Dutch fund manager Vesteda seeks foreign capital in strategy switch

Vesteda, which manages the Netherlands’ biggest independent residential property fund, is breaking with its active sale strategy to focus on expansion with the help of foreign capital.

In an interview with PropertyEU’s Dutch sister publication PropertyNL, Vesteda’s new CEO Gertjan van der Baan and director of asset management Hans Touw said they would in future focus on optimising the Vesteda Residential Fund's existing €3.7 bn portfolio and expanding it to boost returns.

While not mentioning any names of potential foreign investors, Touw said the short list of candidates interested in investing ‘substantial sums’ in Dutch residential assets was indeed ‘short’.

‘Up till now there have hardly been any real transactions by foreign investors in direct property… Indirect investment through a fund is attractive to gain exposure to the Dutch market,’ he said.

Van der Baan noted that ‘ it is not so easy’ for foreign investors to build up a large residential portfolio with a good spread in the Netherlands on their own. ‘We offer that opportunity for investors. We have triple A institutional shareholders: that too is an attractive Vesteda characteristic.’

He said that Vesteda had been forced to write down the value of its portfolio over the past six years and that it was now at attractive levels. ‘ If you are underweighted in residential investments, we offer a good opportunity.’

LOW-RISK MARKET
Van der Baan added that some foreign investors had to realise that the Dutch market is primarily attractive because of its low risk and not so much because of its high absolute returns. 'Optimising the tenant base is paramount in the Dutch rental housing market. It's not a market to get in and out of quickly: don't expect double-digit returns here.'

In 2013, Vesteda’s portfolio consisted of around 24,000 residential assets located across the western and eastern Netherlands.

The Dutch residential property market is in a state of flux. Recent legislation allowing the country’s network of social housing corporations to divest large portfolios is attracting foreign interest. Vestia is a case in point: the housing corporation is seeking to sell 6,600 homes – including 4,400 social apartments - in the largest residential portfolio ever marketed in the Netherlands – for up to €900 mln.

The portfolio is expected to attract a number of cross-border bidders, including private equity from the US and UK.

PropertyEU is holding its latest Netherlands Investment Briefing at the PROVADA real estate fair in Amsterdam on 4 June.