Establishment of Vesteda.
In 1999, Vesteda’s strategy became more sharply focused. Increasing specialisation in the more expensive rental sector marked the start of the changing product development activities and organisation.
In 2000, client-specific information in combination with social-demographic projections led to a division of the portfolio into a Core portfolio and a Disinvestment portfolio. The Disinvestment portfolio ended up containing approximately 30% of the homes. In addition, a steering committee was formed in 2000, within which Vesteda management and ABP, in its role as shareholder, worked out and implemented the strategy which resulted in the transition from a situation in which ABP was the only shareholder to one in which it had a minority share. It was decided to structure the new company in the form of a private company open to investments by institutional investors.
2001 was marked by the preparations for a range of transactions. An information memorandum was released, which enabled a large group of institutional investors to participate in Vesteda. Restructuring activities were also carried out with respect to legal and tax-related aspects, which allowed third parties to actually participate in the new company. Approximately 30% of the equity capital was converted into outside assets in preparation for the definitive financing by external parties. Internally, a reorganisation was completed in line with the chosen strategy. In December 2001, Vesteda Project bv was established.
In 2002, ING Real Estate acquired a 25% share in Vesteda. Shortly thereafter, agreements were signed with six other institutional investors whereby they obtained a total share of 13%. The remaining shares held by ABP were equal to 62% of the total. The outside assets were refinanced in the form of three long-term bonds with terms of three to seven years. Vesteda was able to borrow €1.4 billion from the capital market. For the financial transactions, Vesteda was awarded an AAA rating by the three largest credit rating agencies.
In 2003, Vesteda took a major step on its long-term organisational growth path whereby the property management activities, which had previously been outsourced to external parties, were brought in-house. A total of approximately 100 people were hired, causing the workforce to grow very significantly. By the end of 2003, Vesteda was servicing over 90% of the management portfolio via its own branch offices.
2004 was marked by ongoing organisational consolidation after several years of growth. The influx of finished homes supplied by Vesteda project bv started to increase quite rapidly, resulting in a significant increase in the number of new homes being rented out. In April, partial refinancing was realised for an amount of €400 million.
In 2005, the organisational consolidation continued. The number of new homes being rented out increased. In July, the entire asset capital was refinanced.
In 2006, the portfolio was reduced to a total of 28,000 units. The strategy was refined in more detail, and the model portfolio, which sets out the guidelines for investment policy until 2015, was modified. The total return realised on equity capital was 14.7%, which was the highest realised over the last five years.
In 2007, €320 million worth of shares were reassigned. Three new shareholders were welcomed, and outside assets increased by €350 million. A total of 1600 homes were added to the portfolio, 1050 of which were acquired by purchasing a portfolio. Approximately 1250 homes were sold. In 2007, the balance total exceeded €5 billion for the first time.
In 2008, for the first time in Vesteda’s existence, the value of the portfolio had to be readjusted downwards. In total, the management portfolio decreased by 2.4% as a result of revaluation, i.e. by €116 million. The leverage effect had a negative impact, resulting in a total return on equity capital of -3.1%. This was not a very good result in comparison to the prognosis for 2008 and Vesteda’s track record, but at the same time it was relatively positive in comparison to other investments such as stocks, raw materials, private equity, hedge funds, infrastructure and riskier bonds as well as other sectors within the real estate investment sector such as offices and shops and in comparison to real estate investments elsewhere in Europe.