Kojamo Plc

Good morning. Welcome to LUMO Homes Q1 Result Webcast. I am Niina Saarto, Treasury and Investor Relations Director. Today we'll present you first quarter's figures and we will also give an update on the acquisition of nearly 4,800 apartments, which we completed after the review period on 1st of April. CEO Reima Rytsöla starts the presentation and then CFO Erik Hjelt will continue. In the Q&A, we will open the phone lines for questions. We also take questions via chat. So all is said, gentlemen, now it's your turn.

Thank you, Nina. And a very good morning on behalf of myself as well. And welcome to this inaugural LUMO Homes PLC Interim Report. So fantastic to be here under this LUMO brand. Going a little bit through of our first quarter results and we have shared with the CFO Erik Hjeltså that Erik will go more thoroughly the figures and I will have a kind of a overview of market conditions and overall situation. But all in all, our like-for-like rental income grew and occupancy rate improved from previous year and that was a kind of, I would say, consistent development for us. Even though the total revenue and net rental income decreased, and that was mainly due to the sale of a portfolio of approximately 2,000 apartments, which was closing in last July. We had especially the people who are living in Finland remember that we had the extraordinary cold January, February here in Finland and that affected our FFO as well which declined due to that cold weather and of course the revenue decline as well. Our liquidity position remained very good and our balance sheet is strong and loan-to-value improved and came down to 42.5%. The market situation, I will come back in a minute. We also published our strategy and we had our capital markets day in March where we released our new strategy and where the customer experience is in the core of our strategy. and happy to notice that even though it's early days but already now we hit the record high in NPS at 60 this quarter so going to the right direction although having said that that it's early days and of course the NPS figure might show some volatility but at least promising start in a sense that strategy start to work and we have already took a lot of measures to kind of improve our capabilities to focus on customer experience. And a big part of that was, of course, as I said, that this is an inaugural interim report for LUMO Homes PLC, so a big part of the new strategy is also the brand change that we will operate under the name of LUMO Homes PLC, and an annual general meeting kind of approved that proposal in last March. And as... As Nina told already, so I will give a glance of acquisition that we bought 4,761 apartments, and that deal was closed right after the review period on 1st of April. But I give some glance of what are the first takeouts after a little bit over one month of owning those apartments. The market environment or operating environment has stayed muted. Of course, there's a lot of volatility in the global economy, not the least because of the Iran war and through that rising interest rates. The last year already was in Finnish GDP growth close to zero. At the moment, the different offices expect GDP growth to 1%. We had in a very promising way pre-GDP figure from Q1, which was 0.9, statistics of Finland, but it remains to be seen what's the kind of final figure, but it was kind of a promising sign anyhow. When talking about the rental apartments and oversupply of rental apartments, we still face oversupply and the market conditions haven't improved significantly yet. Although having said that, we kind of repeat ourselves that that in a medium and long term the outlook looks very promising and the main reason is that the new startups for residentials are coming down even more rapid pace than anticipated and the current estimate or forecast is even lower for this year than it was previous year And the Confederation of Finnish Construction Industries just revised their forecast to 15,000 apartments. And my personal view is that we won't even reach that. And the main reason is that actually the subsidized part of new startups will probably be even lower than in this forecast, which was 11,600 apartments. And the main reason is that actually the math is not working at the moment for starting new startups, and especially now when there's still oversupply, but also the current price level for existing apartments are much lower than the new buildings. So that's the main reason. Although combined with the kind of very low level of a new startup, so still the urbanization carries on and the population is growing all the time in biggest cities in Finland. So that's why we are confident of a medium and long-term outlook on supply and demand balance. I won't clean the table for the figures, so I'll let Erik go through the figures more thoroughly. Just one word that our carbon neutral target is well in line and intact and we are ahead of our plan. and reaching the carbon neutrality by apartment in 2030. This is of course one key component for us for cost efficiency as well, and that's why it's kind of a... double-sided, so to say, the target. So it's beneficiary, of course, for climate change as such, but also for our profitability. And then about the acquisition, as I said, that we acquired the 4,761 apartments from Varma Mutual Pension Insurance Company, and that deal closed right after the review period, so 1st of April, so we have roughly a little bit over one month behind us now that owning those apartments, and And the start has been very promising. As you remember, the occupancy rate of the portfolio was very low, 83 on the time of signing. And we said that we are confident that we are able to rise that occupancy rate to our kind of a stabilized level and At the moment, the first month of April looks very promising and even above our expectations. So the lease-up plan is progressing very well. Also, overall, the takeover has gone very smoothly. So I would like to hear also... thank our own people that they have worked very hard and this is a big portfolio to acquire so it has so far went very smoothly and the lease-up plan has progressed really well so we are even more confident on the signing of this deal that we are able to raise the occupancy to the to the more of a stabilized level. I think this was all in my first stint, so as Nina said, we are ready to answer the questions after Erik's financial development and outlook part, so I ask Erik to join on the stage.

Thank you, Reema, and good morning, everybody, from my side as well. So page 11 told the revenue side, so it declined 3.5 million euros from the corresponding period, but it's good to keep in mind that in July 2025, we disposed almost 2,000 apartments. And those old apartments actually contributed 5.4 million euros for the top line last year. So if you exclude that, so actually the top line growth was 1.9 million euros. And main contributor there was improved occupancy. Net rental income came down by 2.9 million euros. Of course, the total revenue plays their role. Repairs came down by 0.6 million euros, and despite a slightly smaller portfolio, the maintenance expenses moved sideways, and the main reason there is actually the heating costs or the Winter was very harsh here in Finland, and the heating expenses was 2.4 million euros more compared to last year, Q1 last year. On the positive side, cleaning and outdoor maintenance came down by 0.8 million euros, and property taxes down by 0.6 million euros. On page 12, on the right-hand side, FFO down by €2.1 million. Of course, net rental income plays a role there as well. So, SG expenses increased €1.1 million. Finance expenses came down by €0.3 million, mainly because of the smaller... loan portfolio. And it's good to keep in mind that the closing of the acquisition, big acquisition, was first of April, so it has no impact in any of our figures during Q1 this year. And current taxes came down by 0.8 million euros. Occupancy rate improved from previous year. Q1 figure, year-to-date figure is, of course, in Q1 the same, so 95.6%, and it's up by 2.8 percentage points from Q1 last year. Tenant turnover slightly up by 0.6 percentage points. We saw very strong like-for-like rental income growth, mainly driven by the improved occupancy, very strong figure there, so 4.3%. Impact of the rental water charges, negative side, 1.1%. We are still increasing the rents for existing tenants. At the moment, the monthly increases are on average between 1.4% and 1.5%. and we are still flexible in rents which come to the vacant apartments, and that flexibility brings the impact of rents and water charges on a negative territory. Altogether, luck for luck, rental growth very strong, 3.2%. Investments were on a low level in the first quarter. We had one ongoing development project, 119 apartments, that was completed in February, located in Helsinki. And modernization investments increased from a comparison period because we started a few larger modernization investment projects. We sold during the first quarter 166 apartments and of course after the period we completed acquisition almost 4,800 apartments. Modernization investments up by 2.5% because of this couple of bigger modernization investment project we started. Fair value of investment properties down by 42.6 million euros. We didn't change any valuation parameters in Q1 valuation. There was four transactions during Q1, including ours, and all these are taken into account in our valuation for Q1. And the main reason for the negative impact of the valuation was due to the change in calculation parameters as properties h. So that's embedded in our model, our valuation model. The change in requirement is based on h of the property, so when it turns and when the property turns 16 years or 30 years after completion or renovation we increase the yield requirement and 15 years point we increased the yield requirement between by 12.5 percent and that was the main reason the value change in Q1 there was unusually amount of aging properties. Most of these properties that we changed the yield requirement because of the aging was assets turned to 16 years old. Remaining part of this year we anticipate no major impact because of this aging question. So page 17, loan-to-value strong, 42.5, well in line with our new target to keep our loan-to-value below 45%, so there's quite a sizable buffer against that level, and equity ratio quite stable as well. On page 18, our financial position remains strong. After the reporting period, we signed a €600 million acquisition finance related to the portfolio acquisition, and the idea there is to refinance that with debt from the capital markets. In March we paid back the remaining part of the 2026 maturing bond, 135 million euros, and now the 2026 maturing loans are already covered, or paid back actually, and now the focus is to refinance 2027 maturing loans, and we will address that at some point during this year. Financial key figures remained strong, so hedging ratio very high, 96%, average interest rate 3.3%, and coverage ratio excluding repair expenses as our PSI are calculating this, so 2.6%. Key figures per share remain strong, no major changes there, so NTA pretty much in line with the previous figures, and the same goes with equity per share. As we revised our strategy, we released our new financial targets for 2026 to 2028. We have four cornerstones, if you like, there. So growth, customer satisfaction, profitability, and risk management targets. And the growth, the target is to grow 5% to 7% annual customer satisfaction to have net promoter score about 65%, profitability, average annual growth FFO per share 3.5%, and loan-to-value to keep below 45%. Now we have the figures for net promoter score and loan-to-value, because growth and profitability figures are annual figures, so we didn't calculate it linked to this Q1 report. Of course, the whole-year figures will be included when we are there. Then page 21, our outlook. We kept our outlook unchanged. So we estimate that the total revenue will amount between 484 to 497 million euros and an FFO between 147 to 157 million euros. If you look at the midpoint of the top line growth guidance, so there we penciled in slightly improvement in occupancy, moderate trend increases, and flexibility in new rents, but reducing amount compared to last year and beginning of this year, and then successful implementation of the acquired portfolio, and we are proceeding well there, as Reimo already discussed. Then if you look at the FFO guidance, so that, of course, the range reflects the top line outlook there. And if you take the midpoint of the FFO guidance, so there we assume the average weather and then the cost of refinancing on a constructive level. And now back to Reima.