semi-annual report 30 Sep 2008 - SEB Asset Management

W
W
W
The quality and condition of buildings also have a
direct effect on their income-generating ability. The
condition of a building can make maintenance
expenditures in excess of budgeted costs necessary.
Additional necessary investment costs can depress
returns over the short term, but may be necessary
for positive long-term development.
Risks of damage caused by natural forces (such as
earthquakes and tornadoes) as well as by fire and
storms are covered internationally by taking out
insurance, to the extent that this is economically
justifiable and objectively advisable.
While vacancies and expiring leases can be a source
of earnings potential, they also pose a risk. Vacant
properties can be deliberately purchased as an anti-
cyclical investment in order to subsequently realise
W
appreciation gains. In this case, it is important to
monitor regularly the markets in which the Fund is
invested and to act accordingly in order to react to
market movements in a timely manner. At the same
time, vacancies lead to loss of income on the one hand
and increased costs to increase the rental attractiveness
of the property on the other.
Tenant creditworthiness is also a significant risk
component. Poor creditworthiness can lead to high
lease arrears and insolvencies can result in a complete
loss of income. One of the goals of portfolio management
is to reduce dependency on individual tenants or sectors.
The list of above-mentioned risks is not exhaustive. For
a more detailed risk description, please refer to the Sales
Prospectus.
Boeing Avenue 53/99,
Schiphol-Rijk/Amsterdam,
the Netherlands
Semi-annual Report as of 30 September 2008