Good afternoon, ladies and gentlemen, and welcome to Kojamo's First Quarter Results News C onference. My name is Maija Hongas, and I'm Manager of Investor Relations here at Kojamo. Today's presenters will be Jani Nieminen, our CEO, and Erik Hjelt, the CFO. After the presentation, we will have some time for questions. First, we'll be taking the questions from the conference call line, and after that, from the chat. Please enjoy, and let's get started. The stage is yours, Jani. Good afternoon, everybody. Nice to be here. The sun is shining here in Helsinki. We are providing some color on our Q1 figures. To start with, it's easy to say that actually the year has started along with our expectations, and there has been an impact because of COVID-19 to the operating environment. Temporary, both, for example, like-for-like growth and the occupancy have been impacted. As we have been estimating, sufficient vaccination level seems to be reached by the summer. A lot of good estimates already that after the sufficient vaccination level will be reached, things are getting back to normal, urbanization will proceed, and for example, students will move back to university cities. Drivers for long-term demand for rental apartments are still valid. We do have a really strong pipeline for our future growth. Actually today, our fair value of investment properties is for the first time more than EUR 7 billion. We are well in line with our strategy, and we have a good starting point to proceed our operations this year and heading towards H2 when we think that after sufficient vaccination level, things are getting back to normal. We are keeping our outlook 2021 the same. Getting a bit deeper with the general operating environment, there is a lot of estimates that the economic environment will be improving after sufficient vaccination level. Means that GDP growth is improving, businesses are improving, people are starting to travel. We have seen a slight increase, and there will be, according to estimate, a slight increase with prices of all dwellings, and as well with rental apartment rents. Latest estimates show that there's an increase of startups concerning block of flats, but it seems that mainly they are because of built-to-sell projects, which were postponed and canceled last year. They are picking up speed again for home buyers. Here in Finland, it's easy to say that vaccination coverage is proceeding nicely. We had a figure on chart 30.9%, but as by yesterday, it was already 35.4%, and still a bit higher today. In the market, we do see that there's still a lot of foreign interest towards our residential market, quite aggressive buyers trying to get residential rental apartment portfolios. That has an impact already towards our valuation and valuation yields as well. I think that provides the color that COVID-19 only has a temporary impact to the operating environment. Long-term drivers for demand are still valid. The development of household sizes, an increasing number of one and two-person households will continue, as well, the urbanization. As soon as people are able to move and travel, students moving back to university studies, doing their studies in a normal manner in place, that will provide a lot of long-term demand. We have seen during the last decade that there's been a change in people values towards ownership, increasing number of households living in rental apartments in all the big cities. Today, already more households living in rental apartments than in owner-occupied homes in three big cities, Helsinki, Turku, and Tampere. If we provide some color on what's been happening in the market during the last decade already, because of the urbanization, there's an average need to provide 35,000 apartments a year. Last decade in Finland, in the big picture, we've been able to provide enough homes on average, but sadly, most often in the wrong places, if we look at the chart on left-hand lower corner. Actually, here in capital region, in Helsinki region, the population growth has been strong and not enough new apartment have been provided here. Only during now the last two years, enough apartments have been provided to the market. On the other hand, last year, because of COVID-19, urbanization didn't continue in a normal manner. That created a situation temporarily that there's less of demand towards a bit bigger supply. Finland, especially capital region, needs that more than 40% of all the new apartments should be completed to Helsinki region. One thing we can see here as well is that the highest volumes in residential startups were 2017 and 2018. Now we've been coming down a bit all the time. That means that the number of completed apartments in the total market are going a bit down all the time. Provide some color on our key figures. Even throughout COVID-19, a bit challenging period of operating environment, we've been able to grow our total revenue. Two aspects there, of course, we've been able to complete new apartments. Then increase rents. On the net rental income side, last winter was cold. Provided a lot of snow compared to previous year. Compared to so-called normal winter. That created more maintenance expenses compared to last corresponding period, it was EUR 2.3 million. For example, extra heating was EUR 1.6 million compared to last year corresponding period. FFO level was impacted, of course, by the a bit lower net rental income as I provided color. On the other hand, the loan portfolio was as well bigger this year. Fair value of investment properties, EUR 7.1 billion today. We've been investing a lot in the market. On the other hand, of course, there was a positive impact and change in fair values. Mostly our investment, gross investment, EUR 68 million are new development projects. New development project investments were EUR 58.8 million. Profit excluding changes in value, EUR 33.6 million, 13.2% better than last year. Of course, profit before taxes, EUR 177 million, was really strong, and that included a net gain in fair values of EUR 143.5 million. For Kojamo, it's all the time important that we are able to grow using multiple sources. We are providing new homes based on our own land. We are buying projects from construction companies. We are able to convert buildings into apartments. We are buying portfolios if we find suitable according to our parameters. At the end of Q1, we had more than 2,600 apartments under construction. All the projects are located in Helsinki region, along with excellent micro-location, along public transportation and services. All the projects are providing the net initial yield of around 4% or above 4%. All the projects have a fixed price with the construction company. Even though if we would see an increase with the construction cost in the market, we wouldn't be impacted with our projects. Metropolia case, the zoning is proceeding. The first project zoning has been completed at the end of last year. For example, the new and old chemistry around Hietalahdentori and then Arkadiankatu. The rest of the project zoning is proceeding this year and hopefully will be finished later this year. Metropolia case will provide another 1,000 units in city center Helsinki. If we look at the estimated timing of completions this year, mainly our project will be completed during H2, so latter part of the year. Actually, the renting concerning new projects has been proceeding in a normal manner. The 2021, we are reaching an even higher number, completing more than 1,700 apartments. A really strong pipeline there. For us, it's always been important that we are creating good experience, excellent experience for our customers. We are providing a lot of services for customers entering Lumo world. We are providing services, customers living in Lumo apartments. Lumo web store already provided more than 23,000 rental agreements. We have created a couple of new services. For example, how to tender electricity contracts, and move-in installation services for existing tenants. An important service has been My Lumo. More than about roughly three out of four of our customers using My Lumo services. Actually, what it means, 1,300 daily users with My Lumo service. To provide some color on Lumo customers, here are a couple of charts, a bit different angles. Mainly one and two-person households, more than 75%, actually, one and two-person households. That's good to connect with the mega-trends. Increasing number of one and two-person households in Finland. That's visible here in Kojamo as well. On the other hand, the age groups. What we have seen last year is that a lot of customers under 25 years are renting the apartments, but as well terminating the tenant agreement in the same apartment. A bit more than one year ago, we had only 8.5% customers below 25 years. Actually, the amount of younger clients has been increasing, but during this COVID-19 period, many of those customers have been a bit worried, moving in, moving out, moving to their parents, moving back to the university city, moving away from the university cities. That's created a rotation which is not normal. Another thing that's been happening, of course, during this a bit more challenging period of time is that families with a single parent seeking for a more affordable home in the market, and then in some scale as well, those people working in service industries, being without a permanent job at the moment. Those kind of phenomenons we have seen in the market. Sustainability plays an important role for Kojamo all the time. We published a sustainability report in March. As well, we published our green finance framework linking our sustainability targets with investments and how we're financing them. Of course, we were proud to receive a recognition as the most equal listed company in Finland. For us, it's important that we are committed complying with the UN Sustainable Development Goals, as well aiming carbon neutral energy in our properties by 2030. Now I would pass word to Erik. Thank you. Well, thank you, Jani, and good afternoon, everybody, from my side as well. On page 13, our total revenue grew EUR 1.5 million, and there's two drivers behind that. One is our like-for-like growth was 0.2%, and I will come back to this like-for-like figure later. The other driver there was completed apartments during the Q1 this year. 45 apartments were completed, but of course, for the top line, plays a role, apartments completed during Q2, Q3, and Q4 last year, more than 400 apartments. Net rental income down by EUR 0.5 million, total revenue up EUR 1.5 million as mentioned, and maintenance costs were up by EUR 2.3 million compared to last year's Q1. There was, of course, the biggest driver, cold winter and higher snowfall. The heating was up by EUR 1.6 million. Taking snow from one place to another was quite costly, so up by EUR 0.3 million. Cleaning was elevated EUR 0.4 million. This higher cleaning cost was related to COVID-19, so people spent more time at their home, so that required more cleaning. Page 14. Profit before taxes, excluding change in fair value or investment properties, up by EUR 3.9 million. Net rental income, negative EUR 0.5 as mentioned. SG&A expenses, EUR 0.9 million. We get some savings thanks to our own activities. Of course, this COVID-19 plays a role as well there because we were not able to travel and people worked remotely. Finance expenses down by EUR 3.6 million. Biggest drivers there was a gain in value of investments, positive figure, EUR 2.2 million. Unrealized change in fair value of derivatives, positive figure, EUR 3 million, and interest expenses, bigger, EUR 1.3 million because of the bigger loan portfolio what we have in our balance sheet. Profit on fair value of investment properties, EUR 143.5 million, and biggest contributor there was the yield compression, so that the yields, valuation yields came down by 10 basis points, contributing EUR 130.8 million for the value change. The restrictions contributed EUR 12 million, and development gained little more than EUR 2 million. Of course, on a negative figure in that valuation line is modernization investments, EUR 1.8 million. FFO down EUR 1.8 million. Net rental income negative figure EUR 0.5 million. SG&A expenses a positive figure, EUR 0.9 million. Financial expenses a negative figure there, EUR 1.7 million driven by the bigger loan portfolio, what we had, as mentioned earlier. Some additional cash taxes because of our disposal during Q1, EUR 3 million. Page 15, financial occupancy rate. Of course, the market situation plays a role here. As Jani mentioned, we've been able to make new lease agreements in a normal manner, and the tenant turnover is elevated. Here, the second wave of COVID-19 of course plays a role because again, students were not able to move to the place where they study, and travelers were not able to come to the country or travel inside the company. As Jani mentioned, we expect those impacts to be temporarily. Like-for-like rental growth, most likely in H1 is going to be moderate, but after the sufficient vaccination level, what we expect to be there during the summer, the second half of this year, the occupancy rate should be improving as the like-for-like rental growth. Page 16. The impact of rents and water charges was a positive figure, 2% here. We've been able to increase the rents pretty much in a normal manner. It's good to note that more than 40% of the annual rental increases are coming through during the first quarter of a year. We are proceeding there pretty much as planned. The impact of occupancy rate is EUR 1.4 million negative. We have 0.4% negative impact for other items, and this is actually a group of several smaller items. We have, in some of our residential buildings, there are some commercial premises there where occupancy rate, of course, impacted by this COVID-19, and some other leased premises as well. Some rent-free periods given in those commercial premises. Sauna fees were down slightly and as well as car parking fees. All this was included in these other impacts. In total, like-for-like growth was moderate as anticipated. Investments proceeding according to strategy, EUR 68 million. Most of that, our development investments, EUR 1.8 million, of course, included as a modernization investment in that figure. Then modernization investments and repairs put together, up by EUR 0.1 million. Repairs down by EUR 2 million, and modernization investments up by EUR 0.3 million. The big picture going forward hasn't really changed. We expect modernization investments and repairs put together to be between EUR 60 million and EUR 70 million going forward. Page 18, value of investment properties, EUR 7.1 billion, up by EUR 209 million from the year-end. Investments, EUR 68 million, and change in fair value of investment properties, EUR 143 million. On the right-hand side, we still have 2,123 apartments where we have restrictions regarding evaluation, and these restrictions will gradually end by 2024, and there's going to be an uplift in total in value around EUR 140 million and EUR 160 million. The impact here is back weighted. Page 19, we have a year-wise view for our development pipeline. On the left-hand side column, apartments, a little more than 2,600 in total. Already EUR 460 million invested and EUR 221 million to be completed, these ongoing developments. These binding agreements providing us a little less than 1,000 apartments, EUR 222 million. It's good to note that these are fixed price turnkey projects, all these. Whatever happens for investment cost, it doesn't have any impact for these figures. Metropolia case, as Jani mentioned, two first rezoning in place already and remaining expected to be in place during this year. This other right-hand side column covers pure land, providing us 1,200 apartments, and then plots and existing building, whether I demolish existing building and build a new one there, providing 700 apartments. Net increase there, 400 apartments because there's 300 apartments in those buildings. We estimate that investments in developments this year is going to be between EUR 370 million and EUR 420 million. Equity ratio and loan to value, we have set a target for equity ratio to be above 40% and loan to value to be below 50%. We have quite sizable buffer against these levels, these figures, balance sheet figures, of course, supports our growth going forward. EPRA NRV improved, ending 17.55 at the end of Q1. Page 22, we have very strong financial key figures. More than half of the portfolio already from the bond market, EUR 3 billion in total interest-bearing liabilities. We have an average fixed interest rate period of four and a half years, as well as average loan maturity of four and a half years, our hedging ratio is 90%. We are very well hedged against any potential changes in market interest environment. Average interest rate 1.8, that's including the cost of derivatives. That's actually a rounding, the third decimal changed there. Nothing changed in the loan portfolio as such. In this year and 2022 and 2023, we don't have any major maturing loans in our portfolio. Page 23, strategic targets towards 2023. Annual growth of total revenue, I will come back to that later. Annual investments well in line with our target. As said, we estimate that the investments this year is going to be between EUR 370 million and EUR 420 million. FFO against total revenue, 28.4. It's good to note that according to IFRIC 21, we booked all property taxes in our Q1 figures. The total amount of property taxes is EUR 11.4 million. If that were allocated, the portion of property taxes for quarters Q2, Q3, and Q4 was around EUR 8.5 million. If we then add this to the actual FFO for Q1, the FFO against total revenue would have been 37.2%, well in line with our strategic target. Net Promoter Score '21, some decrease there. Actually, we measure this Net Promoter Score from four different points: new customers, leaving customers, and our customer service center. This is ongoing thing, and nothing actually changed there. What caused this change in Net Promoter Score was this survey what we do quarterly, and we ask our existing tenants the specific questions, and there was a drop in this recommendation question. All questions related to customer satisfaction was pretty much unchanged. How we interpreted this is actually that people are simply tired of this COVID-19, so they have to spend more time at their home, and they wait to be able to move towards a normal life, if you like. Our outlook for 2021, this is unchanged. We estimate that the top-line growth is going to be between 3% and 5%, and there are, of course, a couple assumptions behind this outlook. First of all, we estimate that the number of apartments to be completed this year is going to be according to the schedule Jani already mentioned. All development projects are proceeding without any delays and all projects that are on a marketing phase are selling in a normal manner. We think that is proceeding as planned. Rent increases is, of course, something that we are going to do in a normal manner, and more than 40% this year rental increases already made. As estimated earlier, we estimate that the like-for-like rental growth for the first half of this year is going to be muted, and impact of a sufficient vaccination level second half of this year will have a positive impact. Based on all estimates from authorities, the estimates are that the sufficient vaccination level is going to be reached during this summer. What happens after that? Students will move to those places where they really want to study, so they want to move those places. International students will move to Finland. Business travelers will be there again. Tourism hopefully is going to pick up as well, and gradually the urbanization is going to be there as well. These students, they most likely is going to be the first movers. They want to go to those places where they actually study as soon as possible. It's going to have a big impact for the total market. Some of those apartments that are currently vacant will be taken by those students. Of course, there is going to be impact for our portfolio as well because we have some portion of students. That might happen actually quite fast. Our outlook for FFO, EUR 150 million-EUR 163 million. If you look then the midpoint of that range, there are several assumptions behind that. We estimate that the total revenue is going to be according to those lines I just described, that the normal weather from here on is going to be no disposal this year, no additional cash taxes, additional financing according to those development projects as they go, and, of course, we estimate that we can achieve some cost savings, especially regarding repairs and SG&A expenses. These are assumptions behind the midpoint of that FFO range. Page 26, dividend policy. Nothing changed there. The 60% of the FFO will be paid as dividend providing that the equity ratio is above this 40% level, and we have, as mentioned, quite a sizable buffer against those levels. Thus, at this stage, back to Jani. Thank you, Erik. As a summary, of course, for Kojamo, it's important that we are a long-term player. Our operations are meant to provide business for several decades. We do follow the mega trends, and we have expected and do expect that the impact of COVID-19 pandemic will be temporary. The big drivers creating demand long-term, urbanization and the development of household sizes will continue as they have been developing before COVID-19. That creates our operational environment in long-term. We are in a good position. We've been operating quite systematically. We have been able to grow our turnover and the fair value of our investment properties. We have a really strong pipeline providing new homes in Helsinki region. As it seems, our expectation concerning the vaccination level will be reached by the summer is proceeding as we've been hoping and expecting, and I think we are in a good position to go forward. Thank you. Now please, Maija. Thank you, Jani, and thank you, Erik. Now it's time for the questions, so we will be taking those first from the conference call line. Please, operator, we're ready. Thank you. If you wish to ask an audio question please press zero one on your telephone keypad. If you wish to cancel from the polling process please press zero two to cancel. Once again please press zero one on your telephone keypad if you wish to ask a question. There will be a brief pause as we wait for questions to be registered. Our first question comes from Anssi Kiviniemi from SEB. Please go ahead. Hi, guys. Thanks for taking my questions. I have a couple of them. First of all, starting with the fair value gains. Yield compression, that was the main source of most of the gains. Could you talk a little bit around that? What kind of properties, which cities did you see the yield compression? Was it just across the board? Hi, Anssi. It was pretty much across the board, but it was slightly weighted for other places than Helsinki center. Turku and Tampere, there we saw the decrease of yield requirements, and then areas around city center area here in Helsinki. Okay, thanks. On the guidance and revenue growth of 3%-5%, in a way, what has been baked in in terms of like-for-like growth and new apartments that will come to the market in the next few quarters? What's the volume growth and what's the like-for-like growth contribution to the guidance? What comes to like-for-like, we estimate that the first half of this year, the like-for-like top line growth is going to be moderate, and on back of the sufficient vaccination level, is going to be higher on the second half of this year. What comes to the completion of new apartments, we have penciled in pretty much the schedule, what's in the presentation page 10 page 10. As discussed, all these development process, they have proceeding according to the plans and the selling side. Marketing side is as well going in a normal manner. By saying normal manner, I mean how they went before the COVID-19. Even there is more supply in the market, it looks like that there's still a lot of demands towards these new apartments. Okay. Thanks for that. That was the third question that I had. Let's skip that. Let's move to fourth. Just making sure the harsh winter conditions, cold weather, combined it was roughly EUR 2 million in cost terms, extra cost in Q1, right? Correct. EUR 2.3 million. Okay, great. That's all from me. Thank you. Our next question comes from Svante Krokfors from Nordea. Please go ahead. Yes. Hi, it's Svante from Nordea. I hope you can hear me. Yeah. Yes. Good afternoon. I have a couple of questions. The first one actually is, I should have asked this already a quarter ago, but I ask it now still. In your property valuation assumptions, you lowered the occupancy rate assumption for Helsinki region from 98 to 97.5. I think it was in Q4 last year. Could you elaborate on that? Yeah, Jani. Hi, Svante. Svante. We had a discussion with the valuation authority, Jones Lang LaSalle, and it seemed that there was a right timing to make a slight change in the occupational level there. Nothing big there. Is it related to high amount of completions in the Helsinki area of new rental apartments? I think it was a normal kind of business running through the numbers and the estimates for a longer-term demand and supply. Okay, thank you. Then a question to Erik. I missed when you split up the like-for-like rental growth. The rental increases were 2%. The impact of occupancy rate was -1.4%. What was the other impact? What did that constitute of mainly? That's a combination of several minor things. They are sauna fees, parking space fees. We have some commercial premises and some other premises, so occupancy in those. It's a combination of several smaller items. Okay, thank you. Perhaps a more broader questions. Have you seen any change in the demand for what kind of apartments? We have heard stories about people wanting to perhaps seek for a bit bigger apartments if they start to work more from home. I know that your target is mainly one and two-person families, but have you seen any trend of this increased demand outside of the metropolitan areas? Actually, we are tracking all the new tenant agreements all the time on daily basis. Nothing big going on there. One could argue that a slight change of people renting two-bedroom apartments, those are typically a household of two persons, but it's only 180 apartments more than last year. Nothing big there. Okay, thank you. Lastly on transactions and your valuation, was there any single deal that impacted your valuation in a material way? There was at least that one YIT and Ålandsbanken sold quite a big chunk, and then I guess there is another deal pending. Are there any major transactions that have impacted your valuation yield? Of course, at the end of the day, that's something that's decided by the valuation agent. What they provided information last year was that they felt that there was not sufficient data from the market, so not enough deals. They've been collecting, of course, data throughout the last 12 months, and piece by piece, that picture has been completing. As we've been providing information, we have seen quite aggressive yields. We have seen portfolios both with the three and mid-figure. Now we see that international players are willing to pay three and a low figure, and that has had an impact towards the valuation yields as well. If I may add. It's not only one or two transactions, so it's a whole bunch of transactions. Brokers are following what's happening in the market, and there's already evidence from several transaction completed, and there are some additional discussions ongoing, but they are not taken into discount. It's a bigger picture what those brokers and these valuators were looking. Okay, thanks. That's all from me. Thank you. Our next question comes from Céline Soo-Huynh from Barclays. Please go ahead. Hi. Thank you for the presentation. My question is more for Erik. Can you explain again why your Net Promoter Score has declined from the series? We are Do you know the Net Promoter Score as such? It's calculated by We simply ask the customers that how likely is it that you recommend the company or its services for your friend or your peer. In scale 1- 10, and then we take out numbers eight and nine, and we calculate the portion of higher numbers and the portion of lower numbers. The figure can be anything -100 to 100. We've been able to move towards our target 40%. Now there is a drop in this Q1 in Net Promoter Score, and we calculate this figure from four different points. We ask these questions from new customers, from leaving customers, and from those who use our customer service center. This is an ongoing thing, and nothing changed there. Actually, the result has been quite stable. What changed during the Q4 was that once every quarter, we ask from existing tenants the same question, and in this Q1 survey, there was a drop in this part of this Net Promoter Score. As I said, only this question, how likely is that your recommendation, there was a change, but all questions related to customer satisfaction was pretty much on the same level, or many of those actually improved during the Q1. How we see this outcome is pretty much that it's COVID-19 related. People are simply tired to be at home and tired of this COVID-19, and that's why they are unsatisfied in a way. Then they are waiting the vaccination level to be sufficient and the restriction to be removed. This is how actually it works. Right. Thank you very much. Thank you. Just as a quick reminder, if you wish to ask an audio question, please press zero one on your telephone keypad. Once again, that's zero one on your telephone keypad if you wish to ask an audio question. Our next question comes from Erik Granström from Carnegie. Please go ahead. Thank you very much. Good afternoon, gentlemen. I only have two questions left after following through the Q&A. Could you explain a little bit about the development of the vacancy rate in Q1 versus Q4? It obviously increased and increased almost 1.5 Percentage points. What exactly is this due to? Is it because of completion of apartments, or is it because of cancellation of contracts that happened earlier in 2020? Did something actually happen in Q1 versus Q4? Thank you for the question. If I provide some broader color on the issue, and then if needed, can provide more detailed color. Actually what we provided from 2020 was the full year occupancy level. Now Q1 figure will then develop after we move forward this year. What's been happening during the winter was that the second wave of COVID-19 kicked in, and that has had an impact to the market. We've seen that even though we've been actually renting the apartments quite in a normal manner, we have seen more people moving out. Terminating tenant agreements. Some of those agreements have been done by students, and even though they already had moved back to their parents, they had kept the apartment. As the second wave kicked in, they terminated the tenant agreement. On the other hand, as I said, we have seen in small scale that, for example, single-parent households have been moving out in order to find a bit cheaper, a bit more affordable solution. As Erik provided color, the renting of new development projects has been proceeding in a normal manner. No problems there. Thank you. My final question is, what have you seen so far in Q2? We are a month and a half about into the quarter, and you mentioned that you expect like-for-like to be, as you put it, moderate in the first half of the year. It was basically zero in Q1. What have you seen so far? Do you actually see like-for-like trending up, or is this something that you're still waiting for? We estimate that the like-for-like rental growth for the first half of this year is going to be moderate. On back of the sufficient vaccination, what we expected to be there during the summer, the like-for-like top-line growth is going to be accelerated the second half of this year. So far, Q2 has developed exactly as Q1? As mentioned, we estimate that the first half of this year, the like-for-like rental growth is going to be moderate. Okay, good. Thank you very much. Those were my questions. Thank you. There appears to be no further questions. I'll hand over back to the speakers. Thank you very much. It seems we don't have any questions from the chat, so I thank you very much for participating our event today. We will be publishing our Q2 report on 19th of August, so hopefully we will meet then again. Thank you very much, and have a nice day.