Kojamo Plc

Welcome. This is Kojaamu's third quarter result webcast. I'm Niina Sarto from Investor Relations. Today's presenter is our interim CEO, Erik Hjelte. Erik is going to go through the result and then as usual, we have Q&A. You can send questions via chat or in case you want to ask the questions yourself, you can click the hand sign on the screen and then you just wait for your turn in the queue. Now we can start the presentation. I'll hand over to you, Erik.

Thank you, Niina, and good morning, everybody. I'm excited to discuss about Koyamo's Q3 figures. Page four, we have in a nutshell what happened during the Q3. And our total revenue and net rental income increased both actually by 3.1% from the corresponding period. Our financial occupancy rate decreased from the corresponding period, but the occupancy rate third quarter improved compared to second quarter. So our occupancy rate is not on a satisfactory level, but during the Q3 we moved into the right direction. There's still oversupply in the market, but it turned to a decline. And that goes with all bigger cities, so Helsinki, Espoo, Vantaa, Turku and Tampere. However, if FFO decreased due to the increase in finance expenses and maintenance expenses, our average cost of financing declined from the Q2, but it's still a higher level compared to last year's corresponding period. And maintenance expenses mainly because of the cold weather, especially during the first four quarters, four months in this year. There was no significant change in fair values of investment properties during the Q3. Our saving program is proceeding according to the plan. Both cost items, so repairs and savings and repairs and estate expenses as well as investments are all in line with our plan. And our balance sheet remains strong, and our liquidity situation is good. And the next financing is about to refinance the 2026 maturing loans. If you then look operating environment, so GDP growth in Finland is on a negative territory. Inflation below the 2% target was set by the central bank, 1.8 is the estimate for inflation. So Finnish economy is contracting this year, but turn towards the growth has already began here in Finland. So page six, if you look... The supply side, so estimates are that 17,000 new apartments will be started this year, and that's whole country and all unit types. And if you then look more, important figure for us is non-subsidized apartments. So the startup is estimated to be only 2,000. It used to be about 20,000, so this 2,000 is very, very low figure. And discussions with the construction companies indicate that in the near future they are not starting any major new projects. So that actually means that once this ongoing developments completed, there's not going to be any significant new supply into the market 2025, 2026. And as we know that it takes roughly 18 months to complete a new development project, it can go as long as 2027 before we see any meaningful new supply coming into the market. On the demand side, of course, these megatrends are still valid. So the development household size declining, unfortunately, in Finland. Urbanization is there still. And the fact is that in the bigger cities, more than half of the households are living in rental apartments over occupied or unoccupied homes. already quite strong in Finland. So we are already on a level of pre-COVID-19 levels so that the population growth in these growth areas is there already. And the migration is strong as well. So there are different estimates how many people are moving towards Finland, but it varies between 30 and 40,000 people moving and most of them go to the Helsinki region. So the demand side is strong, estimated to be strong going forward as well. Then if you look more detailed, our financial figures, so total revenue growth, 10.2 million euros year-to-date and 1.7 million euros during Q3 compared to the compensating period. Biggest contributor for top-line growth was completed apartments. So earlier this year and last year, completed apartment, 11.9 million euros for year-to-date and 3.5 million for Q3. And rents and occupancy was a negative impact, 2.7 million euros year-to-date. I come to the like-for-like rental growth later. Net rental income grew 6.8 million euros, 2.6 million euros during Q3. The growth was mainly because of the cost side growth was mainly because of the increased maintenance expenses, 6 million euros. The growth of the portfolio was impacted, 1.6 million euros. Heating and water, 4.2 million euros. And as said, especially during the first four months in this year because of the harsh winter, and property taxes up by 1.3 million euros. Net rental income margin remained stable, so 67.4%, same as in the corresponding period. Profit before taxes, if you look without value changes, so it's a negative 20.3 million euros. net rental income, as said, on a positive side, then financial expenses increased by 29.5 million euros. It increased, but it's good to keep in mind that in corresponding period this was 8.7 million euros profit from repurchase of the bonds. But if you are excluding that, so the financial expenses increased nevertheless. And SDI expenses decreased by 4.1 million euros. Then a couple notes regarding the FFO compared to profit before taxes. So FFO side financial expenses was 28.5 million euros higher than in corresponding period, and cash taxes 3.4 million euros lower than in corresponding period. Financial occupancy rate, as said, declined from the corresponding period, but improved during the Q3 compared to Q2, and there's still oversupply in the market, and there's not that much yet for improving occupancy, but the improvement has come through because of our own activities. We've been doing some Some changes, especially in sales management and resources, better responding for the evening and weekend demand from the customer side, especially. Like-for-like growth. So impact of rent and water charges, positive 0.9 percent. Impact of occupancy rate, negative 0.9 percent. And then negative 0.4 percent, other impacts. And that comes through because now we are more flexible what comes to the pricing regarding to support the improvement of occupancy. So we have done some price reductions in those apartments that has been vacant a very long time. And then we have some campaigns of one month free period in some of those apartments that has been vacant quite some time. So in total, LAK4LAK rental growth was negative 0.4%. As part of the saving program, investment decreased significantly. So gross investments, 21.6 million euros, almost 140 million euros down from the corresponding period. We started about one new development project that's based on previous binding agreement. So back in the days, 119 apartments will be completed in Helsinki in the beginning of 2026, but no other ongoing developments. And for time being, we don't do any new investment decisions. Modernization investment and repairs both down according to the saving program in total 22.7 million euros, 4.7 million euros on the repair side and 18 million euros on the organization investment side. Fair values didn't change significantly at the end of OQ3. We kept valuation parameters unchanged due to the fact that there was limited amount of transactions in the market. In H1 valuation, we took into account all three transactions completed by the end of Q1 in the market, and they were all taken into account in the H1 valuation. There was a couple of smaller portfolios completed during Q3, and there the pricing is pretty much in line with what we saw during the H1. And there's still 404 apartments coming out of the restrictions, and there will be an uplift in the value when those restrictions end by the end of this year. between 20 and 40 million euros. Loan-to-value and equity ratio strong in line with the current public rating, PAA2, and we have quite sizable buffer against the maximum level of loan-to-value to 50%. And actually loan-to-value equity ratio pretty much unchanged from H1 figures. Loan maturities 24 and 25 already covered. We have quite a strong cash position, roughly 350 million euros, and the idea of also could use that cash to pay back the bond maturing. first quarter 2025, and then that means actually that the next financing need is actually to refinance the 2026 maturing loan. The average interest rate in our portfolio came down, it's now 3%, at the end of H1 it was 3.2, and hedging ratio high 93%. In autumn, MoDIS confirmed our rating, PAA2 with negative outlooks, so that's a positive sign as well. EFRA NRV, 18.34 euros per share. And then our outlook, we kept our outlook unchanged. So we estimate that the top line growth will be between 2% and 4%, and the FFO will be between 142 to 152 million euros, so unchanged outlook there. So at this point, I'm happy to answer any questions there might be.

Okay, we can start from the phone line. When you hear your name, please check that your microphone is unmuted. So first one on the line is Andres Tolme from Green Street. Go ahead, Andres.