International diversification of real estate investments was continued
Varma’s real estate investment portfolio amounted to EUR 3.8 (4.4) billion at the end of 2014, and the total return stood at 3.8 (3.1) per cent.
Varma continued to increase the international diversification of its real estate investments in 2014. New investment commitments in international real-estate funds totalled EUR 129 million. At year-end, the value of international and Finnish real estate fund investments amounted to EUR 466 (565) million and the return was 8.0 (11.6) per cent.
At the end of 2014, Varma had a total of 220 new rental flats under construction in the Helsinki area.
The weighting of domestic, directly-owned real estate investments was decreased. In 2014 Varma divested direct real estate investments in total value of EUR 337 million. Together with Sponda Plc and the State Pension Fund (VER), Varma established a new real estate investment company, Certeum Oy, which invests in logistics properties. The single largest portfolio divested by Varma in 2014 consisted of 22 industrial and warehouse properties, sold to Certeum Oy at a price of EUR 263 million.
In 2014 the Finnish transaction markets were active, which helped the divestment of direct real estate investments, but the challenges in the rental market were reflected in the vacancy rates, returns and values of the direct real estate portfolio. At year-end, the vacancy rate for the business premises owned directly by Varma was at 7.3 per cent.
New rental flats in the Helsinki Metropolitan Area and growth centres
Varma did not acquire any new business premises in 2014. Investments totalled EUR 74 million, but they were focussed on development, maintenance construction and renovations of existing properties. At the end of 2014, Varma had a total of 220 new rental flats under construction in the Helsinki area. Several other housing construction and development projects were also under planning. In Finland, investments are focussed on the Helsinki Metropolitan area and the largest growth centres.
In 2014, the impact of fair valuation of real estate under Varma’s direct ownership totalled EUR -76 million. The market value of the real estate owned directly by Varma stood at EUR 3.4 (3.7) billion at the end of the year. The return on capital employed in direct real estate investments was 3.2 (2.0) per cent. The value of and total return on the portfolio were influenced by fair valuations, the divestment of properties and investments carried out.
Energy efficiency reduces the carbon footprint of real estate
Varma has been focussing strongly on reducing the energy consumption of its business premises. The goal is to reduce energy consumption by 6 per cent by 2016.
The measures used focus on controlling lighting, ventilation and heating, among other things. In 2011–2014, more than 400 individual energy saving measures were implemented in around 70 properties owned by Varma, generating annual savings of approximately EUR 680,000. This is equal to the annual energy consumption of 590 detached houses heated with electricity.