Vesteda Residential Fund - Inaugural Green Bond Investor Presentation - May 2019 - Wilhelminaplein, Rotterdam
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Vesteda Residential Fund
Inaugural Green Bond Investor Presentation – May 2019
Wilhelminaplein, Rotterdam
Zeeburgereiland, Amsterdam
`
Investor Presentation – May 2019
Presenting to you today
Gertjan van der Baan Frits Vervoort Frans Baas Stephan de Bie
Title CEO CFO Treasurer Program Manager Sustainability
In office since 2014 2016 2018 2018
In real estate since 2002 2016 2018 2011
Total experience 25 years 34 years 16 years 8 years
Previous experience • Van Herk Groep / Nagron (CEO) • Grontmij (CFO) • ING Bank • Innax
• Kempen & Co • Deloitte Consulting • Lloyds Bank • Corporate Facility Partners
• Vedior (CFO) • ABN AMRO
• Vendex Food Groep
2
Investor Presentation – May 2019
Key investment highlights
▪ Largest Dutch independent institutional residential investor fund
▪ Experienced management team
Strong corporate
▪ GRESB score: five out of five stars with #2 ranking in the Netherlands (top 20% performers globally)
profile ▪ 84% of Vesteda’s homes have an energy label A, B or C
▪ Broad institutional investor base with a long-term horizon
▪ Structural housing shortage expected to continue
Attractive market ▪ Higher rental prices and house prices expected going forward
developments ▪ Demand in the mid-rental market segment will continue to grow, especially in urban areas
▪ Economic growth forecasts remain positive
▪ Strong position in defined market: Dutch mid-market unregulated rental segment in urban areas with dynamic economic activity & favourable trends
▪ High quality and diversified portfolio with low vacancy rates
Delivering on asset
▪ Solid and predictable returns through pro-active cost-efficient in-house property management
strategy ▪ Economies of scale resulting in low overhead costs
▪ Integration of the Delta Lloyd portfolio is well on its way
▪ Successful execution of funding strategy with clearly defined financial targets
Delivering on ▪ Low leverage profile and strong investment grade BBB+/stable credit rating from Standard & Poor’s (reconfirmed May 2019)
funding strategy ▪ Well-diversified senior unsecured debt funding structure with decreasing cost of debt
▪ Significant headroom under covenants
3
Contents
Introducing Vesteda 4
Market Overview 11
Strategy & Sustainability 14
Company Performance and recent events 23
Financial and funding profile 30
Green Finance Framework 34
Key Terms & Conditions 41
4
Investor Presentation – May 2019
Vesteda at a glance
Introduction Quick statistics as per December 31, 2018
• Vesteda is the largest institutional residential fund in the Netherlands and
focuses purely on core residential real estate
1 1 1 1
• We have a leading position in residential units in economically strong and Fund Portfolio Participant base Internal team
large city areas
• We focus on residential units with a strong long-term investment profile in
the mid market segment
• We see our internal management and property management model as a 27,809 €7.3b €281m 4.7%
differentiating advantage, which translates into strong operational
Residential units GAV Gross rent GIY²
performance and lowest cost (outperforming MSCI index)
• Our broad participant base of well-known (inter)national institutional real
estate investors has a sound balance and supports our investment strategy
• Vesteda has limited debt financing €945 31 bps 1,433 97.5%
Pipeline
• GRESB score: five out of five stars and #2 ranking in the Netherlands (top Rent / month¹ TER Occupancy Rate
residential units
20% performers globally)
• 84% of Vesteda’s homes have an energy label A, B or C
Green Star
23.0% BBB+ GRESB 5-star 23.7%
Total return Credit rating score, Leverage
#2 ranking
1. Excluding parking and commercial real estate
2. Based on annualised rent from acquired Delta Lloyd portfolio 5
Investor Presentation – May 2019
Vesteda operates in a strong but
competitive market
Dutch housing market overview in numbers (# residential units, % of total)
6
Investor Presentation – May 2019
Historic milestones
Real estate New Management. Completion DL
Vesteda opened up for Foreign investors 3 offices merged, head
development First senior unsecured integration, start new
institutional investors acceded for €600m office moved
terminated bond offering ERP system
‘97 ‘01 ‘03 ‘10 ‘11 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19
Head office to
Former Delta Lloyd
Vesteda was created by Property management Amsterdam, strategy CMBS program S&P assigned BBB+
(DL) portfolio acquired,
ABP (APG) internalized focus on mid market terminated rating
APG ownership diluted
segment
7
Investor Presentation – May 2019
Vesteda is the largest Dutch residential
investment fund
Key figures Portfolio
2016A 2017A 2018A
Residential units (#) 22,629 22,454 27,809
Residential units incl pipeline (#)1 24,380 24,726 29,242
Total portfolio value (€b)2 4,342 5,035 7,281
Net asset value (€b) 3.0 3.8 5.5
Leverage 28.3% 23.2% 23.7%
Gross rental income (€m)3 242 247 281
Net rental income (€m) 182 184 210
Net rental income4 4.6% 4.1% 3.5%
Physical occupancy (year-end) 97.8% 97.6% 97.5%
1 Including 121 units for sale at Leidsche Rijn Centrum in 2018
2 Including investment properties under construction 8
3 Theoretical rent minus loss of rent
4 Net rental income as a % of time weighted average investment portfolio
Investor Presentation – May 2019
Strong and supportive equity investor
base
Prominent investors hold large stakes Ownership distribution (YTD)
• Vesteda has one single share class: participation rights
• Dutch and international investor base comprising 14 institutional investors
participating in the fund at year end 2018
• The largest are:
• ABP/APG
• NN Group
• Allianz RE
• PGGM
• Asian investor
• In 2015, two new leading international investors joined Vesteda
• €600m equity raised of which €185m committed
• In 2017, €280m equity raised
• €185m commitment 2015 and €95m additional
• In 2018, €1,080m equity raised related to the acquisition of the former Delta Lloyd
portfolio from NN Group a.s.r. real estate
• For the most part a bricks for shares transaction
• ASR Utrecht Real Estate Investments Netherlands joined Vesteda through a
secondary transaction with NN Group
9
Investor Presentation – May 2019
Vesteda has an experienced management
team
Organisational structure Managing
CEO CFO
Board*
MT Vesteda
Portfolio Strategy Acquisitions Operations
Pieter Knauff Astrid Schlüter
Accounting,
Staff Legal/
Control + Risk Treasury Investor Relations IT HR
(second line) Compliance
Reporting
I.A. Custodian
Internal Audit
(third line) (external)
Supervisory Committee Management board and team
Name Role Gertjan van der Baan – CEO Astrid Schlüter – Director Operations
Peter Kok2 Chairman of the Supervisory Committee Appointed in 2014 Appointed in 2013
Seada van den Herik Chairman of the NomRem1 Committee Previous experience: CEO Van Herk Groep Previous experience: Jacobus Recourt
Hans Copier Member of the NomRem1 Committee
Jaap Blokhuis Member of the Audit Committee Frits Vervoort – CFO Pieter Knauff – Director Acquisitions
Theo Eysink Appointed in 2016 Appointed in 2015
Chairman of the Audit Committee
Previous experience: Grontmij, Vedior Previous experience: Van Herk Groep
1. NomRem = Nomination and Remuneration
2. Tenor ends 1st of July 2019
10Contents
Introducing Vesteda 4
Market Overview 11
Strategy & Sustainability 14
Company Performance and recent events 23
Financial and funding profile 30
Green Finance Framework 34
Key Terms & Conditions 41
11Investor Presentation – May 2019
Housing shortage especially in urban areas
due to continued household growth
Housing shortage continues Housing shortage / availability in 2025, as a % of housing stock
✓ House prices rise are persisting in response to tight supply of homes (c.4.5%
on average in 2019). Growth of the housing stock is expected to fall short of
household growth, causing price increases will continue to exist. Price
pressure will continue for the next few years, until the easing of housing
Portfolio
market supply concentration
Vesteda
✓ Rental prices expected to increase in the future
✓ Flattening house price growth in the large cities, overflow to surrounding
municipalities
✓ Demand in the mid-rental market segment will continue to grow, especially in
urban areas
Source: Vesteda, ING Research 12Investor Presentation – May 2019
Outlook Dutch residential market
Key trends Construction cost index Forecast household growth to 2030
• Economic growth forecasts remain positive, although
Dutch economic growth is expected to flatten out in 2019
to 1.5%
• Mortgage interest rates remain relatively low
• Where investment volume in residential real estate in The
Netherlands reached a new record high in Q1 2019, recent
forecasts for 2019 are moderate due to lack of supply
(CBRE, Savills)
• Limited capacity construction companies. Feasibility of
new building projects remains under pressure, partly due
to increasing construction costs
• Total number of households expected to grow to 8.4
million in 2030
Source: ABF Source: ABF
• Potential threat of regulatory measures against
(excessive) rent rises in the mid-rental segment on a
national level
13Contents
Introducing Vesteda 4
Market Overview 11
Strategy & Sustainability 14
Company Performance and recent events 23
Financial and funding profile 30
Green Finance Framework 34
Key Terms & Conditions 41
14Investor Presentation – May 2019
Strategic targets 2019 - 2023
Business Plan – Strategic Ambition Targets for 2019
Provide high quality and convenient housing to satisfied middle-income • Tenant satisfaction Vesteda portfolio ≥7.0 (higher than benchmark)
Tenants
tenants in urbanised areas at an affordable level • Rental prices between EUR 720 – 1,200
Provide long-term investors an attractive risk-return profile in a pure- • Direct and indirect return > 3 year benchmark (MSCI)
Participants
play Dutch core residential property fund • Further reduction TER (total expense ratio)
• Energylabels: ABC ≥80%; D ≤20%, >D 0% in 2020
Improve the quality and sustainability of our portfolio to ensure a stable • GRESB 5 star and top 3 classification in the Netherlands; excl
Portfolio
growth of rental income and MSCI outperformance building certificates
• Residential units ≥75% focus areas and ≥75% middle segment
Being a service oriented organisation, supported by smart technology. • HPO Score ≥ 7.5 target for 2019 and ≥ 8.5 target long term
Organisation & staff Operated at an attractive cost level and regarded as the employer of • Successful ERP Implementation
choice • Insourcing former Delta Lloyd portfolio
• Cost of debt ≤2.3%
• Weighted average maturity > 5 yrs
Provide a robust and well-diversified, flexible funding structure with low
Funding • Issue a Green bond of €500m
leverage and low cost, largely fixed-rate debt
• Merger of CVF II B.V., CVF III B.V., CVF IV B.V. and CVF V B.V. into
CVF I B.V.
15Investor Presentation – May 2019
Continued focus on mid market segment
Regulated segment Mid market segment Higher market segment
• c. 2,900 units • c. 21,600 units • c. 3,200 units
Key Stats
• €434m value • €5,146m value • €1,457m value
(YE 2018)
• €147,900 value per unit • €237,800 value per unit • €450,900 value per unit
• 98.8% occupancy • 97.4% occupancy • 97.8% occupancy
• €646 rent per unit per month
• €911 rent per unit per month • €1,444 rent per unit per month
• 34y average age
• 29y average age • 12y average age
Portfolio 14% 19%
17% 18%
distribution
(weight in
value) 63%
16
2014YE 2018YEInvestor Presentation – May 2019
Vesteda: Sustainable Housing,
Sustainable Living
Vesteda and Corporate Sustainability and Social Responsibility
(CSSR)
• Corporate Sustainability is an essential part of our mission: we can
only serve our communities if we ensure our continuity
• As the property manager of over 27,809 residences in the
Netherlands, Vesteda is in a position to have a significant impact on
the environmental effects of housing throughout the country
• We believe that our efforts in the field of CSSR improve and
strengthen Vesteda, both directly and indirectly, that they result in
future-proof returns on our investments, and that they help us to
create value for all our stakeholders
• Our CSSR targets are an integral part of our business plan and are
therefore firmly embedded in our business operations
“ Our social mission is fully
integrated with our business
Gertjan van der Baan, CEO ”
Vesteda
17Investor Presentation – May 2019
Green thinking integrated in our business
CSSR plan 2019 - 2023
• Vesteda sees Corporate Sustainability and Social Responsibility (CSSR) as vitally important for the long-term value development of our portfolio, our organisation
as a whole and the society in which we operate. Our 2023 CSSR targets are an integral part of our business plan and are therefore firmly embedded in our
business operations
ENVIRONMENTAL SOCIAL GOVERNANCE
DECREASE RESOURCE IMPROVE SUSTAINABILITY OF
ENGAGE STAKEHOLDERS IMPLEMENT WELL-BEING FIVE GREEN STARS IN GRESB
CONSUMPTION PORTFOLIO
Outperform Energy Agreement Rental
Sector 2020. No household cooks on natural Help stakeholders make sustainable
Decrease GHG use with 2% per year gas by 2035 choices
Increase health and well being of tenants Maintain 5 stars in GRESB
What Increase renewable energy use Ensure that the construction of new Facilitate communities whereby tenants and employees Monitor CSSR in a KPI-dashboard
complexes and the maintenance of existing are in close contact with Vesteda
buildings is sustainable and environment
friendly
✓ Sustainable mobility
✓ Monitor sustainability in the supply
✓ Renewable energy at individual houses ✓ Develop Vesteda tenant app ✓ Implement Well Being action plan chain
✓ Smart living app ✓ Energy label improvement ✓ Improve communication channels with focus on tenants and employees
How ✓ Energy consumption reduction ✓ Solar Panel on Vesteda’s portfolio
✓ Selection of suitable certification
✓ Implement communication plan for ✓ Participate in Well Program method of the portfolio
✓ Installation of Smart Meters each new project ✓ Implement UN SDG and UN PRI
• # users of community platform • Achieve first WELL Residential
• % decrease of labels D, E, F, G • # of GRESB stars
• % Renewable energy • # satisfied tenants Certificate in the Netherlands
KPIs • % increase of labels A, B, C • % of suppliers that responded to
• % Reduction GHG • # participants in the ‘Doe Groen-dagen’ • % tenant satisfaction healthiness of
• % of complexes with solar panels Vesteda’s Sustainable Declaration
homes
18Investor Presentation – May 2019
Improving ESG performance
Portfolio Sustainability Improvement CO2 emissions (kg) per FTE
• As a fund, we seek to constantly
improve our performance in the field 12,949*
of sustainability 27,809 84%
Number energy Percentage of
• Our objective is to reduce our performance Number of homes with
consumption of energy and water, measures residential units A++,A+, A, B or C
and cut CO2 emissions as much as
possible
-66%
• We also aim to use materials that
have no harmful impact on the 4,543 €37m
environment, and we want to work 5 stars
with business partners who share our Number of houses For energy
own high sustainability standards with improved performance 2019-
GRESB #2 ranking energy performance
• Our tenant satisfaction is a valuable 2020
since 2016
indicator of how well we serve them.
Vesteda’s current tenant satisfaction
score is 6.8, which is a slightly higher
improvement on the score in 2017
(6.7) and is higher than the
benchmark score (CustomEyes) * Measures implemented since 2013: high efficiency boilers and glazing, DC ventilators, insulation, LED lighting
and solar panels
19Investor Presentation – May 2019
Vesteda sustainability journey
Sustainable Portfolio
• By the end of 2020, at least 80% of Vesteda’s homes will have energy Energy labels distribution 2011 - 2018
label A, B or C; less than 20% of Vesteda’s homes will have energy label
D; and Vesteda will strive to have zero homes with labels E, F, or G 15,6% 13,7% 11,9% 11,9% 9,3% 7,6% 6,7% 6,1%
9,6%
12,8%
17,3%
• Vesteda committed to improve the energy performance of the recently 22,4% 23,4%
24,0%
24,6%
acquired Delta Lloyd portfolio in line with Vesteda’s overall targets 26,6%
• In 2018, Vesteda improved the energy performance of 1,474 housing
units: 84,3%
80,5%
75,2%
− The percentage of homes in our portfolio with a green energy label 57,8% 61,7% 65,8% 67,3% 68,3%
(A++, A+, A, B, of C) increased to 84% in 2018, from 81% the
previous year
− The percentage of homes with a D label declined to 10%, from 13% 2011 2012 2013 2014 2015 2016 2017 2018
the previous year
ABC D EFG
− The percentage of homes with an E or worse energy label declined
to 6%, from 7% the previous year
• In 2018, Vesteda has achieved a GRESB score of five out of five stars About GRESB
with a score of 85 ranking 2nd out of 13 in the Netherlands GRESB assesses the Environmental, Social and Governance (ESG) performance of real
estate and infrastructure portfolios and assets worldwide
• The fifth star in GRESB is the highest attainable rating and means that
we are among the 20% best-scoring funds that participate in the 38 42 48 38 67 76 85
benchmark worldwide
2012 2013 2014 2015 2016 2017 2018
20Investor Presentation – May 2019
Our impact on the Sustainable
Development Goals
Sustainability development goals
• In 2015, the United Nations adopted 17 Sustainable Development Goals
(SDGs), defining global sustainable development priorities and aspirations for
2030
• Vesteda has decided to embrace the Sustainable Development Goals. In 2018,
we have conducted an analysis to determine which SDGs are most relevant for
our activities
• The SDGs we consider as most important in relation to our activities are:
− SDG 7: Affordable and clean energy
− SDG 11: Sustainable cities
− SDG 12: Sustainable consumption
• These SDGs are integrated in the CSSR strategy and led to numerous
initiatives (see next page)
21Investor Presentation – May 2019
Vesteda Sustainability Initiatives
Vesteda & Dutch Bird Protection Project Diepstroeten - zero energy home Vesteda’s Car Sharing Programme
partnership
• Vesteda and the Dutch • Vesteda and partners have signed a turnkey agreement • Vesteda 100% electric BMW i3s are
Society for the protection for the realisation of 45 zero-energy houses according to used as a shared car via an online
of Birds Good Living concept platform
(Vogelbescherming • At these houses, the net • The electric cars will be available to
Nederland) signed a energy consumption is both the tenants in De Boel and the
cooperation agreement reduced to zero by employees of Vesteda. With this,
with the aim of improving making smart use of Vesteda contributes to reducing CO2
the living environment for energy-saving and emissions and reducing parking
both people and birds energy-generating pressure in Amsterdam
facilities
Vesteda aims at healthy living with WELL Building Vesteda’s Investments in Solar Energy
Standard
• Vesteda has installed more than 6,000 solar panels in
• The Well Building Standard (WELL) is the new health total that produce more than 1,300 MWH annually
and wellbeing standard for buildings. WELL
certification is aimed at improving the impact of a
building on the health, comfort and wellbeing of its
• Vesteda is currently
users
working on a new policy for
• Vesteda registered its single dwelling homes to be
‘Aan de Rijn’ apartment able to install solar panels
complex in Arnhem for a by tenants in which they
WELL Building Standard profit directly without a
certificate
split incentive for Vesteda
22Contents
Introducing Vesteda 4
Market Overview 11
Strategy & Sustainability 14
Company Performance and recent events 23
Financial and funding profile 30
Green Finance Framework 34
Key Terms & Conditions 41
23Investor Presentation – May 2019
Key Highlights 2018
✓ Significant progress made in the execution of our strategic plans
✓ Total return 2018 even higher than the extraordinary high returns in previous years (2018: 23.0% on time weighted average equity)
✓ Major steps taken in optimising the portfolio
▪ Sale of portfolio (1,872 units)
▪ Acquisition of former Delta Lloyd Portfolio (6,777 units of which 5,983 existing and 794 pipeline)
✓ Overall satisfaction of our tenants has improved to 6.8 in 2018 from 6.7 in 2017 (benchmark 2018: 6.7)
✓ Capital structure was strengthened and cost of debt reduced (2.7% over 2017 to 2.1% in 2018)
✓ Integration of the Delta Lloyd portfolio is well on its way
✓ Implementation of new ERP system on track
✓ Awarded with a GRESB 5 stars rating and ranked 2nd in the peer group of 13 companies in the GRESB in the Netherlands(top 20% performers globally)
24Investor Presentation – May 2019
Vesteda – Key figures
End of period, amounts in €m FY2018 FY2017 FY2016 Key operating highlights
Solid operating performance ✓ Acquisitions of €1,423m of which main part is related to the former Delta
Net rental income 210 184 182 Lloyd portfolio
EBITDA1 192 168 160 ✓ Revaluation in 2018 amounted to €760m
✓ Total redemption in 2018 amounted to €415m, of which €264m related to
Unrealised results 825 544 391
the proceeds of the UCP-portfolio sale which was paid out in April 2018
Result after tax 1,032 682 533
✓ Capital paid in €1,079m
ICR (EBITDA / Interest expenses) 6.9x 5.7x 4.9x
✓ Arranged new bank facility of €200m of which €191m was drawn at year
Conservative balance sheet end
Total assets 7,337 5,084 4,375
Equity 5,517 3,819 3,045
Debt capital 1,746 1,177 1,237 Improved returns
Leverage 2) 23.7% 23.2% 28.3% ✓ Realised result excludes return from portfolio sale in 2018 (1.0%)
✓ Realised return declined primarily due to increase in portfolio value
Improving Operating Yield ✓ Decline in realised return more than offset by the increase of the
Realised return 3.6% 4.1% 5.1% unrealised return
Unrealised return 18.4% 16.3% 14.2% ✓ Outperformed the 3 year MSCI IPD Netherlands Residential Benchmark in
Total return excl. results from terms of direct return (0.2%) and indirect return (0.5%)
23.0% 20.4% 19.3%
revaluation and unwind derivatives
1. Excluding property sale of €44m
2. Loan capital divided by total assets
25Investor Presentation – May 2019
Development of the portfolio
Acquisitions and disposals Key observations
Value of portfolio (€m) 2013 2014 2015 2016 2017 2018 • Vesteda was able to profit from the favourable market conditions
At start of year 3,970 3,655 3,593 3,726 4,207 4,778 and disposed a large portfolio of units that no longer fitted the
Inflow 10 45 23 167 90 1,750 criteria of required return and quality
Capex 13 18 20 23 25 34
Outflow (186) (142) (75) (84) (81) (298) • A large portfolio (former Delta Lloyd) was also acquired resulting
Revaluation (152) 17 165 375 537 760 in a net inflow, both in value as well as in number of units. This
At year-end 3,655 3,593 3,726 4,207 4,778 7,024 portfolio is not only a good addition in terms of return and quality
but also reduces the total expense ratio as a result of scale of
economies
Development of portfolio (# of units) • Revaluations continue to be at high levels due to strong market
fundamentals
2013 2014 2015 2016 2017 2018 26Investor Presentation – May 2019
Improved operational performance
Like-for-like (y-o-y) in % of theoretical rent Loss of rent in % of theoretical rent
Property opex (gross-net) in % incl. landlord levy
Comments
• Average monthly rental income per unit rose by 3.8%, mainly as a result from
the average annual rent increase of 2.4%. The average rent of the inflow was
higher than the average rent of the outflow
• Vesteda managed to increase the rent above the inflation rate in the last 10
years, despite a significant house price decline 2009-2013
• Gross / net was slightly lower than 2017
27Investor Presentation – May 2019
Cost-efficient organisation
Employee base Management expenses
Comments
• Management expenses (TER) decreased from 35bps in 2017 to 31bps in 2018
• Management expenses in 2017 were positively impacted by a release of €0.9 million from provisions
• In June 2018, 10 employees were insourced as part of the acquisition of the former Delta Lloyd portfolio
• Project for new ERP system started in 3Q18
28Investor Presentation – May 2019
Update Delta Lloyd acquisition
Pillars •The Delta Lloyd acquisition…
• Offers economies of scale due to our platform efficiency
1 In line with our strategy
• Improves our profile for tenants, employees and investors
• Brings a surplus in our single family homes supply
• Increases our offer of rental units in the midmarket segment
2 Strenghtening of our portfolio
• Increases our offer in big-city areas
• Strenghtens our position in economic growth areas
• Offers rent potential by active management
3 Value creation for our participants • Lowers our operational and management expenses by economies of scale
• Replaces external property managers by dedicated internal management (to be completed in 4Q19)
• Improves our yearly return
4 Strenghtening of our financial position • Brings us a portfolio with a high Internal Rate of Return
• Improve TER by our platform efficiency
29Contents
Introducing Vesteda 4
Market Overview 11
Strategy & Sustainability 14
Company Performance and recent events 23
Financial and funding profile 30
Green Finance Framework 34
Key Terms & Conditions 41
30Investor Presentation – May 2019
Continuously improving covenant
headroom and debt metrics
From CMBS to a robust and well diversified unsecured funding …catering for a lower leverage and increasing ICR
structure...
Funding source (drawn) Leverage (loan to value) ICR
2012YE 2018YE
60% 7,0x
6,0x
50%
5,0x
40%
€ €
1.6bn 4,0x
1.7bn 30%
3,0x
20%
2,0x
10% Debt capital / Total assets 1,0x EBITDA / Interest Expenses
EMTN Covenant
EMTN Covenant
CMBS notes Mortgage funding DCM unsecured bonds 0% 0,0x
Bank facility unsecured Private placement 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
EMTN Programme Covenants 2018A 2017A 2016A 2015A 2014A 2013A
Consolidated EBITDA to Total Interest ≥ 1.8:1 6.9x 5.6x 5.2x 4.5x 3.3x 3.1x
Consolidated Loan to Value Ratio ≤ 50% (Leverage) 23.7% 23.2% 28.3% 28.6% 34.5% 35.7%
Encumbrance of Group Assets ≤ 30% 0% 0% 4% 8% 34% 56%
31Investor Presentation – May 2019
Diversified debt portfolio with decreasing
cost of debt
Instrument maturity overview 2018YE Debt maturity schedule 2018YE (€m)
Debt Instrument Drawn (€m) Weight Tenor (yr) 1000 2019 Bond SMBC USPP 2021
EMTN PP 1.93% 2027 35 2.0% 9.0 2022 Bond RCF drawn RCF undrawn
EMTN PP 2.50% 2032 65 3.7% 14.0 2026 Bond USPP 2026 EMTN PP 2027
EMTN PP 2032 RCF if extenison exercised
Pricoa USPP 2021 100 5.7% 2.4
Pricoa USPP 2026 100 5.7% 8.0
500
€200m SMBC RCF 191 10.9% 1.9
€700m Syndicated RCF (extended to 2024) 155 8.9% 4.4
Bond 1.75% 2019 (repaid 2Q19) 300 17.2% 0.6
Bond 2.50% 2022 300 17.2% 3.8
Bond 2.00% 2026 500 28.6% 7.5 0
Total 1.746 4.8 2019 2020 2021 2022 2023 2024 2025 2026 2027 2032
Overview Debt portfolio & recent transactions Cost of debt and average maturity
• Diversified debt portfolio in terms of tenor, instrument and counterparty 6,0% Average maturity (yr) 7,0
• Further optimisation of debt redemption profile with average debt maturity 4.8yr and 5,0% Cost of debt 6,0
4,7 4,8
cost of debt further reduced to ~2.1% at 4Q18 4,1% 4,5 4,6 5,0
4,0%
• Mar-2018: RCF extended by 1yr and increase to €700m with 20bp lower margin 3,3% 4,0
3,0% 2,9 2,8% 2,7%
• Jun-2018: Successful €500m 8yr bond priced at 2.0% 2,1%
3,0
2,0%
• Dec-2018: €200m RCF with SMBC to increase liquidity headroom 2,0
1,0% 1,0
• Feb-2019 established €1b Euro Commercial Paper in which we borrow at negative
rate, helping to reduce average cost of debt 0,0% 0,0
2014 2015 2016 2017 2018
• Mar-19: RCF one year extension to 2024 (with another 1-yr extension option left)
Source: Vesteda
32Investor Presentation – May 2019
S&P recently confirmed BBB+ credit rating
with stable outlook
▪ In May 2019, S&P reconfirmed its BBB+ rating with stable outlook assigned to Vesteda (assigned as per April 2016)
▪ Business risk profile: strong
▪ Good market position as the largest Dutch institutional residential investor and well-positioned in the Dutch mid-market unregulated sector, where property
values are continuing to rise
▪ Vesteda's good track record of stable rental income, despite difficult conditions in the Dutch housing market between 2008 and 2013
▪ Operating stability supported by consistently high occupancy of above 97%, low tenant turnover, and limited exposure to development activities
▪ Full geographical focus on the Netherlands and therefore reliance on the performance of the Dutch economy
▪ Financial risk profile: intermediate
▪ Low leverage for the real estate industry, with debt to debt plus equity of below 30%
▪ Conservative financial policy and strong liquidity, underpinned by the limited upcoming debt maturities in the next 12 months as well as undrawn available
revolving credit facilities (RCFs)
▪ Moderate ratio of debt to EBITDA at approximately 8.5x-9.0x, but in line with other rated residential peers at the same rating level
Source: Standard & Poor’s (03 May 2019)
33Contents
Introducing Vesteda 4
Market Overview 11
Strategy & Sustainability 14
Company Performance and recent events 23
Financial and funding profile 30
Green Finance Framework 34
Key Terms & Conditions 41
34Investor Presentation – May 2019
Vesteda Green Finance Framework
1 Use of proceeds:
• Vesteda intends to use the net proceeds of the green finance instruments to exclusively finance or refinance
assets and activities in the category Green Buildings as defined on the Green bond Principles1
2 Process for Project Evaluation and Selection:
• On an annual basis the Green Finance Framework Group will review the list of Eligible Assets
whether they meet the eligibility criteria
3 Management of proceeds:
• The Treasurer will manage the net proceeds of issued green finance instruments on a
portfolio basis. Vesteda aims to ensure that the total value of issued green finance
instruments does not exceed the value of its portfolio of Eligible Assets
4
Reporting:
• On at least an annual basis, until full allocation, Vesteda will report to update investors on the
allocation of the net proceeds and the performance on specific environmental impact indicators
5 External review:
• Prior to issuance, Vesteda has commissioned Sustainalytics to obtain a Second Party Opinion of its Green
Finance Framework. Additionally, Vesteda has obtained pre-issuance certification of the Climate Bonds
Initiative for its inaugural Green Bond
1. https://www.icmagroup.org/green-social-and-sustainability-bonds/green-bond-principles-gbp/
35Investor Presentation – May 2019
Use of Proceeds – Green Buildings
✓ Vesteda intends to use an amount equivalent to the net proceeds of Eligibility Criteria
the green finance instruments issued under this Framework to Energy efficient residential buildings Refurbished residential buildings
✓
exclusively finance or refinance, in whole or in part, assets and ✓ New and existing buildings with an EPC label
Refurbished residential buildings: existing
buildings which have made an
activities in the category Green buildings ≥ “A” issued by the Netherlands Enterprise improvement of at least two EPC label
Agency (Rijksdienst voor Ondernemend steps up to a minimum EPC label of “C”
✓ Vesteda has established eligibility criteria for the building stock that Nederland, RVO)
✓ The EPC label improvements are a result
requires new and existing buildings to have at least an Energy of measures such as building insulation,
Performance Certificate (EPC) label of A. This eligibility criterion is energy-efficient glazing, high-efficiency
boilers and the installation of solar panels,
recognized as being aligned with Climate Bond Initiative (CBI) standard
and result in an energy efficiency
low-carbon building criteria for the Netherlands improvement of at least 30%
✓ Vesteda’s refurbished residential buildings, which have made an
improvement of at least two EPC label steps up to a minimum EPC label c. € 1.6* billion c. € 145 million
of “C”, will achieve a reduction in carbon intensity of at least 30% and
aligns with the Low Carbon Building Criteria of the Climate Bond
Total CO2 savings A-label buildings (excl. 2 label
Standard steps) in comparison with a representative average c. 5.4 million kg
Dutch residential portfolio
✓ To qualify as assets eligible for green finance (“Eligible Assets”), the Total CO2 savings of existing buildings which
c. 1.5 million kg
assets are required to meet the eligibility criteria. The categories of have made an improvement of at least two EPC
label steps
Eligible Assets are also mapped on the UN Sustainable Development
Goals (SDGs). All Eligible Assets are located in the Netherlands
*The amount excludes refurbished buildings which improvement led to an EPC Label of “A”. These improved
buildings are included in refurbished residential buildings portfolio 36Investor Presentation – May 2019
Process for evaluation and selection
Sustainable Finance Committee Evaluation and selection process
✓ The use-of-proceeds of Vesteda’s Green Finance Framework The corresponding Eligible Assets are expected to comply with
are aligned with the business model and CSSR strategy of local laws and regulations, including any applicable regulatory
Vesteda Screening environmental and social requirements, and are evaluated
from a sustainability perspective
✓ The eligible assets will be selected by:
Decision Process
• The Program Manager Sustainability
• The Appraisal Manager The Green Finance Framework Group will review the list of
existing and potential Eligible Assets whether they meet the
• The Manager Financial Control and Reporting Review
eligibility criteria of / as further defined in Vesteda’s Green
• Treasurer Finance Framework
On a quarterly basis the Treasurer will report to Vesteda’s Risk
Reporting Committee on the compliance of the issued green finance
instruments with Vesteda’s Green Finance Framework
37Investor Presentation – May 2019
✓ The Treasurer of Vesteda will manage the net proceeds of issued green finance
instruments on a portfolio basis
✓ The Green Finance Framework Group will monitor on at least an annual basis the
portfolio of Eligible Assets
Eligible green assets
✓ Vesteda aims to ensure that the total value of issued green finance instruments c. € 1.7bln
does not exceed the value of its portfolio of Eligible Assets
Total CO2 savings:
✓ The allocation of the net proceeds of issued green finance instruments to Eligible c. 6.9 million kg
Assets will be reviewed and approved by Vesteda’s Risk Committee on at least
Expected Green Finance
an annual basis, until full allocation of the net proceeds of issued green finance Instruments
instruments Outstanding
€ 500m
✓ If an Eligible Asset is divested or does no longer meet the eligibility criteria,
Vesteda will remove this asset from the portfolio and will strive to replace it with Total CO2 savings:
another Eligible Asset as soon as reasonably practicable c. 1.9 million1 kg
1. Proportion of total CO2 Savings based on the size of the green bond 38Investor Presentation – May 2019
Reporting
✓ On at least an annual basis, until full allocation, Vesteda will prepare a report to update investors on the allocation of the net proceeds of issued green
finance instruments
✓ Vesteda will report to investors on the impact of their investments from a sustainability / non-financial perspective
✓ Vesteda intends to align its impact reporting with the ‘Harmonized framework for impact reporting’, developed by an informal working group of eleven
international development banks
Allocation Reporting Impact Reporting
The EPC label composition of the portfolio of eligible Assets
The total outstanding volume (in EUR) of issued green finance instruments
Estimated energy savings (in MWh/GWh and/or GJ/TJ) through the
portfolio of energy efficient residential buildings in comparison with a
The allocation of proceeds to a portfolio of Eligible Assets, including a representative average Dutch residential portfolio and the accompanying
breakdown of allocation to the specific Use of Proceeds categories on an greenhouse gas emission avoidance (in tonnes of CO2 equivalent)
aggregated basis
Estimated energy savings (in MWh/GWh and/or GJ/TJ) through the
portfolio of refurbished residential buildings and the accompanying
The value of unallocated proceeds (if any) greenhouse gas emission avoidance (in tonnes of CO2 equivalent).
Total energy savings (in MWh/GWh and/or GJ/TJ) and the accompanying
The share of financing vs. refinancing and the average look-back period of greenhouse gas emission avoidance (in tonnes of CO2 equivalent)
the portfolio
Examples or case studies of Eligible Assets
39Investor Presentation – May 2019
External review – SPO and CBI
certification
✓ Sustainalytics has issued a (positive) Second Party Opinion on Vesteda’s Green Finance Framework
✓ The Climate Bonds Initiative has issued pre-issuance certification
Use of proceeds: Sustainalytics is of the opinion that green building certification, energy
efficiency and renewable energy for the residential real estate market in the Netherlands
Vesteda’s Green Finance Framework is
will lead to positive environmental impacts and advance the UN SDGs (7) Affordable and
clean energy and (11) Sustainable cities and communities certified in line with the Low Carbon
Building Criteria of the Climate Bond
Standards
Project evaluation / selection: According to Sustainalytics, Vesteda’s project evaluation
and selection is aligned with the market practice
Sustainalytics is of the opinion that the
Vesteda Green Finance Framework is
Management of proceeds: Vesteda’s Treasurer will manage proceeds on a portfolio credible and impactful and aligns with the
basis. If assets are no longer eligible, Vesteda will remove the project from the portfolio four core components of the Green Bond
and aim to replace it as soon as feasible. For Sustainalytics, this is aligned with market Principles 2018 and Green Loan Principles
practice
2018. Additionally, Sustainalytics has
confirmed conformance with the pre-
Reporting: Vesteda is committed to reporting on relevant impact metrics. Vesteda’s
issuance requirements of the low carbon
allocation and impact reporting are aligned with market practice residential building criteria of Climate Bonds
40Contents
Introducing Vesteda 4
Market Overview 11
Strategy & Sustainability 14
Company Performance and recent events 23
Financial and funding profile 30
Green Finance Framework 34
Key Terms & Conditions 41
41Investor Presentation – May 2019
Key Terms & Conditions Inaugural Green
Bond
Issuer Vesteda Finance B.V.
Guarantors Custodian Vesteda Fund I B.V., Custodian Vesteda Fund III B.V., Custodian Vesteda Fund IV B.V.
Company Profile Dutch residential real estate investment fund
Status Senior, unsecured
Currency Euro
Expected Rating BBB+/Stable (Standard & Poor’s)
Size Benchmark
Tenor 8 – 10 years
Use of Proceeds Finance or refinance assets and activities in the category Green buildings
Documentation Vesteda Finance B.V. EMTN Programme 2019
Denominations EUR 100,000 + EUR 1,000
• Consolidated EBITDA to Total Interest shall not be less than 1.8:1.0
Covenants • Consolidated Loan to Value Ratio ≤ 50%
• Maximum Encumbrance of Group Assets of 30%
Law Dutch
Listing NYSE Euronext in Amsterdam
Joint Lead Managers ABN AMRO, BNP Paribas, ING Bank, Rabobank and SMBC
42Important Notice
This document has been prepared by Vesteda Investment Management B.V. (“Vesteda”, or the “Company”) exclusively for the benefit and internal use of the original recipient and solely for information purposes. It does not constitute,
and should not be construed as, an offer of financial instruments within the meaning of Directive 2003/71/EC (as amended, including by Directive 2010/73/EU) (the “Prospectus Directive”) (and laws implementing the Prospectus
Directive or similar laws of any other relevant jurisdiction) or solicitation to enter into any transaction regarding any financial instrument, nor should it form the basis of or be relied on in connection with any such transaction.
This document does not constitute a prospectus and has been prepared for promotional purposes. This document d does not disclose all the risks and other significant issues related to an investment in the securities. An offer to acquire
securities pursuant to an offering will be made, and any potential investor should make its investment, solely on the basis of information that will be contained in the prospectus of Vesteda Finance B.V. and the applicable final terms.
Copies of the prospectus can be obtained at no cost from Vesteda Finance B.V., and the website of the Netherlands Authority for the Financial Markets (Stichting Autoriteit Financiële Markten) and through the website of the company
(https://www.vesteda.com/en/about-vesteda/investor-relations/credit-investors.aspx). Prior to transacting, potential investors should ensure that they fully understand the terms of the securities and any applicable risks.
No reliance may or should be placed for any purposes whatsoever on the information contained in this document or any other material discussed at the presentation, or on its completeness, accuracy or fairness. This document is only
directed to recipients which are qualified investors within the meaning of the Prospectus Directive (and laws implementing the Prospectus Directive or similar laws of any other relevant jurisdiction, including the Dutch Financial
Supervision Act (Wet op het financieel toezicht)).
This document contains certain forward-looking statements relating to the business, financial performance and results of the fund managed by Vesteda and/or the industry in which the fund operates. Forward-looking statements
concern future circumstances and results and other statements that are not historical fact. The forward-looking statements contained in this presentation, including assumptions, opinions and views of the Company or cited from third
party sources, are solely opinions and forecasts which are uncertain and subject to risks. Actual events may differ significantly from any anticipated development due to a number of factors. The Company does not guarantee that the
assumptions underlying the forward-looking statements in this presentation are free from errors nor does it accept any responsibility for the future accuracy of the opinions expressed in this presentation or any obligation to update the
statements in this presentation to reflect subsequent events. The forward-looking statements in this presentation are made only as of the date hereof. Neither the delivery of this presentation nor any further discussions of the
Company with any of the recipients thereof shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. Consequently, the Company does not undertake any
obligation to review, update or confirm investors' expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of the
presentation.
The information in this document is incomplete. No representation or warranty is made as to, nor should reliance be placed on, any information contained herein being accurate or complete. Neither Vesteda, nor any of its parent or
subsidiary undertakings, or any such person's officers or employees, accepts any liability for any losses or damages that may result from the lack of accuracy or incompleteness of this information. The information set out herein may be
subject to updating, revision, verification and amendment and such information may change materially. Neither Vesteda nor any of its affiliates is under any obligation to update or keep current the information contained in this
document or the presentation to which it relates and any opinions expressed in them is subject to change without notice.
This document and its content, as well as information disclosed in the presentation to which it relates, is confidential and may not be reproduced, redistributed, sold, altered or otherwise offered, in whole or in part, by any person for
any purpose without the prior written permission of Vesteda. The Company accepts no liability whatsoever for the actions of others in this respect. The distribution of this document in certain jurisdictions may be restricted by law, and
recipients into whose possession this comes should inform themselves about, and observe, any such restrictions.
This document is not for distribution in, nor does it constitute an offer of securities in the United States. Neither the presentation nor any copy of it may be taken or transmitted into the United States, its territories or possessions, or
distributed, directly or indirectly, in the United States, its territories or possessions or to any US person as defined in Regulation S under the US Securities Act 1933, as amended (the “Securities Act” and “Regulation S”). Any failure to
comply with this restriction may constitute a violation of United States securities law. Accordingly, each person viewing this document will be deemed to have represented that it is not a US person within the meaning of Regulation S of
the Securities Act. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Neither the Issuer nor the Guarantor has registered and does not intend to register any securities that
may be described herein in the United States or to conduct a public offering of any securities in the United States.
NO ACTION HAS BEEN MADE OR WILL BE TAKEN THAT WOULD PERMIT A PUBLIC OFFERING OF ANY SECURITIES DESCRIBED HEREIN IN ANY JURISDICTION IN WHICH ACTION FOR THAT PURPOSE IS REQUIRED. NO OFFERS, SALES, RESALES
OR DELIVERY OF ANY SECURITIES DESCRIBED HEREIN OR DISTRIBUTION OF ANY OFFERING MATERIAL RELATING TO ANY SUCH SECURITIES MAY BE MADE IN OR FROM ANY JURISDICTION EXCEPT IN CIRCUMSTANCES WHICH WILL RESULT
IN COMPLIANCE WITH ANY APPLICABLE LAWS AND REGULATIONS.
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