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Performance on diversification

Type of property

The Covid-19 pandemic has accelerated a number of existing trends, which are likely to increase demand for sustainable and easily accessible office buildings that are well suited to act as a social hub for users. For one, tenants are already looking for even more flexibility, in terms of both office use and in terms of flexible leases. In addition, a healthy working environment is very much top of mind right now, and we could see the introduction of higher climate control and air quality standards. Very importantly, the fact that so many people have been working from home has highlighted just how important offices are as meeting places and workplaces for inspiration, brainstorming and innovation. The fact that many companies are likely to downsize their overall office space will create additional demand for more compact (flexible) offices. These will often be part of larger – multi-tenant and multifunctional – office complexes, as these offer the flexibility and the additional facilities and amenities seen as essential by most modern office users.  

Multiple lease agreements reduce the volatility of revaluations and help increase the control of asset management risks. Furthermore, the Fund focuses on locations that attract a widely diverse group of people and offer a mix of culture, education, sport and work facilities. The share of multi-tenant assets in the portfolio increased slightly, to 65.2% at year-end 2021 (2020: 64.3%). The addition of Central Park (Utrecht) to the portfolio is fully in line with the Fund's focus on multi-tenant buildings. Delayed asset rental transactions due to delayed occupancy decisions by users due to Covid-19 have resulted in lower than planned occupancy at completion (43% versus 70% planned). However, especially in the second half of 2021, it was clear that many companies and organisations had resumed taking those decisions. This led to various lease transactions for a total of approximately 4,400 m2 of office space, which will result in an occupancy rate of 60% in 2022, after the start of all new lease agreements. Ongoing negotiations at the end of the year provide a positive outlook for 2022.

The current portfolio composition deviates from the diversification guideline, which stipulated that multi-tenant assets should account for more than 70% of the total portfolio. Since the adoption of the guideline, the portfolio has grown considerably in terms of size, number of assets and variety of tenants. The contribution of the multi-tenant share in the portfolio in terms of spreading risk is therefore less significant. The Fund has reduced this diversification guideline to 50% from 2022 onwards. Nonetheless, in addition to single-tenant assets, the Fund continues to strive to acquire multi-tenant buildings.

Portfolio composition by single versus multi-tenant based on market value

Tenant mix

Most of the Fund’s tenants are considered to have a low debtor’s risk. The top five tenants accounted for a total of 38.2% of the total potential rental income in 2021 (2020: 45.3%), which is in line with the Fund's diversification guideline that the total potential rental income of the five largest tenants may provide a maximum of 50% of the Fund's total potential rental income.

Allocation of investment property by tenant sector as a percentage of rental income
Top 10 major tenants based on passing rent

Expiry dates

Close relationships with its tenants enable the Fund to propose lease extensions at the right time. However, the Fund does take lease expiries into account and anticipates these to attract new tenants. This is one of the reasons tenant satisfaction is so important and why this is a key part of the Fund’s strategy. Following the Covid-19 outbreak, the Fund engaged with tenants very quickly, to help them implement Covid-19-related measures in their offices and shared areas in their buildings. The Fund also stepped up communications through a variety of channels (newsletters, community apps, narrowcasting), as well as personal discussions and online meetings with all the tenants in its multi-tenant office buildings. The Fund also continued to invest in improvements and upgrades, including sustainability measures, such as the generation of renewable energy, LED lighting and improved insulation. Last year, the Fund launched programmes related to tenant engagement and health and well-being. Plus it measured tenant satisfaction and communicated the results to its tenants, together with the improvement actions the Fund plans to take.

As of 31 December 2021, the weighted average remaining lease term of the Fund stood at 5.6 years.  

Expiry dates as a percentage of rental income


Reducing the age of the Fund’s portfolio is not a target in itself. More important than age is the asset’s distinctive character, its location, its sustainability and its return prognosis. Some assets have a listed status based on their rich history and architecture. The age of some assets is determined by their date of completion after redevelopment. This means that the construction year of The Garage and Move, which were originally built in 1962 and 1931, is being reported as 2019. However, some older assets that have been or are being renovated and upgraded in phases retain their original construction date, despite being equipped with state-of-the art climate control systems, renewable energy sources and other modern amenities and facilities. New-build asset Central Park (Utrecht) reduced the average age of the portfolio in 2021.

Allocation of investment property by age based on market value

Allocation by risk

In terms of risk diversification, at least 90% of the investments must be low or medium risk. The actual risk allocation at year-end 2021 is shown in the figure below. Every year, the Fund assesses all properties separately. In 2021, the Fund was classified as 100% low to medium risk and as such was consistent with the framework of the Fund conditions.

Future investments in WTC Rotterdam and Central Park in Utrecht will run parallel to an increase of their occupancy rates and will therefore lower the risk profile of the Fund even further. For instance, WTC Rotterdam is currently categorised as medium risk, but will be categorised as low risk once its occupancy rate climbs above 85%, something the Fund expects to see in 2023. This means the Fund has sufficient leeway on the risk front to acquire an office redevelopment project or an office building with a low occupancy rate.

Allocation of investment property by risk category based on market value

Financial occupancy

In 2021, the Fund's occupancy rate of 90.4% was a little lower than in 2020 (92.8%) which was related to the start of explotation for Central Park. While Covid-19 has delayed new rental transactions, the Fund was able to extend existing contracts and sign new tenants for vacant spaces. The transactions concluded in the fourth quarter for Central Park (Utrecht) will make a positive contribution to the occupancy rate in 2022.

The new lease agreement signed in 2020 with the Central Government Real Estate Agency for Centre Court (The Hague, approx. 10,000 m2) came into effect on 1 August 2021 and contributed to the occupancy at portfolio level from that date.

Financial occupancy rate