Outlook

The improved investment and interest rate climate in 2024 was underlined by four consecutive quarters of positive revaluation and the return of yield compression. The return of the positive valuation trend since the start of 2024 is supported by significant rental growth and continuing strong operating metrics. Following recent developments in legislation there is now less uncertainty on the impact of rent regulation, which also improves the outlook for residential real estate

The long term trend for the ARC Fund is likely to remain favourable due to the significant shortage of housing and increasing demand for the unregulated rental market. The modern and relatively energy efficient portfolio is well positioned, which is underlined by the low vacancy rates for the standing portfolio and the low level of rent arrears for its residential units. In addition the ARC Fund maintains a low LTV, which provides optionality to pursue attractive investment opportunities when they arise. For the short term further growth of the ARC Fund's pipeline is likely to be limited and on a selective basis, also depending on the volume of new equity raises. We expect that this will change with further positive momentum in 2025.

For the first half of 2025 we foresee a continuing trend of positive fundamentals for the residential real estate market, which will amongst others lead to more investment market activity. Market values are likely to increase at a more modest pace, depending on the trajectory of interest rates in 2025.

Amsterdam, the Netherlands, 16 April 2025

G.N. von der Thüsen, Director Finance and Risk

D. Anakram, Portfolio Manager