PROPER TY I N P E R S P E CT IV E
ISSUE 16 FA L L 2 0 1 4
-O
pportunities in the Dutch Real Estate
market > 1
- IBUS update – Full speed ahead> 11
-P
roperty financing: one candy today or
two candies tomorrow?
> 4
- Changes at IBUS
> 12
-S
ustainable real estate – becoming the first
office fund in Europe to have zero carbon
emissions
> 7
Opportunities in the Dutch Real Estate market
This spring, Stef Blok, Dutch Minister for Housing and Public Service, was presented with
the research paper ‘Dutch residential investments in European Perspective’. This analysis
was initiated by eight Dutch institutional investors, whose aim is to
focus international attention on the Dutch market. The research paper tells us that this seems to be the right time for both national and
international investors to take a good look at the Dutch residential
property market. Is this preaching to the choir or are they right? After
a long period of write-downs, the Dutch real estate market seems to
have reached a point in the cycle where opportunities are arising,
especially for investors in the residential market. The negative sentiment in the real estate market has not yet disappeared, but as time progresses, prices seem
to be becoming more attractive.
Although the Dutch economy is recovering
slowly and continues to suffer the consequences of the financial crisis, the outlook is
positive. The tentative recovery is not yet really
reflected in the property market. The office, retail and residential market have suffered major
problems in recent years. The office market is
struggling with huge vacancies and pressure on
prices. The retail market still has low consumer
Graph 1: Development European house prices 2002-2013
200
confidence to cope with, and is therefore seeing low consumer spending, but also competition from online retailers. Many high streets and
shopping centres have rising vacancy rates to
contend with. The residential market has been
under pressure too, due to the financial crisis
and changing legislation, with significant price
falls as result. Conversions into apartments,
which fuelled this market for years, have been
more or less non-existent in the last three years.
Bank financing declined substantially and in addition the new tax on regulated dwellings is reducing the free cash flow of operations.
France
175
Sweden
Britain
150
Denmark
125
Netherlands
Germany
100
0
2000-05
2005-10
Source: De woningmarkt in beeld, Capital Value feb 2014
FA L L 2 0 14
2010-15
All this might give the impression that the Dutch
real estate market is not very attractive to invest
in at all. However, the property market consists
of sub-segments and areas, some of which offer
interesting opportunities. Foreign investors in
particular, all with different investment strategies, have set aside their doubts and stepped up
investment activity in the Netherlands in the last
18 months. Institutional core investors like Deka
and Union acquired prime offices in “Zuid­as” in
Amsterdam for about EUR 1.1 billion at yields of
around 6%, which is some 1% higher than other
European prime office locations. In addition,
1
Graph 2: Expected housing demand by ABF research (Socrates)
5.2
2.8
1.8
2.4
1.0
+20%
O
c
r-oc
wne
upi
ed
+13%
Regu
4.0
2011
renta
-16%
2017
2023
2030
1.6
2011
2017
2023
2030
Source: Dutch residential Investments in European perspective
1
Dutch Residential investments - spring 2014
Anglo-Saxon opportunistic investors, often in
conjunction with local partners, have acquired
commercial ‘working’ portfolios of office buildings and industrial assets in more secondary
locations. Lone Star, for example, bought 32 offices (302,000m2) in one deal for EUR 385 million (about EUR 1,275/m2). They succeeded in
leasing 18,000 m2 to Bol.com in WTC Papendorp
(Utrecht), underlining that an opportunistic office investment strategy can work. But more
recently, some massive residential transactions
were completed too. German investor Patrizia
has taken over 5,500 rental units from the troubled housing corporation Vestia, 4,000 of which
should remain in the regulated sector. Recently
too, Aventicum Capital, a joint venture funded
by the sovereign-wealth fund of Qatar, acquired
723 rental units, 54% of which is in the regulated sector. These investors are said to have
paid prices of about 15-16 times the rent in
place, which implies unleveraged operational returns of below 4%. The low risk profile, improving market conditions and lack of perspective in
other asset classes are however important considerations when accepting these returns.
Retail property at A1 locations in major cities
and excellent neighbourhood shopping centres
with one or two supermarkets in growth areas
still attract many investors. Of all the segments
however, the outlook for investments in nonregulated residential rental properties (houses
with rents of more than EUR 700 per month) is
currently the most promising. This is based on a
number of developments:
•Since the beginning of the financial crisis, the
prices of residential real estate have fallen
sharply (about 20%)
2
-10%
+201%
ls
2.0
Millions
Millions
4.4
lated
-re
Non
0.6
Millions
4.8
gula
ted
a
rent
ls
+79%
0.2
2011
2017
2023
Minimum
2030
Maximum
•
rents in this segment have risen in recent
years, or at least remained stable
•limited funding for starters on the housing
market
•limitation on mortgage tax relief
•the number of households, particularly singleperson households, will grow in the next ten
years
•trend towards increased flexibility
•shortage of about 250,000 homes.
As a result of these developments a shift has
occurred from the owner-occupied sector to the
rental sector and this is having a positive impact
on the market for non-regulated rental homes.
Growing demand and interest is especially being seen in the rental segment between EUR 700
and EUR 1,000 per month.
ABF research1 expects that future demand for
non-regulated rental dwellings will increase
to somewhere between 286,000 (80%) and
695,000 (200%) dwellings over the next twenty
years. The demand for owner-occupied units
is predicted to increase by 13-20%. These data
are in line with the report by Statistics Netherlands that more people are moving from owneroccupied to rental housing than vice versa. In
addition, there still is a housing shortage and
it is worsening every year. In short, the rental
market is much more dynamic than the market
for buying property, although buyer activity has
also increased substantially during the last few
months.
Rents in the non-regulated sector have increased
above the level of inflation in recent years. This
development and the increasing demand makes
investments in the residential market a good
PROPERTY IN PERSPECTIVE
hedge against inflation in the long run. Although
house prices in some areas may still decline, the
expectation for the coming period is that the
values of houses will contribute positively to
the total return although at a lower level than
before the crisis.
The share of the residential sector in the total
investment in real estate is expected to rise.
Certainly institutional investors will increasingly focus on the opportunities in the market.
This will undoubtedly lead to more competitive
yields. The first signs are already visible.
It is however, important to distinguish between
shrinkage and growth areas in the Netherlands.
These latter areas include the four major cities
and the northern wing of the Randstad: the areas on which many foreign institutional investors are focusing. Also several cities in Brabant
and Arnhem-Nijmegen are growth areas and remain interesting to invest in. Local knowledge
is essential to determine whether it is worth investing or not.
IBUS has been actively involved in the Dutch
property market since 2000. The company has
long-standing experience with the management
of both commercial and residential assets in the
Netherlands. Over the years, IBUS has acquired
a residential portfolio but stopped investing in
the Netherlands in 2005/2006 when prices became prohibitive. Several strategies have been
applied to increase value: dividing property into
single units, rental increases, technical improvements to units and buildings, improvements to
the tenant structure, conversion of simple rental
units to high quality furnished apartments for
expats, etc. IBUS’ activities in the Netherlands
have been boosted in the last two years by the
takeover of the management of a commercial
portfolio (ANTEA) and several advisory missions.
IBUS is planning to complete several new residential investments. Its focus is on value add assets in de Randstad. Besides this, asset management of mixed portfolios for third parties will be
increased.
Population development per region (2012-2040)
Segments where large institutional investors
keep their distance are redevelopment and
transformation projects. This is because the volumes are small, risks are higher and the need
for intensive management attention is greater.
Nonetheless, this segment offers good investment opportunities. Vacant office buildings
and industrial sites in urban locations could
meet the demand for rental properties in the
non-regulated segment and owner-occupied
one and two-person households. This combination of transformation projects in growth areas
in the Netherlands offers investors interesting
opportunities.
Sterke krimp (-10% of meer)
So yes, it is the right time for both national and
international investors to take a good look at
the Dutch property market and in particular the
residential market. However it is still a case of
exercising prudence. The signs in the Dutch
economy and real estate market tend to be positive, but a dip in the economy could throw a
spanner in the works. Knowledge of local markets, segments and the field of play are therefore essential for operating successfully in the
Dutch real estate market.
FA L L 2 0 14
Krimp (-10 to -2,5%)
Redelijk stabiel (-2,5 to 2,5%)
Groei (2,5 tot 10%)
Sterke groei (10% of meer)
Source: PBL/CBS regionale bevolkings- en huishoudensprognose 2013 - 2040
3
Property financing: one candy today or two candies
tomorrow?
Some guidelines for borrowers to withstand their bank’s powerplay
In its position as Asset Manager of real estate portfolios, IBUS takes care of the financing
structure of these funds. We act in the long-term interests of the real estate portfolios we
manage. In doing so, we try to make reasonable proposals to ensure long-term cash flow by
considering the combination of rental income, most favourable financing, tenant investments and the possible costs of repositioning a property. Recent years of economic crisis and
negative property revaluations have taken their toll on financing discussions with banks. It
appears that banks are generally using their power and General Terms & Conditions (GTC)
to strengthen their position and increase margins. Lately, we have encountered several situations where banks seem to be mainly motivated by short-term repayment considerations
rather than by a desire to strengthen their role as loan provider in the long term. Banks’
funding costs have recently gone down; spreads on the market have seen decreases and overall interest rates have plummeted. Under these circumstances, it will be more difficult for
banks to argue that there should be a higher margin attached to the renewal of an existing
loan agreement. In fact, banks that are increasing margins for existing clients should provide arguments to back their view that these clients have an increased risk profile.
•Insisting on new valuations (paid for by the
borrower)
•Requesting additional repayments (leaving no
cash flow surplus to invest in the properties)
•Increasing margins (‘compensating’ for lower
interest rates to the bank’s advantage)
•Calculating penalty interest
•Requiring additional security
•Overruling the loan agreement by using the
‘small print’ of the GTC
In our own discussions with banks and in our
conversations with other real estate investors and fellow Asset Managers, we often hear
that banks are focusing purely on extracting
cash flow from a portfolio. Now that the property markets are on their way up and real estate financing is picking up (especially in the
USA and in Germany), some banks (especially
in the Netherlands) are continuing to insist on
maximum repayment alone. Over the past years
we’ve seen a wide variety of problems occurring
in real estate portfolios, including:
•Negative revaluations
•Cash flow reductions
•Increasing vacancy
•Lower rents
•Additional requirements for tenant improvements (= investments)
Banks’ approach in response to these problems
has very often been one of the following:
4
Although banks usually believe the opposite,
they do not actually have complete freedom
in setting the rules. The ‘playing field’ is determined by several conditions, like the loan agreement, the GTC, the loan file, the communication
trail, the reputation of the bank and case law
and legislation. Banks, especially those in the
Netherlands, have a ‘duty of care’ as laid down
in Art. 7: 401 of the Dutch Civil Code and must
apply ‘criteria of reasonableness and fairness’ as
provided for in Art. 6: 248 lid 2 of the Dutch
Civil Code.
IBUS always works to uphold the long-term perspective of a real estate portfolio or fund. This
requires an assessment of long-term cash flow
scenarios and necessary future investments in
order to attract tenants and keep a portfolio up
to market standards. In our view, this cash flow
oriented approach offers the best perspective
for maintaining the value of a portfolio or fund.
PROPERTY IN PERSPECTIVE
In our dealings with banks over the years, we
have collected some do’s and don’ts worth sharing with you. We will illustrate them below with
references to some Dutch case law.
A.Approach your bank well in advance, communicate transparently about potential problems and keep a ‘communication trail’. Retain
the initiative. Discuss issues with the bank
and keep the discussion going, even if the
situation seems lost. Do not ‘close the door’.
Dutch case law shows that a bank that does
not take a client’s reasonable requests into
consideration and does not propose or consider ‘alternatives’ puts itself in a difficult position.
B. Keep your file updated at all times. Keep a
file of all communication and always ‘inform’
your bank in good time.
C.Before a loan reaches maturity, submit a
written request for renewal or extension well
in advance. It is our experience that some
banks deliberately propose a renewal after
the maturity date in order to threaten their
client with a default situation or to propose
new (and less favourable) conditions that
have to be accepted ‘immediately’.
D.Always respect arrangements made with
your bank; respond quickly to bank mails
and be reliable. This does not mean that you
have to accept everything from your banker,
but if you reject your bank’s proposal, do it
swiftly and give your reasons. Banks have a
‘duty of care’ towards their clients that, according to a ruling by the Court of Arnhem in
2003, is based on the following elements:
•Substantial reduction of creditworthiness
•Behaviour and reliability of the borrower
•The level of attributable failure by the borrower
•
The chance of survival of the borrower
(possibly after reorganisation)
•The way banks take decisions
•The track record of the borrowing party
E.Make motivated plans for continuity and
future potential; emphasize the long term.
Presenting a short-term restructuring plan
may provide some breathing space for the
short term but does not necessarily result in
FA L L 2 0 14
a structural solution. In that case (Court of
Amsterdam 2-4-2014) the bank may consider
not only whether there is sufficient security
value, but will also take into account the borrower’s track record, the way in which the
borrower has attributably failed, the proven
reliability of the borrower and the probability
of continuity and future potential.
F. If the bank requires a new valuation, do cooperate. But if you do not agree, cooperate
under protest and provide arguments to illustrate why you do not agree with the bank’s
valuation (and ask for the cost of the valuation to be refunded, if applicable). The security value may have changed due to changes
in market circumstances. In that case, a reasonable request from a bank to update the
security value could be acceptable. However,
if a re-valuation schedule is already in place
and high costs are involved, you do not have
to accept all the bank’s requirements.
G.Avoid overdue maintenance. Under certain
circumstances it could be useful to confirm
to the bank all maintenance done to avoid
any future accusations that maintenance has
been insufficient.
H. If the bank requires additional repayments of
the loan from your cash flow, provide arguments that these repayment requirements
are unreasonable from a cash flow point of
view. A bank requiring repayments that are
too high in relation to the available cash flow
is skating on thin ice.
Do specific clauses in the loan agreement prevail over the GTC? In principle: yes, but the
bank can argue that the GTC provide means to
overrule the loan agreement under certain circumstances. The bank should substantiate this.
The GTC may prevail if the loan situation is such
that some of the following circumstances exist
(Court of Amsterdam 2-4-2014):
•The borrower is structurally in default
•A security risk is becoming void
•There is insufficient rental income
•There is structural vacancy
•Tenants are overdue with rental payments
Is a ‘fixed’ spread really fixed? Quite often
banks adjust a fixed spread agreed in the loan
5
agreement by referring to the GTC that allow the
bank to change the spread. This could be permissible under certain circumstances. However,
the bank should not act unreasonably onerously
towards the borrower. The ruling by the Court
of Amsterdam (19-6-2013) requires banks to
provide reasonable arguments for applying the
GTC and motivate its margin increase with solid
arguments.
All in all, with sufficient cash flow and good
asset management, a property portfolio could
provide two candies tomorrow instead of one
today. All that is required is a fair bit of tenacity
and persistence to convince your loan provider.
6
PROPERTY IN PERSPECTIVE
Villa Trompenburg, Rotterdam
Sustainable real estate – becoming the first office fund
in Europe to have zero carbon emissions
Interview with Guus Berkhout – Triodos Real Estate Fund
Triodos Real Estate Fund is the first listed sustainable office fund in Europe. The fund mainly
invests in sustainably built and sustainably maintained offices. The sustainable nature of
the properties is determined by means of the Triodos Sustainable Real Estate Screen. This
screening model was designed by Triodos Real Estate Fund. In it, the concepts of people,
planet and profit are tailored to the real estate sector with the addition of the factor project.
This ensures that social aspects (people), environmental aspects (planet), economic aspects
(profit) and spatial aspects (project) are all included when assessing a possible acquisition.
Real estate contributes to the quality of our living environment. Sustainably built properties
are more pleasant and healthier to live or work in. Their energy consumption is lower and
they do less harm to the environment. Sustainable real estate takes account of the efficient
use of resources and the impact on individuals and the environment throughout the entire
lifecycle of a building, from development and funding to management and re-use. The goal
for Triodos Real Estate Fund is to become the first office fund in Europe to have zero carbon
emissions. The fund won the VWD Cash Fund Award in 2012 for its stable risk/return and
several of its investments won prizes as well. We spoke to Guus Berkhout, fund manager of
Triodos Real Estate Fund about the relationship between profit and sustainability.
1. Can you tell us a bit about the background to Triodos Real Estate Fund?
Triodos Real Estate Fund is the first listed sustainable office fund in Europe. It started in 1994
and focuses on sustainable office buildings.
Nowadays we have 17 office buildings throughout the Netherlands
in our portfolio.
These
buildings
can roughly be divided into three
categories: existing
buildings with high
sustainability
potential, sustainably
built new buildings
and listed buildings.
The occupancy rate
is 97%, whereas the
average occupancy
rate for offices in
Guus Berkhout
the Netherlands is
83%. I guess it is safe to say that the high occupancy rate demonstrates its success. Although
it is a relatively small fund, we are setting important examples to the market: firstly by introducing sustainability to the real estate market,
secondly by developing a test to substantiate
sustainability, and thirdly by introducing the
green lease in the Netherlands.
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2. What is your primary ambition for the
fund?
Our aim is to offer a stable dividend return to
our shareholders and to maintain the high occupancy rate and the strong weighted average
lease length (currently 5.3 years). But that is
what every real estate fund wants to do. We also
want to create the first “zero carbon emission”
portfolio in Europe. The energy consumption
of the portfolio is currently 40% below average and the CHC emission is 80% below average. We are constantly improving the quality of
our buildings and want to provide them with
green e
­ lectricity and gas. To determine whether
buildings are truly sustainable, Triodos Real
Estate Fund has developed a screening model:
the Triodos Sustainable Real Estate Screen. The
unique aspect of this model is that, when determining buildings’ sustainability, the test does
not assess buildings in isolation, but includes
the environment, users as well as owners and
the financial return that is important to them.
These elements can be subdivided into four
main c
­ ategories: People, Planet, Profit and Project. These categories are part of the total test
and lead to four outcomes. To be included in
the Triodos Real Estate Fund, buildings must attain at least a ‘satisfactory’ score (5.5) in three
of these elements and a ‘good’ score (7.5) for
one of the Ps.
7
energy buildings, so energy efficient buildings
are “future-proof”. Higher cash flow and lower
risk push up the value of the investments.
MINIMUM
RESULT
AMBITION
Triodos Real Estate Fund declares a building to
be sustainable when its users are able to enjoy
working in it and are safe (People), when the environment is not put under excessive pressure
(Planet), when it produces a good return (Profit)
and when it meets physical and spatial requirements (Project). In other words, buildings in the
model can only really be classified as sustainable
if the requirements of all four Ps are met. By applying this principle, Triodos Real Estate Fund is
marking out a clear position for itself relative to
other screening methods. The model enables Triodos Real Estate Fund to look beyond a building’s
energy consumption and environmental quality.
An office may possibly attain a high score on
energy and environmental aspects, for example,
but if it does not provide sufficient information as
regards its rentability, it does not meet the model’s criteria and will therefore not be included in
the portfolio. Hence, the Triodos Sustainable Real
Estate Screen clearly shows that, where sustainability is concerned, financial aspects cannot be
viewed separately from environmental aspects.
After all, a building may be in tip-top condition
environmentally, but if it generates an insufficient return, it will not be an attractive investment. This plainly shows that a weak P for Profit
undermines sustainability. Return and the environment are inextricably linked in sustainability.
3. You once said that energy efficient real
estate (residential and offices) has a higher
value than less ‘green’ buildings. But is
value not primarily determined by location?
I think value is driven by cash flow. The lower
the energy consumption of a building, the
higher the rent and thus cash flow can be. Theoretically, tenants are willing to pay higher rents
if energy consumption is lower because their
“total costs of usership” remain the same. Besides, energy efficient buildings have a lower
risk profile as they are “future-proof”. EU regulations are pushing the market towards zero
8
4. Which technical solution for energy efficiency has the highest potential: solar panels, insulation, hot/cold storage or is there
another solution we should think of?
Energy efficiency can only be achieved by combining all these technologies and more. Insulation is the first step. Which additional measures
can be taken depends on the quality of the
building, the length of the rental contract and
the willingness of the tenant to share costs or
savings. We provide the buildings in the Triodos
Real Estate Fund portfolio with additional insulation, we install solar panels and solar boilers on
the roof, apply LED light bulbs and we have hot/
cold storage in 33% of the buildings. In the future we want to apply what is known as phasechange material (PCM), a building material
which is capable of storing and releasing large
amounts of energy. We are also considering connecting the offices in the building through what
is known as an energy smart grid to optimize
the total energy consumption of our portfolio
and reduce costs.
5. You like “out of the box” thinking for real
estate, such as constructions for multiple
use and no predetermined “use” by governmental institutions. Can you give us some
examples?
I think we should add features to real estate to
improve the sustainable qualities of the buildings and increase cash flow from it. We introduced the “green lease” in real estate: tenants
pay one price that covers both rent and energy.
We keep up a constant dialogue with our tenants about energy efficiency. We stimulate but
we don’t dictate. Some of our tenants have
caught the ‘going green virus’ and are implementing more sustainability into their way of
doing business. Some of them don’t. But that
is no reason not to accommodate them as tenants. We do look at our tenants’ backgrounds. It
would be a bit hard to explain to our investors
why we would accommodate an organisation
that works on nuclear energy for example. The
more Triodos Real Estate Fund is able to reduce
energy consumption, the better it is for the environment and the higher the cash flow for the
investor will be.
PROPERTY IN PERSPECTIVE
Stationsweg, Groningen
I also think that too many government regulations increase the risk for the investor: if the
government were to stop prescribing what the
use of a building should be, buildings could
be used by many different tenants: for living,
working, shopping or even urban farming! This
would increase opportunities for buildings to
generate cash; it would increase their liquidity
and their value.
6. You have a background as a historian.
How is that useful when working for a real
estate fund?
Working as a fund manager for Triodos Real
Estate Fund requires an awareness and understanding of many different disciplines: investing, finance, tax and legal, the real estate industry etc… It is not possible to know about all
these topics in detail. It is important to develop
a helicopter view. Historians have that helicopter view. They interpret facts and write history
with these facts. I interpret the facts presented
by specialists from different disciplines and
combine it into one sustainable real estate story.
Same business!
7. In 2004, Triodos Real Estate Fund was
one of the first to develop the sustainability test you spoke about earlier. During the
last 10 years, however, GRESB, BREEAM etc.
have developed many criteria. Does this
mean that in the future all real estate will
become ‘sustainable” and that the Triodos
Fund will lose its exceptional status?
“Sustainability” is constantly changing. Some
years ago, it was about acid rain and contaminated soil. At present, sustainability in buildings
is defined by obtaining a BREEAM certificate or
having a high GRESB score. On the one hand,
these methods create transparency, which is
good. On the other hand, the labelling industry could frustrate the further development of
“sustainability”. I think sustainability should be
linked to important issues in society. How does
real estate relate to energy transition, CHC reduction, but also to a more flexible world subject to the ever increasing influence of modern
communication and IT applications? Sustainable
real estate provides answers to these issues.
Sustainable real estate can contribute to the
quality of life of its stakeholders and be a valuable business proposition to tenants and investors. Triodos Real Estate Fund wants to play a
FA L L 2 0 14
role in the further development of sustainability
in real estate, not only in terms of energy but
according to our 4 P model. I don’t think it will
lose its current exceptional status.
8. The Triodos Real Estate Fund has total
assets of around 70 million euros. Are you
happy with this size and why, or if not, why
not?
I think there is room for improvement regarding
the size of the fund. Ideally, total assets should
increase to create a more solid fund. More investments will lead to a lower concentration
risk and a higher quality cash flow. More capital
will lead to a more solid balance sheet and more
outstanding shares will lead to greater liquidity of those shares. New buildings can create
new sustainable trends to set an example to the
market.
9. Triodos Real Estate Fund became a
“closed-end” fund last year. Can you tell us
about the advantages and disadvantages of
open-end versus closed-end?
After examining the developments in the real
estate market, we realised that the open-end
structure of the fund was no longer appropriate.
The closed-end structure is the most appropriate for real estate investing. Capital base in the
closed-end structure is more stable. Real estate
is a long term investment which should be financed with long-term capital. Capital base in
the open-end structure is very volatile, as in that
structure, the fund continuously buys and sells
its own shares, resulting in a constantly changing capital base. The fund must have substantial
cash at hand to be able to buy its shares back
from shareholders if required. Cash at hand cannot be invested and is costly. It reduces the return of the fund.
In the open end structure, the share price is
more stable as it is calculated on the basis of
net asset value of the assets divided by the
number of outstanding shares. In the closed end
structure the share price is based on supply and
demand. These are very much influenced by expectations. Management of these expectations
through investor relations is much more important in the closed end situation as it influences
the price of the shares.
9
10. If you had to choose between financial
advantages or sustainability advantages,
which would you choose?
The underlying assumption in this question is
that there is antagonism between profitability and sustainability. I don’t think you have to
choose between profitability and sustainability.
I think they reinforce each other. More sustainability will lead to more profitability: a more sustainable building is less risky and can generate
more cash flow than a general building as tenants are theoretically willing to pay higher rent
for these buildings.
11. Which creative sustainability solution
are you most proud of?
Triodos introduced the “green lease” concept
in the Netherlands in which lower energy costs
lead to higher rent. The higher rent can be used
to finance the sustainable features of a building. Two of the places where this “green lease”
was introduced were in a listed building in Baarn
and in the refurbishment of the GasTerra building in Groningen. The latter was nominated for
four different prizes and won two. One of the
nominations was for the prestigious FGH Real
Estate Award.
12. How will Triodos Real Estate Fund be positioned 5 years from now?
I think it can grow substantially. We want to further explore the application of sustainable energy in the real estate world. Every two years,
all the buildings in the portfolio are tested by
an independent institution to see whether they
still meet our criteria. We ask for their feedback
on what to improve in order to make our buildings more sustainable. The ultimate goal is to
develop a zero energy portfolio, although that
is a great challenge. The next step will be to use
green electricity and green gas throughout the
portfolio.
10
PROPERTY IN PERSPECTIVE
IBUS Update: full speed ahead
Several things have changed in the IBUS management in the last few
months. This consequently led to changes in the organization’s strategy and vision for the future. We’ve used the summer and early fall for
some introspection on our business model. Although this has not led to
dramatic changes in our strategy or vision, a few things have been tightened up. This issue will give you a short insight on our new motto ‘Full speed ahead while
going back to our roots’.
IBUS creates and manages real estate investment
funds. By purchasing real estate at the right
time, adding value to it, generating maximum
rental income from it, positioning it perfectly
in the market, maintaining it well, ensuring the
best possible financing structure and selling the
real estate at the right time, IBUS aims to offer
investors an attractive return with manageable
risk.
IBUS will continue to focus on asset management and on managing its existing and new real
estate funds. Our team of experienced, committed professionals will continue to make every effort to maximize return in existing funds.
In keeping with IBUS’ origins – real estate funds
with a focus on the US, Germany and the Netherlands – IBUS will concentrate on initiating, creating, structuring, positioning and managing real
estate funds and will report on them transparently. This includes:
a. Initiating private placements for third parties.
b.Initiating real estate projects ourselves or
with a developer and then offering them to
investors in the form of an investment fund.
c. Performing asset management for these real
estate funds.
d. Performing asset management for third parties.
The focus on regions and type of real estate
will be brought back to the countries where we
originally began: the United States (New York,
Washington DC, Boston and possibly Atlanta),
Germany (Berlin, Düsseldorf-Keulen, Hamburg
and possibly Frankfurt) and the Netherlands
(the urban agglomeration of Western Holland or
the Randstad). At present, the focus in all this is
primarily on residential real estate. By concentrating on three to four cities in these countries,
their markets can be monitored more effectively
and projects can be sourced through our own
network of smaller local project developers.
This network is already in place.
The other aspect we will concentrate on is Asset
Management assignments for third parties, particularly in Germany and the Netherlands. The
focus there will be on both residential and retail
real estate and on offices. IBUS has extensive
experience in real estate management and is
highly competent in providing private investors
with fund reports and in communicating with
them. IBUS currently has one asset management
portfolio under management for a third party.
To a considerable extent, these activities are
consistent with IBUS’ track record, with the expertise and experience in the organisation, with
the circle of IBUS’ client investors and with market conditions.
FA L L 2 0 14
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CHAN G ES AT IB U S
Disposal of rental apartment building
in Washington Heights, Manhattan,
New York, US
IBUS has recently sold its apartment building
on Ft Washington Avenue in the Washington
Heights submarket of Northern Manhattan,
New York. The building, with a total of 41
apartments, was acquired in April 2013 for
USD 8 million. The sales price amounted to
USD 11.5 million (before sales costs). The
return for investors was approximately 35%
on an IRR basis. IBUS worked in this investment in partnership with a well-known,
New York-based investment partner.
Disposal of rental apartment portfolio
in Rheinland area, Germany
IBUS has recently sold the larger part of its
Rheinland portfolio, with assets in Duisburg
and Krefeld, Germany. Approximately 1400
units were sold to a German private investment firm for EUR 54.5 million. This sale
represents around 80% of the portfolio. The
remainder of the portfolio will be sold in the
years to come.
Charles Bloema new Managing
Director for IBUS Asset Management
Charles Bloema has been appointed
Managing Director of IBUS from July 1,
2014. Charles has extensive experience as
Corporate Treasurer and Head of Investor
Relations and as an
independent advisor for real estate
funds. Charles has
joined us from the
listed international
real estate company, Wereldhave.
There, he worked for 19 years as Corporate
Treasurer and Head of Investor Relations,
being responsible for a loan portfolio of EUR
1.4 billion, foreign exchange, cash management, intercompany loans, derivatives, interest swaps, banking relations, stock exchange listing, relations with shareholders
and financial communication. Since mid2013 Charles has been active in advising a
real estate company, as supervisory board
member of a private real estate investment
fund, as advisor with his own “boutique”
Advisory Services, Redhood Bloomer B.V.,
which specialises in restructuring commercial real estate loans and as a fundraiser for
the Dutch Beekeepers Association (NBV).
Initially, Charles worked in banking, includ-
ing in corporate finance, capital markets
and portfolio management in Luxemburg.
Charles studied business law and economic
law in Utrecht.
IBUS USA engages Carmen Taveras to
lead the company
IBUS has engaged Carmen Taveras as its exclusive representative to lead the company’s
activities in the United States. Carmen has
gathered over 30 years of extensive scholastic training and hands-on experience in
all aspects of successful real estate ownership. As a Real Estate Professional, Carmen
has demonstrated proficiency in leading
existing or start up investment and development activities, for domestic or international capital, from concept to realization,
including supervision of all financial, fiscal
and general business matters. Carmen’s professional experience includes managing
Wereldhave USA, a US Real Estate Investment
Trust owned by a publicly-traded Dutch
REIT, with approximately $1.2 billion in
commercial real estate investments and development projects, across the United States
- comprising office, multi-family residential,
hotel, retail and developable land - in New
York, Philadelphia, Washington DC, Texas,
California, and various other markets. While
remaining active in the real estate community, Carmen serves on the Operating Board
of Directors and the Finance Committee of
Open Door Family Medical Center, Inc. a nonprofit organization offering medical services
to communities throughout Westchester
County, in New York.
IBUS USA relocates its office to
New York City
Recently, IBUS has relocated its USA office
from Washington, DC
to New York City. The
office is located at 355
Lexington
Avenue,
NYC, between 40th
and 41st Streets, steps
away
from
Grand
Central Terminal, The
Chrysler Building and
the United Nations.
The office space is
subleased from The
Weitzman Group, a
prominent real estate
consulting firm.
Bergedorfer Strasse, Hamburg-Geesthacht, Germany
Krijgsman 6
P.O. Box 8010
1180 LA Amstelveen
T. +31 (0)20-755 90 00
F. +31 (0)20-755 90 90
E-mail: info@ibus.nl
www.ibus.nl
Follow IBUS Asset
Management on Linkedin
The IBUS Company is an independent
group established in 1992 by Onno Husken,
former Chief Executive Officer of Wereldhave
N.V. and Kempen & Co. IBUS develops and
invests in office, retail, residential and
hotel properties in the United States,
Europe and Asia. Since inception, 61 real
estate funds, with a total investment
consideration in excess of
€
1.6 billion,
have been introduced with private and
institutional investors. Over the years,
more
than
half
of
these
investments
were successfully sold. IBUS also uses its
real estate knowledge and experience
to
advise
companies
financial
and
institutions,
institutional
listed
investors.
These assignments are directed towards
portfolio analysis, asset allocation policy,
investment strategy and second opinions
on direct and indirect real estate investments. IBUS is based in offices in
Amstelveen (The Netherlands) and New
York City (United States).
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