Financial performance
Fund return
The Fund realised a total return of -8.3% in 2023, consisting of 3.7% income return and -11.7% in capital growth. Net rental income, administrative and finance expenses are the main drivers for the income return. The decline in capital growth was primarily driven by uncertainties triggered by the geopolitical and economic effects of the war in Ukraine, high interest rates, inflation and energy prices.
Fund performance | 2023 | 2022 | |
Actual | Plan | Actual | |
Income return | 3.7% | 3.3% | 2.8% |
Capital growth | (11.7)% | (6.3)% | (5.9)% |
Fund performance | (8.3)% | (3.1)% | (3.2)% |
Income return
Net rental income of € 51.8 million was € 0.1 million lower than the plan of € 51.9 million (2022: € 43.8 million). The most significant drivers of the deviation from plan were higher property operating expenses (€ 1.8 million) offset by higher gross rental income (€ 1.8 million).
Gross rental income was higher than plan due to the indexation of rental income from standing assets. The difference in property operating expenses was mainly due to higher-than-expected maintenance costs and higher taxes.
Capital growth
The Fund realised capital growth of -11.7% compared with the plan of -6.3%. Highly changing market circumstances in 2023 caused all real estate forecasts to be less accurate. Especially the further rise of inflation and interest rates affected the yields and thus the capital values. The (prime) office market is substantially leveraged and was therefore hit harder by the yield increase, while, additionally, the uncertainty regarding the effects of the working from home remains hanging over the market.
Property performance
Property performance | 2023 | 2023 | 2022 |
Actual | MSCI | Actual | |
Income return | 4.3% | 4.1% | 3.4% |
Capital growth | (12.0)% | (14.7)% | (6.0)% |
Property performance | (8.2)% | (11.1)% | (2.8)% |
The total property return for 2023 came in at -8.2%, consisting of a 4.3% income return and -12.0% capital growth. The Fund outperformed the MSCI Netherlands Property Office Index (all properties) by 288 basis points in 2023. This outperformance was related to both the Fund's capital growth as the income return. The capital growth of -12.0% was 266 basis points higher than the benchmark's capital growth of -14.7%. The income return of 4.3% was 14 basis points higher than the benchmark's income return of 4.1%. Outperformance was mainly driven by a lower allocation to Amsterdam (where the benchmark had the lowest total return of -14.05%) and a significant higher allocation to The Hague (where the benchmark an above average total return of -7.1%). In addition, the Fund showed higher total returns in all G4 cities. The highest outperformance was shown in Utrecht (0.6% versus -5.1%) and Rotterdam (-8.7% versus -11.3%).