Kojamo Plc

This is Koyamo and this is our Q1 result webcast. I am Niina Saito from Investor Relations. I have with me here today Erik Hjelt, our interim CEO. He will give us a presentation covering the Q1 result and also an update on the operating environment. Please be active. You can send questions via chat. And those joining over the phone lines can also ask live questions when we have the Q&A. after the presentation. Now I think we can give the floor to Erik. Welcome.

Thank you Nina and good morning everybody. So I'm really excited to discuss our latest result and operationally we had a very strong quarter. the improvement of our occupancy rate accelerated in the first quarter of this year. So total revenue and net rental income grew in the first quarter of this year. So total revenue growth was 0.9% and the net rental income growth was 3.7%. Our FFO decreased because of the effect of increased financial expenses, so net rental income grew 2.2 million euros, but on the FFO side, financial expenses grew 3.6 million euros. So, our occupancy rate has improved since last autumn, and the increase accelerated during the first quarter. And at the end of, or during the March actually, the occupancy was already 93.5. Our balance sheet remains strong and liquidity situation is very good. And following the successful issuance of 500 million euros in March, so now we can say that already 2026 material laws are covered. So, geovoltaical tension grew significantly in the beginning of this year. And that has, of course, an impact for the general economic environment. But since Kojama is operating only in Finland, and we don't have any export or import, so the direct impact of this geopolitical tension is not visible in our operations. So for us, it's more important what is happening in the rental resin market here in Finland. I'll come to that later as well. So operating environment, as said, so global economy is expected to be uncertain, to say the least. Finnish GDP growth is expected to be 1%, quite muted, but anyway growing, and inflation muted as well, so a little more than 1%, so giving in that sense a good background for our operations. So, operating environment, if you look first supply side, so already three years in a row, the resi startups in Finland has been historically low level, 2023 and 2024 below 20,000 units each year, and estimates for this year is around 20,000 as well. For us, more important is non-subsidized apartments. Resi startups and 2023-2024, each year it was way below 4,000, and estimates for this year non-subsidized apartment startup is 7,500. That estimate is given of Confederation of Finnish Construction Industry, If you look at releases from listed construction companies, this 7,500 may be quite an optimistic figure. Nevertheless, there are estimates that in Finland, we need 35,000 new apartments annually to cover the needs of the organization. So, these startup figures are way below that requirement. And as we know that it takes roughly 18 months once the process is completed, so it's pretty clear that second half of this year, 2026 and 2027, no major amount of new supply coming into the market. Moving to the next page, so the demand side, so the organization is already on the same level as it was before COVID-19 and actually city of Helsinki, for example, and the population growth there is even stronger than before COVID-19. And at the same time, the immigration according to Finnish standards has been quite strong. Finland estimates that this year 45,000 people are moving to Finland, next year 40,000. Most of these people that are coming to Finland are staying in Helsinki region. So if you combine, we are not giving any guidance here, but if you combine these two figures, so the volume of startups, resist startups and the population growth in these growth centers, we might be in a balanced situation by the end of this year. And when I say balanced situation, I mean that the available apartments in the public borders on the same level it was before COVID-19. Moving to page nine, total revenue grew 1 million euros, improving occupancy contributed 0.5 million euros, and then completed apartments another 0.5 million euros. Net rental income grew 2.2%, repairs was 0.2 million euros lower than in corresponding period, and maintenance was 1 million euros below corresponding period. Heating was 1.4 million euros down from the corresponding period due to the mild winter here in Finland. And electricity was 0.5 million euros below last year's figures during the Q1 as well. On the growing side, there was water and cleaning together roughly 1 million euros up. Moving to page 10, so profit before taxes excluding change in values, so net rental income contributed 2.2 million euros, SGA expenses same level as in corresponding period, and finance expenses on the BNL side up by 4.7 million euros. On the FFO side, finance expenses up by 3.6 million euros. Page 11, our occupancy has improved since last autumn. If we compare Q1 occupancy to Q4 last year, so the occupancy rate improved 1.2 percentage points, so quite strong improvement there. And if we take only the occupancy rate for March, it was already 93.5%. And during the April, we have made a good number of new lease agreements as well. And tenant turnover decreased from the last year, so corresponding period, down by 0.6%. And all this happened regardless of the fact that there's still oversupply in the market, and there's typical seasonality in the market. So what we've been actually doing, so the renting has been quite strong. There are several reasons behind that positive improvement there. So we are still increasing the rents for existing customers more than 1%, but that's much more a moderate level compared to beginning of last year. We are more flexible what comes to the rents, and we have made some additional repairs to support the renting. And we have improved our own operations. Actually, we have developed our sales management, and we have enhanced our online processes, and then we have established a sales support function in our service center. Tenant turnover is coming down as well, so other thing that is contributing for improving occupancy is that we have been able to enhance our customer satisfaction. So now we have been developing our operations of LUMO Service Center and we have improved our cooperation with property management partners. And now the end situation is that we are offering faster and more effortless service for our customers, and this is already visible in our figures. So Net Promoter scored 57, so an all-time high figure there. Page 12, our like-for-like rental income. It's good to keep in mind that like-for-like calculation is backward looking. So it's past 12 months compared to previous 12 months. So if you look at the impact of rents and water charges, as said, we are still increasing the rents for existing customers contributing point. 8% is 0.4 like follow-up calculations. And these lowering rents and incentives we are in some cases offering had a negative impact of 0.4%. But this impact of occupancy rate, the negative 1.7% has said this is backward looking. figure and we are more concentrating to improving our occupancy looking forward. And this like-for-like calculation, we actually carry on the situation Q2 and Q3 last year, and that has a strong negative impact on this like-for-like calculation as shown in this figure. But if you look how we have been able to improve our occupancy year to date and the good amount of new lease agreements in August, That impact, the negative impact, is about to change when we look at the future calculations later this year. Page 13. Our investments remained at the low level, so for the time being we are not making new investment decisions. We have one ongoing development process, 119 apartments. so-called Centering Kuja project in Lassila in Helsinki, 119 apartments to be completed during the first quarter of 2026. Gross investments during the first quarter this year was quite low, figure €4 million. Modernization investments €2.9 million and repairs €5.8 million. We estimate that repairs for the whole year will be broadly in line with last year's figure. And the modernization investments this year is going to be somewhere around 30 million euros, given the fact that we have started a couple of bigger modernization investment projects. Fair value investment properties slightly down 0.5%. There was limited amount of transactions in the market, actually only one small portfolio transactions, and that was brought in line with the previous transactions, so there was evidence that the yield requirement has moved during the first quarter. And it's clear that decreasing in interest rates reduce the pressure to increase the yield requirements. Because of the limited amount of transactions in the market, we kept our valuation parameters unchanged. In the negative outcome, 37.4 million euros, there are several items included. These items include the impact of net rental income and aging of the buildings. At 15, equity rates and loan-to-value at a strong level. So we have communicated that our aim is to do some moderate amount of disposals between 100 and 300 million euros. And because of the IFRS requirement, we have now booked 280 million euros worth of assets as held for sale because of the IFRS requirement. So there are several ongoing discussions, but nothing more to say at this point. So if we are able to finalize several of these discussions, then of course we'll release the outcome in due course. So in our loan-to-value, 44% is now including the assets held for sale, so basically no changes there compared to the end of last year. Page 16. So we have been active on the financing side as well. So we issued this 500 million euro bond in March. And together with that, we made a tender offer for 2026 maturing bond. And we were able to re-purchase 165 million euros worth of all those bonds. They're still outstanding 135 million euros. in that 2026 maturing bond. This new one is carrying a coupon of 3.875. And our net debt went down to 3.470 million euros. And if you combine all these factors, we can now say that 2025 and 2026 maturing laws are covered. At the end of the quarter, we had 317 billion euros cash and financial assets, and 375 million euros unused committed credit lines. They are really unused. Hedging ratio is still quite high, 91%. Average interest rate went up to 3.3. There were several reasons behind that. One is that the bond issue was very, very successful, but nevertheless, the coupon rate is higher compared to what we have on average in our portfolio. During Q1, we paid back the remaining part of 2025 maturing bond, a little more than 400 million euros. And then the bond, 2026 maturing bond, we made the repurchase, so that was getting a lower coupon compared to the new one. So these factors lead to the increase in average interest rates, 3.3, that's including the cost of derivatives. There has been some discussions regarding the comparability of our figures, because it looks that some of our peers are booking part of the repairs and monetization investments on the balance sheet, and only part of them are booked in P&L. So now we introduce a new KPI, so coverage ratio excluding repair expenses, to make our figures more comparable. The coverage ratio including repairs is 2.5 and excluding repair expense is 2.7. Page 17, our key figures here, equity rates, equity per share, and APRA NRV remained pretty much unchanged compared to the big ending of last year. So page 19, our outlook for this year, we kept that unchanged. So we estimate that top line growth is going to be between 1 and 4%, and FFO is going to be between 135 to 145 million euros. In the midpoint of the top line guidance, we assume that the rent increase is going to be moderate. The improvement on the occupancy is penciled in there as well, and the fact that we are flexible what comes to rents. We haven't penciled in any support from the market, improving market in this guidance. And then if you look the FFO guidance, so the range there reflects the top line growth rate range, and then average, the midpoint of the FFO guidance, including the assuming average weather remaining part of this year and SG expenses and repairs in line what we had in 2024. Strategy targets, couple notes there. So FFO against total revenue, it's good to keep in mind that because of the booking requirements, the whole year's property taxes are booked in first quarter, almost 15 million euros. And then other thing is this net promoter score. Very, very strong improvement there in latest year, and as I said, Q1 this year, the all-time high figure there. I'm extremely pleased with that improvement in Net Promoter Score. To summarize, our Q1 saw total revenue and net rental income increased, FFO decreased due to the increased finance expenses. Our occupancy rate has improved since last autumn, and the increase accelerated during the Q1, and fair value investment properties are pretty much in the same level as year-end, and our financial situation has remained strong. So now, I'm happy to answer any questions you may have.

So, do we have any online questions we can take?