Kojamo Plc: Kojamo plc Interim Report 1 January–30 September 2023

Kojamo plc Stock Exchange Release, 2 November 2023 at 8.00 a.m. EET

Kojamo plc Interim Report 1 January–30 September 2023

Total revenue and net rental income increased, occupancy rate improved

This is a summary of the January–September Interim Report, which is in its entirety attached to this release and can be downloaded from the company’s website at www.kojamo.fi/investors.

Unless otherwise stated, the comparison figures in brackets refer to the corresponding period of the previous year. The figures in this Interim Report have not been audited.

Summary of July–September 2023

• Total revenue increased by 5.7 per cent to EUR 111.5 (105.4) million
• Net rental income increased by 6.3 per cent totalling EUR 83.1 (78.2) million. Net rental income represented 74.6 (74.1) per cent of total revenue
• Result before taxes was EUR -88.5 (90.8) million. The result includes EUR -141.8 (35.8) million net result on the valuation of investment properties at fair value. Earnings per share was EUR -0.29 (0.29)
• Funds From Operations (FFO) decreased by 0.4 per cent and amounted to EUR 48.5 (48.6) million
• Gross investments totalled EUR 45.0 (78.1) million, representing 40.3 (74.1) per cent of total revenue
  

Summary of January– September 2023

• Total revenue increased by 7.6 per cent to EUR 328.6 (305.4) million
• Net rental income increased by 6.7 per cent to EUR 221.6 (207.6) million. Net rental income was 67.4 (68.0) per cent of total revenue
• Result before taxes was EUR 7.2 (248.6) million. The result includes EUR -136.7 (110.9) million net result on the valuation of investment properties at fair value and EUR -0.1 (0.2) million in profits and losses from the sale of investment properties. Earnings per share was EUR 0.02 (0.81)
• Funds From Operations (FFO) increased by 7.5 per cent to EUR 128.9 (120.0) million
• The fair value of investment properties was EUR 8.2 (8.9) billion at the end of the review period
• The financial occupancy rate was 92.7 (91.7) per cent for the review period
• Gross investments amounted to EUR 161.3 (416.5) million, or 49.1 (136.4) per cent of total revenue
• Equity per share was EUR 15.18 (17.96), and return on equity was 0.2 (6.1) per cent. Return on investment was 1.2 (5.1) per cent
• EPRA NRV (Net Reinstatement Value) per share fell by 15.6 per cent to EUR 19.11 (22.63)
• There were 779 (2,012) Lumo apartments under construction at the end of the review period

Kojamo owned 40,192 (38,983) rental apartments at the end of the review period. Since September of last year, Kojamo has acquired 0 (985) apartments, completed 1,273 (1,562) apartments, sold 73 (0) and demolished or otherwise altered 9 (-48) apartments.

Key figures

	7-9/2023	7-9/2022	Change %	1–9/2023	1–9/2022	Change %	2022
Total revenue, M€	111.5	105.4	5.7	328.6	305.4	7.6	413.3
Net rental income, M€ *	83.1	78.2	6.3	221.6	207.6	6.7	280.1
Net rental income margin, % *	74.6	74.1		67.4	68.0		67.8
Profit/loss before taxes, M€ *	-88.5	90.8	-197.5	7.2	248.6	-97.1	-499.8
EBITDA, M€ *	-67.9	105.1	-164.7	55.0	291.0	-81.1	-441.3
EBITDA margin, % *	-60.9	99.7		16.7	95.3		-106.8
Adjusted EBITDA, M€ *	73.8	69.3	6.5	191.8	179.9	6.6	240.4
Adjusted EBITDA margin, % *	66.2	65.7		58.4	58.9		58.2
Funds From Operations (FFO), M€ *	48.5	48.6	-0.4	128.9	120.0	7.5	160.7
FFO margin, % *	43.5	46.1		39.2	39.3		38.9
FFO excluding non-recurring costs, M€ *	48.5	48.6	-0.4	128.9	120.0	7.5	160.7
Investment properties, M€				8,171.4	8,857.1	-7.7	8,150.2
Financial occupancy rate, %				92.7	91.7		92.0
Interest-bearing liabilities, M€ *				3,650.3	3,582.9	1.9	3,678.2
Return on equity (ROE), % *				0.2	6.1		-9.9
Return on investment (ROI), % *				1.2	5.1		-5.7
Equity ratio, % *				45.0	48.7		45.3
Loan to Value (LTV), % *				44.3	39.9		43.7
EPRA Net Reinstatement Value (NRV), M€				4,722.9	5,592.3	-15.6	4,825.9
Gross investments, M€ *	45.0	78.1	-42.4	161.3	416.5	-61.3	501.6
Number of personnel, end of the period				311	309		304
Key figures per share, €	7-9/2023	7-9/2022	Change %	1–9/2023	1–9/2022	Change %	2022
FFO per share *	0.20	0.20	0.0	0.52	0.49	6.1	0.65
Earnings per share	-0.29	0.29	-200.0	0.02	0.81	-97.5	-1.62
EPRA NRV per share				19.11	22.63	-15.6	19.53
Equity per share				15.18	17.96	-15.5	15.55
* In accordance with the guidelines issued by the European Securities and Markets Authority (ESMA), Kojamo provides an account of the Alternative Performance Measures used by the Group in the Key figures, the formulas used in their calculation, and reconciliation calculations in accordance with ESMA guidelines section of the Interim Report

        
Outlook for Kojamo in 2023 (specified)

Kojamo estimates that in 2023, the Group’s total revenue will increase by 7–8 per cent (previously 7–9 per cent) year-on-year. In addition, Kojamo estimates that the Group’s FFO for 2023 will amount to between EUR 162–168 million, excluding non-recurring costs (previously EUR 158–167 million).

The outlook is based on the management’s assessment of total revenue, property maintenance costs and repairs, administrative expenses, financial expenses, taxes to be paid and new development to be completed, as well as the management’s view on future developments in the operating environment.

The outlook takes into account the estimated occupancy rate and rises in rents as well as the number of apartments to be completed. In addition, the outlook takes into account the result of the repurchase of eurobonds and the effect on FFO of the financing arrangement made after the review period.

The outlook does not take into account the impact of potential acquisitions or disposals on total revenue and FFO.

The management can influence total revenue and FFO through the company’s business operations. In contrast, the management has no influence over market trends, the regulatory environment or the competitive landscape.

CEO’s review

Our operations developed as anticipated during the third quarter. Total revenue and net rental income grew, and occupancy rate improved from previous year. Our balance sheet remained strong.

During the summer and autumn, the rental market has been active as expected, and our cumulative occupancy rate improved. In the third quarter of the year, our occupancy rate rose to above 94 per cent. A large number of rental and owner-occupied apartments from construction projects started in previous years are being completed in the market still this year. Owner-occupied housing sales are subdued, increasing the number of unsold new apartments, and investors' interest for new rental housing investments is very low. The supply of completed rental apartments will continue to be high until the beginning of next year but will decrease sharply after that.

The outlook for construction has become bleaker. The number of new residential start-ups has collapsed during this year, and there are currently no signs of a significant increase in the number of start-ups next year. This will be reflected in the entire housing market in the next few years as a very low amount of new supply.

The shrinking supply and the continuation of urbanization and immigration are expected to have a positive effect on the rental market. The shrinking supply and the increased maintenance and financing costs will likely be reflected in the market during 2024-2025 as more strongly increasing rents.

Our saving programme announced in August is progressing according to the plan. Our goal is to achieve total savings of EUR 43 million in costs and investments in 2024, of which the share of costs is estimated to be EUR 18 million. The personnel change negotiations related to the saving programme have been completed in accordance with the goals in October. We renewed our organization, especially in Housing department, to bring even better efficiency to our operations. The vast majority of personnel cost savings are realised through layoffs, and it is important for us to ensure the company's agile reaction ability when the situation on the market improves and our growth continues.

With regards to other savings, the plan is ready and its implementation has started. For the time being, we are not launching new development projects or modernization projects, and we are focusing our repairs to support renting. At the end of the review period, we still had 779 apartments under construction, most of which will be completed this year. As part of measures to strengthen the company's financial situation, the company's Board of Directors decided that it will propose to the spring 2024 general meeting that no dividend for 2023 be paid.

We were able to utilize our development contributions from previous years when we made a demand response agreement with Vantaan Energia regarding district heating for the majority of our properties located in Vantaa. The room temperatures of Kojamo's properties are monitored using smart technology, and the use of heating in the properties can be optimized directly from Vantaa Energia's district heating network. The solution brings a total emission reduction of up to 20 percent to Kojamo's properties.

After the review period, we signed a EUR 425 million secured syndicated loan agreement with Nordic banks. The arrangement made with the five relationship banks is proof of the strength of our banking relationships. We had previously made financing arrangements for loans maturing in 2023, and the financing agreed on now will cover the loans maturing in 2024, including the bond maturing in June.

The uncertainty in the financial and real estate transaction markets has continued, and interest rates are not expected to decline in the near future. There were limited number of transactions in the market, and we have based the yield requirement increase of 0.07 percentage points on the opinion on an external expert. Adapting to the challenging situation and the new interest rate environment is still in progress for many players. I believe that with active and proactive measures, we can ensure a strong position and our ability to grow in the future as the market situation turns more favourable again.

Jani Nieminen

CEO

News conference as a webcast

Kojamo will hold a news conference for institutional investors, analysts and media on 2 November 2023 at 10.00 a.m. EET at the company’s head office at Mannerheimintie 168A, Helsinki. The event will be hosted by Kojamo’s CEO Jani Nieminen and CFO Erik Hjelt, and it will be held in English. After the event, the media has a possibility to ask questions also in Finnish.

The event can also be followed as a live webcast through which it is possible to ask questions. No registration for the webcast in advance is needed. The event will be accessible at https://kojamo.videosync.fi/q3-2023.

A recording of the webcast will be available later on the company website at https://kojamo.fi/en/investors/releases-and-publications/financial-reports/.

For more information, please contact:

Niina Saarto, Director, Treasury & Investor Relations, Kojamo plc, tel. +358 20 508 3283, [email protected]

Erik Hjelt, CFO, Kojamo plc, tel. +358 20 508 3225, [email protected]

Distribution:

Nasdaq Helsinki, Irish Stock Exchange, key media

Kojamo is Finland’s largest private residential real estate company and one of the biggest investors in Finland. Our mission is to create better urban housing. Lumo offers environmentally friendly housing and services for the city dweller who appreciates quality and effortlessness. We actively develop the value of our investment properties by developing new properties and our existing property portfolio. We want to be the property market frontrunner and the number one choice for our customers. Kojamo’s shares are listed on the official list of Nasdaq Helsinki. For more information, please visit https://kojamo.fi/en/

Attachments

• Kojamo Interim Report 1 January - 30 September 2023
• Kojamo Interim Report 1 January - 30 September 2023 - presentation