a.s.r. real estate

Continued growth in a competitive real estate market

The a.s.r. real estate platform has continued its strong growth, by expanding both the investor base and assets under management, despite a challenging acquisition climate and a diverse investor market. We aim to continue strengthening our platform and remain in close collaboration with all our investors at the individual, fund and platform levels. An example of this was the first annual Investor Day, held in September 2018, which gave investors from all vehicles the opportunity to exchange views and find out more about the strategy and portfolio of the three Dutch sector funds. Also with regard to fund liquidity, the a.s.r. real estate platform has further improved its funds. Since 1 July 2018 all three sector funds offer the opportunity to trade on the secondary market. The further diversification of our (globally) diversified client base is the ability to focus on a long-term strategy for each of the sectors, while providing investors with best-in-class management in the specific fund vehicles. The approach that we have taken for each of these vehicles also applies to our overall way of doing business. We seek to build long-term relationships with our investors, to learn from their input, and to ensure that our sector funds continue to outperform the benchmark.

The ASR Dutch Core Residential Fund (ASR DCRF) has continued to deploy capital in the Dutch housing market and has expanded its investment pipeline with €423m. This expansion has been funded by additional commitments from several existing shareholders and the addition of a new investor in the Fund in Q4 2018, which further contributed to a robust investor base. This has been accomplished while also delivering on current investors’ desire to deploy capital in future-proof residential areas and maintain a Fund with a limited queue. In the second half of 2018 the Fund acquired two future inner-city landmarks. The acquisition of the WonderWoods building is a strong addition to ASR DCRF’s pipeline, combining solid returns with a strengthening of ASR DCRF’s CSR ambitions. At the end of last year, another inner city acquisition, in The Hague was added to the pipeline Grotius Plaats. This acquisition is an excellent match with ASR DCRF’s focus on the affordable rental segment in one of its focus regions, and will expand the Fund’s presence in The Hague.

2018 also proved to be highly successful for the ASR Dutch Prime Retail Fund (ASR DPRF). With an influx of commitments of over €275m and the acquisition of the Lapis Portfolio of around €100m, the Fund was able to reinvest in the Dutch retail market in line with the strategy of the ASR DPRF, all while maintaining a solid income return and capital growth. The Lapis Portfolio included a small non-core part of around €20m in assets outside ASR DPRF’s focus areas. Several non-core assets were sold within six months of the dealing date, ensuring limited exposure to non-core areas and in line with the investment case. Furthermore, the disposal of non-core assets benefitted the Fund by lowering real estate transfer tax. Alongside these divestments, the Fund continued to dispose of other assets in the current portfolio which were outside its focus areas. This brought its high street exposure to the top retail cities up to 95% of the high street portfolio, adding further to the core profile of the Fund. The way in which the retail sector operates is changing as it focuses more on F&B operations and less on traditional retail formats. The ASR DPRF is well on its way to achieving 100% of the portfolio in line with the strategy in 2021, by continuing to be selective with respect to acquisition opportunities.

Lastly, the ASR Dutch Mobility Office Fund (ASR DMOF) had a successful second year since its inception in December 2016. The acquisition pipeline grew to around €275m with the addition of the WonderWoods office building to the pipeline, while income return remained at a high level compared to the other Dutch office vehicles. Additionally, the Fund welcomed an Italian insurer as of July 2018, further diversifying its client base which now consists of European and Asian institutional investors. The pronounced improvement in the office market and solid asset management lifted the occupancy rate noticeably by 3 percentage points to 96%. Another trend noted and acted on by our ASR DMOF Fund Team has been the increasing importance of flexible office operators, with tenant demand from smaller and medium-sized companies changing rapidly. Last year also saw a robust performance on the GRESB survey as ASR DMOF achieved a 70 point score in its first year of participation in this important sustainability benchmark.

In 2019, we aim to continue our efforts and improve our performance once again. There will be new initiatives and portfolio additions in the pipeline and we will continue to pursue opportunities over the year to come. We would like to thank investors for their continued support and enabling us to further expand our investment platform. If you have any questions regarding the fund management activities of a.s.r. real estate, please do not hesitate to reach out to me, or any of the fund management teams.

Luc Joosten
head of Fund Management a.s.r. real estate
M: +31 (0)30 257 95 28
E: luc.joosten@asr.nl