Altera manages three sector-specific portfolios within the framework of a single company. Each sector portfolio has its own separate investment policy. After all, the individual markets for residential, retail and industrial differ from each other and each sector therefore requires its own specific approach.
However, the overall structural approach taken is the same and is based on a ‘top-down’ and ‘bottom-up’ policy. The top-down policy determines the strategic and tactical portfolio structure and is based largely on the results of research. The strategic portfolio structure per sector is implemented with the help of a target value matrix (price, product, market, segment etc.). The bottom-up policy is implemented within the boundaries set out by the top-down policy and aims to make an active contribution to the outperformance goal and the risk profile chosen.
This is realized, in part, via efficient asset management and the sale of properties that no longer meet the portfolio and/or yield criteria (based on hold/sell and SWOT analyses) as well as acquisitions appropriate to the desired portfolio structure. Accordingly, the selection and acquisition of individual properties or portfolios is not based primarily on the market but on the needs of the specific portfolio.
The above approach ensures that decisions relating to the portfolios are transparent for the shareholders, the Supervisory Board and the organization, and the market.
At the portfolio management department, a sector manager is responsible for developing a sector portfolio and for the results realized in this portfolio. Each asset is evaluated annually for holding or disposal based on the portfolio structure that has been set out. If a property is being considered for disposal, the most effective selling procedure will be determined. Decisions in this context are taken by the management team, consisting of the members of the board, the head of acquisition and the head of research & strategy.
The hold/sell analysis of existing assets as well as the financial analysis of properties still to be acquired is based on a consistent set of financial criteria.
Due to the constant growth of the company's equity and reinvestments made with the proceeds of property sales, the company is continually searching for investment opportunities in all relevant sectors. This activity is the responsibility of the acquisitions department, which operates on a national level and uses clear search profiles for each sector based on the portfolio structure targeted by Altera.
In addition to sector-specific characteristics, several general principles or goals apply here:
- reduce the average age of property assets by purchasing newer properties and newly built properties;
- deploy timeless architecture, sustainable materials and operation;
- deploy attractive design, easily marketable dimensions and flexible layout;
- use technical building specifications in line with the prevailing market.
Contacts can be established in various phases of the property process, including initiation, development, construction and exploitation. The acquisition process can proceed efficiently thanks to the clear search profiles per portfolio, systematic procedures in relation to propositions, and the use of expertise and experience available within the other organizational units.
This includes in-house research and legal expertise as well as relevant technical and financial disciplines. A great deal of knowledge and experience is present in various areas, including (re)development, turnkey- and purchasing/building contracts. The same applies for due diligence investigations, asset and portfolio analyses, and valuation & risk assessments. In addition to the search profiles per portfolio, Altera also applies extensive technical performance standards for properties, including product specifications which serve as a reference when evaluating existing or future properties, building specifications and drawings, and statements of requirements. Decisions in this regard are taken by the management team, consisting of the members of the board, the head of acquisition, and the head of research & strategy, accompanied by an objective and independent assessment from portfolio management as well as research.
Altera’s position as final investor is quite clear. Project development and its associated risks are excluded. Accordingly, in the case of new buildings, Altera often cooperates with developing contractors and project developers. All investments are done exclusively using the company's own equity. External financing, i.e. leverage, is therefore structurally excluded, which also means that the company does not depend upon outside financiers.
If a property is bought or sold, a customer due diligence investigation or an investigation into the “ultimate beneficiary” is part of the selection process.
Sustainability has been an integral component of the investment policy adopted by Altera Vastgoed since 2008. The focus in this context is on minimizing the consumption of energy and water in a pragmatic manner that does not negatively impact investment returns and on the optimum use of measures that encourage sustainability. The approach taken is based on proven and accepted solutions, materials and technologies. Starting with its annual report for 2009, Altera has provided detailed information each year with regard to the goals and concrete progress made in the area of sustainability. Altera also aims to encourage the application of uniform and broadly accepted market standards and measurement methods in the area of sustainability, which also allow for comparisons between sectors, properties and market players involved in property. Altera participates in the Global Real Estate Sustainability Benchmark (GRESB).
The above cost-neutral approach does not depend solely on internal financial considerations. After all, the sustainability of a property is also an important instrument for improving the positioning of the asset in the market, as it makes it easier to lease the building and makes it less susceptible to economic and technical aging. Tenants can also make a financial contribution as a result of reduced energy costs (through so-called green leases) or if sustainability is also an element of their business operation.
Altera Vastgoed views sustainability within a broader perspective. Sustainable development involves more than just energy savings alone. The choice of materials used, water savings, land use, health and pollution are also aspects of sustainability which deserve equal attention at least. However, due to the lack of tools for measuring the impact of sustainability and obtaining insight into possibilities for improvement, the initiatives in the market in this area are limited in scope and often idealistic in nature.