invested capital combined with the higher rental income resulted in a stable income return of 2.3% (2018: 2.2%).

Capital growth

The Fund realised capital growth of 17.7% in 2019 compared with 4.5% in plan (2018: 9.2%). The values of investment property generally shifted upwards in 2019, primarily as a result of an improved office real estate investment market, with the most marked appreciations for Hourglass in Amsterdam and WTC The Hague in The Hague, partly driven by new and renewed lease contracts.

Office Development

In 2018, Office Development signed a settlement agreement with Lokhorst Bouw en Ontwikkeling, taking over the redevelopment project for the two buildings in Amsterdam. Office Development put together a task force and managed contracts with sub-contractors and suppliers. Controlling the project put Office Development in a better position to take timely decisions and improve the cooperation with sub-contractors. This enabled Office Development to stick to the delivery schedule agreed upon with tenants and to avoid further delays. Office Development set aside a provision for the additional costs involved in 2018. 

In 2019 Office Development completed the redevelopment of the former Citroën buildings. The assets were renamed Move and The Garage and handed over to their new tenants in January and September.

Property performance

The total property return for 2019 came in at 22.5% (plan: 7.9%; 2018: 13.3%), consisting of a 2.3% income return (plan: 3.1%; 2018: 3.0%) and a 19.8% capital growth (plan: 4.6%; 2018: 10.0%). Forward funding related to new developments and redevelopment projects as well as continued valuation increase of the properties led to a 0.7% drop in the direct property return to 2.3% in 2019, from 3.0% in 2018.

The Fund outperformed the MSCI Netherlands Property Office Index (all properties) in 2019 by 5.4% (total return MSCI: 17.1%). This was mainly a result of strong revaluations, especially for assets in Amsterdam. Investments in (re)development projects affected rental income for the full year 2019. This will improve in 2020, as two redevelopment projects, Move and The Garage, and the new asset Hourglass will be standing assets in 2020.

The Fund return (INREV) and property return (MSCI) are different performance indicators. The Fund return is calculated according to the INREV Guidelines and puts net result as a percentage of the net asset value (INREV NAV) while according to the MSCI methodology the property return calculates the net rental income with valuation gain as a percentage of the value of the investment properties. INREV includes cash, management fee and administrative costs in the calculation of the income return (INREV). Furthermore, the amortisation of acquisition costs is treated differently by INREV and MSCI.

Capital Management


In 2019, the Fund welcomed one new investor and agreed € 47.3 million in new commitments and € 24.4 million in additional commitments. This year, we made capital calls of € 150 million, putting the committed capital of our investors to work.


In accordance with the Information Memorandum, the Fund will be financed solely with equity and will have no leverage. It may borrow a maximum of 3% of the balance sheet total for liquidity management purposes.

In 2019, the Office Fund was financed solely with equity and did not use any loan capital for liquidity management purposes.

Treasury management

For treasury management purposes, the Fund acted according to its treasury policy to manage its liquidity and financial risks in 2019. The main objectives of the treasury management activities are to secure shareholders’ dividend pay-out and liquidity for redemptions, as well as managing the Fund’s cash position.

At year-end 2019, the Fund had € 73.7 million in freely available cash. In 2019, the Fund's cash position had improved by € 56.8 million when compared to year-end 2018.

Interest rate and currency exposure

In 2019, the Fund was subject to negative interest rates for its bank balances.

The Fund had no external loans or borrowings, nor any foreign currency exposure in 2019. As a result, the Fund had no exposure to interest rate risks or currency exposure risks. The interest rate risk related to bank balances is limited for the Office Fund.

Dividend and dividend policy

The Executive Board of Directors proposes to pay a dividend of € 20.1 million for 2019 (2018: € 15.1 million), which corresponds to a pay-out ratio of 100%. It is proposed that the dividend will be paid in cash, within the constraints imposed by the company’s fiscal investment institution (FII) status. Of this total dividend, 73.2% was paid out in the course of 2019. The fourth instalment was paid in February 2020. The rest of the distribution over 2019 will be paid in one final instalment following the Annual General Meeting of shareholders on 15 April 2020.


The Fund qualifies as a fiscal investment institution (FII) under Dutch law and is as such subject to corporate tax at a rate of zero percent. Being an FII the Fund is obliged, among other things, to annually distribute its entire taxable result. The Fund complied with the FII requirements in 2019.

The Fund met its obligations related to value added tax, transfer tax and other applicable taxes in their entirety in 2019.

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