The Fund realised a total return of -3.2% in 2022, consisting of 2.8% income return and -5.9% in capital growth. Net rental income, administrative and finance expenses are the main drivers for the income return. The decline in capital growth was primarily driven by uncertainties triggered by the geopolitical and economic effects of the war in Ukraine, high interest rates, inflation and energy prices.
The total fund return ended significantly below target. The Fund’s income return ended just above target and capital growth 7.6% points below target as a result of the uncertainties in the market.
Net rental income of € 43.8 million was € 2.4 million higher than the plan of € 41.4 million (2021: € 39.3 million). The most significant drivers of the deviation from plan were higher gross rental income (€ 4.1 million) and higher property operating expenses (€ 1.4 million).
Gross rental income was higher than plan due to the indexation of rental income from standing assets and lower vacancies than expected. The difference in property operating expenses was mainly due to higher-than-expected maintenance costs and higher taxes.
The Fund realised capital growth of -5.9% compared with the plan of 1.7%. Due to rapidly rising interest rates, rising costs and numerous market uncertainties, appraisers have expressed the turmoil in the market through higher exit yields and discount rates. Valuations are under pressure and WTC The Hague, Hourglass and The Garage (both Amsterdam) made the biggest contribution to the negative capital growth.
The total property return for 2022 came in at -2.8%, consisting of a 3.4% income return and -6.0% capital growth. The Fund outperformed the MSCI Netherlands Property Office Index (all properties) by 0.4 basis points in 2022. This outperformance was related to both the Fund's capital growth as the income return. The capital growth of -6.0% was 0.2 basis points higher than the benchmark's capital growth of -6.2%. The income return of 3.4% was 0.3 basis points higher than the benchmark's income return of 3.1%.