CEO’s review
According to the Kojamo plc’s Interim Report 1 January – 30 September 2024
Growth in total revenue and net rental income continued in the third quarter of the year. FFO decreased compared to the previous year, which was due to increased financial and maintenance expenses. Our balance sheet has remained strong, and our liquidity situation is good.
Due to the completion of previously started projects, there is still oversupply in the rental market. The competition for residents has remained intense, although the supply of apartments has turned to a decline.
The number of residential start-ups has remained at a very low level, and no clear sign of construction recovering is visible. In the next couple of years, the number of completed market-based apartments will be very low, and this is expected to reduce the oversupply. Population growth has been rapid in the Helsinki, Tampere and Turku regions due to internal migration and immigration. Population growth is expected to continue strong in big cities.
Our cumulative occupancy rate decreased, but our occupancy rate in the third quarter nevertheless improved compared to the second quarter of the year. Although the dissipation of the oversupply has been delayed, limited construction and strongly increasing population in growth centres is expected to balance the market in the longer term.
At the end of the review period, we did not have any apartments under construction, and for the time being, we refrain from making new investment decisions. However, we will start the construction of a project at the end of this year, which is based on a previously signed binding preliminary agreement. In Helsinki, 119 apartments will be completed in the beginning of 2026.
Administrative and marketing expenses as well as repair expenses decreased significantly during the review period. During the first nine months, expenses were a total of EUR 8.8 million lower than in the previous year. The cost savings will continue during the end of the year.
Our financial situation has remained stable. At the beginning of the year, we refinanced our loans that are due next year. Our next financing need is for loans maturing in 2026. Interest rates have turned to a decline, and the market expects central banks to continue rate cuts next year as well, which will have a positive effect on the price of future financing arrangements. In the autumn, Moody’s confirmed Kojamo’s previous Baa2 (negative) credit rating. It is important for us to maintain the investment grade credit rating also in the future.
Our housing brand, Lumo, was launched ten years ago. It was established with the desire to offer modern services for rental living. From the beginning, the goal has been to make living easy and effortless and to give customers more freedom of choice. Shortly after the launch, we opened the Lumo webstore, which renewed the way to rent an apartment. In ten years, the importance of services has become even more pronounced. We want to be the number one choice for our customers in the future as well. Thus, our work with better and more responsible urban living goes on.
During the year, we have enhanced our operations in order to address the challenges of the operating environment. Although the challenges persist, there are positive signs in the rental and financing markets. With our active efforts, we have achieved necessary changes. I thank the personnel for the determined development of Kojamo.
Erik Hjelt
Interim CEO
Page updated 7 November 2024