a.s.r. real estate

Creating value through sustainable renovations

The ASR Dutch Core Residential Fund (ASR DCRF) has a sincere belief that sustainability is an integral part of maintaining an attractive portfolio. This is especially true for a mature portfolio such as that of ASR DCRF, which has been built up over the last fifty years and has a large share of dwellings in attractive, well-established neighborhoods where supply is constrained and new developments are scarce.

Before the launch of ASR DCRF, the portfolio shed a large share of its assets, which were unfit for the Fund based on location or physical characteristics. It held on to well-located properties, which have performed well for decades and would be virtually impossible to purchase on the current market.

In 2015, the Fund embarked on a large-scale renovation project of this part of the portfolio, which remained in high demand among renters but was technically no longer up-to-date and would face increased maintenance (costs) in the future. Simultaneously, the Fund launched the ambition to apply the same sustainability objectives to its entire portfolio. This meant eliminating “non-green” (below EPA C) labels from the portfolio and setting ambitious goals for the average Energy Index of the portfolio.

Every renovation the Fund has performed involved sustainable measures such as insulation of the roof, cellar and façade, sustainable glazing, high-performance heating systems and solar panels as well as guaranteeing an EPA label increase to an A label. In 2015, the Fund commenced the renovation of 846 dwellings, which will more than double the number of EPA A labels in the portfolio when the last renovation is completed in Q1 2018 (see Figure 1).

Figure 1: Improvement of EPA labels in ASR DCRF portfolio since mid-2015

Renovating our portfolio in a sustainable manner has not only allowed us to meet our CSR targets, but has directly created value for the Fund. Besides creating future-proof assets, with lower maintenance costs, it has an immediate positive effect on income. This is because current renters are more inclined to pay additional rent for sustainable measures than for regular renovations, as their energy costs decrease. The renovations have also increased the market rent of the assets, especially where regulated units are able to be liberalized upon mutation.

In preparation of its first closing, many of the Fund’s regulated units were sold in 2014, as can be seen in Figure 2. From 2015 onward, the sustainable renovation of well-located and attractive assets has decreased the share of regulated units (contracts currently below €710.68) even further; from 29.4% in 2015 to 14.5% in Q1 2018, when current renovations are completed. Besides reducing the amount of regulated units in the portfolio, it has decreased the number of structurally regulated units (which cannot be liberalized upon mutation) that are not labeled for individual unit sales, from 10.0% to 3.9%. By enlarging the share of the standing portfolio which can be liberalized upon mutation, the rental income and uplift potential of the portfolio has vastly increased, to 10.0%.

Figure 2: reduction of regulated housing in ASR DCRF portfolio since Ultimo 2014

In 2018, ASR DCRF plans to sustainably renovate another 254 dwellings, furthering our CSR goals and adding additional value to the portfolio. Alongside these renovations plans, the Fund will deliver its first zero-energy dwellings (0-op-de-meter woningen) in 2018 and is investigating the possibility of eliminating natural gas use in its dwellings by employing heat pumps, heat and cold storage and heat recovery systems.

For more information on the Fund and its sustainable efforts, please contact Lizzy Butink or Olle Overbosch.

Lizzy Butink
Sustainability manager
a.s.r. real estate
M: +31 (0)6 51 19 07 74
E: lizzy.butink@asr.nl

Olle Overbosch
Associate Fund Management
ASR Dutch Core Residential Fund
M: +31 (0)6 30 50 68 41
E: olle.overbosch@asr.nl