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Message from the CEO

Message from the CEO

Dear stakeholders,

Last year saw a rapid deterioration of the sentiment on the retail market, driven by another string of high-profile bankruptcies and rising vacancy rates in many towns and cities. This deterioration in sentiment was clearly reflected in the very sharp decline in the stock prices of listed retail real estate funds, which of course has a knock-on effect on values in the unlisted retail real estate market. We continue to believe that the negative image of the retail market does not reflect the fundamentals of the Dutch retail market. This is why last year we conducted an in-depth study of this market, which you can find on our website.

What we see is that the trends like growing online sales, ageing and the high density of retail supply in the Netherlands are all having a negative impact on the bricks and mortar retail. The population of the Netherlands is still growing, so we will continue to see consumer numbers grow. However, while some cities will see stronger population growth than others and while occupancy rates will remain stable or increase in these cities, smaller cities in peripheral areas of the country will see an increase in vacancy rates. This growing polarisation makes it even more important to choose the right locations for investment. We are also seeing the emergence of new brand stores that are proving popular with consumers, and retailers targeting a combination of online sales and sales via their physical stores. We believe this multi-channel approach will be one of the keys to successful retail formulas as we go forward.

Very importantly, the strategy of focusing on Experience and Convenience we chose several years back is a good fit with the current trends on the Dutch market. We are still signing new leases and we still have an occupancy rate of around 97%. However, given the challenges the retail market is facing, we now have to make even clearer choices. We have refined our definition of Experience and Convenience even more precisely and added a new ‘Mixed retail’ segment, which will enable us to take advantage of opportunities outside our strict definition of Experience and Convenience.

While the Fund’s total return was lower than planned at 4.3% (plan 6.9%), we still outperformed the market as a whole. In addition, we made a great deal of progress in terms of optimising our portfolio. We acquired good Experience assets in Eindhoven and Utrecht and completed the sale of the Makado shopping centre in Purmerend, Maasplaza in Dordrecht, three supermarkets in Hengelo and Enschede and two non-prime retail units in the Achterdoelen shopping centre in Ede. Also on the optimisation front, we completed the renovation of the Muntpassage in Weert and the upgrade and expansion of the Goverwelle shopping centre in Gouda. These are now both in good shape for the future. Our 2019 acquisitions and disposals were fully in line with our Experience and Convenience strategy and our optimisation drive.

Of course, improving the sustainability of our portfolio and our assets has been and will continue to be an integral part of this optimisation. We have made a lot progress in terms of improving the sustainability of our portfolio, partly thanks to the fact that we are working closely with a number of tenants to realise our shared ESG ambitions. Last year, we retained our GRESB 4-star rating and improved our overall score, putting us well on track to achieve our targeted 5-star rating in 2021. We have also set ourselves the target of a Paris-proof portfolio before 2045. 

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

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