Interview with Portfolio Manager Tim Aalders
Over 100 years ago, we started as builders. We now have a real estate portfolio consisting of over 1,500 homes, shopping centers, office buildings and hotel properties spread across various cities in the Netherlands and Europe. For us as real estate investors, it is important to make clear choices within asset management. All the more reason to talk to Portfolio Manager Tim Aalders about the role of the asset manager and Van der Vorm Vastgoed's approach.
How long have you been working for Van der Vorm Realty?
I have been with Van der Vorm Vastgoed for over 5.5 years, currently in the position of Housing Portfolio Manager in which I remain highly involved in the asset management of the entire Dutch housing portfolio.
What is the most enjoyable part of the asset manager job for you?
The great thing about the asset management position is the comprehensive nature of the position. You are an important link to concretize the strategic interests outlined for the coming years of the housing portfolio and bring them to fruition with the team (internal/external). Due to the comprehensive nature of the position, you will be involved in everything from the purchase/development of a new housing complex to bringing it into operation with the property manager and the period up to and including possible sale.
What complexes and operations fall under your responsibility? And can you list one or more unique aspects of each complex from e.g. tenant point of view, architecture, technology, product?
I am responsible for the Dutch residential portfolio, which is characterized by its location in the Top 15 cities of the Netherlands and/or large peripheral municipalities. Over the past five years, through new acquisitions and our own development pipeline, the residential portfolio has evolved from an outdated portfolio of approximately 35 years old, with the associated inconveniences and maintenance costs, to a portfolio with an average age of 8.5 years young, with a high-quality finish and energy label A. A large part of our residential portfolio is located above one of our shopping centers. In this way, the tenants can benefit from all amenities in the vicinity. We also create in this way an "own" consumer stream. Looking at the type of product, we currently have a portfolio consisting of apartments for a very large target group. We are strongly represented in the affordable rental segment from € 752 to approximately € 1,000 per month. These properties are largely located in Leiden, Delft, Zoetermeer and Utrecht. There are also a number of properties which, due to their location and type of tenant, are suitable for exclusive rental (expat rental), including properties in Amsterdam, Eindhoven, The Hague and Rotterdam. Together with an interior designer we always look for the most suitable look and feel for the price segment and type of tenant.
As an asset manager, how do you ensure that tenants of the same type of product in different locations are also / yet offered a similar living experience?
Although this is virtually impossible in practice because the location weighs very heavily in the assessment of living enjoyment/experience, we always try, regardless of the location, to provide a high level of finishing in the homes, distinctive and of high quality. Not only the very complete homes provide a very pleasant living experience, also the public areas, such as the entrance, corridor areas and even container areas are designed together with an interior architect so that the complex is "right" down to the last detail. Think of look&feel, color palette, use of materials and signing. Besides the fact that we ensure a good finish of the house and complex, we are convinced that we can also offer our tenants a high service level, which underlines the pleasant living experience. We can offer this service level through good agreements with reliable partner companies such as property managers, contractors and hospitality partners. In addition, I must not forget to mention my "housing colleagues" who, with a great deal of commitment, skill and experience, take care of the ups and downs within the housing complexes on a daily basis.
How do you determine which complexes fit Van der Vorm Vastgoed's strategy/portfolio objectives? And what considerations do you make before developing or purchasing a property for the portfolio?
The residential portfolio currently accounts for approximately 50% of the company's total invested assets. The strategy as well as the portfolio objectives have been composed in consultation with the shareholders as well as the management team. A clear strategy with a long-term investment horizon has been established, but the high degree of flexibility and liquidity in the company means that changes in the market and opportunities can be quickly and effectively absorbed. In the composition of the portfolio, the location as well as the type of property plays a very important role. An increasingly emphatic role in the assessment of a development/purchase are the housing regulations determined by the government and/or municipalities to, among other things, keep the rental market "affordable". This has significant consequences for the returns that can be made. We also look directly at the target group, market viability, long-term operation/management, as well as affiliated parties (contractor/municipality/developer/seller) in the initial assessment. In the end, the most important thing remains the enthusiasm of the team to work with a new object every time in order to keep improving the portfolio.
How do you weigh social and financial returns? What are any difficulties in finding the balance between the two? And are you as asset manager responsible for both pillars or are different people within Van der Vorm Vastgoed responsible for this?
Within asset management, this is perhaps one of the most complicated topics to explain. As a 100 year old Rotterdam Family Company, there is of course always a social commitment, as a family you take care of each other, so we also try to take care of our tenants and real estate. On the one hand by offering high quality housing products, as well as good service towards the tenants, which is why we have scored and won very high in several customer satisfaction surveys based on customer experience and customer satisfaction. To be able to continue to do this at a permanently high level, constant investment is needed in the knowledge and skills of the employees, maintenance and preservation of the housing complexes as well as investment in new housing complexes to allow even more tenants to experience our housing experience. As an asset manager, you are always looking for the right balance between social and financial returns. Nevertheless, we are increasingly forced by governments and municipalities to take an even closer look at this when developing new real estate, as well as handling the current housing supply in order to make "living" possible for everyone.
You work with several fellow asset managers. What issues are you currently encountering?
We work with a number of asset managers on the retail as well as residential portfolio, each with their own specialization and therefore their own issues. As can be understood, currently most of the issues within the retail portfolio are COVID-19 related. The effects of the lockdown are well visible in this sector. The housing market still seems to show somewhat less impact due to COVID-19, although we do see that cities where our investments are largely segmented in the high rent segment as well as expat segment, rents have to be temporarily adjusted to maintain good occupancy within these segments. Hot topic issues within the housing market stem mainly from the ever-increasing purchase/rental prices, governments that are partly regulating the free sector rental as well as risk considerations within current and pending properties. Here the high rental and purchase values play a very emphatic role.
As an asset manager, what is a success from the past period that you are glad you were a part of?
Successes come from a certain degree of team spirit and wanting to perform together. For example, we know the "small" successes in which the leasing team demonstrates consistently high occupancy rates within the portfolio by dealing flexibly and commercially with current market conditions. In addition, in recent months we have been able to add two new investments to the portfolio. A development from our own pipeline of 58 apartments in the center of Arnhem, as well as two properties consisting of 68 apartments located in the city center of Zoetermeer. With these two high-quality investments which are offered in the low-rent and mid-rent segment, we support the strategy of growing the portfolio in the Top 15 cities and (large) suburbs as well as expanding in the affordable rental segment. Both properties are fully let.
Sustainability is playing an increasing role in real estate development. How is this reflected in Van der Vorm Vastgoed's residential portfolio? And which project(s) are a prime example of this?
We are looking within the portfolio, on the one hand, at sustainability as everyone knows it, but on the other hand, we are also looking at sustainable housing rentals. I will elaborate on this later in this piece. We are currently developing/transforming an office in Rhoon into 44 apartments. During this transformation we have chosen not to make the object sustainable in accordance with the "legally obtained" conditions, but to make it sustainable according to the current requirements that are set, in addition, within this object we have chosen not to connect all PV panels to the general facilities of an object, but approximately 20% of the homes are connected to the panels, so that the individual tenant experiences the benefits of these facilities, combined with an electric heat pump, high-quality insulation and gas-free construction, we can speak of an all-electric home. This immediately relates to sustainable leasing, where we look even more closely at the match between type of home and tenant in order to establish a long-term good rental relationship. In the case of the transformation in Rhoon, tenants who are consciously working on sustainability in one form or another will live in the all-electric homes. Other tenants will choose the "standard" housing.
Another good example of sustainable rental is our project in Loosduinen The Hague. Here, Tiny Houses are being realized in the middle of a landscaped vegetable garden which is part of development Harvest (to be completed 2019). In order to really find the right tenants for this type of home and to understand how they interact with our property, the application procedure has gone completely digital by means of application videos where tenants can introduce themselves and show what they stand for and what click they have with the tiny house concept. In this way we try to achieve an optimal mix of a tenant who enjoys living in our complex and will become a long-term rental relationship.
What insight have you gained in the past year, in the crisis period we are in now?
The past year has been one that I myself have not experienced before in my active career. On the one hand, this period has caused a lot of suffering in one way or another, financial problems, illness, sense of freedom restrictions, etc. On the other hand, we have also somewhat returned to basics and I have personally realized that the little things in life are incredibly beautiful and valuable. I have realized again that your "home" should feel like a safe place, where you can feel comfortable and live without hassle. This also relates directly to how we partly look at new home developments. Here we strive to create living enjoyment and make people feel safe. It is important to us that tenants feel that they are truly "coming home" to us.
What do you expect from the asset management of the future?
With all the data collected, the complete digitization of the real estate industry and more and more publicly available data for consumers, the asset manager will increasingly be data-driven and less on the old familiar gut feeling and roll out plans for the optimization of the property based on this. The role of asset manager, as pivot between tactical and strategic issues, will remain unchanged in importance. A true specialist role with (financial) knowledge of the objects in which connections are made with market conditions and changing consumer wishes.
Want to know more about Tim, our projects or our organization. Check out: www.vormvastgoed.nl and follow us on social media.