Type of property

The Covid-19 pandemic has accelerated a number of existing trends, which are likely to increase demand for sustainable and easily accessible office buildings that are well suited to act as a social hub for users. For one, tenants are already looking for even more flexibility, in terms of both office use and in terms of flexible leases. In addition, a healthy working environment is very much top of mind right now, and we could see the introduction of higher climate control and air quality standards. Very importantly, the fact that so many people have been working from home has highlighted just how important offices are as meeting places and workplaces for inspiration, brainstorming and innovation. The fact that many companies are likely to downsize their overall office space will create additional demand for more compact (flexible) offices. These will often be part of larger – multi-tenant and multifunctional – office complexes in vibrant and highly accessible locations, as these offer the flexibility and the additional facilities and amenities seen as essential by most modern office users.

Multiple lease agreements reduce the volatility of revaluations and help increase the control of asset management risks. Furthermore, the Fund focuses on locations that attract a widely diverse group of people and offer a mix of culture, education, sport and work facilities. The share of multi-tenant assets in the portfolio had increased to 68.7% at year-end 2023 (2022: 64.5%). The purchase of multi-tenant asset The Bell in Amsterdam contributed to this; 50 new tenants have been added to the portfolio. 

Since the reduction of Covid restrictions, the dynamics on the occupier market have increased. There is a particular demand for sustainable buildings in easily accessible locations with something extra to encourage employees to return to the office. Central Park (Utrecht) has benefited from this. The Fund signed new lease contracts for a total of 7,176 m2 in 2023, which means that the occupancy rate at Central Park had risen to 97.6% at 31 December 2023.

Portfolio composition by single versus multi-tenant based on market value

Tenant mix

Most of the Fund’s tenants are considered to have a low debtor’s risk. The exposure to the largest tenants (top 5) fell to 39.0% from 41.3% in 2023, which is in line with the Fund's diversification guideline to the effect that the total potential rental income of the five largest tenants may provide a maximum of 50% of the Fund's total potential rental income.

Allocation of investment property by tenant sector as a percentage of rental income

Top 10 major tenants based on passing rent

Expiry dates

Close relationships with its tenants enable the Fund to propose lease extensions at the right time. However, the Fund does take lease expiries into account and anticipates these to attract new tenants. This is one of the reasons tenant satisfaction is so important and why this is a key part of the Fund’s strategy.

The increase in expirations after 2028 is mainly a result of new rentals for Central Park (Utrecht) and some new lease agreements for The Bell (Amsterdam), WTC The Hague and Nieuwe Vaart (Utrecht). In addition, lease extensions, especially in WTC The Hague, WTC Rotterdam and Olympic Stadium (Amsterdam), also contributed.

The newly added asset to the portfolio, The Bell (Amsterdam), has a large number of tenants with relatively short remaining lease terms. This is one of the reasons why the average weighted remaining term of lease agreements at the end of 2023 was slightly lower than it was at the previous year-end (5.2 years as of 31 December 2023 versus 5.6 years at year-end 2022).

Expiry dates as a percentage of rental income

Allocation by risk

In terms of risk diversification, at least 90% of the investments must be low or medium risk. The actual risk allocation at year-end 2023 is shown in the figure below. Every year, the Fund assesses all properties separately. In 2023, the Fund was classified as 100% low to medium risk and as such was consistent with the framework of the Fund conditions.

Future investments in WTC Rotterdam will run parallel with an increase in the occupancy rate for this building and will therefore lower the risk profile of the Fund even further. This asset is currently categorised as medium risk, but will be categorised as low risk once its occupancy rate climbs above 85%, something the Fund expects to happen in 2024. This means the Fund has sufficient leeway on the risk front to acquire an office redevelopment project or an office building with a low occupancy rate.

Allocation of investment property by risk category based on market value

Financial occupancy

In the course of 2023, the occupancy rate increased to 93.2% from 90.4%. The Fund closed numerous new leases, especially in the second half of the year. Transactions for Central Park (Utrecht) led to an increase in the financial occupancy rate for this asset to 97.6% per 31 December 2023 from 72,5% at the beginning of the year. Many of the new lease agreements started on 1 December, which will result in a further increase in the financial occupancy rate at portfolio level from 2024.

Financial occupancy rate