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Report of the Board of Directors

Financial performance in 2016

Total return

The Fund realised a total fund retun of 5.5% (2015: 0.5%), consisting of a 3.6% income return (2015: 4.2%) and a
1.9% capital growth (2015: -3.7%). The total return in Euro's grew to € 30.5 million in 2016, from € 4.0 million in 2015. The main cause of the difference in total return between the two years is the improvement in capital growth in 2016.

The Fund's NAV declined to € 526 million from € 555 in 2015, a decline of € 29 million. The main cause of the NAV decline is the repayment of share premium (€ 50 million) in 2016.

Income return

The Fund realised an income return of 3.6% in 2016, 0.6 %-points less than in 2015. 

The gross rentail income for 2016 was less than 2015 (-17%), mainly due to the large sale of investment properties at the end of 2015. The net property operating expenses were about equal for both years, resulting in a higher OpEx-ratio in 2016, compared to 2015. The main drivers of the relative increase in the property operating expenses are the executed maintenance and the letting and lease renewal fees in 2016. Also the lack of rental income for The Olympics in Amsterdam due to preparations for the redevelopment, contributed to the decrease in income return in 2016, compared to 2015.

The secured rent until 2019 (three-year horizon) at year-end 2016 was 35% of the 2016 gross rental income (year-end 2015: 52%). The decrease in the secured rent is mainly caused by a relatively high concentration of lease expirations in 2017 and 2019. The high concentration of lease expirations in 2017 is due to a potential ending of a lease at Centre Court in The Hague, whereby the closing of a one year lease extension is foreseen for Q1 2017, which will result in a shift in the peak of expiry dates to 2018.  In accordance with the market conditions, the like-for-like rent decreased -2% (2015: -11%).

The average financial occupancy rate has increased slightly, to 81.3% in 2016 from 80.1% in 2015. The rise of the occupancy rate is mainly a result of new lettings for Nieuwe Vaart (Utrecht) to several organisations that form a cluster based on their strong CSR policies.

Capital growth

The Fund realised a capital growth of 1.9% in 2016, 5.6%-point more than in 2015.

The values of investment property tended to shift upwards in 2016, primarily a result of an improved office real estate investment market. However, for some assets a decrease in value was realised, due to the anticipation of possible lease endings.

Not only investment properties have increased in value, but also the investement under construction, The Olympics in Amsterdam, contributed to an overall capital growth of the Fund's portfolio.

Property performance

The total property return for 2016 came in at 7.0% (2015: 1.4%), consisting of a 4.5% direct property return (2015:
4.9%) and a 2.4% indirect property return (2015: -3.4%). The Fund underperformed the total property return IPD Property Index (all properties) in 2016 of 9.7%.

The five-year average outperformance of the IPD Property Index is mainly the result of outperformances in 2012 and 2013. The optimisation of the Fund in recent years included acquisitions, which added substantial vacancy to the portfolio. Decreased direct returns affected the performance of the Fund to such an extent that outperformance was not feasible. New investments, including Hourglass and the redevelopment of The Olympics in Amsterdam, position the Fund again for a return to outperformance in the future.

The fund return (INREV) and property return (IPD) 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 IPD methodology as a percentage of the value of the investment properties. INREV e.g. includes cash, the fee costs and administrative costs in the calculation of the income return (INREV). Furthermore the amortisation of acquisition is threated differently by INREV and IPD.

Capital Management


In accordance with the Information Memorandum, The Fund will be financed solely with equity and will have no leverage, but may borrow a maximum of 3% of the balance sheet total for liquidity management purposes. 

During 2016, the Fund was solely financed with equity and did not use any loan capital for liquidity management purposes.

Treasury management

For treasury management The Funds acted accordingly its treasury policy in 2016, in order to manage liquidity and financial risks for the Fund. The main objectives of the treasury management activities were to secure shareholders’ dividend pay-out and liquidity by redemptions, as well as managing the Fund’s cash position.

At year-end 2016, the Fund had € 22.5 million in freely available cash and € 5.0 million in a 30-day deposit as at 31 December 2016. During 2016 the cash position decreased with € 59.3 million, as compared to year-end 2015, mainly as a result of the repayment of share premium (€ 50 million) in 2016.

During 2016, The Fund paid € 19.2 million as dividend to the shareholders. At the end of 2016, one capital call was executed at a total amount of € 10 million.

Interest rate and currency exposure

During 2016 The Fund was subject to the negative interest rate development for its bank balances. In order to minimalize the costs of the negative interest rate on the bank balances, during 2016 the Fund used 30-day bank deposits.

As the Fund had no external loans and borrowings during 2016, as well as The Fund did not had any foreign currency exposure during 2016, The Fund had no exposure to interest rate risks or currency exposure risks.

Dividend and dividend policy

The Board of Directors of Bouwinvest proposes to pay a dividend of € 73.18 per share for 2016 (2015: € 88.22 per share), which corresponds to a pay-out ratio of 100%. It is proposed that the dividend be paid in cash, within the constraints imposed by the company’s fiscal investment institution (FII) status. Of this total dividend, 79.2% was paid out in 2016, with the final quarterly instalment paid out in March 2017. The remainder of the distribution over 2016 will be paid out in a final instalment on 25 April 2017, following approval by the Annual General Meeting to be held on 12 April 2017.


The Fund is structured as a fiscal investment institution (FII) under Dutch law and is therefore not subject to corporate tax. Being an FII, the Fund is obliged by law to maintain a pay-out ratio of 100% of the Fund’s distributable profit; as stated above, the Fund proposes to pay out 100% of said distributable profit. The Fund met its obligations related to value added tax, transfer tax and other applicable taxes in their entirety in 2016.

Due to the status of the Fund as a FII, Bouwinvest Office Development B.V. and Bouwinvest Dutch Institutional Office Fund Services B.V. were established in 2016.


Bouwinvest is the fund manager of the Office Fund. Since 2014, Bouwinvest has an AIFMD licence. Under the licence, Intertrust Depositary Services B.V. acts as independent depositary of the Fund for the benefit of the investors and performs all depositary functions and duties pursuant to AIFMD regulations.

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