Kojamo Plc

And welcome. This is Kojaamo and this is our full year result webcast. I'm Niina Saito. I'm from investor relations. And today I have with me our interim CEO, Erik Hjelte. He will shortly present the last year's figures and then we will hear about the operating environment. Finally, he'll share us the outlook for the current year. Please send us questions. You can do that via chat throughout the presentation. And then in the Q&A, which is after the presentation, we will also take questions from the phone line. Now, I think we are good to go, so I will hand over to you, Erik.

Thank you, Nina, and good morning, everybody from my side as well. So thrilled to discuss about Koemos last year. And on page four, we have the highlights of the year. So total revenue and net rental income grew in 2024. The top line growth was 2.3% and the net rental income grew by 0.1%. we were able to improve our occupancy. So during the fourth quarter, the improvement was 30 basis points compared to third quarter. And this was despite of the normal seasonality and the still oversupply in the market. And if you just look at Q4, so the December was the strongest month in Q4. And I say there's still oversupply in the rental market, especially in capital region, but expectations are that the market will balance out. And this is because of the historically low amount of resi startups what we see in the market and the population growth has accelerated in bigger cities. FFO decreased last year mainly because of the finance expenses were in price and then maintenance expenses were on a higher level compared to previous year. Our saving program was implemented according to the plan. Both P&L impacted mainly repairs and SGA expenses, savings there, and investments as well. So they were very low level compared to previous years. Our financial position is secured, so we are quite strong position there. All this year maturing loans are already covered. And the next one we are looking is to refinance the 2026 maturing loans. If you then look operating environment, Finnish GDP is expected to turn to the growth, quite moderate growth, but growth anyway, expectations are 1.6%. Inflation, very moderate level, that of course is a positive thing for Finnish economy. There are certain uncertainties related to the market for global economy. If we then look The supply side in the market, there are estimates that roughly 20,000 startups here in Finland, whole country this year is quite low level, given the fact that estimates are that 35,000 startups required to cover the needs for new apartments, especially in growth centers. In our case, more relevant figure is actually the startup of non-subsidized apartments. Last year, around 2000 apartments, that's historically low level compared to many, many previous years, not 23, but other previous years, so the volume has been above 20 000 and so last year only 2 000. There are estimates that the startup non-subsidized department startups this year is going to be 7 500. That's kind of official estimates that might be on optimistic side. So very low level of startups even this year and as we know that it takes on average 18 months to complete a new development project. That means that after the tail Earlier started process will come to the market first half of this year. There's going to be very limited amount of new supply coming into the year. Later part of this year, 2026, and it's fair to say even 2027. Then if we look the demand side, So the migration is already on the same level as it was before COVID-19. So this so-called growth triangle is growing. So that part of the population growth is already in place. And on top of that, we have seen in Finland, according to Finnish standards, quite strong immigration. There are several estimates that immigration is going to be around 45,000 people this year and 40 000 next year. These are estimates given by the statistics of Finland. Then if we move to page 10, so we look first total revenue. So total revenue growth was 10.2 million euros last year. Completed apartments contributed 14.2 million euros of the growth and on the negative side was rents and impact of rents and occupancy. Net rental income there, the growth was 5.7 million euros. Maintenance expenses up by 10.8 million euros. Biggest drivers there were heating and water. The portfolio grew during last year, and then property taxes. And the heating was up almost by 4 million euros compared to previous year, mainly because of the last winter was very harsh here in Finland. And repairs were down 5.2 million euros last year. So profit before taxes and FFO, if we first look P&L side, so SGA expense is down by 6.2 million euros. And if we exclude one of items, so the SGA expenses were down by 7 million euros. Finance expenses, 32.5 million euros more than in the previous years. Of course, the underlying loan portfolio was bigger, but on top of that, of course, the higher interest rate environment plays a role there. On the FFO side, the finance expenses impact was negative 32.9 million euros. It's good to keep in mind in corresponding periods, there was almost 9 million euros profit regarding the reversals of the bonds, but nevertheless, finance expenses were clearly higher compared to previous years. And current tax is slightly down 3 million euros. Financial occupancy rate, as said, we were able to improve the occupancy during Q4 compared to Q3, 30 basis points, and the December was the strongest during the Q4. And this was despite of the fact that there's still oversupply in the market, and normal seasonality, what we see in the market, but we were able to move into other direction. Tenant turnover remained on the same levels as in previous year. Like for like rental income, impact of rents and water charges, positive side 1%. We are still increasing the rents monthly basis, but the increase is moderate compared to the beginning of last year. And then this other impact is that the impact of being more flexible, so in some cases we've been even lowering the rents, and in some cases we are offering incentives, so meaning rent-free periods in the beginning of tenancy. And the impact was negative 0.4%. Occupancy on the negative side, 1.9%. As we said already during Q3, that our occupancy is not on a satisfactory level. And this is something that we are focusing on to improve the occupancy. And late last year, we were able to turn the trend and be moving in the right direction, not in a satisfactory level yet, but moving in the right direction. So combined this, so like for like rental income growth total was on negative territory. As part of our saving program, investment decreased significantly. If we first look at gross investments, it came down by 137.9 million euros from the corresponding period. Last ongoing development was completed in June last year, and now we have one ongoing project based on our previously signed agreement, now 119 apartments. to be built here in Helsinki, that will be completed in early 2026. Then if you look at modernization investment side, so down by 22.6 million euros from 2023, and repairs, as already said, down by 5.2 million euros from the previous year. So all investments and savings, if you like, they're in line with the saving program. At 15, the value of investment properties, the whole year figure, negative 134 million euros. During the Q4, the value change was positive 3.9 million euros. There's limited amount of transactions in the market, as we all know, so the valuation should reflect the actual transactions in the market, and now there hasn't been that many transactions. Actually, only one completed transaction during Q4. There the pricing is pretty much in line what we saw earlier this year. So we kept valuation parameters at the end of Q4 unchanged, given the fact that there's no changes in the market. And of course, decrease in interest rates has already used the pressure to increase the yield requirements. loan-to-value slightly down, as anticipated, that was the plan, to bring that loan-to-value slightly down, and we still have quite sizable buffer against this 50% level, so the target is to be below this 50, and currently we are at 43.9, so quite strong buffer against that 50% level. Page 17, loans maturing 2025, they are covered as said. So at the end of last year, we had 359 million euros cash or cash equivalent investments. We had 375 million euros committed and used credit lines in place. And we signed in December last year new unsecured financial agreement with the new bank, 150 million euros. That 50 million part of that is term loan. It was undrawn at the end of last year. And on top of that, that 150 million includes 100 million euros credit line. So all 2025 maturing loans are covered and the next arrangement we are looking is to refinance 2026 maturing loans. Our aim is to return to the bond market. We've been in a good position that we have had access for different sources of financing, but now it looks that the bond market is attractive and our aim is to return to the bond market Not yet designed it finally, but it might happen already during Q1, but Q2 this year at the latest. Financial key figures pretty much unchanged, hedging ratio quite high, 93% average interest rate unchanged as well, 3% and coverage ratio 2.6. EFRA NRV pretty much unchanged compared to the end of 2023. And then our outlook. So now we estimate that the top line growth this year is going to be between one and four percent, and the FFO will be between 135 and 145 million euros. If we take the midpoint of the top line growth guidance, that reflects that there's basically no impact for completions, given the fact that we are not at the moment investing, so no ongoing developments that will be completed this year. No impact basically there. midpoint of the kindness includes improving occupancy, moderate rent increases and the fact that we are still flexible what comes to the rent levels, given the fact that we are still focusing on improving the occupancy and that's why we are flexible in the rents. And in that guidance, midpoint of the guidance, we are not expecting any support from the improving market. And then the FFO guidance, so the midpoint of that, that's reflecting the impact of 2026 maturing loans to be refinanced this year and pay back 2025 maturing loans as well. Average weather factor is quite important when it comes to the maintenance expenses, SCM expenses and repairs in line with 2024 figures. And then, of course, the total revenue growth guidance is included in the FFO guidance range as well. And now, happy to answer any questions there may be.

Okay. It seems that we don't have any questions coming from the phone line, but instead we have some questions here in the chat. So if we start, you end it with the guidance. So what sort of occupancy improvement or rental growth is included in the total revenue guidance?