Dear stakeholders,
Last year, the residential real estate market was once again dominated by the discussion around the issue of affordability, both in the Netherlands and in other European countries. And this will continue, driven by the growing population and the increase in the number of households, especially in the country’s larger cities.
Last year one of our main priorities was once again adding affordable homes to our portfolio. We completed acquisitions worth around € 422 million last year, compared with our target of € 200 million, 51% of the assets added to our pipeline were affordable homes. Of course, we will need a huge amount of investment in housing to create a balanced situation. We require the addition of close to a million new homes in the Netherlands, with the majority of these in the country's main urban centres.
We and our peers added some 10,000 mid-rental segment homes in the liberalised rental sector in 2019, which was a big jump compared to previous years. This shows that institutional investors are still in a position to help bridge the – growing – gap between supply and demand on the residential market, as long as investment is not hampered by overregulation that could have a negative impact on investment cases.
Under the auspices of the association of institutional real estate investors in the Netherlands (IVBN), we have also been discussing this problem with the Dutch government, as it also wants a long-term solution to this problem of housing shortages and rising rents, which they know will require continued investment from the private sector. We are pleased to be a part of this dialogue and we are hopeful we will be able to find a compromise.
As part of our response to this issue, we limited our rent increase to inflation plus 0.5% last year, sending a clear signal to the government that we are willing to compromise. For its part, the government has outlined an additional budget of € 2 billion to accelerate housing production, with € 1 billion earmarked for extra sustainability measures.
We delivered a total return of 11.5% last year, which was above plan, driven by the solid economy, a low interest rate environment and the shortage of quality homes. We also made progress on the optimisation of our portfolio; in addition to the € 422 million in acquisitions, we divested around € 83 million in assets and signed one sales agreement for € 150 million, which will be delivered in 2020. And most of our investments were in cities outside the G4, including our first investment in Delft. This allowed us to add more affordable homes to our portfolio, as the sharp rise in house prices in the G4 has made it very challenging to acquire affordable homes in these cities. We also made solid progress on our sustainability drive last year. We retained our GRESB 4-star rating and improved our overall score, putting us well on track for a 5-star rating in 2020.
On the funding side, we attracted new commitments for a total of € 190 million in 2019. The queue for cash out is making it difficult to attract new investors, but this is getting shorter as new-build projects are delivered. And of course, last year we made preparation for the transfer of shares from bpfBOUW. This will give existing and possibly new investors the opportunity to invest directly, with immediate cash out.
The impact of the coronavirus will affect our organisation and the Fund’s results and forecasts. In the coming period, we will be monitoring the impact on our organisation and the Fund closely and will inform our investors about the effects of this pandemic and actions taken to mitigate the related risks among others in our quarterly reports and investor calls.
All that remains now is for me to thank our investors for their continued faith in our strategy and all our employees for their hard work and commitment to Bouwinvest in 2019.
Dick van Hal
CEO and statutory director