Summary of January–June 2016
- The Group’s gross investments during the period totalled EUR 89.9 (115.0) million. Gross investments were 49.3 (62.8) per cent of turnover.
- The fair value of investment properties was EUR 3.6 (3.9) billion. The fair value was reduced by the executed divestment of 8,571 apartments. Return on investment was 7.1 (8.5) per cent.
- The Group’s turnover totalled EUR 182.3 (183.1) million. Turnover is entirely generated by rental income.
- Profit before taxes amounted to EUR 105.3 (124.4) million. The profit includes EUR 56.2 (47.2) million in net valuation gain on the fair value assessment of investment properties and EUR -26.9 (1.4) million in capital gains and losses on investment properties. The capital losses might decrease later as a result of the appeal on ARA’s decision. Net rental income and capital losses resulting from the delay of the divestment of 8,571 apartments were approximately EUR 15.5 million higher than expected. Nevertheless, the delay of the transaction does not have a substantial effect on the Group’s operating profit. The Group’s strong profit performance is based on fair value changes, low financial costs, a good rental occupancy rate and the successful management of maintenance costs.
- Net rental income was EUR 116.5 (113.2) million, representing 63.9 (61.8) per cent of turnover. Net rental income was increased by completed new development, higher rental income and the successful management of maintenance and repair costs.
- The rental occupancy rate remained high, standing at 96.9 (97.4) per cent.
- There were 1,303 (1,385) rental apartments under construction at the end of the review pe-riod.
- The Group owned 32,736 (40,674) rental apartments on 30 June 2016.
- The company specifies its outlook with regard to net rental income and investments.
Summary of April–June 2016
- Turnover totalled EUR 86.4 (92.3) million. Turnover decreased due to rental housing stock divestments.
- Profit before taxes amounted to EUR 51.0 (64.1) million. The profit decreased by EUR 13.0 million. The profit was impaired by capital gains and losses on investment properties, totalling EUR -27.9 million. The capital losses might decrease later as a result of the appeal on ARA’s decision. The profit includes EUR 42.1 (21.2) million in net valuation gain on the fair value assessment.
- Net rental income was EUR 55.8 (57.8) million, representing 64.5 (62.7) per cent of turnover. Net rental income was decreased by rental housing stock divestments.
- The rental occupancy rate remained high, standing at 96.9 (97.4) per cent.
- The Group’s gross investments during the period totalled EUR 46.2 (61.8) million.
Jani Nieminen, CEO:
VVO Group’s financial development remained good during the review period. We have proceeded systematically in the implementation of our strategy and sought growth in market-based operations by investing strongly both in new development and in acquisitions of existing housing stock. The acquisition of ICECAPITAL Housing Fund II and the transactions with Y-Foundation are an excellent contribution to the implementation of our strategy. The Lumo segment now accounts for nearly 90 per cent of the Group’s housing stock. In May, we specified our strategy, extending it until 2021. It still focuses on offering an excellent customer experience and investing in growth in urban centres.
On 4 July 2016, we acquired ICECAPITAL Housing Fund II, which owns 2,274 rental apartments. The apartments covered by the transaction are market-based, and most of them are located in Helsinki, Espoo, Vantaa and Tampere. The fund is an excellent fit with the Group’s existing housing stock: the apartments are new and in the best locations in each city. This transaction contributes to the achievement of our strategic growth targets.
ARA made decisions on the transaction between VVO Group and Kiinteistö Oy M2-Kodit, owned by Y-Foundation. ARA’s tasks were the buyer designation and the determination of the maximum sales price according to the principles specified in law. The first phase of the transaction was executed on 31 March 2016 and the remaining phase on 20 June 2016. The sales price might be increased later as a result of the appeal. VVO Asunnot Oy will appeal ARA’s decision on the maximum transfer price by necessary means.
We also developed a new housing concept, Lumo Kompakti that was announced dur-ing the review period. It has been designed for the needs of urbanising Finland, especially the Helsinki Metropolitan Area. In terms of overall rent, Lumo Kompakti is a more affordable option than what is generally available on the market. Lumo Kompakti has also been developed through crowdsourcing among young people. Currently, we are looking for suitable plots for the concept.
The demand for rental apartments that are located close to good traffic connections and services is growing constantly. We aim to continue to invest in rental housing in Finnish growth centres, particularly in the Helsinki Metropolitan Area. Our investments during the review period totalled EUR 89.9 million. The Group had 1,303 rental apartments under construction.
Outlook for VVO Group
The Group is specifying its outlook for 2016. VVO Group’s rental occupancy rate is expected to remain at the current level throughout 2016, due to the continuing stable demand for rental housing. The estimate is based on currently valid tenancy agreements and the stable demand in growth centres. VVO Group estimates that net rental income adjusted for the effect of divestments will remain at the 2015 level. Investments are forecast to exceed EUR 600 million. The specified outlook takes into account the effects of the divestment of 8,571 apartments and the acquisition of 2,274 apartments, the estimated occupancy rate for the remainder of the year and the number of apartments under construction.
Interim Report Q2/2016
Interim Report Q2/2016 presentation materials
Further information:
Jani Nieminen, CEO, VVO Group plc, tel. +358 50 373 4847, jani.nieminen@vvo.fi
Erik Hjelt, CFO, VVO Group plc, tel. +358 400 472 313, erik.hjelt@vvo.fi
VVO Group plc offers rental apartments and housing services in Finnish growth centres. The vision of the housing investment company is to be a pioneer in housing and the customer’s number-one choice.
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Under the Lumo and VVO brands, VVO Group Plc offers versatile and effortless rental solutions coupled with an extensive range of housing services for different life situations. VVO Group aims to invest heavily in increasing housing supply in the next three years by developing new properties and buying existing properties.