CEO review

May 12, 2022

CEO Jani Nieminen

CEO’s review

Our operations remained stable and our financial position strong during the first quarter of the year. Total revenue and net rental income as well as FFO increased, and the fair value of our investment properties rose to EUR 8.4 billion.

In the early part of the year, the rental market was still clearly affected by the tighter COVID-19 restrictions introduced late last year and the related uncertainty. Consequently, our financial occupancy rate decreased year-on-year. Nearly all COVID-19 restrictions were lifted at the beginning of March, and we expect this to be favourably reflected in the rental market and the recovery of migration. As urbanisation continues in line with forecasts, the outlook for the demand for rental apartments is stable, especially in Finland’s major growth centres. In the Helsinki region, the number of vacant rental apartments decreased in March–April, and Kojamo’s number of new tenancy agreements began to grow in the same period.

The war in Ukraine has not had a direct impact on our business operations, as we operate only in Finland. Our current projects are primarily implemented on a fixed-price basis, and the projects have progressed according to plan. Higher construction costs and problems associated with the availability of materials for construction companies are increasing uncertainty in the market, particularly with regard to new projects, and the number of new housing start-ups may be lower than previously predicted.

At the end of the review period, we had 2,566 apartments under construction, along with binding preliminary agreements for the construction of 636 apartments. In the first quarter, we started work on the renovation of Helsingin Bulevardi 31, which is the first part of the Metropolia real estate development project. The former chemistry laboratory and teaching facilities, known as Uusi kemia and Vanha kemia, will be renovated and converted into 77 premium apartments to be completed in autumn 2023. In the coming years, the Metropolia project will see us develop as many as 1,000 new apartments in central locations in Helsinki.

We continued to invest in the development of sustainability services for our customers. In the first quarter, we worked on a carbon footprint test for residents and the possibility to compensate for district heating emissions. The services will be launched at the beginning of May. In construction, we made decisions on the use of geothermal heating at seven of our properties in the capital region. We also started our first pilot project that adheres to the principles of Green Deal demolition. The property to be demolished is the old Puotila shopping centre in Helsinki, which will be replaced with residential and business premises.

Volatility in the financial markets has been high in the early part of the year, and market interest rates have continued to rise. In spite of the challenging market situation, we successfully issued a EUR 300 million green bond in late March. It is Kojamo’s second green bond, and the proceeds will be used for energy-efficient real estate development projects. In addition, we signed a new EUR 100 million revolving credit facility linked to our sustainability targets in March. Our liquidity is very good, and the new financing agreements ensure our ability to continue our investments in line with our strategy.

Jani Nieminen

Page updated 12 May 2022