Portfolio results 2019
x € million
Funds and mandates
Target size 2022
Secured pipeline 2019
Relative performance 2014 - 2018
North America Mandate
Dutch Residential Fund
Dutch Office Fund
Dutch Retail Fund
Dutch Hotel Fund
Dutch Healthcare Fund
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The European portfolio recorded a return of 6.4% 2019 (2018: 4.7%). At year-end 2019, the European portfolio was valued at € 1.2 billion. In 2019, 47% of the investments in the European portfolio had above–average sustainability scores (GRESB 4 or 5 stars). The energy use of the assets declined by 1.4% and CO2 emissions fell by 1.2%.
The European mandate made a total of € 143 million in new investments in 2019, largely in offices and logistics centres. The Europe Mandate has an investment of € 182 million.
North America Mandate
The North American portfolio recorded a return of 11.5% (2018: 4.3%). At year-end 2019, the portfolio was valued at
€ 1.4 billion. Currently, 28% of the investments in the North American portfolio have above-average sustainability score (GRESB 4 or 5 stars). The energy use of the assets declined by 0.3% and CO2 emissions were cut back by 0.4%.
The North America Mandate has an investment pipeline of € 441 million. In 2019, Bouwinvest invested a total € 348 million in this region, with investments in affordable homes, healthcare real estate and logistics real estate. The latter investment is focused specifically on small distribution centres in cities in the eastern part of the United States, including Chicago, Dallas, Houston, Atlanta, Philadelphia, Baltimore-Washington and central and southern Florida.
De Asia-Pacific portfolio recorded a return of 10.6% in 2019 (2018: 8.9%). At year-end 2019, the portfolio was valued at € 1.1 billion. Last year, 31% of the investments in this portfolio had above-average sustainability scores (GRESB 4 or 5 stars). The energy use of the assets in the Asia-Pacific Mandate declined by 2.5% and CO2 emissions fell by 9.1%.
The Asia-Pacific Mandate has an investment pipeline of € 252 million and invested a total of € 209 million in 2019. Last year, this mandate invested in offices, retail real estate, logistics and student accommodation. For instance, the mandate invested € 88 million in metropolitan areas in the Asia-Pacific region. This was an investment in a portfolio that includes office buildings in Tokyo, Osaka, Hong Kong, Seoul and Auckland.
The Residential Fund recorded a total return of 11.5% in 2019 (2018: 18.2%), with an income return of 2.3% (2018: 2.5%). Capital growth came in at 9.1% in 2019 (2018: 15.4%). At year-end 2019, the Fund had invested capital of € 6.5 billion. The Residential Fund retained its GRESB 4-star rating in 2019. The CO2 emissions from the assets in the Residential Fund increased by 10.3% last year, as a result of an increase in gas consumption. Energy use fell by 2.2% in 2019. The Fund has 22 clients, who signed new commitments for a total of € 190 million in 2019.
The Residential Fund has an investment pipeline of € 784 million and last year signed transactions for € 422 million in new assets. For instance, the Fund invested in 30 natural gas-free apartments in The Hague. The Residential Fund also acquired three projects with 177 homes in Rijswijk, Hoofddorp and Zwolle; invested in 316 homes in Delft and acquired 115 apartments in the De Open Veste project in Purmerend. The Fund also made two investments in Eindhoven: 139 rental apartments in the De Gebroeders project in the Oud-Strijp neighbourhood and 99 apartments in the NEXT project in the Strijp-S neighbourhood. The majority of the homes will be rented in the mid-rental segment.
In 2019, the Retail Fund recorded a total return 4.3% (2018: 5.6%). This was the result of an income return of 4.2% (2018: 3.5%) and capital growth of 0.1% (2018: 2%). At year-end 2019, the Fund had total invested capital of € 979 million. The Retail Fund once again retained it GRESB 4-star rating. The energy use of the assets in the Retail Fund declined by 7.3% in 2019, while CO2 emissions fell by 18.6%. In 2019, the Fund’s clients committed a total of € 78 million, taking total commitments to € 90 million. The Fund currently has seven clients.
At this moment, the Fund’s investment pipeline is empty. The transaction volume came in at € 8.2 million in 2019. In line with its strategy, the Fund invested in shopping centres for daily goods (convenience). For instance, the Fund completed the modernisation of the Goverwelle centre in Gouda. The Fund also invested in retail units in main shopping streets, including another retail unit on the Demer shopping street in Eindhoven. Following this acquisition, Bouwinvest now has more than 2,000 m2 of retail space on this street.
The Office Fund recorded a total return of 20.3% in 2019 (2018: 11.4%). The income return came in at 2.3% (2018: 2.2%) and capital growth amounted to 17.8% (2018: 9.1%). At year-end 2019, the Office Fund had total invested capital of € 1,077 million. Last year, the Office Fund once again retained its GRESB 5-star rating (the highest). The energy use of the assets in the Office Fund declined by 10.2% in 2019, while CO2 emissions fell by 7.8%. In 2019, the Fund’s clients committed a total € 72 million. The Fund currently has seven clients.
The Fund has an investment pipeline of € 134 million and did not sign any new transactions in 2019. January saw the start of construction on the Central Park office building (28,000 m2) in Utrecht. The redevelopment of the former Citroën buildings on the Stadionplein in Amsterdam was also completed last year.
The Hotel Fund delivered a total return of 22.3% in 2019 (2018: 17%), with an income return of 4.2% (2018: 4.9%) and capital growth of 17.6% (2018: 11.7%). At year-end 2019, the Fund had total invested capital of € 333 million. The Hotel Fund once again improved its GRESB score considerably in 2019 and raised its GRESB rating to four stars. GRESB named the Hotel Fund the global sector leader in unlisted real estate funds for the second year in a row.
The Hotel Fund has an investment pipeline of € 34 million and signed transactions worth € 25 million in 2019. Hotel Boat & Co in Amsterdam-Houthaven was officially delivered in 2019. Boat & Co offers an innovative hotel concept with 82 spacious hotel apartments, bar and restaurant, spa and gym.
The Healthcare Fund recorded a total return of 7.7% in 2019 (2018: 8.1%), with an income return of 2.8% (2018: 3.0%) and capital growth of 4.8% (2018: 5.0%). At year-end 2019, the Fund had invested capital of € 262 million. The Healthcare Fund improved its sustainability performance considerably in 2019 and was awarded a GRESB 4-star rating, up from a 1-star rating in 2018.
The Fund has an investment pipeline of € 71 million. In 2019, the Fund signed transactions totalling € 85 million for investments in independent care apartments and intramural care facilities in Rijswijk-Buiten, Zoetermeer and Heerenveen. The Healthcare Fund also acquired a care facility in Harderwijk. This facility will be built flexibly and in line with circular building principles and will meet the standards required for WELL certification.
Sustainable real estate investments
Our sustainable real estate investment strategy focuses on the continuous improvement of our sustainability performance by investing in sustainable real estate, improving stakeholder value and acting as a responsible organisation.
Investing in sustainable real estate
Our main goal is to ensure that at least 75% of our invested capital has an above-average sustainability rating (GRESB 4 or 5 stars) by 2021. The share of investments with above-average sustainability scores increased by 2% to 81% in 2019 and is now more than 6% above the minimum target of 75%. This increase was largely due to the fact that the Hotel Fund and the Healthcare Fund were both awarded GRESB 4-star ratings for the first time in 2019. GRESB also named the Hotel Fund global sector leader in the unlisted funds category.
Each quarter, Bouwinvest reports to shareholders on its sustainability performance at fund, mandate and group level. In the third quarter, we provide investors with the updated strategy and the plan per fund/mandate for the next three years. When we update our strategy, we evaluate the previous targets and if necessary we adjust our approach and the targets.
Bouwinvest has raised its target for the percentage of sustainable investments, which came in 81% in 2019, so well above the original minimum target of 75%, to a minimum of 80% for the next three years. Our approach will remain the same.
In 2019, Bouwinvest participated in the PRI benchmark for the first time. For both the strategy and governance module and the property module, we scored an A+, the highest possible score.
Target for improving sustainability performance
In 2021, at least 75% of the invested capital has an above-average sustainability rating (GRESB 4 or 5 stars)
On track: 81.3%
Our sustainable real estate investment strategy is based on two pillars: certified sustainable real estate and reducing our environment impact.
Certified sustainable real estate
Sustainability certificates demonstrate the quality of our buildings, provide us with insight into the current status of our investments in terms of sustainability and potential improvements. We use internationally accepted green building certificates to measure and assess the overall sustainability of our buildings and portfolios.
For the Residential Fund and the Healthcare Fund, Bouwinvest uses the GPR label. The GPR label scores the sustainability performance of buildings based on five themes, including health. The GPR label assesses the reduction measures of noise nuisance, sufficient influx of fresh air, comfortable ventilation and sufficient presence of daylight. In addition, the GPR label process checks user quality, which includes the likes of a safe living environment.
The Retail, Office and Hotel funds use BREEAM-NL certification. BREEAM assesses asset performance and building management on eleven health aspects, comparable to the GPR aspects noise, air quality, thermal comfort, light and visual comfort and user quality. Any acquisitions made by the Dutch funds are subject to strict minimum building label requirements and Bouwinvest has raised its target scores for the standing portfolios. This is how Bouwinvest plans to realise a sustainable portfolio, but also a healthy one. Each year, we evaluate the spread in the portfolio and draw up a plan for improvements. While health has so far been an integral part of the certification schemes, we expect future assessments to look more closely at the specific scores of the underlying aspects that make up a sustainability certificate.
A building that has been certified as sustainable helps to combat climate change and generates broader social, economic, ecological and health benefits. We are convinced that gaining insight in the sustainability performance of our assets reduces risk, ensure higher returns and increases the attractiveness of our real estate and portfolios. In 2019, Bouwinvest was once again one of the biggest clients for the certification of new-build plans using BREEAM-NL. During the Provada property trade fair, Bouwinvest received its 200th GPR building certificate. Bouwinvest was also a co-investor in The Spiral office building (260,000 m²) in New York. Thanks to a number of adjustments in the final design phase of this project – partly at the behest of Bouwinvest – the intended LEED sustainability certificate was adjusted upward to Gold.
The percentage of buildings with green building certificates in the Dutch funds increased to 98.2% in 2019 (2018: 62%). And we also saw an increase in the percentage of buildings with sustainability labels among the GRESB participants in the international mandates. What is more, the international portfolio scored higher than the global average in terms of sustainable building certificates.
Reducing environmental impact
Last year, we once again reduced the environmental impact of the Dutch portfolio via renewable energy generation, i.e. the installation of solar panels and thermal energy storage systems. In addition to this, we include sustainability improvements in strategic maintenance projects. For instance, the use of modern energy-efficient climate control systems, smart lighting systems and the use of new technologies and innovations can all reduce the environmental impact of our assets and portfolios.
Each quarter, the realised reduction in energy use and CO2 emissions per sector fund is reported to the Executive Board of Directors and investors, evaluated and. In the third quarter, Bouwinvest updates and refines the fund plans for the coming three years and submits these to the investors in the funds for approval. When Bouwinvest updates the strategy for the funds, it evaluates the ESG targets (including the reduction of energy use and CO2 emissions). And if necessary, we adjust our approach and our targets.
Over the past few years, the Dutch Residential Fund has implemented a wide range of energy-saving measures and acquired many energy-efficient homes. Thanks to these efforts, 100% of the properties in the residential portfolio had been awarded green energy labels as of 2019.
We see cooperation and targeting real energy use reduction as an essential part of the effort to meet the targets laid down in the Paris Climate agreement. As part of this effort, the Office Fund and technical services provider ENGIE signed the Energy Performance Contract for the WTC The Hague. The aim of this contract is to continue to reduce the energy use in the WTC The Hague in the coming years, effectively making the building Paris-proof, so it can meet the Paris climate targets (for offices: 50 kWh/m2).
The Retail Fund also initiated a collaboration with Albert Heijn. As part of this agreement, we have installed solar panels on the Molenhoek shopping centre in Rosmalen. Bouwinvest leases these panels to Albert Heijn and the energy generated is used to provide electricity for the Albert Heijn supermarket in the centre.
In 2019, Bouwinvest’s Dutch portfolio had a total installed sustainable energy capacity of 9.4 MWp. This was in an increase of 4.6 MWp, due in part to the installation of 1.0 MWp of solar panels on homes in the residential portfolio. This puts us well on track to achieve our target of installed capacity of 12.5 MWp by year-end 2021.
In 2019, the final reduction in energy use amounted to 7.7% for the Dutch funds open to investors and 1.1% for the international mandates. The Dutch portfolio reduced CO2 emissions by 6.8% and the international mandates reduced emissions by 3.5%.
The 6.8% reduction in emissions exceeds our target of 3%. In the year ahead, we will be looking at whether we can include the reduction of CO2 emissions in the quarterly reports, to increase the evaluation frequency.
We will continue to devote attention to making sure we have full and complete access to accurate energy use data in time. To improve the access to energy use data, since 2019 we have been working on gaining direct access to energy use data via an environmental data management system. We have now completed the pilot we ran in 2019 and this helped us draw up a tender for a system that will have to be suitable for all types of property and environmental data. In 2020, we will make a start on the implementation of this system. We have also determined a baseline year for each fund for the calculation of reduction targets from 2020 onwards.
On top of this, we have been devoting an increasing amount of attention to climate risks, such as floods, drought, heat and extreme winds. Extreme weather conditions could have an impact on real estate investments, due to the likes of physical damage, the rising costs of resources or changing demands in terms of products and services. This is likely to result in higher maintenance costs, higher insurance costs or limited availability or coverage of insurance policies, but in extreme cases could also result in the permanent loss or (partial) decline in the value of a building, due to changes in the demand for certain products/locations.
This is why Bouwinvest has started to map out its current portfolio’s exposure to climate risks. We are doing this by combining climate data with building data and other data. In 2020, we will continue to roll out the analysis in terms of asset and portfolio-specific risks, together with appropriate measures.
In addition to being a big user of energy, the built environment – and the real estate sector – is a major user of raw materials. Circular development and building will be necessary to arrive at a new real estate economy and a sustainable building industry. Buildings built according to circular principles generally have a lower environmental impact, as they tend to reuse what are often scarce raw materials and to reduce waste flows. In addition, circular real estate is more sustainable and generates broader social, economic, ecological health benefits. This is why Bouwinvest, too, has set its sights on circularity. In 2019, we invested in a healthcare facility (Villa Verde) in Harderwijk that will be built according to circular building principles.
On top of this, a team of people from accountancy firm Deloitte, materials passport provider Madaster and eight leading real estate owners, including Bouwinvest, have conducted research into the added value of circular building. This research clearly demonstrates the financial impact of integrating the reuse value of materials in buildings in circular business cases.
Target for sustainable buildings
100% of Dutch portfolio labeled in 2020
On track: 98.2%
Target for environmental impact
Reduction of 5% per year
12,5 MWp of installed capacity in 2021
Achieved: c. 10.6 MWp
Improving stakeholder value
Bouwinvest strives to optimise the long-term relationships with its stakeholders. Our most important stakeholders include our clients, local operators, tenants and employees. Clients provide us with capital to invest, local operators help us to invest in buildings outside the Netherlands, our Dutch tenants use our buildings and our employees are essential to achieving our targeted results.
To monitor what our main stakeholder groups think about us, where we could improve our services, or in fact where we are doing well, we regularly conduct various satisfaction surveys. We conduct an annual tenant satisfaction survey, and biennial employee and client satisfaction surveys. The results and improvement points are discussed with the Executive Board of Directors and we publish the outcome in the annual report.
Last year, we conducted our first ever reputation survey, to gain a better understanding of how our stakeholders rate us and what we as an organisation can improve. For this survey, we organised interviews with 45 of our main stakeholders. Clients, consultants who advise pension funds, international partners, Dutch developers and municipal authorities gave us an average score of 7.8. We score highly on items such as entrepreneurship, solidity, enthusiasm, collaboration, expertise and returns. This is something we want to maintain, but there is also room for improvement. Our stakeholders expect us to be more transparent, to provide more information and they want us to have a clear profile on the sustainability front.
Clients see Bouwinvest as a good and professional player. Consultants see Bouwinvest as an effective, solid and professional player. At the same time, both clients and consultants would like to receive timely information on the likes of disappointing results or issues.
International partners are enthusiastic about Bouwinvest. Our peers recognise the development Bouwinvest is going through, but do question our international ambitions. Chain partners value Bouwinvest as a reliable, solid and pleasant partner to work with. Industry organisations see Bouwinvest as an engaged member committed to the sector. Municipal authorities see Bouwinvest as one of the top players in the real estate sector, but find us too modest when it comes to our contribution to cities and communities.
We measure satisfaction among our tenants via an annual tenant satisfaction survey. The teams who are in direct contact with our tenants evaluate the outcome of the surveys. We include any actions necessary to improve the customer journey in our annual planning cycle. We publish the results of the survey in our annual report and discuss these with our property managers so they can make their contribution to improving tenant satisfaction. In 2019, our average tenant satisfaction score was 7.3, which was above our minimum target.
Other initiatives to meet the needs of our tenants include the new tenant portal we developed in 2019. We expect this to help us improve the information we provide to our tenants. In addition, shared mobility company Hely is installing mobility hubs at a number of residential complexes in urban areas. These offer tenants a sustainable alternative to owning and using their own cars. These hubs offer the likes of (electric) shared cars, bikes and cargo bikes that are available to all the tenants in a complex. Hely completed the first hub in Amsterdam North last year.
We also want to contribute to the industry-wide awareness of the environment and social issues. For instance, we teamed up with GRESB to organise the GRESB Annual Results event. One of the aims of this event was to exchange know-how on the consequences of climate risk within the real estate sector.
In 2019, we devoted specific attention to the standard framing and closing of green leases. These contracts include a clause in which both the landlord and the tenant commit to cooperate to make a building more sustainable. Landlords frequently require access to user data, to improve monitoring and to make any sustainability-related efforts more effective. At the same time, landlords commit to listening to any requests tenants may have with regards to improving a building’s sustainability.
We are also working full out in the building sector to improve safety, sustainability and local communications through the certification of our building sites. In its agreements with project developers and construction companies, Bouwinvest includes a condition that the building sites in question should be registered with the Dutch Considerate Constructors scheme (Stichting Bewuste Bouwers). This code of conduct provides the entire project team with concrete guidance on how they can consciously work with a view to the local area, the environment and safety and with less inconvenience for local residents, and goes much further than the legal minimum requirements. In 2017, we set ourselves the target of having more 50% of our building projects registered under the Considerate Constructors scheme each year. Every six months, the percentage of Considerate Constructors building sites is reported to the Executive Board of Directors and to our shareholders. If necessary, we then make adjustments. We publish these results in our annual report and they are audited by our external auditor. In 2019, 51% of our building sites were registered under the scheme (2018: 46%). Last year, we also took a seat on the Advisory Board of the Considerate Constructors Foundation.
Because we achieved our target for 2019, our ambition is now to increase that percentage. To achieve this, from 2020 onwards, in the acquisition phase of a project we will initiate a dialogue with project developers on safety in the construction phase.
Bouwinvest is an active member of various sector organisations and is involved in a range of sustainability and liveability-related initiatives. For instance, Bouwinvest is an active participant in the Sustainable Renovation Deltaplan of the Dutch Green Building Council (DGBC). This is a long-term sustainability programme for shops, supermarkets, offices, logistics centres and social real estate, including schools and healthcare institutions. The goal is to meet the Paris targets for real estate, but earlier than the date of 2050 set by the Dutch government cabinet. Bouwinvest is participating in both the umbrella working group for the sector as a whole and the working group for retail and office real estate.
The members of the Bouwinvest Executive Board of Directors and its employees actively participate in 50 boards and working groups at organisations such as ULI, IVBN, INREV, ANREV, GRESB, DGBC, NEPROM and FSC Nederland. Bouwinvest is also a partner in the Holland Metropole initiative. Last year, Bouwinvest joined Platform31, Stichting Kennisontwikkeling Gebiedsontwikkeling (Knowledge Exchange Area Development - SKG) and the Dutch National Renovation Platform (NRP).
Targets for improving stakeholder value
Conducting a client and tenant satisfaction survey every two years
Achieved: client satisfaction score 7.8
Satisfaction score of > 7
Achieved: tenant satisfaction score 7.3
Minimum of 50% of building sites registered as Considerate Constructors scheme ('Bewuste Bouwers')
Achieved: 51% registered
Being a responsible organisation
Bouwinvest believes it is important to run its business on the basis of integrity, honesty and transparency and we respect the interests of those with whom we maintain relationships. We have embedded these values throughout our organisation and included them in our code of conduct. We believe integrity, honesty and corporate social responsibility are essential to ensure that we do our work properly.
The housing shortage in the Netherlands, primarily in the mid-rental segment with rents between € 720 and € 1,000, in the country’s major cities, is a problem we all face. Bouwinvest considers the affordability of homes to be important, not least because we have been investing in urban areas for 20 years or more. We believe that liveable, affordable and inclusive cities provide a better guarantee for the value retention of our investments. This gives us the best chance of long-term stable returns for our clients. We are closely involved in the discussion on affordable mid-rental segment homes. Our contribution is as follows:
In 2019, we maximised the rental increases of our liberalised sector rental homes at inflation plus 0.5%, following a maximised rental increase of inflation plus 0.5% in 2018. This is a temporary solution, but it has an immediate positive impact for tenants.
We have set ourselves the target that 60% of our residential investments must be in affordable mid-rental segment homes.
We were involved in the agreements with the municipal authorities of Utrecht and Amsterdam for the realisation of affordable rental homes.
The Residential Fund’s acquisition team monitors the number of mid-rental segment homes that are acquired. When making acquisitions, investment proposals explicitly indicate whether and how many mid-rental segment homes are included in the complex and what requirements have been set for mid-rental segment homes. At the end of the year, the result is explained in the Residential Fund’s annual report.
Our investments are less vulnerable to legal, financial and reputation risks as they are a good match with what society requires from us. This also applies to our fiscal conduct. Bouwinvest does not therefore see taxes as a cost item that must be minimised, but as an investment in infrastructure, the legal system and the communities of the jurisdictions in which we invest.
In concrete terms, this means that Bouwinvest takes in to account international initiatives focused on combatting tax evasion and the promotion of greater transparency regarding fiscal matters. Nor do we wish to abide solely with the letter of the law, but also act in accordance with the intention behind legal rules and tax treaties.
We took part in a debate on the culture of the real estate world and the need to continue to boost integrity and transparency in the sector.
A responsible organisation can be expected to organise its procurement in a socially responsible manner. In 2019, Bouwinvest adjusted its procurement policy and made this more sustainable. This is about more than just prices. We also take into account the impact purchasing products has on people and the environment.
Target for being a responsibe organisation
Zero incidents as a result of negligence
Achieved: No issues
Summary of results in 2019
In 2019, Bouwinvest achieved the following results on the sustainable real estate investment front:
Results responsible investment
Continuous improvement of our sustainability performance
81% above-average sustainable investments total portfolio (GRESB 4/5 Stars) (2018: 79%)
100% of the Dutch investments had GRESB 4/5 stars in 2018 (2018: 94%)
35% of investments in the international mandates had GRESB 4/5 stars in 2018 (2018: 41%)
As they did last year, all the Dutch sector funds particated in GRESB.
79% of the international mandates (on the basis of invested capital) participated in GRESB. This is a rise of 4%-point compared with 2018
The Dutch funds have an average GRESB score of 85 points (2018: 79)
The average GRESB score of the international mandates in 2019 (79 points) is equal to previous year and seven points higher than the GRESB global average in 2019 (72 points)*
Investing in sustainable real estate
Sustainable building certificates
98% of the total floor space of the Dutch funds has been awarded a sustainable building certificate (2018: 62%)
The International mandates scored a weighted average of 57 points (2018: 56) on the component sustainable building certificates in GRESB. This is two points higher than the global average (55 points).*
Reducing environmental impact
The buildings in the Dutch funds had solar panels generating c. 10.6 MWp of electricity in 2019. This was an increase of 4.7 MWp compared with 2018.
12% of the energy consumption of the international investments came from renewable sources in 2019.*
Reduction of energy consumption:
The Dutch portfolio recorded a like-for-like energy reduction of 7.7% compared with 2018 and a reduction of 6.8% in GHG-emissions.
The International mandates recorded a 1.1% reduction in energy consumption in 2018 compared with the previous year and a reduction of 3.5% in GHG-emissions.*
98% of the Dutch portfolio has a green label (51% A-label) and the average energy index improved to 1.10
Improving stakeholder value
51% of the construction projects were registered under Considerate Constructors Scheme (2018: 46%).
36 of Bouwinvest's employees have active positions on 50 boards or working groups in sector related organisations i.e. IVBN, ANREV, INREV, AFIRE, VBA, ULI, DGBC and NEPROM
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* Results of the most recent GRESB benchmark 2019