Kojamo Plc

Good afternoon, ladies and gentlemen, and welcome to Kojaamo's news conference. I'm Niina Sarto from Investor Relations. Today we have two speakers. Our CEO, Reema Rytselä, starts with the key highlights for the period and with the operating environment. And then CFO Erikelt continues. We're going to hear more about the financial development. We have Q&A following their presentation, and then we take live questions and questions coming via chat. Now let's go handing over to you.

Thank you Nina and very good afternoon on behalf of myself as well. We released an hour ago of our Q3 results and happy to say that it was a solid quarter even though the market conditions are still more or less challenging even though kind of a bit improving. I think the highlight again on this Q3 was the kind of recent occupancy rate. We had a very good performance and our occupancy rate raised in Q3 to 96.1. We also, due to that fact, were able to kind of grow our revenues and net rental income and also the leakage that we discussed last quarter on Q2 that net rental income didn't grow as much as revenue we said at that time that we see it as a seasonal adjusted issues there and it remains the to be true and this time the net rental income grew in the same pace than revenues. FFO decreased due to the fact that the financing costs are way higher than last year and repair expenses are a bit higher than previous year. The balance sheet as such is in a strong shape and during the quarter we closed the sale of close to 2,000 apartments to Apollo Funds and we kind of paid our depth for 200 million and launch also the share buyback. The market as such is still, as I said in a very first sentence, is still kind of in a challenging mode, but I think we have a slight slight or minor signs of improvement, even though the kind of recovery has postponed already many times. One very positive topic for Koyama during the Q3 was as well the that Moody's affirmed the BAA2 rating for us and that's a very important factor for a company like Koyama, that its financing capabilities remain very solid. We also started the strategy review but as I said already in Q2 release that we expect that to be more of a revising of a current strategy or tuning the current strategy not as such as a totally new strategy. Then if we talk about a little bit the operating environment, so the economical growth in Finland remains muted, even though it has slight optimism in different kind of forecasts. The global economy is more optimistic and also the Eurozone. But in Finland, unemployment has risen lately, and all in all, I would say that our equity story can't build on Finnish economic growth as such, but more of an operating environment in the context of supply and demand in the long run. As we can see here in this graph, we can note that the residential startups are still very low in Finland, and especially the non-regulated or non-subsidized apartment startups have stayed low level. rumors or initiatives that the legislation will change in subsidized apartment buildings as well. So we see how it develops, but it probably will come down in the future as well. in a sense that if we have a basic need for 35 000 new apartments in Finland and even though you might question that whether it's a correct one or should be 30 000 or 35 000 but still given the fact that our new startups level has been less than 20 000 for three consecutive years now and even though there's some forecast that it will pick up in the next year, but it won't be significantly higher, so it's easy to say that it's definitely underneath the constant need for apartments as such. And while the need is still there, in the biggest cities the population grows constantly, and the immigration is obviously a big factor of that, and the kind of megatrend that is backing up the equity story here in Koyamo is obviously the population growth. One thing that have been in discussions that why is that supply-demand balancing out taking so long time, probably the one reason is that even though immigration has grown a lot in the last three to four years in Finland. So the number of households haven't increased in the same pace than population growth. So that has been one factor that has kind of slowed down the melting process of oversupply. The kind of old story as such, which we have been explaining for quite a long time, but more than 97% of our portfolio is seven biggest cities, the urbanization and the population growth overall in big cities are supporting the Koyamo's portfolio locations, and here we can see that it's kind of a very good fit for the urbanization process as such. Overall, I would say that this quarter, as I described it, it was solid. If you take a comprehensive view of our results, all the factors were performing as expected and I would describe it that even though the market conditions haven't eased up significantly, so the performance of our own has been good in Q3. So I would like to hand over to Erik now and then we can go to Q&A.

Thank you, Reimo, and good afternoon from my side as well. So page 12, if you look at the total revenue first, so the total revenue grew 4.8 million euros year to date compared to three quarters last year, and the Q3 growth was 0.4 million euros compared to Q3 2024. The whole improvement actually came through because of the improved occupancy. It's good to keep in mind that because of the disposal we completed at the end of July, that has an impact for the top line 3.7 million euros. So we lost that, if you like, in a top line growth way. So net rental income year to day growth was 3.2 million euros and Q3 it was positive 0.3 million euros. Maintenance expenses pretty much flattish in year-to-date, and 0.8 million euros decrease during the Q3. Repairs year-to-date up by 1.5 million euros and 1 million euros during the Q3. If you then look maintenance expenses, so there are positive and negative figures there. On the positive side, heating down by 1.8 million euros, credit losses down by 0.8 million euros, and electricity down by 0.5 million euros. On the negative side, if you like, is water up by 1.2 million euros, and cleaning up by 0.6 million euros. Both water and cleaning are impacted by the improved occupancy. Page 13, on the right-hand side, we have FFO. So FFO declined by 7.7 million euros year-to-date, and net rental income contributed 3.2 million euros. SG expenses increased 0.7 million euros, and finance expenses on FFO side grew by 8.6 million euros. On the P&L side, the finance expenses growth was 9.1 million euros. and current taxes were up by 2.7 million euros. And in these current taxes, we are not including current taxes due to the disposal of assets. So, page 14, we are extremely proud that we are still able to improve our occupancy. If you look at year-to-date figures, so cumulative figures, so there the growth is 2.9 percentage points, but more important is actually to look what happened third quarter compared to second quarter this year. So the third quarter figures was 96.1 and it was 94.4 in Q2. So there's improvement on 1.7% in points that I would call that quite achievement in current market position. Tenant turnover down by 2.4 percentage points. Main drivers there of course is that our net promoter score is at the moment all-time high and then we have enhanced our interaction with our customers. So that of course plays a role on the financial occupancy rate angle as well. Page 15, like-for-luck rental income. In this type of turning point, I'm not even today any good fan of this like-for-luck calculation. It's prepared according to APRA best practice recommendations, but because it's backward looking, so in this type of turnaround situation, it's not that... that representative for what's really going. But actually, if you look at our figures, they are improving exactly how we estimated. So now the impact of occupancy rate is visible in this figure, it's positive 1.7%. impact of rent and water charges down by 0.5% and others negative 0.2%. So the total like for light rental income growth is positive 1.1%. And then if you just do the math and look at Q4 figures and the Q4 last year, that will be repaced in the calculation, in our Q4 calculation this year. So the impact of the occupancy will improve further. So page 16, we completed the disposal of almost 2,000 apartments at the end of July, and we have one ongoing development, so 119 apartments in Helsinki region that will be completed early next year, and there's 4.1 million euros to be invested in order to complete that ongoing project. Repairs, we estimate that the repairs this year is going to be slightly above the last year figures. So a little more than 24.1 million euros. And the modernization investments already clearly higher than last year. So now 19 million euros year to date. Last year it was 4.1 million euros. And we estimate that the modernization investments the whole year is going to be around 30 million euros. The increase in modernization investments is mainly due to the fact that we have started a couple of bigger modernization investment projects this year. Next page shows the value of investment properties. Quite stable there, so we didn't change any valuation parameters. We didn't change the yield requirement or any other valuation parameters. The outcome in the valuation was negative 16.4 million euros. Almost all that came through because of ongoing modernization investments. So on the P&L side, the money invested is a negative figure in the valuation. And then, of course, once these processes are completed, the outcome of this process will be booked when completed. loan-to-value and equity ratio, quite strong figures there, and actually our loan-to-value decreased by 2.5 percentage points on back of this, the completed disposals and the fact that we paid back 200 million euros of outstanding loans on back of this transaction as well. page 19. So very important piece of information is that Moody's actually affirmed our PWA2 rating and they stabilized our outlook and we are extremely pleased of that. And the thing is that the next financial arrangements will be to refinance 2027 maturing loans. So in that sense our liquidity position is quite strong because we have 240 million euros cash or finance assets put together, and 275 million euros committed unused credit lines in place. And we've been active in financing other ways as well, so we actually refinanced two loans during the Q3. So 100 million euros loan with OP Banking Group and 75 million euros credit line with Danske Bank. Our equity per share and EPRA NRV moved sideways, so no major changes there. Page 22, we actually kept our outlook for this year unchanged. So we estimate the top line growth is going to be between 0 and 2%. year on year and then we estimate that our FF4 this year is going to be 135 to 141 million euros. If we take the midpoint of the revenue growth outlook, so there we estimate that of course the occupancy has improved moderate rent increases remaining part of this year that the fact that we are still flexible what comes to renting when apartments come vacant and we try to find a new tenant. Then if you look the midpoint of FFO guidance, so of course the guidance as such is reflecting the range for what revenue growth guidance and in the midpoint of FFO guidance we assume the average weather for remaining part of this year, that SD expenses and repairs broadly in line what we had in 2024 and no additional financing arrangement to be done during the end of this year. And now at this point, I hand it back to Reimo. Thanks, Erik.