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Due to the desire for greater diversification in the overall real estate allocation to International Investments, the target allocation will increase in the years ahead. Following last year's shift in focus towards North America and Asia Pacific, the plan is to shift the portfolio towards an equal weighting in terms of regional allocation in the longer term. The performance of the total portfolio International Investments is expected to be in line with the long term target of 7.5%, which is high compared to bonds and net initial yields on direct real estate investments, due to recovering asset values and J-curve effects in the existing portfolio. The existing investments in all regions are expected to generate these relatively high returns, as a result of a combination of anticipated rental growth and favourable financing costs. In general, cap rates are expected to remain in the low range, as the historically high spreads with government bond yields offer a cushion against rising interest rates. The addition of listed real estate contributes to an improvement of the overall risk-return characteristics of the international portfolio.

We expect most real estate markets to continue to grow in 2016 and we are generally positive on the outlook for the growth of returns from our assets under management.

In 2015, we once again reaped the benefits of our continued investment in the past few years – even during the crisis years – and we believe we will continue to benefit from the strategic decisions we made in 2015, including new residential and retail investments and the disposal of a package of office buildings we no longer considered as core assets. We have a positive outlook for the Dutch real estate market and a very solid secured pipeline of new properties of around € 700 million. This will generate even more interest and is expected to lead to new investors. 

The real estate sector is now a full-fledged alternative asset class, with a proven track record of outperformance when compared to fixed interest and stock investments. More and more institutional investors are now increasing their allocation to real estate, as it provides solid and stable returns, acts as a hedge on inflation and enables them to diversify their investment portfolios. Real estate has the potential to make investment portfolios far more resilient in the face of turbulent and volatile financial markets and the increasing demands of market regulators. Of course, this is likely to make the market far more competitive and more expensive, certainly for top-notch assets in the prime segments of our core regions. On the other hand, many investors are looking for an investment manager with the right level of expertise and a solid track record in the real estate industry.

We believe we fit that bill. This is why we are seeing a great deal of interest from investors in our open funds. In just two years, we have gone from zero to eleven third-party investors in these funds and we fully expect to welcome many more in the years ahead. This puts us in a very strong market position. We have the funds, the commitment and the market know-how to continue to expand our secured pipeline in 2016 and beyond to meet this growing demand from Dutch and international institutional investors.

Amsterdam, the Netherlands, 14 March 2016

Bouwinvest Real Estate Investment Management B.V.

Dick van Hal, Chairman and Statutory Director
Arno van Geet, Managing Director Finance
Allard van Spaandonk, Managing Director Dutch Investments
Stephen Tross, Managing Director International Investments

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