Pension funds, housing association and City of Amsterdam jointly invest in the core of Amsterdam’s city centre
The City of Amsterdam, housing association Stadgenoot and equity manager Syntrus Achmea Real Estate & Finance are jointly investing in the core of Amsterdam’s city centre (postal code area 1012). On Friday, 8 July 2016, the three parties established the public-private investment and management company 1012Inc NV for this purpose. The goal is to improve the liveability of the area through the strategic purchase and proper management of real estate. This will result in a greater number of shops and businesses that can contribute to the overall quality of the neighbourhood, and provide a better balance between locally oriented facilities and facilities geared towards visitors and tourists. The pension funds ‘Rabobank Pensioenfonds’ and the ‘Bedrijfspensioenfonds voor de Landbouw’ will be shareholders in this public-private enterprise, via Syntrus Achmea RE&F. The neighbourhood itself will also play an important role in improving the general situation.
The establishment of 1012Inc means that several city council proposals adopted in 2009 have now been implemented. The council had called upon social partners to also invest in the area, and to involve the local residents in tackling the issues affecting postal code area 1012. Finding the right partners took a lot of time, partly because there were more than 20 potential partners to meet with, but also because of the economic crisis. Talks between the municipal authorities, Stadgenoot and Syntrus Achmea RE&F started in 2014, with the city council approving the proposal to establish 1012Inc in June 2016.
In recent years, the City of Amsterdam has worked with a number of housing associations to make considerable investments in the area, including with NV Stadsgoed, a full subsidiary of Stadgenoot and a precursor to 1012Inc. A total of 125 window prostitution units have been bought and the premises redeveloped into housing, shops and restaurants. Streets and squares have been revitalised and 22 coffeeshops in the area closed. The three partners in 1012Inc now wish to work further with local residents and entrepreneurs to improve the overall quality of the area.
The investments will bring improvements to the area, but will also yield revenue. The parties have drawn up a business case that projects an annual dividend of at least 4%. If the investments yield more than the projected 4%, the additional profits will be distributed equally (50%-50%) between further investments in the real estate portfolio for social purposes and the payment of dividend.
Knowledge, real estate and starting capital
The City of Amsterdam, Stadgenoot and Syntrus Achmea RE&F have all contributed money or real estate to 1012Inc. The City will convert the remainder of a loan to Stadsgoed – amounting to €21 million – into shares in 1012Inc. This makes the City a shareholder in the investment company.
Stadgenoot is contributing its subsidiary NV Stadsgoed and, with that, its portfolio of recently redeveloped properties. It is also contributing its extensive experience and expertise in purchasing, redeveloping and properly managing premises in the city centre's De Wallen neighbourhood.
On behalf of the two pension funds, Syntrus Achmea RE&F is contributing €59 million and is offering its specific knowledge, experience and expertise with respect to residential, commercial and business premises, and regarding the development and transformation of real estate. Furthermore, Syntrus Achmea RE&F has an extensive network in the retail sector. Its participation in the partnership is coupled with the right to build 750 mid-range rental homes in other locations in Amsterdam, at standard market rates. The two participating pension funds thereby demonstrate that financial and societal benefits can go hand in hand.
Role for the neighbourhood
The three parties feel that it is very important to closely involve local residents and entrepreneurs in the purchase and management of real estate and the further improvement of the area. That is why 1012Inc has arranged an active role for the neighbourhood: first of all by inviting the neighbourhood platform to nominate three candidates for a seat on the supervisory board. Residents and entrepreneurs will furthermore have the opportunity to contribute their ideas to the overall policy. To stay closely on top of developments in the area, 1012Inc will open an office in the neighbourhood.
Parties from the neighbourhood will also have the opportunity to invest financially in the area. Upon the establishment of 1012Inc, the distribution of shares is 44% for Stadgenoot, 20% for the City, and 36% for Syntrus Achmea RE&F. However, over time the distribution of shares should be modified to 30% per participating party, which will leave 10% for smaller local investors.
Mr Ronald Wiggers, currently the managing director of NV Stadsgoed, has been appointed as director of 1012Inc. A Board of Supervisors has also been appointed. The entire Stadsgoed organisation will be absorbed into 1012Inc.
In early 2016, the city council decided to close a further 37 prostitution windows and to end the premises’ prostitution function. It has been agreed that 1012Inc will purchase these premises. Available property from the Ymere housing association in the 1012 area can also be purchased. The investment company will focus on premises that can contribute substantially to the desired transformation and diversification of the area. For example, the possibility of opening a medical practice (GP) in the area is being looked into. By participating in business investment zones (BIZ) and business associations, 1012Inc will seek to maximise its influence on the neighbourhood.
Finally, it has been arranged that if the city council should make that decision, the real estate management company NV Zeedijk, in which the City holds a majority stake, can also be absorbed into 1012Inc.