Underlying results and outlook for real estate
Bad debt costs at 278 basis points
Value adjustments rose again, due to the continuing poor state of the Dutch real estate market
in 2013.The increase in value adjustments was concentrated in the commercial real estate sector.
Many tenants went bankrupt, there were relatively few businesses looking to relocate and many
companies reduced the amount of office space they use. There was also pressure on rents, since
tenants have the upper hand in the market. Value adjustments at Rabo Real Estate Group
amounted to EUR 513 (238) million. Expressed in terms of basis points of average lending,
bad debt costs corresponded to 278 (124) basis points, compared to a long-term average of
49 basis points.
In view of the difficult circumstances in the real estate markets, the underlying results were
satisfactory.The results in Germany and France, and at Bouwfonds Investment Management,
made positive contributions. Unfortunately, the operating results were overwhelmed by the
effects of impairments and revaluations of land holdings and operations, and value adjustments.
Rabo Real Estate Group believes that a turning point was reached in 2013. Tentative signs of a
market recovery were already visible. This could also positively affect the division's future results.
Rabo Real Estate Group is therefore confident that an upward trend will begin to take shape.
While unfortunately this will probably not deliver the positive results we wish for in the sense of
a profitable performance in 2014, the direction is now positive.
Annual Report 2013 Rabobank Group
