Outlook and strategic targets

Kojamo’s outlook for 2020

As stated in the January-March 2020 Interim Report

Kojamo estimates that in 2020, the Group’s total revenue will increase by 2–6 per cent year-on-year. In addition, the company estimates that the Group’s FFO for 2020 will amount to between EUR 146–158 million, excluding non-recurring costs (previously EUR 142–156 million).

The outlook takes into account the effects of the completed housing divestments and acquisitions, the estimated occupancy rate and rises in rents, as well as the number of apartments to be completed. The outlook is based on the management’s assessment of total revenue, net rental income, 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.

Additionally, the outlook is based on strong demand sustained by migration, which will increase Like-for-Like rental income. 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.

Effects of the COVID-19 pandemic on Kojamo’s outlook

In spite of the pandemic, Kojamo’s management expects the Group’s operating activities to continue undisrupted for the most part. The webstore enables the renting of apartments to continue almost as normal. The pandemic has not led to an increase in the Group’s rental receivables, and they are not expected to grow significantly in the near future. Kojamo follows the development of rental receivables and credit losses actively. Kojamo aims to prevent increases in rental receivables through active resident advisory services as well as payment plans and arrangements agreed on with customers.

Kojamo’s management estimates that the demand for rental apartments will remain strong going forward. The restrictions implemented in response to the pandemic may, in the short term, affect people’s willingness to relocate as well as prevent both migration within the country and work-related immigration. Economic uncertainty may influence people’s willingness to take housing loans, which may increase the popularity of rental housing.

Kojamo will continue to implement its growth strategy. All development projects have progressed as planned thus far. However, challenges potentially faced by construction companies may result in delays to Kojamo’s projects. In Kojamo’s construction contracts, the construction company takes on the overall responsibility for the entire construction project and payments are made in accordance with the degree of completion. Kojamo’s management estimates that potential delays in projects will not have a material impact on the Group’s total revenue and FFO for the year.

Kojamo’s financial position and liquidity are good. Thanks to the Group’s diverse financing structure, Kojamo has been able to carry out financing arrangements without disruptions. Kojamo’s management estimates that if the financial markets continue to be unstable, the cost of new financing may significantly increase.

Strategic targets 2020–2023

Kojamo published updated strategic targets in connection with Financial Statements Release 2019 on 13 February 2020.

Strategic targets 2020–2023 1–3/2020 Target
Annual growth of total revenue, % 4.6 4–5%
Annual investments, M€ 62.1 200–400 M€ /year
FFO/total revenue, % 30.7 > 36
Loan to Value (LTV), % 39.5 < 50
Equity ratio, % 45.3 > 40
Net Promoter Score (NPS) 36 40

Previous strategic targets

FINANCIAL TARGETS Actual Jan–Sep 2019 Actual 2018 Actual 2017 Actual 2016 Actual 2015
Equity ratio over 40% 42.0% 43.0% 41.3% 40.7% 41.1%
Loan to Value (LTV) less than 50% 46.7% 45.9% 46.0% 47.1% 39.8%
Funds from Operations (FFO) over 32% of total revenue 37.9% 32.4% 32.0% 31.9% 34.9%

OPERATING TARGETS
Actual Jan–Jun 2019 Actual 2018 Actual 2017 Actual 2016 Actual 2015
Fair value of investment property portfolio EUR 6 billion 5.4 5.1 4.7 4.3 4.0
Number of apartments appr. 38,000 35,061 34,713 34,383 34,974 41,153

Net Promoter Score: 40
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Page updated 7 May 2020