Dear stakeholders,
Last year we performed better than expected. We recorded a double digit return on Bouwinvest's assets under management of 12.1%, improving the total return of 10.6% we recorded in 2015. This time it was the Dutch portfolio that delivered a strong performance, especially the Residential portfolio. In 2015 our returns were lifted by excellent results from our International Investments arm. We are satisfied with the returns we booked in 2016, both in absolute and relative terms.
And I believe we were able to do this in a market that is fraught with risks and challenges precisely because we have continued to maintain our investment discipline and stick to our guns. We have always believed that we need to invest in high-quality real estate, in the right locations and geared to the current and future needs of tenants, all backed with thorough market research and real estate market expertise. That discipline and expertise, plus our continued belief in specific sectors in the Dutch and global real estate markets, even during the financial crisis, is now paying dividends.
Last year we also managed to invest over € 800 million, more than the € 782 million we invested in 2015, in what was an even more fiercely competitive market. This gives us a secure pipeline of over € 1.3 billion, putting us in a solid position for the future, especially as we have made no concessions whatsoever in terms of the quality of our portfolio assets.
An example of this is our acquisition of the Hourglass building in Amsterdam’s Zuidas business district, which combines offices and a hotel. It fits into our strategy of acquiring multifunctional buildings and will be an excellent addition to both the Office Fund and the Hotel Fund. And that ability to divide this asset across our funds puts us in a very competitive position, as most investors want to acquire an office or a hotel, but seldom both together. But what I find most pleasing is that this was a real joint effort, involving a lot of hard work from people right across the organisation. The Hourglass acquisition is also a testament to our confidence in the Dutch office market, especially in multi-functional and multi-tenant assets. We are seeing clear signs of recovery at prime locations. The fact that we added a third client to the Office Fund shows that others share our faith in this market.
We welcomed six new clients in our funds last year, taking the total to 17 clients - including bpfBOUW - on 1 January 2017. These new clients reflect the growing interest in real estate as a whole and the confidence in our core investment approach. The new clients will have to wait a while to see their funds invested, as we are investing largely in new-build assets. But like us they have long-term investment scope and like us they want to invest in quality assets that will stand the test of time.
Our investment strategy also reflects a number of megatrends that we believe will dominate the market in the years to come. These include world population growth and the urbanisation trend, which will see a further concentration of people living in cities; the ever-increasing growth of one-person and two-person households, plus the demand for student housing, the ageing of the population and technology will all have a profound impact on the demand for real estate.
Anticipating and responding to these megatrends will be a key factor in our future success. We are looking to increase our assets under management to over € 11 billion in the next three years (including value development), from the current € 8.5 billion. A large part of that will be in international markets. The demands on our management organisation are increasing, but our assets under management give us the critical mass we need to meet all the demands of the market and of our clients.
We are a relatively small organisation, with 146 people (136.6 FTEs) working from our head office in Amsterdam, but we are self-sufficient. We have our own investor relations team and risk management, compliance, tax, and legal functions. As the Hourglass acquisition proved, we are a very effective and responsive organisation. Our clients see that we are dedicated to the real estate sector, that we have good portfolios, take a responsible approach to investing, with a modern and hands-on organisation. And this was borne out last year, when IPE Real Estate voted us the best investment manager in the Benelux and we were nominated in the Best Global Investor category.
At the end of 2015, we set ourselves ambitious targets related to collaboration, innovation and client-orientation and we made progress on all those fronts last year. Client satisfaction has improved by 0.2 points since 2014, and we scored an overall 7.9 last year. We also set up a training programme in so-called soft-skills for our employees. And we set up an Innovation Lab to give people a chance to explore and test innovative ideas together. This also creates awareness of challenges and opportunities on the innovation front in the market, because people are looking at what is happening in the world outside and take this in account. To top all of this, Bouwinvest was ranked third in the best employer category for Dutch financial companies with up to 1,000 employees last year, something else we are proud of.
Last year, we also saw the installation of our first fully elected Works Council. I was impressed to see that no less than 90% of our staff voted in this election, which I believe is a clear sign that we have a committed and engaged workforce. I was also pleased to note that we now have more young people on the Works Council, which now has an average age of 40, compared with an average age of 56 before the election. All in all, I think this bodes well for the future and I am looking forward to our close cooperation with the Works Council in the years ahead.
This year we will continue with our Corporate Social Responsibility (CSR) strategy, with its focus on long-term investments, plus stable and sustainable returns. We will continue to invest in promising and high-quality real estate to create and maintain a portfolio that is sustainable and future-proof and meets tenants’ and clients’ needs today and in the future, with a risk-return profile that enables us to meet very strict requirements. Bouwinvest wants to stay in the leading group on the CSR front. For that reason, I was also pleased that WTC The Hague was awarded the BREEAM-NL In-Use Excellent certificate, and the fact that our three Dutch sector funds retained their GRESB Green Star ratings.
The real estate market is hot right now, and that brings its own challenges. The market is becoming more and more competitive but we are optimistic about our portfolios and the Dutch and international real estate markets. We believe we will continue increasing our assets under management and record long-term annual returns of 5-7% in the years to come. With regard to the management company we expect to maintain the good level of result of 2016 (€ 2.6 million)
All that is left is for me to express my gratitude to our clients for their continued trust and to our Supervisory Board for their efforts on our behalf. And last but certainly not least, I would like to thank all our employees for their commitment, dedication and collaboration over the past year.
Dick van Hal, Chairman of the Board of Directors and Statutory Director