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Pivotal year in the retail market and ASR DPRF

Following the global financial crisis, Dutch retail real estate remained an attractive asset class, compared to the office and residential sector. It was characterized by stable rental income, a natural shortage of inner-city retail floorspace and attractive capital growth compared to other asset classes. Partly due to the Eurocrisis and Dutch fiscal austerity, retail market recovery lagged alongside a delay in improved disposable income for consumers. At the same time, e-commerce and the bankruptcy of some major household-name retailers in the Dutch retail landscape impacted the market structure, resulting in a few winning locations and several losing cities or areas. The ASR Dutch Prime Retail Fund was incepted in 2011 and remained dedicated to its strategy of a high quality portfolio and ‘value over size’. The fund focuses on the top 20 retail cities for high street retail (2/3rd of the portfolio) and strong economic regions for convenience-oriented retail (1/3rd of the portfolio, mainly DSCs and supermarkets). Historically, the retail sub-markets in which the fund is active, have outperformed other retail sub-markets in terms of risk-return ratio (see table below). The portfolio allocation in combination with the professional management of the portfolio have translated in continuous outperformance of the MSCI IPD-Dutch Retail Benchmark.

Total return on asset level of retail locations in the Netherlands (1995 – 2015)

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The ASR Dutch Prime Retail Fund aims at a long-term distribution yield of 5.0% per annum and an average total return of more than 7.0% per year, net of fees. Over the last few years, capital markets, due to quantitative easing and a search for investment product, pushed down yields for real assets, such as high street retail. By active asset management and the inflow of large redevelopments, the fund has been able to improve dividend yield for investors in the fund in the past year and profit from capital growth. By using market momentum to dispose of assets that do not match the strategy of the fund and acquiring assets in the high street and convenience segment, the ASR Dutch Prime Retail Fund ensures a future-proof market position.

To identify real estate with the needed quality requirements, the fund uses tailor-made research tools and acts proactively on assets and acquisition opportunities. The focus on top 20 cities in the Netherlands for high street retail and strong regions for convenience diversified the fund to multiple retail asset classes with a high return-risk ratio. With more than 200 assets, the low concentration risk enables the fund to continuously add value by redeveloping the portfolio and renegotiating leases. The low leverage status provides stability and limits correlation with possible rising interest rates, while providing flexibility to act on acquisition opportunities. With a highly diversified investor base, the fund has been able to raise capital throughout the active years of the vehicle. An investor considering Dutch retail property in the next two to three years could obtain rental cash flow at an attractive price and an attractive spread compared to other alternatives and bonds. 

For more information on the ASR Dutch Prime Retail Fund and its strategy, please contact Luc Toren.

Luc Toren
Associate Fund Management
ASR Dutch Prime Retail Fund
M: +31 (0)6 53 31 16 80
E: luc.toren@asr.nl