CEO review

May 12, 2021

CEO Jani Nieminen

CEO’s review

Kojamo’s total revenue grew in the first quarter, supported by the growth of the housing stock. The value of our investment properties developed favorably, with the fair value exceeding EUR 7 billion. The number of apartments under construction is high and all of our current projects under construction are located in the capital area. We are in a good position to continue our growth.

In the first quarter, maintenance costs were increased by the colder weather and higher snowfall compared to the previous year and the long-term average, and net rental income decreased slightly. Repairs and modernisation investments remained on a par with the comparison period.

The impacts of the COVID-19 pandemic are still visible in the market. Migration has temporarily slowed down due to the restrictions aimed at preventing the spread of the pandemic. The market supply of rental apartments is high, especially in Helsinki. Our financial occupancy rate decreased in the first quarter, with tenant turnover increasing particularly due to uncertainties related to studying and working arising from the restrictions. This meant that the growth of Like-for-Like rental income was moderate, as anticipated. Nevertheless, we have also observed that the demand for rental apartments in central locations has remained good in spite of the pandemic and the rental of newly completed properties has progressed well, for example. Our outlook for 2021 remains unchanged.

The recovery of urbanisation depends on reaching sufficient vaccination coverage. We believe the impacts of the pandemic will be short-lived and we expect urbanisation to continue even stronger once the pandemic abates. The resumption of contact instruction in studies, for example, would quickly increase the demand for rental apartments in cities with universities.

We are a long-term operator that is focused on creating the conditions for future growth. We have set detailed criteria for our investments and I am satisfied with our strong project pipeline, which responds to the needs of urbanising Finland. We believe that growth centres will continue to serve as providers of jobs and study opportunities as well as meeting places. Combined with the decreasing average size of households, the appeal of growth centres creates demand for apartments.

It is essential for us to provide our customers with good, easy and effortless living solutions and we will continue to invest in service development. Our digital My Lumo service channel has achieved a high level of popularity amongst our customers as well as a high customer promoter score. One in ten new customers have also used the channel to order some of our paid value-added services.

Our balance sheet is strong, and our equity ratio and Loan to Value (LTV) are both in line with our strategic targets. In March, we also took a significant step on the sustainable finance front by publishing Kojamo’s Green Finance Framework. It enables us to link our sustainability targets with our financing solutions and underscores our commitment to promoting sustainable development. Our goal is to become carbon-neutral in energy consumption for our entire property portfolio by 2030.

Jani Nieminen

Page updated 12 May 2021