CEO’s review

According to Interim Report 1 January-30 September 2022

Kojamo’s total revenue, net rental income and FFO grew. The rental market developed positively, even though there are significant uncertainties in the investment and financial market. The increase in energy prices had only a minor effect on the company’s maintenance costs. Our balance sheet remained strong and our liquidity has stayed good.

The number of new leases began to grow in the summer, and our occupancy rate turned to substantial growth in the third quarter. The occupancy rate in September was already almost 93 per cent. Demand is supported by the resumption of the urbanisation trend after the COVID-19 pandemic. Increased economic uncertainty is also a factor behind the growing popularity of rental housing. The prolonged COVID-19 pandemic still affected our occupancy rate in the first half of the year. The resumption of work-related migration and the return of students to university cities were delayed after the pandemic-related restrictions were lifted in March.

It is important for us that the company has access to diverse sources of financing. This is evidenced by the new six-year unsecured credit agreement of EUR 100 million which we signed with OP Corporate Bank after the review period in October. Although our financing needs will be minor over the next year, the new financing arrangement further strengthens our liquidity position.

Interest rates have risen quickly and uncertainty in the financial markets is continuing. Over the years, we have systematically maintained a high hedging ratio for our financing. Our financial expenses have not risen in line with the higher interest rates due to the high hedging ratio of our loan portfolio, and the average interest rate of the loan portfolio remained at 1.7%.

A total of 1,100 Lumo homes were completed during the period under review, and we also acquired a further 985 apartments. At the end of the review period, 2,012 apartments were under construction.

As we have anticipated, the number of new housing start-ups is expected to decline substantially. Higher inflation, energy crisis, rising interest rates and the risk of a recession have weakened the outlook for the construction sector and the demand for new owner-occupied apartments. Rising interest rates have increased uncertainty in the market in particular. Although our balance sheet is strong, we have decided to not make new investment decisions for the time being due to the lack of visibility. A deteriorating outlook in the construction sector may create attractive opportunities for us going forward. We are actively monitoring the market situation and, if visibility in the market improves, we will be able to respond quickly to any opportunities. Our ongoing development projects are being implemented on a fixed-price basis, and they have progressed according to plans. We will complete these projects as normal.

Kojamo is involved in the national Down a degree campaign where we encourage Lumo residents to take practical energy-saving measures that have an immediate effect. Kojamo’s own commercial properties are also included in the campaign.

The second and final stage of the Lumo One skyscraper was completed at the beginning of September. The move-in of the residents went smoothly, and the skyscraper has had a very high occupancy rate right from the start. Lumo One is a unique property in the Finnish rental apartment market. In addition to a unique building and unparalleled views, Lumo One offers a very wide range of services.

Jani Nieminen

Page updated 3 November 2022