a.s.r. vastgoed vermogensbeheer

The inception and first year of the ASR Dutch Mobility Office Fund

With the establishment of the ASR Dutch Mobility Office Fund, a.s.r. real estate has further strengthened its presence in the Dutch institutional real estate market through a strong diversified platform, which offers exposure to residential, retail, offices and rural real estate. The opportunity to acquire the ‘Basisfonds Stationslocaties’ portfolio from the Dutch railway company NS was a great incentive to set up a third sector fund. The acquisition process started back in early 2015 while the closing of the portfolio took place in December 2016. The bid by a.s.r. real estate was very competitive, although not the highest. Despite this, the Manager was able to close this deal thanks to the trust and capital available from its sponsor ASR Nederland N.V. This meant it was able to execute the transaction very swiftly. Of the 15 assets that were acquired, six were immediately sold to Cairn Real Estate, as these assets did not fit the Fund’s strategy. 

After acquiring two offices from the ASR Levensverzekering portfolio, the Fund had a portfolio of 11 assets and an investment value of approximately € 230 million. Deal execution strength was further demonstrated in the first quarter of 2017 through the acquisition of an asset in the Utrecht CBD (Daalsesingel, € 16 million). The Fund currently has a large allocation (67%) in the four largest cities in the Netherlands (G4), while the remainder is invested in national mobility hubs in cities like Eindhoven and ‘s-Hertogenbosch.

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The Fund has a clear focus on (inter)national mobility hubs that are multifunctional and have access to high-quality public transport. Accessibility via public transport is becoming increasingly important as urbanization continues and road traffic further increases. Time losses on the Dutch main road network have shown an upward trend, which is expected to continue. Going forward, this will make public transport a better alternative for relatively more employees. The significant investments and renovations currently taking place at most of the large train stations in the Netherlands further confirm this trend. In December 2016, Utrecht’s public transport terminal (‘OV-terminal’) was delivered after a redevelopment that lasted ten years.

With our in-house research tool, the Dutch Office Location Filter, the Manager has identified the locations which are expected to be futureproof for office investments. These locations are intercity stations with a diversified tenant base and positive office market fundamentals. With our research knowledge and strong market presence we are able to detect acquisition opportunities in an early stage. Highway and monofunctional locations, which still represent a large part of the Dutch office market, are not considered for the Fund.

This unique focus, which stands out in comparison to other Dutch office funds, has been highly appealing to domestic and international investors. The first closing involving an external investor was concluded in May, with Bedrijfstakpensioenfonds voor de Detailhandel (Dutch pension fund) committing capital to the Fund. In July two Asian investors, including the second largest bank in Japan (Sumitomo Mitsui Banking Corporation), were part of the second external closing. Thanks to these three new investors, the Fund attracted € 150 million in external capital in a very short period of time. The Fund is currently focusing on attracting an additional European investor.

The current pipeline, with an expected investment value at delivery of € 180 million, is solely located in the G4 and will further enhance the core character of the Fund. This pipeline provides the Fund with the opportunity to grow and mature. As market conditions have improved significantly over the last two years, we have witnessed a further yield compression. As the Fund targets a 5% dividend yield, we find it increasingly difficult to acquire in some highly sought-after markets, like Amsterdam South-Axis. Markets outside the G4 are considered, but only if they meet the Fund’s well-defined strategy, both from a location and asset perspective.

Although the Fund is still in its first year of operation, progress has already been made in improving the quality of the portfolio. Detailed asset management plans that include ambitious leasing strategies, capital expenditure plans and sustainability objectives are currently in place. Having the fund, asset and property management disciplines in-house has been beneficial as we are able to implement new initiatives very swiftly. A great example of this was the successful handover of the renovation of Laan van Puntenburg from the previous owner, which resulted in productive discussions with the tenant on improving the asset’s sustainability targets. Consequently, the Fund is now targeting a BREEAM ‘Excellent’ certification for this office building instead of ‘Very Good’. And by implementing ambitious sustainability targets at a fund level, we are trying and keep the assets up-to-date and attractive in the long term.

Going forward, we expect the Fund to further benefit from improving market conditions, as tenants and investors will increasingly focus on attractive multifunctional office locations with excellent accessibility via public transport. Given the limited supply levels for the best office locations in the Netherlands, capital values and rental levels at these locations are expected to grow in the medium term at least.

For more information on the Fund, please contact Pieter Vandeginste or Victor Hagenbeek.

Pieter Vandeginste
Fund Director
ASR Dutch Mobilty Office Fund
M: +31 (0)6 22 78 79 55
E: pieter.vandeginste@asr.nl

Victor Hagenbeek
Associate Fund Management
ASR Dutch Mobility Office Fund
M: +31 (0)6 10 50 28 01
E: victor.hagenbeek@asr.nl