Lumo Kodit Oyj

Good morning. Welcome to Kojaamo's Q3 results news conference. I'm Niina Sarto, Treasury and Investor Relations Director. Today I have with me our CEO Jani Nieminen and CFO Erik Hjalt, and they will shortly present the third quarter's results. After that, we have Q&A, so you can send us questions via chat or if you wish to ask in person. There is a hand sign on the screen. You can click that and wait in the queue for the turn. And please, before speaking, put your microphone on. Let's start the presentation now with Jani's part. Welcome, Jani.

Good morning. Nice to be here providing a bit of color what's been going on through the first nine months of this year. What's been happening here in Kojaamoa and in the market. As usually, I will summarize a bit of operational environment, and then the key figures and CFO Eric Jelt will provide a bit deeper color, and then we go to Outlook. On page four, the big picture, it's easy to say that our operations developed as anticipated. and during the third quarter our key results are solid we were able to grow total revenues the net rental income and as estimated already after h1 results we've been able to improve the occupancy actually in September the occupancy rose about 94% and now the reported occupancy for the first nine months as a consolidated figure was 92.7%. So the rental market has been active during the market and our operations have been quite successful there. Our cost saving program is progressing as planned. and change negotiation with the personnel have been completed in line with our targets. So that part is proceeding quite nicely. Our balance sheet remains strong. And after the review period, we made a financing agreement totaling 425 million euros. Actually, it means that we now already cover the maturing loans 2024. couple words otherwise yes there has been a very limited number of transactions in the market so it's not easy to make the valuations and we have based the yield requirement increase on the opinion of the outside expert then moving forward to page five a couple of words concerning the operational environment The outlook for the world economy is still, in my eyes, a bit uncertain. And at the same time, twofold. In the US, economic growth has surprised positively. While in here, in Europe, the outlook is becoming a bit bleaker. Inflation has slowed down, although we see that the core inflation is still high. It's good to know that the latest news provides a bit of color that inflation might be going down. Let's see what's going to happen there. Here in Finland, the GDP growth will remain at zero level this year. and we see that household spending and corporate investments have reduced at the same time even if the employment will weaken in the short term it's estimated that it will remain at high level here in Finland so at the moment the unemployment rate is expected to be around seven percent The interest hike cycle is estimated to be nearing its end, but key interest rates might not come lower until much lower next year. So this might be the new normal for a while. Some of the industrial key figures have been changing. Our point of view has been quite clear for some time that a very limited number of new residential startups will happen here in Finland this year. Now the official estimate is that at most 16 000 apartments would be started here in Finland. In my eyes it's still a positive thinking way. most likely it will remain below that 16,000 apartments. I said after H1 results that tops 15,000 apartments, still at the same opinion. And there it's good to know that, the number of non-subsidized block of flats is estimated to remain below 4 000 apartments and that will have a severe impact throughout the market concerning the coming new supply starting next year and then 2025. Estimates are that price of old block of flats meaning unoccupied homes would go down between 1.5 to 3%. It seems that this estimate is way too low. We already witnessed here in Helsinki region during the last 12 months that home prices have been coming down around 9%, and that's more likely the level. Housing trade is low at the moment. Homebuyers are really careful. That most likely will have a positive impact towards the rental market. On page six, it's easy to say that the old truth is still valid. So the megatrends creating long-term demand for rental apartments are valid. We do have an increasing number of small households, especially one-person households, and these small households typically tend to live in rental apartments. we've been saying that urbanization is continuing. What we now see is that actually the population growth has been accelerating in so-called growth triangle, meaning the capital region, Turku and Tampere regions, And according to statistics which follow the population growth here in Helsinki region since 1990, the latest 12 months has been the fastest growth of population here in Helsinki region. And that creates demand. for new apartments and for existing apartments. Housing trade, I said, is low, and it seems that people more often choose to rent the apartment. Good to note on the lower right-hand corner that even though the national statistics tend to say that most of the Finns live in unoccupied homes, more than 60%, Actually, in the biggest cities, more households live in rental apartments than in owner-occupied homes, and the number of households living in rental apartments is growing on an annual basis. For example, in Helsinki, Tampere and Turku, actually more households live today in rental apartments than in owner-occupied homes. As said, the number of new resi startups has been going down rapidly, and we will see a historically low number of new resi startups providing an impact for new supply coming to the market starting next year. That will continue 2025 as well. Typically, it takes at least 18 months to complete a construction project. So as we are not now starting towards the year 2023, there will be less supply 2024 and 2025. At the moment, we don't see any signs or evidence that there would be a rapid recovery. and most likely the volumes concerning new construction projects in residential part of the construction business will stay low as well 2024. That said, it means that we see a historically low number of new completions in the market, urbanization will continue, and I would be surprised if we would not see significantly higher rental increases throughout the market starting next year and continuing 2025. On page eight, a couple of words concerning the key figures. As said, operational figures are solid, actually strong, We were able to grow the total revenues by 7.6%, meaning 23.2 million euros, a combination of three aspects. One is, of course, the completed apartment during the latter part of 2022, then 2023, this year. completed apartments that provided roughly 30 million euros, then increased rents and improvement in occupancy provided 4.7 million euros and the rest came from the portfolio acquisition made last year during the summer. Net rental income grew by 6.7%, meaning 40 million euros. There's of course a positive impact from total revenue growth. On the other hand, we witnessed that there was a growth concerning maintenance cost and their cost increase there in total was 9.5 million euros. Two biggest elements there, heating 2.5 and property taxes 1.6 million euros. Funds from operations improvement there, 7.5%, ended up to 128.9 million. Positive impacts there, of course, tender offer during Q2 this year, and then the positive net rental income improvement. Fair value of investment properties, 8.2 billion euros at the end of Q3, comparison figure 8.9 billion euros last year there is good to keep in mind that we already adjusted property values at the end of last year by nine percent downwards and now at the end of Q3 this year there was a revaluation providing a negative impact of 1.7 percent Gross investments, 161.3 million euros. Mainly new development projects, close to 131 million euros, and the rest, 30 million euros in big picture, was modernization investments. Profit excluding changes in value, 143.9 million euros. Improvement there was 4.5%. of course a combination of total revenue growth improvement in net friendly income and FFO then profit before taxes ended up to be 7.2 million euros there is good to keep in mind that now the change in fair value of investment properties was minus 136.7 million euros and the comparison figure a year ago was 110 million euros positive. A couple of words concerning the ongoing development project. It's good to keep in mind that for the time being, we are not making any new investment decisions, so we are not starting any new construction projects. Of course, we are completing all the ongoing projects in a normal manner, and they are proceeding all as planned. At the end of Q3, we still had 779 apartments under construction. The cost of completing those projects is 27.1 million euros. As I said, all the projects are proceeding in a normal manner. What we have seen with our construction projects, it seems that construction companies are keen on completing the project rather early, not later. many completions have been ready 30 days before the originally planned timetable but in our eyes it's good that we have new supply to the market and we get the cash flows in the remaining 779 apartments roughly half of those projects will be completed this year during Q4 and the remaining part during next year. Development gains still closing 10% at the moment. On page 10, a couple of words concerning the housing stock and customer distribution. Still easy to say that the portfolio meets the demand really nicely. And if we consider the portfolio, it's good to keep in mind that 73% of the portfolio is either studios or one bedroom apartments. Why? Most likely customer is always a small household looking for a one bedroom apartment or a studio. Of customers, three out of four typically look for a studio or one bedroom apartments. one and two percent household sharing in our customer base is at the moment 77.6 percent customers between 26 and 65 years I would say working people that's roughly 75 percent of the customer base. What we saw during the summer was as expected that the age group below 25, there was a slight increase from 11 to 12.5 percent. That actually is the evidence that students are really back to the university cities, and they want to rent the apartments. In my eyes, that's a typical seasonality in a customer structure, that someone provides a bit younger customers. A couple of words concerning sustainability. As always said, sustainability is a part of Coemos DNA, an important part of all our daily actions. We have committed to the UN Sustainability Development Goals, and our target is that our property portfolio will be carbon free by 2030. And we are proceeding very well with those targets. Actually, we do have a really strong result in the reduction of carbon dioxide, minus 15.3% this year. We have made some actions there. One thing to note is that we've been able to provide that data is valuable. As said, we've been using AI in order to optimize heating. We have sensors in 28,000 apartments outside the buildings. AI is combining that data against the weather forecast, able to optimize the amount of heating needed and the timing when to buy additional energy. Now we made a demand response agreement concerning district heating with Vantan Energy. And actually what it means that we are able to provide exceptional data for Vantan Energy, and they are providing now carbon-free energy for us without additional costs. On the right hand side, top corner, it's easy to say that our customers really like the digital services we are providing, so the utilization rate concerning myLuma services is now 85%, and the NetProMotor score is in my eyes at a good level, 51 at the moment. the way we are approaching our customers has been successful. At this point, I will give it to Erik, and he will provide a bit more detailed color.

Thank you, Jani, and good morning, everybody, from my side as well. So page 13. As Jani already mentioned, we had a very strong, operationally very strong quarter, this Q3 this year. So the top line growth year to date was 23.2 million euros. And Q3, the top line growth was 6.1 million euros from the corresponding period. Like-for-like growth was 1.9%, increase in rents and water charges contributed 1.8%, and now the impact of the occupancy rate was actually on a positive side, not much, but anyway on a positive side, 0.1%. So completed apartments, 2022 and 2023 completed apartments contributed, year-to-date €13 million, €4 million during the Q3, Increase in rents and improving occupancy contributed to 4.7 million euros for year-to-day and 1.7 during the Q3. And acquisitions, actually the portfolio we acquired in summer 2022 contributed year-to-day figures 4.6 million euros and only 0.2 million euros for Q3, because obviously that was already included in Q3 figures last year. On net rental income side, so year-to-day growth there, 14 million, 1.4 million euros, Q3, 4.9 million euros. Keep in mind that the underlying portfolio is, of course, bigger than in the corresponding period. So maintenance expenses increased, 9.5 million euros year-to-day, 1.9 million euros during Q3 from the corresponding period. The biggest growing items are heating, as Jani mentioned, 2.5 million euros, property taxes 1.6 million euros, and water 0.8 million euros, and waste management 0.7 million euros. The increase in heating pretty much came through during the first half of this year, given the price increases. Now, in the second half of this year, the prices are clearly on a lower level than in the first half of this year. So page 14, if we first look at the change in fair value investment properties, as Jani mentioned, there were no relevant transactions in the market. And we changed the yield requirement by 10 basis points in capital region, and that translates into seven basis points for the whole portfolio. On the positive side, we had the development gains of completed developments and those apartments where restrictions regarding valuation ended during the Q3. Then if you look profit before taxes excluding, changing fair value, investment properties, couple notes there. One is HCA expenses up to 2.7 million euros. Year-to-day personal expenses 1.3, marketing 0.5 and ICT 0.9 million euros. And there is good to keep in mind that during Q3 we didn't have any impact from this saving program, so they are coming through later. towards the end of this year and especially 2024. On the FFO side, finance expenses was 2.9 million euros. And on the profit before taxes side, it was 5.4 million euros, mainly because of the bigger loan portfolio that we had. And on the FFO side, of course, we had a positive impact of this tender offer completed at the beginning of summer. Financial occupancy rate improved one percentage point from the corresponding period, and tenant term over down by 1.7 percentage point of view. As Jani mentioned, during the third quarter the occupancy was already above 94 percent. I think we already covered this like for like. So investments, for the time being, we are not making any new investments. No, we are not launching any new modernization project as part of the saving program. These ongoing developments will be completed as agreed. There we have fixed prices. Those projects are proceeding as planned. And to finalize these ongoing developments, we need to invest 27.1 million euros, 10 million euros next year and 17 million euros by the end of this year. If you look at the monetization investments here today, there's a growth of 8 million euros from the corresponding period. But most of those modernization investments will be completed by the end of this year as well. So we estimate that as part of the same program, we are not starting new modernization projects. So the modernization investments 2024 is going to be between one and two million euros. Page 18, investment properties. So as said, we increased the yield requirement by 10 basis points in capital region, 7 basis points for the whole portfolio. There were no significant comparable transactions in the market. We still have 881 apartments where we have restrictions regarding the valuation and those restrictions will end by the end of next year and there's going to be an uplift between 65 to 85 million euros. In these ongoing developments providing apartments 779, together we already invested 172 million euros and as said 27 million euros to be invested in order to complete these projects. Development gain in these ongoing developments give or take 10% and still yield on cost 4% as in previous discussions we have provided the information. Loan-to-value equity ratio still strong figures there well inside our targets and we have quite sizable buffer against our targets. So the target is to have equity ratio above 40% for zero and loan-to-value below 50. And at the end of Q3, the loan-to-value was 44.3. We played with the figures, what needs to happen to reach 40% level or 50% level in loan-to-value or 55% level And we looked only if yield requirements changed. Of course, it's important to keep in mind in valuation there are several other things as well. So increasing rents gives a positive impact for valuation. We have descending restrictions and so on and so forth. But if we look only change in yield requirements. So we have buffer for this 50% loan-to-value level, almost 1 billion euros in values, and that's a little more than 60 basis points. And then if you calculate what's the buffer against 55% loan-to-value, so that's 112 basis points. So as said, quite sizable buffer against these two mentioned levels. Page 20, so the information here is pretty much how things were at the end of Q3. All exciting things actually happened after the reviewing period. But at the end of Q3, we had still strong financial KPIs, average interest rate 2.3%, and that's including the cost of derivatives, quite strong hedging ratio still, average loan maturity, average interest rate fixed period close to three years. After the review period, the first draw the remaining part of the syndicated loan we made before the summer, so 200 million euros, and pay back the secured bond 17th of October. So 2023 loans shown in the chart is already taken care of. And then Monday this week, we actually signed the new syndicated secured loan with Nordic Banking Group, 425 million euros. And that secured as well the margin between 150 and 200 basis points. And we agreed to have a six month availability period. And the idea is to draw that loan at the end of that period and to use the proceedings to pay back. the remaining part of the June 2024 maturing Eurobond. So if we combine this on Monday signed agreement and the total saving program, so taking into account the saving program as such, and the fact that the board decided to propose the AGM not to pay dividend. So this put together will take care of all loans maturing 2024. So now even 2024 maturing loans are covered by the company. So we are in that sense in quite strong position as well. So EPRANERVY 19.11 at the end of Q3, down by 15%, basically because of changes in fair values. And then page 23, our outlook, slightly specified. So now we estimate that the top line growth is going to be between 7 and 8%. And we estimate that the FFO is going to be between 162 to 168 million euros. So if you look at the midpoint of this FFO guidance, so there we have assumed that the ongoing developments will be completed as planned. that we are increasing the rents in a normal manner, and the average weather. So the weather, of course, plays an important role when it comes to the maintenance expenses for the remaining part of this year. And then this guidance already takes into account the result of the repurchase of Eurobond earlier this year, and the effect of, on Monday this week, we signed a new syndicated loan. Page 24, as a reminder, our strategic KPIs in line with our targets, so top line growth 7.6%, investments 161 million euros, FFO against total revenue 39.2%, strong key figures regarding loan-to-value equity ratio, as said, and we are, of course, extremely happy with the Net Promoter Score Figure 51. And at this point, I think back to Jani.

Thank you, Erik. Water is dangerous. But as a summary, it's easy to say that the operational figures were solid and actually strong. All the operations developed as anticipated and estimated. We've been able to grow revenues and net rental incomes. balance sheet as Erik mentioned has remained strong and we actually as said have now covered the maturing loans 2024 already rental market has been active it's good to say that yes there's still supply in the market competition in the market but as prior said we started new measures already springtime we've been able to improve our operations increase activities And so, in a way, we've been beating the market, and we are successful at the moment. I am very happy with our organization. Supply will come to the market at least until Q1 next year, then there's a very limited number of new supply in the market and that operational environment will only get better throughout the next 24 months at least. So there was a positive development of occupancy On the other hand, yes, we see that there's uncertainty in the financial and property transaction markets and it has been continuing and likely that will change in a couple of months. But we are following that situation and scanning opportunities whether to sell or not. We've been saying that during the next 12 months we will most likely sell a moderate part of the portfolio, but that remains to be seen. We are not in a rush and the saving program is progressing as planned. We have actually all the measures already ongoing. At this point of time, I think we are ready to move to Q&A. Thank you.

Thank you, Jani, and thank you, Erik. We can now start taking questions, and the first question comes from the room here. Go ahead, SEB, please.

Thank you, Anssi Rausse from SEB. A couple of questions. and i start with the fair values and you mentioned that you made these adjustments based on external recommendations so how should we think about the process like Is it done now or will there be more in Q4? Or was this the total overhaul of the fair values?

We do, as always, valuation on quarterly basis. So we're not anticipating anything for Q4. That remains to be seen. We are following what's going on in the market. if there would be data from the market which is relevant then that has to be taken into account so valuation should be based on actual data from the market it should not include any forced sellings that's the reality but we are following what's going on the market so we are not guessing what's going to happen

Okay and then about your savings program it's 43 million euros in total so just to remind us how big portion of this sum is affecting your fair values like is it nine million euros or how much was it?

So, 80 million euros out of the saving program is coming on a direct cost side. So, half of that in a ballpark on admin cost and half as savings in repairs and modernization investments. So, that means half of that will have a impact in valuation.

And maybe if I continue on that, could you maybe remind us about the sensitivity table you have in your report, like how much that is in euros, roughly speaking?

I don't have the figures with me, so it's not... We need to keep in mind that the valuation is a combination of several factors. We look at all parameters when we do the valuation, and we take into account all gas flows at hand at that time. So it's not relevant to look at one figure as such. It's better to look at the whole valuation.

yeah and I would add that I would say typically the year-end is the right place to consider all the parameters concerning valuation whether it's the estimate how the top line will improve what's happening with the cost and what's the yield requirement so it's a combination going through all the parameters

okay thanks and the last one is about your potential rent hikes of course we all know that there's a pressure to increase rents in Finland in the coming years but what kind of magnitude we are we are talking about here going into 2024 and also your new contracts have you been implementing rent hikes or testing the market already

Well, I'll start actually by saying that we are not providing any outlook yet concerning what's going to happen 2024. And as rents are total revenues, we would be providing an outlook if I would be commenting on our rental increases. So that's not something I would do. But as I said, the balance between supply and demand will change radically next year. There's already information, for example, from social housing providers, that the cost pressures are existing. And for example, Heka, providing social housing here in Helsinki, will increase the rents by 11% next year. I don't see that happening in commercial rental apartments. But I would be surprised if we don't see at least double increases compared to prior years throughout the market next year. When they start happening, that remains to be seen. But trends are moving upwards. Okay, thank you.

Thank you. Next question comes from here as well.

A couple of questions left. Looking at your life-for-life rental income and the impact from rents and water charges, that is now below two and it has been above two, so could you elaborate a bit around that and also what's your balancing between Or what has your balancing between rent increases and occupancy rate been?

I said already during the summer we started active measures in order to improve the occupancy as we see that the market conditions will change radically next year. And our aim has been to improve the occupancy. as we know that we are able to increase the rents 12 months after every tenant moves into the apartment so we've been using in a way agile pricing in some sense in some apartments we see that the vacancy period has been in our eyes a bit long that's always impacting we've been close to normal in this environment, increasing the rents close to 2% around the stock. And we are waiting for the right moment to hit the barrel.

Thank you. And then regarding the transaction market, what kind of activity do you see among, I mean, international investors obviously haven't haven't been active but they are probably looking at the market. So what kind of movements have you seen?

It seems that there's still interest towards the Finnish market. Some processes ongoing. It seems that those processes take a bit longer time at the moment. and many buyers according to my understanding are at the moment a bit opportunistic and trying to find out whether they are able to do bottom fishing and provide aggressive pricing and that seems to be the case at the moment so those processes take a bit of time

Has the bid-ask spread narrowed at all or is it still wide?

I said there's no actual data from the market, so not able to comment on that one.

And regarding your possible non-core disposals, do you have any portfolio that you actively market?

We are scanning the market, testing the market. There are several options. We are not a forced seller. If somebody thinks that Koyama would accept a lowball offer and we just have to sell at any price, there would be a huge misunderstanding. We would sell something during the next 12 months if the pricing is reasonable. We have one testing ongoing at an early phase, so not yet able to provide any comments on that one. But we will find a way, where is the best appetite, where is the most reasonable pricing at the moment. And when we find that one, then we most likely will move forward. Okay, thank you. That's all from me.

Thank you. Seems that we have one more question.

Thank you, Anssi Raussi from SCB again. Thanks for the follow up. Just about your financial targets and 50% LTV. Like, is it so that if you would hit this limit, you would take actions immediately or would it be okay to exceed this 50% for like a short period of time?

So we have already communicated that we want to maintain our investment grade rating. And the investment grade rating level, now it looks a little bit of a moving target, but according to the matrix of our rating agency, the investment grade level is 55 actually. So in that sense, there's no need to do immediately something. So it remains to be seen what is the right level, what is the right target. But the key here is that we are committed to keep the investment rating as such.

But is this LTV like the most critical like number here or do you think that there should be some other number we should be looking at when we are trying to estimate that is your investment grade at risk?

Yeah I would say good luck with that because it's a little bit tricky to try to estimate but of course in rating agencies matrix there are several figures and they look at the total market and the company's position and management and so on and so forth But today it looks that they are extremely concentrating on looking loan-to-value coverage ratio and liquidity situation. These seem to be the three most important at the time.

Okay, thank you. And it's good to keep in mind that concerning the LTV, there's still a significant buffer.

Thank you. Now we can move on to audio cast line questions.

Next, we will have Anders Tum from Green Street. Go ahead.

Hi, good morning. So my first question is just about potentially more restrictive immigration policies in Finland. Can you just give an update on that? And how do you see that potentially cutting into otherwise strong net migration figures in Finland? sorry there's quite a big echo going on could you wait a moment and then repeat yeah sure is it a bit better now it's much better thank you My question was if you can give an update on the proposed more restrictive immigration policies in Finland and how do you see that potentially cutting into otherwise strong net migration figures?

Yes, there's been an ongoing discussion concerning migration. And in my eyes, it's not hurting the immigration and demand for rental homes. It's mainly discussion concerning what kind of people would be moving towards Finland. We know that we need people in Finland in order to start working here. So working force is needed here. And limitations would be concerning the minimum salary. So mainly that people would come to Finland in order to start working, not in order to benefit from the strong social security system.

Understood. And then my second question is around the margin on the bank loan you signed. Is it more or less in line with the previous agreement that you did earlier this year or is it different now?

The margin is between 150 and 200 basis points, so it is slightly higher than in the previous one.

Understood. And then my third one, just thinking about your cost structure going into next year, and I know you don't want to give guidance, of course, but how do you see cost increases as you stand here today? And if you think about the next year, and that's sort of on a like for like basis, because of course, you're doing the cost cutting program as well. But you know, things around heating, staff costs and maintenance. And again, on a like for like basis, if you think about it.

So, of course, this saving program plays a big role here. But some comments on top of that. So the heating is, of course, the biggest portion of maintenance expenses. And what we've seen so far is that this Distributed providers in Finland, they typically give their prices for next six, nine or 12 months. And late last year, we got the new prices from those companies, and the highest price increases was 0%. Lowest was zero, so it's a mixed bag. And before the summer, we started to get new prices from these distributed providers for the next six months or so, and there the prices came down by almost 20%. So those ones who increased 30% by the end of next year. So prices seem to be or estimates for the pricing, those prices we already know, and those prices that we estimate is going to be lower compared to the last winter. But then, of course, it's good to keep in mind that the weather factor is very, very important. So depending on how harsh winter we are going to have, that, of course, plays a role. But the prices are now looking more positive compared to late last year.

Perfect. Thanks very much.

Next, we have Alex Kornstein from Kempan. Please, Alex, go ahead.

My mic is on mute. Can you hear me now?

Yes, we can hear you.

Thanks for taking the question. So the question is, on the one end, your revenue guidance has been narrowed towards the lower end of the range. But at the same time, there's an increase in FFO guidance without any additional one-offs. So where on the operational side of the business do you see the improvement coming from?

So the top line growth, as you said, is narrowed from the upper end of the range, and that's where we estimate the rent increases and the development process and so on and so forth. But the more positive FFO outlook is based on the cost savings already. than the fact that we managed to agree a six-month available period for this syndicated loan. So, of course, that means that the financing for the remaining part of this year and first quarter next year is going to be lower than anticipated. So these are the two main factors. And then there are other savings on STA and on the maintenance cost as well taken into account when specifying this new guidance.

Okay, thank you. We have something left here in the chat. We already discussed the new facility we signed this week, but there is a question about 2025 bond refinancing. Can you comment on the plans for refinancing that one?

So, yes, we are extremely happy that now 2024 maturing loans are all covered. And that, of course, extremely good situation. And now we are focusing the 2025 maturing loan. And again, it's important to have access for different sources of financing. So we are looking at different options and not yet decided which way to go. But that's the next one that we are approaching.

Then a question about private homeowners who are not able to sell their home. Is that impacting the rental market? Is there some risk involved?

I would say it's not impacting the rental market in a negative manner, that homeowners are not able to sell their homes. It means that they have to stay put at the moment, so they are not able to move. On the other hand, as home sellers are not able to sell, home buyers are not willing to buy, those home buyers are more likely to move towards the rental market if we see these high interest levels.

Thanks. Then a question regarding the new development starts. How are you looking at this and how are your capabilities impacted by the cost cutting program?

We are a company which keeps the readiness. We will start investing again once we see it is clever and reasonable. We did not start a cost-saving program because we are between a rock and a hard place. We started it because we saw it as a reasonable thing to start. We are a strong company and we want to keep the company strong and by keeping the company strong, you are actually keeping the capabilities to start investing once it is reasonable.

Good. And then there has been questions about the cost cutting program in general. We already discussed it, but can you remind how fast it will be impacting net operating income? Do we see savings already this year or will they be for 2024?

So some savings already by the end of this year, but clearly the rate is 2024. So as I said in the program, it's the saving program for 2024. The full impact is going to be next year, but already minor impacts, positive impacts this year, given the fact that these layoffs in Finland, when they start, you actually stop paying salaries quite fast. And that, of course, is going to have a positive impact already at least in December, given the fact that we have finalized these change negotiations already.

Okay, thank you. That was actually the last question. Thank you for attending today. Kojaamo's financial statements will be released 15th of February next year. So thank you for today and see you next year. Bye bye.