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Performance on strategy

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Financial performance

Fund return

The Fund realised a total return of 6.8% in 2020, consisting of a 2.4% income return and 4.4% capital growth. Net rental income, administrative and finance expenses are the main drivers for the income return. Capital growth is primarily driven by the ongoing demand for homes, the shortage of homes and the high levels of investor interest in this sector.

The total fund return ended almost on target. The Fund’s income return ended 0.2% above target and capital growth 0.4% below target. These results confirm that the impact of the Covid-19 outbreak on the (rental) housing market has so far been limited due to the strong fundamentals of the Dutch housing market.

Fund performance

2020

 

2019

 

Actual

Plan

Actual

Income return

2.4%

2.2%

2.3%

Capital growth

4.4%

4.8%

9.1%

Fund performance

6.8%

7.0%

11.5%

Income return

Net rental income of € 194.6 million was € 16.6 million higher than the plan of € 178.0 million (2019: € 168.9 million). The most significant drivers of the deviation from plan were a one-off settlement of € 14.0 million, lower vacancy (+ € 1.3 million) and lower maintenance costs (+ € 1.8 million).

Administrative expenses (€ 35.0 million) were € 0.3 million higher than plan (€ 34.7 million) due to higher management fee costs, directly driven by the Fund's higher than planned average NAV. Finance expenses totalled € 4.5 million, compared with the plan of € 0.1 million. This difference of € 4.4 million was due to higher negative interest charges (€ 1.6 million) and land lease costs (€ 2.8 million). The difference in land lease costs was due to the reallocation of these costs according to IFRS 16. These deviations resulted an increase in the income return to 2.4% compared with the plan of 2.2%.

Capital growth

The Fund realised a capital growth of 4.4% compared with a plan of 4.8%. This figure confirms that the impact of the Covid-19 outbreak on the (rental) housing market has so far been limited. The adjustment of the RETT from 1 January 2021 had already been partly taken into account in the valuation of the portfolio in 2020.

Property performance

The total property return for 2020 came in at 7.3%, consisting of a 2.8% income return and 4.4% capital growth. The Fund showed an underperformance of -1.0% versus the MSCI Netherlands Property Healthcare Index (all properties). The underperformance is largely driven by the capital growth which was 0.9% lower compared with the benchmark's capital growth of 5.3%. In addition, the income return was 0.1% lower compared with the benchmark's income return of 2.9%.

Property performance

2020

2020

2019

 

Actual

MSCI

Actual

Income return

2.8%

2.9%

2.8%

Capital growth

4.4%

5.3%

9.3%

Property performance

7.3%

8.3%

12.4%

The Fund return (INREV) and property return (MSCI) are different performance indicators. The Fund return is calculated according to the INREV Guidelines as a percentage of the net asset value (INREV NAV) and the property return is calculated according to the MSCI methodology as a percentage of the value of the investment properties. For example, INREV includes cash, fee costs and administrative costs in the calculation of the income return (INREV). Furthermore, the amortisation of acquisition costs is treated differently by INREV and MSCI.