Bouwinvest aims for stable absolute returns and to outperform the relevant indices alongside booking social returns. These figures are shown below. This is followed by a brief review per fund and mandate.

Residential Fund

Residential Fund, De Meester, Haarlem

Due to the negative sentiment on the residential investment market, the Residential Fund ended with a total return of -6.3% for the whole year (0.6% in 2022), consisting of a 2.4% income return (1.9% in 2022) and -8.5% capital growth (-1.3% in 2022). The decline in capital growth was primarily driven by the geopolitical and economic circumstances mentioned in “The world around us” (page 12). The relative performance against the MSCI Netherlands Index was an underperformance of -1.2% over the five-year period of 2019-2023. Over 2023 the relative performance against the MSCI Netherlands Index was an outperformance of 0.1%.

The Residential Fund’s fundamental strategy was unchanged in 2023 and it delivered solid performances on its main strategic pillars, quality, affordability and sustainability. The tenant satisfaction score on the building and its surroundings increased slightly compared to the previous year. Despite the fact that the Fund made no new acquisitions, the Fund was able to add 943 homes to the portfolio, with 314 of these in the mid-rental segment. On the sustainability front, the Fund retained its five-star GRESB rating, while once again improving its score. The Fund also reviewed its ESG performance framework, and made preparations to refine its asset-level sustainability plans based on the CRREM performance. The Fund also managed to sell nine assets to meet the redemption requests of a number of investors.

In 2023 in a courtcase in which a landlord attempted to recover rent arrears, the court of Amsterdam ruled that, based on the rent increase clause in the lease agreement, it was unclear to the tenant which circumstances were taken in consideration for the determination of the annual rent increase. Therefore, this clause was annulled in this particular case, and the court ruled that based on European consumer protection laws the Fund should not have passed on any rent increase as of the start of the lease. This decision could potentially have a material impact on all the other lease agreements. Several other landlords (including (most) IVBN members) are dealing with the same issue and preliminary questions will be asked to the Dutch Supreme Court to clarify the matter. The clarification from the Dutch Supreme Court is expected in the summer or autumn of 2024. 

Office Fund

Office Fund, The Bell, Amsterdam

Although the Office Fund showed a solid outperformance against the MSCI index in 2023, it recorded a higher than expected negative total return of -8.3% for the full year 2023 (-3.2% in 2022) consisting of 3.7% income return (2.8% in 2022) and -11.7% in capital growth (-5.9% in 2022). The decline in capital growth was primarily driven by the geopolitical and economic circumstances mentioned in “The world around us”. In the Office market the lack of transactions and evidence for appraisers was also a contributing factor in the declining values. The relative performance against the MSCI Netherlands Index was an outperformance of 1.7% over the five-year period of 2019-2023.

The Office Fund’s fundamental strategy was unchanged and the Fund continued to focus on its main strategic pillars of sustainability, the G4 cities and multi-tenant assets. The acquisition of The Bell in Amsterdam increased the Fund’s focus on the G4 cities and added a very promising multi-tenant asset to our portfolio in November. On the sustainability front, in 2023 the retained its GRESB five-star rating and improved its score to 93 points (92 in 2022), putting the Fund third in its group of 29 peers. In Q4 2023, following the BREEAM recertifications, the Fund once again achieved at least a Very Good label for all assets, with the exception of De Lairesse and Valeriusplein in Amsterdam, both of which are for sale. The average tenant satisfaction score for the Fund’s office buildings came in at 7.3 in last year’s survey, above the target of 7.0.

Retail Fund

Retail Fund, Winkelcentrum ‘t Fort, Apeldoorn

The Retail Fund delivered a solid performance, outperforming the MSCI index with a total return of 3.6% for the full year (10.5% in 2022) ) consisting of 4.4% (4.2% in 2022) income return and -0.8% (6.1% in 2022) capital growth. Total return was well above the index and the funds forecasts for the year. The Retail Fund’s past performance was recognised once again in 2023, as it won the MSCI European Property Investment Award for the fifth year in a row. MSCI named the Fund the best-performing specialist real estate fund in the Netherlands over the previous three years through December 2022. The relative performance against the MSCI Netherlands Index was an outperformance of 4.6% over the five-year period of 2019-2023.

While the fundamental strategy was unchanged in 2023, the Fund puts even greater focus on its main strategic pillars - quality, future-driven and sustainability and delivered solid performances. On the quality front, the Fund completed the acquisition of De Groote Wielen shopping centre in Rosmalen-Noord, while Q4 saw the completion and delivery of the Kerschoten shopping centre in Apeldoorn. The Fund also managed to sell a non-core experience asset in Maastricht to optimise its portfolio. On the future-proof front, the Fund completed two projects at Demer 48 in Eindhoven and the Goverwelle shopping centre in Gouda. The Fund also made preparations or started projects at four other assets. On the sustainability front, the Fund managed to retain its GRESB 5-star rating and increased its score to 92 points, four more than the previous year. The Fund also improved its ranking to fourth out of six in the Netherlands, from sixth the previous year. The Fund also continued its efforts to gain greater insight into the energy use (and emissions) of it portfolio on the basis of actual consumption data, custom-made (asset-level) recommendations and BREEAM improvement plans.

Healthcare Fund

Healthcare Fund, Woonzorgcentrum Rosengaerde, Dalfsen

Despite the difficult market conditions, the Healthcare Fund delivered a relatively solid performance in 2023. The total return for the full year came in at 1.1% (-0.1% in 2022), consisting of 3.7% (3.2% in 2022) income return and -2.5% (-3.2% in 2022) in capital growth. The Fund improved its occupancy rate to 99.2% for the whole of 2023.

The Fund’s fundamental strategy was unchanged and performed strong on its strategic pillars: growth, stable return, social return and environmental sustainability. On the growth front the Fund acquired several projects totalling more than € 200 million, well above its plan of € 100 million. The Fund also has a full acquisition pipeline of 9 assets, as a result of which it is likely to draw the remainder of its undrawn commitment of € 161 million in the first half of 2024.

The specific indexation agreements are an example of the Healthcare Fund’s focus on social return. Another example is the goal of housing all types of elderly people, resulting in a well-diversified portfolio with 43% assisted living, 30% intramural care and 24% private care. Last year 70% of the acquisitions were in the mid-rental segment. Furthermore, tenants are on average satisfied with the Fund’s service. 2023 tenant satisfaction survey among our assisted living tenants resulted in an average score of 7.2 from private tenants and 7.9 from commercial tenants.

In the GRESB benchmark survey 2023 the Healthcare Fund achieved a 4-star rating and scored 87 points, placing the Fund second in its peer group. The Fund has GPR labels for all assets and the average score grew to 7.2. The Fund is steady moving to a Paris Proof portfolio with gas free and energy efficient assets.

Reference is made to the court ruling described in the Residential Fund section which may have a similar impact on the residential lease agreements in the Healthcare Fund.

Hotel Fund

Hotel Fund, BOAT&CO, Amsterdam

Boosted by higher-than-expected capital growth the Hotel Fund performed well above expectations, recording a total fund return of 4.1% for the full year 2023 (9.0% in 2022), consisting of 5.2% income return (4.3% in 2022) and -1.1% capital growth (4.6% in 2022). The Fund's fundamental strategy remained unchanged in 2023, focusing on its key strategic pillars, quality, diversification and sustainability.

Due to market conditions, the Fund was unable to further deliver on its diversification strategic pillar, nor expand in terms of its coverage of the top 10 hotel cities. The Fund made no investments or disposals in 2023. However, in late 2023 the Fund’s sole shareholder bpfBOUW confirmed its current allocation of € 400 million to hotel real estate and signalled that there may be additional funding.

On the sustainability front, the Fund retained its GRESB 5-star rating and scored 90 points, placing the Fund second out of seven participants in the benchmark, which is referred to as ‘Europe / Hotel / Core / Tenant Controlled’. In accordance with the Fund’s ESG targets, all assets now have at least a BREEAM-NL Very Good certificate for the Asset component.

Although the outlook for the hotel market remains positive, the Fund remains to focus on the optimisation of its portfolio for the foreseeable future. The future of the fund is depending on the new strategy which will be worked on by bpfBOUW and Bouwinvest in 2024.

Impact Partnership

In Q4 2023 the Dutch Social Impact Real Estate Partnership was launched. This is a joint venture partnership between bpfBOUW and ABP with an initial commitment of € 400 million. No investments have been made in 2023. The Dutch Social Impact Real Estate Partnership is a real estate and social impact strategy in the Netherlands. The Partnership will focus on assets in residential, healthcare and other social real estate. By investing in these categories according to the social impact strategy, the Partnership has a clear intention to contribute to solutions for a broad range of target groups by providing much-needed affordable, healthy, sustainable and appropriate housing. With this the Partnership intends to add more than 1.500 affordable, appropriate and healthy homes. The Partnership has an initial annual investment target of around € 130 million.

Europe Mandate

Europe Mandate, Ardrath Celbridge, Ireland (Ardstone)

The Europe Mandate recorded a return of -2.8% in 2023 (-8.8% in 2022). Lower valuations were mainly caused by higher interest rates leading to elevated yields in most sectors and countries. Overall, 2023 total return for non-listed markets came in at -7.5% (-1.6% in 2022). Listed markets were more volatile and were boosted in the last quarter by anticipated first rate cuts in the first half of 2024 with y-o-y results coming in at 14.2% (-30.4% in 2022). The relative performance against the INREV/GPR index was an outperformance of 0.7% over the five-year period of 2018 Q4 – 2023 Q3. By year-end 2023, the portfolio had a value of close to € 1.7 billion and 76% of the core investments (63% of the total investments) in the European portfolio scored above average on sustainability (GRESB 4 or 5 stars). The Europe Mandate’s pipeline of committed investments currently amounts to € 194  million. The mandate made new investments of € 193 million in 2023, mainly in listed real estate, German and Nordic mezzanine debt and logistics in the United Kingdom.

North America Mandate

North America Mandate, US Workforce Housing (Nuveen)

The North America Mandate recorded a return of -3.8% in 2023 (0.5% in 2022). The valuations in the North American portfolio reflected market dynamics driven by high interest rates leading to elevated yields in most sectors, after the portfolio held relatively well last year. Overall, 2023 proved negative for non-listed markets which came in at -6.7% (9.1% in 2022). Listed markets were more volatile and were boosted in the last quarter by anticipated first rate cuts in the first half of 2024 with y-o-y results coming in at 15.4% (-23.8% in 2022). The relative performance against the NCREIF/GPR index was an outperformance of 2.4% over the five-year period of 2018 Q4 – 2023 Q3. At year-end 2023, the portfolio had a value of nearly € 2.0 billion and 33% of the core investments (29% of the total investments) in the North American portfolio scored above average on sustainability (GRESB 4 or 5 stars). The North America Mandate’s pipeline of investments currently stands at € 332 million. Bouwinvest did not sign new commitments in this region in 2023, due to the relatively high North America exposure and the market conditions.

Asia-Pacific Mandate

Asia-Pacific Mandate, Japan Logistics (Goodman Japan Core Fund) Greater Tokyo – West Building

The Asia-Pacific Mandate delivered a return of 3.0% in 2023 (1.5% in 2022). Overall, 2023 proved profitable, the non-listed portfolio came in at 3.3% (4.4% in 2022) mainly caused by development profits. Listed markets came in at 1.4% (-9.3% in 2022). The relative performance against the ANREV/GPR index came in at an outperformance of 0.7% over the five-year period of 2018 Q4 – 2023 Q3. At year-end 2023, the portfolio had a value of around € 1.5 billion and 76% of the core investments (65% of the total investments) in this portfolio scored above average on sustainability (GRESB 4 or 5 stars). The Asia-Pacific Mandate’s pipeline of investments currently stands at € 602 million. In 2023, this mandate committed a total of € 224 million, including investments in Australia built-to-rent and Asia-Pacific listed self storage and data centers.