Good morning, and welcome to Kojamo's half year results news conference. My name is Niina Saarto. I'm Group Treasurer and Head of Investor Relations. Today's presenters are our CEO, Jani Nieminen, and CFO, Erik Hjelt, who will tell you about the first six months' figures and events. After the presentation, we take five questions, first from this room, then from the conference call line, and finally from the chat. Now, I would like to hand over to Jani. Please go ahead. Thank you. Good morning, everybody. Nice to be here providing color on what's been going on here in Kojamo and in the Finnish residential market during H1 this year. First, I would just wanna mention that the building on left-hand side in the picture is Lumo One Tower. Its first tenants actually moved last month, and today, even prior to completion, the occupancy is actually already above 90%. It's been a huge success story. Moving forward, to closer to our half year figures. In the big picture, I would say our H1 key figures are solid. We've been able to create profitable growth. We acquired almost 1,000 apartments, and our financial position is really strong. In the market, as COVID-19 restrictions were lifted in March, since that, we have seen the rental market improving towards the summer. That's kind of the big picture. Moving closer to the operating environment. Of course, the continuation of Russia's attack towards Ukraine has had an impact, creating inflation, interest levels increasing, construction cost increases. Now what seems to be happening in the market is that a substantial decrease concerning new startups, especially non-subsidized block of flats. The estimated decrease is 29%. In my eyes, it may be even bigger one. The total amount of startup estimated officially 39,000. In this thinking includes only the decrease of non-subsidized block of flats, but I would assume that in the total market, as well other parts of the construction business like social housing or one family homes, new startups will decrease, so housing volume startups in Finland will decrease. On the other hand, we have seen a significant construction cost increase in the industry, at the moment in the way what the construction companies provide information, it seems that this cost increase is slowly leveling off. Rent levels are increasing back again in the whole market. Home price is still increasing this year. Now, of course, the latest information seems to be that home buyers are getting a lot more careful, and that may have an impact in the owner-occupied market, actually creating more demand towards the rental market. Inflation has been a big topic and most probably will be a topic towards the rest of this year. Inflation level estimate here in Finland, 5.8%. Actually, in my eyes, it's good to know that for us in Kojamo, the inflation impact, the cost increase, if you think about maintenance cost, H1 this year, the increase was 1.9%, if you calculate it in euro per square meter per month. Not the whole inflation impact is coming to our figures. We are able to optimize our doings and on the other hand, buildings use energy and need cleaning and maintenance repairs, but they don't eat. They don't buy groceries. In the upmarket, otherwise, actually, a couple of large portfolio deals been made during the summer, both around 2,000 apartments, so it seems that there's a lot of interest towards the Finnish resi market still. Yield seems to be in a normal level, no impacts there because of the market situation. Of course, we have seen a couple of portfolio deals postponed or taken away from the market. On the other hand, we know that a couple of new portfolios are entering the market. We released information prior that we are considering a possible disposal. No decisions been yet made other than that we decided to postpone this project because of the uncertainty related to Ukrainian situation, NATO discussion, raising interest levels. In that sense, we saw the market atmosphere a bit cloudy, and at the end of the day, as we've been saying, we don't have to sell that portfolio. We are happy to enjoy the net rental income. Moving a bit forward. An important aspect is that we do still believe that all the mega trends creating long-term need for new rental apartments are still valid. Urbanization will continue. The number of small households in Finland seems to be still growing. Values towards ownership have been changing. People seem to be choosing easy and effortless living in rental apartments, not that anxious anymore to take the housing loans. As the table on the right-hand side, the bottom corner shows, actually in all the big cities, the number of households living in rental apartments is still increasing on annual basis. Towards the summer, as I said, we have seen the improvement of the rental market. Actually, one factor is that it seems that there was uncertainty related to COVID-19 and the restrictions as they were lifted in March, whether new restrictions would be entering. We have seen an increasing number of new job opportunities in Helsinki region, people being a bit careful in order to move towards Helsinki. Actually Q2 this year, net migration in Helsinki was again positive. Students are active in moving into university cities, now an age group between 25-35 people. An increasing number of new tenant agreements actually mean that people are coming to Capital Region in order to start working. Our renting, even though it's in a way not a H1 figure, have to say that actually we did make a new record concerning new tenant agreements this July, and August seems quite strong, providing a lot of new tenant agreements. Of course, that way it will have a positive impact towards the occupancy as towards the end of H1, tenant turnover has been decreasing. In the operational environment, of course, as I said, we estimate that there's a substantial decrease concerning new startups. Aspects behind that are increase in construction costs, home buyers' intentions to buy apartments are decreasing, and of course, housing loan interest levels are increasing. That's creating a bit of a challenge situation for construction companies to provide build to sell projects. At the same time, it's good to keep in mind that all Kojamo projects are turnkey projects, fixed price projects, so all projects are proceeding in a normal manner. Remains to be seen what's the situation later this year as construction companies been saying that the cost increases seems to be leveling off. Mainly the impact of Ukrainian situation. Digging into the half year figures. As I said, strong figures, solid performance providing profitable growth. Total revenue increased 3.1%. We've been quite consistent with our strategy, increasing the rents in a normal manner as we have seen the COVID-19 situation as a temporary thing. Of course, there's been an impact in occupancy, providing a moderate like-for-like growth. Basically, the total revenue growth has been coming in by a high level of investment, so buildings completed last year and during this year. A strong performance in net rental income improvement compared to last year, 4%. Of course, if you look inside the maintenance, there was an increase of EUR 2.7 million. Biggest couple of aspects there, increase in electricity, EUR 0.9 million, increase in property taxes, EUR 0.7 million, mainly because we just own more buildings, and then some repair savings concerning repairs. FFO growing strong, 2.7% increase there against the comparison year. Of course, a positive thing there is the net rental income improvement. On the other hand, there's an impact because of financing and the actual green bond we launched at the end of Q1. As we have more debt, that had an impact. On the other hand, I would say that was a good thing to do during Q1. We were cash rich, and actually the interest levels are in a good level in Kojamo. Fair value of investment properties at the moment, EUR 8.7 million. We are investing a lot. There's been a positive development concerning fair values. As I said, investing a lot across the investments during H1, EUR 338 million. Would say in a big ballpark around EUR 130 million. New development projects close to EUR 200 million acquisitions, and then roughly EUR 10 million modernization investments. Profit excluding changes in fair value improved by 2.7%, being EUR 82.7 million. A good solid performance there. Profit before tax is EUR 157.8 million. It's good to keep in mind that this year the impact of changes in fair values of investment properties, there was a positive impact, EUR 75 million, mainly because of the strong development gain we are receiving as we are completing apartments. On the other hand, we have to keep in mind that a year ago, the corresponding number was EUR 446 million, and there was, yields were going a bit down. In the big picture, solid figures, good performance. As we've been saying, for us, it's important that we are able to grow by using multiple sources. We've been quite careful what to buy concerning existing portfolios. We were able to find a portfolio matching our parameters, good micro locations, quality new apartments. We bought a portfolio of 942 apartments in June. There's been some questions concerning the transaction price. In a big picture, I would say that well below EUR 200 million. We don't have any revenues in H1 figures. We did do the acquisition during H1, but actually, the revenues are generated from the beginning of July, and it seems that, occupancy-wise, we've been having quite a good start. Towards looking in the future, the stabilized yield is 3.8%-ish. Being able to use multiple sources in order to grow is a way to optimize the growth. Now we were able to buy close to 1,000 units. On the other hand, we still have more than 2,200 apartments under construction, mainly in Helsinki region. This year has been quite active in order with the completion, so close to 800 apartments were completed. We are helping people to move towards the big cities, providing new homes. We've been consistent with our strategy. All our projects have a high-quality micro location, close to public transportation services. All the projects are turnkey projects with a fixed pricing, actually meaning that the development gains are around 30%. Providing good impact to our fair values looking forward. In a market, Lumo operates in a way that we really want to provide easily best living. It's a combination of providing apartments, communal spaces, and services. Strategy is to provide added value for a customer. Some of the services are included in the monthly rent. Some of the services tenants pay as they use them. We don't aim to be the cheapest player in the market, only the best player in the market. Looking to the services, for example, the installation of dishwashers has been appreciated by the customers. There seems to be an increasing number of customers there. Couple of new services, carbon footprint test is available in My Lumo as well our tenants are able to buy carbon-free district heating using My Lumo application, so actually able to join the movement. Now, if Erik, you would go a bit deeper to our figures, please. Thank you, Jani, and good morning, everybody from my side as well. Page 13, our total revenue growth was EUR 6 million/3.1%, and the like-for-like growth was -0.4%. We've been increasing the rents and water charges in a normal manner, so that contributed + 2.2% figures, 2.2% occupancy rate, negative figure there, -2.7%, and others 0.1%. The growth was mainly generated by the growth of the property portfolio. During H1 this year, we completed 784 apartments, and in H2 last year, 841 apartments. Of course, that generates growth for top line. As Jani mentioned, the portfolio acquisition didn't contribute any cash flows during H1. It's starting to contribute for the top-line growth first of July. Net rental income growth was EUR 5 million/ 4%. Maintenance expenses up by EUR 2.7 million. Electricity biggest factor there, so up by EUR 0.9 million. Property taxes, EUR 0.7 million. Heating, EUR 0.2 million. All other items were pretty much in line with the corresponding period. What comes to the heating, it's of course heating expenses as such has been increasing but given the fact that the weather, so the milder winter this year offsets the increases in prices. Repairs decreased by EUR 1.6 million. FFO, if you first look at profit before taxes, excluding changing values, there was an increase there. If you look at the changing value part of the equation, yield requirements were kept unchanged. We increased our assumptions related to inflation, rent increases, and expense increases 30 basis points, to somehow reflect the change in inflation environment. Of course, this is based on 10 years cash flow calculation, so it's inflation for 10 years and not the inflation figures today. During Q2, we had one property where the restrictions ended, contributed roughly 4% of the change in fair value, so almost all positive change in fair value of investment properties was due to the completed developments or development gains. All these developments on average, the development gain has been north of 33.3%. FFO increased by EUR 1.9 million, so net rental income contributed EUR 5 million as mentioned. SG&A expenses up by EUR 0.7 million. No big changes there. Finance expenses up by EUR 2.2 million because of the bigger loan portfolio what we currently have. Cash tax is flat, EUR 9.1 million as in during the corresponding period. COVID-19 have had a impact for our occupancy rate. The rate came down 0.4%. Of course, it's not on a satisfactory level. Nevertheless, we think that the impact is temporary and related to COVID-19. Now we have seen actually several positive signs. One is that restrictions regarding COVID-19 have been removed in Finland, March this year. We have seen since people starting to move towards Helsinki region especially. The total population in Helsinki region now is increasing according to statistics. We've seen students starting to be active and some tourists are here as well. All these are, of course, positive signs, and according to our estimates that's how we are going to come out of this restriction. One is that students will be the first movers, then people start to move towards the Helsinki region where there are a lot of job opportunities and then as tourists will return to Finland. That part we have already seen. Other positive sign is that our tenant turnover came down by 1.3 percentage point, and most of that or almost all of that positive change there was during the Q2, so in the wake of ending restrictions. Tenancy agreements completed in July and August saw so clear improvement compared to the previous years. There are clearly positive signs now in this occupancy rate thing. I think we covered already the slight full rental growth. Investments EUR 338.4 million, as Jani mentioned, the acquisition of this sizable portfolio included in these figures, and it started to generate cash flows for us in the 1st of July. Other part of this investments of course were developments both completed and ongoing developments. Modernization investments EUR 7 million. Modernization investments slightly up EUR 2.1 million, and repairs decreased EUR 1.6 million. Investment properties EUR 8.7 billion, and of course biggest contributors acquisition, ongoing developments, as well as positive change in fair value on investment properties. We still have little more than 1,800 apartments where we have restrictions regarding valuation, and those restrictions will graduate by 2024, and we are going to get an uplift of EUR 110 million-EUR 130 million when these restrictions end. We start to just apply different valuation techniques, so we are not aiming to dispose those, maybe just start to apply a different valuation method there. The uplift in values is somewhat back-loaded. If you look euro-wise, our ongoing developments as well as the land bank, so 2,230 apartments under construction, EUR 331 million already invested, and EUR 132 million to be invested in order to complete these ongoing developments. Binding agreements is a little more than EUR 100 million to be invested, fixed price there as well as in this ongoing developments. Under this binding agreements, we have apartments, 363 apartments. We estimate that, the development investments of this year is going to be between EUR 280 million and EUR 330 million. 94% of all this in Helsinki region. Actually we have one project in Turku and one project in Tampere ongoing, and then all others are located here in Helsinki region. We have fixed prices, as mentioned, in this binding agreements as well as on these apartments under construction. Net initial yield 4-ish% still, and we estimate that the development gain is going to be north of 30%. Equity ratio, loan-to-value, we have strong figures there. The target is to have equity ratio above 40% and loan-to-value below 50%, and we have quite sizable buffer against these levels. The increase in loan-to-value after Q1, nothing exciting there. Actually we made this Eurobond during Q1, and then net- debt was what that was included in net- debt calculation, and this portfolio acquisition was paid as cash. That plays a role in net- debt calculations. Nothing exciting there. EPRA NRV per share EUR 22.29. Growth from corresponding period 16.9%. Our financial key figures are very strong. Here it's good to note when you compare our figures to many other players in Europe, especially in Sweden. We have strong balance sheet figures. We have high hedging ratio, 91%. Actually, our average cost of financing decreased during Q2 down to 1.7%. We still have quite sizable cash positions or cash and cash equivalents and financial assets total EUR 240 million. We have credit lines EUR 300 million, committed, unused, and a commercial paper program EUR 250 million. Outstanding commercial papers, EUR 65 million. Our average maturity in our loan portfolio and as well as our fixed interest rate period close to four years, and no major maturities in next 12 months or so. Our strategic targets, top line growth, 3.1%, H1. Investments, EUR 338 million. Growth is there. FFO against total revenue, 35.7%. There is a good point to keep in mind that because of IFRIC 21, the whole year's property tax is already included in our figures during Q1. If we adjust the FFO against total revenue by the H1 portion of property taxes, EUR 5.85 million, that means roughly three percentage points improvement in FFO. That means that FFO against the total revenue will be improving going forward this year. Loan-to-value equity ratio already discussed. Net Promoter Score, 43. There now we include the digital NPS as well. Our outlook this year specified. Now we estimate that the total revenue increase will be between 4% and 6%, and we estimate that the FFO is going to be between EUR 155 million and EUR 165 million. If you look at what might take us towards the higher end of this top line growth range, so that requires that we are increasing the rents in normal manner between 2.1% and 2.5%. That's what we've been doing so far and that's our aim to achieve second half of this year as well. Some improvement in the occupancy. Then of course, completed apartments, those ones that are completed, especially Q2 and then Q3 will contribute to the top line growth. Then this portfolio acquisition that we already discussed. What assumptions we have for FFO guidance, if we take the midpoint of the guidance, that reflects our specified top line outlook, and we have a couple assumptions there. One is that normal weather during H2 because the weather plays a role for our maintenance cost and current inflation figures included in our assumptions as well in the midpoint of the FFO guidance. Dividend policy, no changes there. 60% to FFO, providing that the equity ratio above 40%, and that is clearly the case today. At this stage, back to Jani. Thank you, Erik. First, before Q&A, in a way a bit summarize. Easy to still say that we've been proceeding very systematically according to our strategy, as usual. Able to provide profitable growth. Megatrends creating long-term demand for new rental apartments in the big cities are still valid. Now, looking short-term, the rental market seems to be improving. As Erik described, our financial position is really strong. We are able to create growth using multiple sources. Actually during H1 investments, EUR 338 million were a strong figure providing future growth. Now if we would move to Q&A by Niina. Thank you very much, Jani and Erik. Let's start with questions from here. Do we have anyone? Okay. It seems that there are no questions here. Let's take the conference call line then. Operator, we are ready. Our first question comes from Antti Jausi of SEB. Please go ahead, your line is open. Thank you, good morning. I have actually a couple of questions, and I go one by one if I may. The first one is about capital allocation. Like if we think about your asset yields and cost of debt, like how do you see the situation in terms of effective capital allocation? I mean, what should happen in spreads between bond and asset yields that you would actually start to divest assets and repurchase your bonds? Also, how do you see share buybacks instead of acquire properties as your shares trading below EPRA NRV value? That's the first one. Thanks. Thanks for the question. As described, our financial key figures are very stable, given the high hedging ratio and our average cost of financing declined actually during Q2, and we still have quite strong cash position. We are able to invest there. If we get 4% of our net initial yield in new developments with average cost of financing 1.7%, that makes a lot of sense to invest according to our strategy. Of course, if you look then the price of new financing that has been really a rollercoaster. If you compare what price for us was starting of this year then towards the summer and today, and the changes has been substantial, and it's very difficult to predict what is the cost of additional financing going to be when we finally need it. A good thing is that we don't need to make any new finance agreements in next 12 months or so. That of course gives us a very strong position again compared to many other players, especially in other Nordic countries. Though we haven't seen any need for a change our approach towards the capital allocation regarding new developments or acquisitions or disposals, it's unclear right now where the yields are heading. As Jani described, there has been portfolio transactions quite actually aggressive pricing. There are a couple portfolios coming into market according to our understanding. At the same time, several portfolios they're very into market but those transactions postponed. That remains to be seen where the price is in the market when it comes to portfolio transactions is heading going forward. Finland still seems to be an attractive target market for international investors. What we estimate that is going to be, construction companies will come to a situation that they might start calling us again and offer us attractive projects and, since the demand for owner-occupied homes is declining clearly in Finland. That's something that we are looking going forward as well. Okay. Thanks. Actually my second one is a bit related to first one, and it's about development gains. Like what kind of development gains you are currently seeing and, it's like, are you taking into account how markets are valuing your share? What I mean is that if we look at Kojamo share price, for example, or market cap, we can assume that markets are not valuing Kojamo with same yield, which is used in official EPRA NRV calculation. How do you see the situation regarding development gains at the moment? We of course are not commenting share prices, EPRA NRV and how markets sees that. The thing is that in all our ongoing developments as well as our binding agreements, we have fixed prices and we estimate that the development gain is now 33.0%. Nothing changed there in our portfolio. Okay, clear. The final one from me is just the overall question regarding market demand. Like how do you see the demand actually at the moment? I mean, your occupancy ratio still came down a bit in Q2, but we know already that the students should be coming back to the cities now. Also could you remind us how much you expect to see impact from students moving back? Yeah. Thank you for the question. Yeah. As I try to provide color since the restrictions were lifted in March, we have seen an increasing number of job opportunities here in Helsinki region. It seems that there was some uncertainty by individuals in order to move towards Helsinki. Moving toward the summer, we have seen activities increasing in the rental market. In the summer, students been active. We did make a new monthly record concerning new tenant agreements in July. August will be strong, we already know that. In that sense, the market is now coming back to normal. Looking backwards, what's been going on in Q2 was the first time net migration was positive in Helsinki. Espoo started already during Q1. Vantaa is still balancing on close to zero level. Now it seems that these indicators are moving towards a positive sign. We've been estimating all the time that students will start moving towards university cities during the summer. It seems that there was a bit of delay before working people started moving towards Helsinki region, related to the uncertainty whether new restrictions would be entering. The supply in the market has been coming down now on monthly basis in Helsinki. In my eyes, it's not a surprise that, of course, the cheapest apartments are observed first from the market. As I said, we did make a record high number of new tenant agreements in July. At the moment we are doing okay. Okay. Thanks. Actually one quick one from me still about asset yields in Q3. What kind of development have you seen? Like transactions still, going with the same kind of yields as seen in Q2 or how is it? As Erik provided color, and as usual, we don't provide any outlook concerning yield developments. Our valuation is based on analysis concerning concluded deals. We have seen a couple of sizable deals in the summer. Pricing was still aggressive. Transactions that we have seen in the market provide no data that there would be a change in yields. Okay. That's clear. Thank you so much. Thank you. Our next question comes from the line of Andres Toome of Green Street. Please go ahead. Your line is open. Hi. Good morning. Just wondering, regarding your occupancy rate, which has obviously come down again, just trying to understand why is Kojamo occupancy still going down while your peers are actually able to increase occupancy already for two quarters in a row? Is it just a function that you are protecting rental rate growth at the expense of occupancy and that peers are doing sort of the opposite, or is it something else that is creating this divergence in relative performance? Yeah. Thank you for the question. It's a good one. Of course, different players seems to have a different strategy, and that's good for the market. We've been quite systematic in our strategy, seeing that the impact provided by COVID-19 is a temporary thing. We've been increasing the rents in a normal manner. I've been saying this prior, one of the easiest things in this business is to improve occupancy. You just start lowering the rents enough or start spending money in repairs and personnel. It's good to keep in mind that when you compare companies, you should use multiple figures and compare the key figures as well. As I said, it seems that as the market has been improving, it's not a surprise that for example, students absorb from the market first the cheapest apartments. The most price sensitive customers are looking for the cheapest apartments now, but in the future as well. Okay. Understood. My second question then, sort of follow up and, in regards to the comments you made about, quite strong leasing volumes coming in in July and August looking quite good as well. Just wondering, you know, if you're looking into sort of year end, are we in for a big spike in occupancy rate or is it going to improve materially now? I think, you know, not even asking for a forecast really, but what are you seeing today in so far as if you were to close the books again today, would you be reporting a higher occupancy than in June? A tricky question as yes, we do not provide any forecast or outlooks concerning occupancy. As I said, we did have a record high number of new tenant agreements in July. There was a decrease concerning tenant turnover towards the end of H1. August, if we look at the number of new tenant agreements is strong. These are all positive indicators. I did say that it will have a positive impact in occupancy. Of course, there's a slight delay always when you make a tenant agreement until you move the apartment. Sometimes it's 24 hours, sometimes it's a couple of weeks, sometimes one month. Yes, we do have a positive thinking towards the future. Okay. Thanks for that. My last question is regarding your disposal portfolio that you were sort of putting on the market and you've taken it out. Just wondering, did you get any bids on that? How much were they, you know, below your asking price, I guess then because you have taken it off the market. We haven't said at any point that we will sell the portfolio. We have been saying that we are evaluating the strategy and whether we would be willing to sell the portfolio. As things started happening, bad things in Ukraine, we felt that the atmosphere is not best possible one. Because if you don't have to sell something, you really need to get an attractive pricing if you would be willing to sell it. We didn't feel that the market was clear enough to start that kind of an operation. There were no bids really, and that sort of assessment was more on the back of broker indications, I guess, in terms of where you could expect reasonably to sell. Of course, we've been doing kind of market sounding, but we didn't feel like moving forward, like really move forward. Okay. Thank you. That's all. Thank you. Our next question comes from the line of Svante Krokfors of Nordea. Please go ahead. Your line is open. Thank you. Good morning, Jani, Erik, and Niina. A couple of questions left from me. The first one, regarding rent increases. You have been quite consistent with the 2.1%-2.5% rent increases. How are you now reasoning regarding that given the inflationary environment and increasing costs? Well, of course, for the short term, we are consistent with our strategy. As always we've been saying providing the color that our aim is to create like-for-like growth between 2.1%-2.45% without the positive impact of occupancy. Looking forward, in the market I see that now I talk about the whole market, not about Kojamo. There's an increase in maintenance in all residential buildings in Finland that will provide pressure for individuals owning rental apartments. They've been having quite low yields, and now the cost side is increasing significantly. They are not able to use big volumes like we do. That will provide pressure for the market. At the same time, we see that the supply in the market is decreasing. Typically, when that happens, that will provide an impact on rent increases. We are following the market on an actual daily basis. Our aim is to get the market price we feel is right at all times. Thanks. You have kept the rent increases perhaps a bit at the cost of higher vacancy rate because of the temporary situation from the pandemic. What kind of threat do you see from the, I guess, still h igher supply in the market than pre-pandemic levels on your occupancy rate long term? As I said, it seems that the market is coming back to normal. The supply in the market seems to be coming down. Number of new startups is decreasing substantially. Looking forward, there's less new supply coming to the market. On the other hand, what we see in the market is that home buying intentions are low level. If people stop buying homes, that will create pressure towards the rental market, and either way supply from the market. In that sense, there is the long term demand for new rental apartments and our capability to increase the rents in the long term. Thanks. The last question regarding the transaction in June. I think you said that the stabilized yield 3.8% sounds quite attractive, and I guess the square meter price less than EUR 6,000. Was it an off-market deal or was there intense competition for the target? I would not provide any detailed color on that. We made a good offer, and we are happy with our deal. It sounds like a good deal. Thanks. That's all the questions from me. Deals. Thank you. Our next question comes from the line of Erik Granström at Carnegie. Please go ahead, your line is open. Thank you very much, and good morning. Almost all of my questions have already been answered, but I have one follow-up, and that's regarding the outlook. Could you just specify a little bit the reasoning behind sort of narrowing the range here in Q2? Was it due to things you've seen in the rental market? You mentioned increased activity. Was it because of the transactions that you made in the summer? Or could you just specify that just to make sure? Yeah, sure. Typically we narrow the guidance at this point of the year because now then at this point we know H1 figures and then it's more visible what is going to happen second half of this year. Now we have this transaction completed. We know what is the rent level, what is the amount of new agreements July, August. The view is clearer. That is one reason why we want to narrow the guidance range at this stage. This is a normal timing for narrowing range. Of course, one may argue that because the market is a little cloudy or foggy, so one might want to keep the guidance unchanged, but since we think that we have enough visibility for the H2, and that's why we did it, the narrowing in a normal manner. Nothing out of the ordinary there. Okay. The acquisition that you did make in June, it is included? Now the EUR 4-ish million top line that the acquired portfolio will provide second half of this year is included in the guidance. Okay. Thank you. Those were my questions. Thank you. Our next question comes from the line of John Vuong of Kempen. Please go ahead, your line is open. Hi. Good morning. Thank you for taking my questions. Just a couple of questions left. On the tenant turnover, what would you say is the driver for the decrease at the end of H1? I would say there are several reasons. People are feeling more confident. What we saw a year ago was a positive period in people's minds. We saw a high number of new tenant agreements. Towards the autumn, COVID-19 kicked in and students started moving back to their parents. People started losing jobs because of restrictions and started moving away. Now things are normalizing. People are more confident. On the other hand, yes, we did make a change in our business model, and the first period of staying since spring is 12 months. We are looking for more permanent tenants as well. How would you expect that this would develop for the rest of the year? It's not easy to predict. Of course, it will have an impact, as all the new agreements include a minimum stay of 12 months. The other aspect is that hopefully things will stay in a normal manner, so no new COVID-19 variants on the planet, no new restrictions, so people would be able to study face-to-face in the universities and other places as well. People would be able to use services, and service employees would be able to work in normal manner. If this stay, I feel quite good about our tenant turnover at the moment. Okay. That's clear. Just on the development starts, you mentioned that they are decreasing. How does this relate to the natural medium-term net migration? Would you say that this is rather in balance or is it in favor of the tenant or landlord? Sorry, I really didn't hear the first part. Sorry. On the development starts, you mentioned that they are decreasing. How does this relate to the natural medium-term net migration? As I said, it seems that city of Helsinki is now picking up speed. Q1 concerning net migration was positive. It hasn't been during COVID-19, and that's not usual thing here in Finland. Looking forward, we do estimate that urbanization will continue according to the estimates. Helsinki region is the heart of Finland. Most of the new jobs will be created here. As things normalize, urbanization continues, that will eat away the supply from the market. Of course, then it remains to be seen how many months it will take when we are back to normal levels. Just to summarize, you do expect that the imbalance is going to grow in, say, two or three years when these developments are coming in? Let's say if you compare the imbalance in such a manner that there would be oversupply in the market in three to four years, I don't believe in that because now we already see that the number of new startups is going severely down. When urbanization continues creating more demand and the new supply goes down, there will be the balance in the future. At the end of the day, it's good to keep in mind that actually Kojamo don't place a strategy on the imbalance between supply and demand. Our aim is to provide best effortless living. Okay. That's clear. Thank you. Thank you. We currently have one further question in the queue. Just as a reminder to participants, if you do wish to ask a question, please dial zero one on your telephone keypads now. The next question comes from the line of Pouya Ghaffari at Citi. Please go ahead. Your line is open. Thanks. Good morning, everyone. It's yeah, Pouya Ghaffari at Citi. I just have a couple of questions. The first one is on the valuation. Obviously you crept forward again in the quarter. I'm just trying to understand with the vacancy still moving backwards, kind of why that's not reflected by the valuers. You know, it's clearly a cash impact. Yet the val uers seem to just be using a standard assumption, rather than reflecting that the vacancy is actually increasing. Can you just give a bit of color as to why that's the case? Thank you for the question. Of course, it's important to keep in mind that the valuation is based on a discounted cash flow methodology concerning the next 10 years. All the estimates should be valid looking forward 10 years. As the occupancy is handled, the situation in the market, we've been saying it's temporary. We follow, and of course, we use an outside expert providing the final decision-making there. On the other hand, there's a feature in the valuation that actually all the empty apartments are handled as to be empty the next 12 months. In that sense, the occupancy has an impact in the valuation immediately. Meaning that if the occupancy would improve, it will have a positive impact because there's less apartments handled as empty for the next 12 months in a cash flow model. On the other hand, if the occupancy would not improve, there is this feature included. Okay. Just to clarify, it sounds like the increase in vacancy should be having an impact on valuation, but that's not what we've seen. As in, the values have moved forward consistently over the whole period where the occupancy has been declining. In that. So, so- Sorry. How is it reflected? In that sense, the occupancy is reflected in the valuation because all the apartments which are without a paying customer are handled to be in such a manner that they won't provide cash flow for the next 12 months in the valuation. Oh, okay. It's yeah. Okay. That's all. I mean, I take the point. It just then I would have expected that the valuation would have come down when the vacancy is now, you know, much lower than the assumption at 97%. And therefore, I expected a very large step down in the cash assumption if what you're saying is correct, is that all of the empty apartments should be featured in the cash flow, should be featured in the valuation. Just on the 10-year forward point. Just finishing my thought, just on the 10-year forward point, again, I take it that it's a theoretical value for 10 years. But how many years have we had now behind the 97%? This year, definitely year before. You so I don't think it's, you know, the actual occupancy has been at 97.2%, which is the number given as the, you know, the valuer's assumption. At what point is this sort of temporary occupancy no longer temporary when it's been going on for kind of three years? That's something that the outsider expert is included to make the decision-making. Of course, one has to be able to say that the market is normal. Not in any way the market during the last two years has been normal because of COVID-19. Yet the discount rate as well hasn't reflected any kind of market uncertainty. Everything's just been kind of, you know, left as a normal market, even though we've been in abnormal times. Is that fair? Yeah. This discounting factor is. It's actually coming from the market. It's market observations based on transactions completed and the yield paid there. There we take the yield part of the equation, and then we add when we do the discounting, when we calculate discount factor, then we add inflation. Now we, as already mentioned, increase the inflation factor by 30 basis points. That's how the yield part of the equation works. It's not based on any worst view where the yields are. It's based on transactions completed in the market. It's pretty much a factor. As Jani already explained, this temporary thing is that we discussed that with the external evaluator. Their thinking is that since we were above this 97.5% before the COVID-19, and they expect that to be the case after this COVID-19 during. They are taking a 10 years view here. They think that the reason why the occupancy is now lower than that is temporary. It's COVID-19. As long as they haven't given any years or how many years that they want to follow this, but as long as they see the reasoning behind the current situation as temporary, there's no need to make any changes regarding the occupancy, I mean. Yeah. Okay. Yeah, that's clear. Thanks. I had one other question, which is a follow-up on the previous and just on the portfolio transaction that you've pulled. I take the point about the market uncertainty and whether it was the right time to sell. But given we've seen the two large transactions, and I think they're 2,000 units, obviously, you know, there kind of was the demand there, and there was a particular interest in Finnish resi at the time. You know, I'm struggling to square those two points a little maybe. Yeah, you know, you obviously saw market uncertainty that meant that a sale wouldn't be possible, yet we saw two large portfolios go through. Firstly, yeah, just a little more color there. Secondly, maybe if you can explain what the differences are between the portfolios that did go through and yours, which you decided not to pursue. Was it kind of a pricing difference? Is it a quality of assets difference? Just any more color on that. Thanks. I would say of course, in a way it's a timing question. Those portfolios which were completed during the summer, we don't know the exact date when the processes in the market were started. Typically, we hear when the process is ongoing and completed. We follow the market and the market thinking. As Russia attacked Ukraine, there was a NATO discussion going on in Finland and how would international investors consider Finland. Prior to NATO decision, there was the interest rate discussion ongoing. We decided not to start this kind of project and try to really sell it. Yes, there is now proof that it would have been doable. Sometimes you have to make the decision with the existing information. We did decide otherwise because we really didn't have to sell it. The other players decided to go through with the process, and they were able to conclude the process and complete the disposal. For us, it's a good thing because they were non-core portfolios. The pricing was quite attractive, quite aggressive, showing that there seems to be still quite a lot of interest towards the Finnish resi market. Can I just check kind of what level you're happy to get to based on you know the CapEx program and whether you're comfortable pushing on at the moment from in the 40s you know into the mid-40s? Would you repeat it? Sorry. Yeah, sure. The question was on the LTV, because the portfolio sale would have brought your LTV back into a, you know, maybe more comfortable area, sort of maybe 4% down. I'm just checking where you're happy to push the LTV to from the 41% today, based on the CapEx program and the outlooks. Current loan-to-value level is very healthy. Our target is actually to keep loan-to-value below 50. That figure is actually coming from the rating agency matrix. Our current public rating, Aa2, is from Moody's with a stable outlook that's anchored in a one way loan-to-value level and 50% seems to be one level there. We have actually quite sizable buffer, 10 percentage point buffer against these levels what rating agency feels is rightful for our current public rating. We think that this level is very, very healthy given that we are operating in the less riskier part of the real estate market. Our all our key figures are very strong. We have a very attractive price level in our loan portfolio. Average cost of financing 1.7%. Very high hedging ratio, 91%. Very long average maturity in the loan portfolio, and a very long fixed interest rate period. We think that this 40% is very, very healthy. On the other hand, it gives us a space to invest. If we find something to be acquired, we are easily able to do both from the balance sheet point of view as well as access for additional financing. We think this is quite very, very healthy situation. Yeah. Okay. Yeah, that's clear. Yeah. Comfortable with the current level. Happy to push it forward, and 50% with the max. Yeah. Okay. That's clear, and that's my questions. Thanks, guys. Very helpful. Thank you. There are no further questions from the phones at this time. Okay, thank you. Let's take some questions from the chat. I think we have covered most of these already, but a few remains. What risk on your property cost do you see from the rising energy costs? Actually, of course, the energy prices has gone up, and there are reasons to believe that that is going to be the case, especially during the winter. It's good to keep in mind that in Finland, we don't actually use gas for heating. These district heating providers only very small part of the energy consumption is based on gas. Gas is not playing any role actually in here in Finland. What comes to the heating cost side of the maintenance cost, as already discussed, the impact for heating cost, H1 was quite limited. You know, of course, the prices went up slightly, but that was offset by the milder winter. The weather is playing much more bigger role for heating cost than price changes. Electricity prices, of course, is one thing we are paying for property energy used in the building, not inside the apartments, but the building. There those prices has gone up, and there are estimates that those prices might go up during the winter as well. Yes, we do have hedging in place. Electricity costs are hedged. That of course limit the impact for price increases going forward. For remaining part of this year, the pricing of electricity pretty much hedged and big portion of next year's prices as well. Of course, most likely energy prices are going up, but the impact for us is going to be rather limited. I guess one angle to add was the information we provided already, that so far the increase concerning maintenance cost when we compare euro per square meter per month has been 1.9%. Okay, thanks. Related to our rental agreements, can you remind how you are able to compensate CPI inflation in the rental agreements? Yeah. Thank you for the question. Our way is that we apply a clause in a tenant agreement which allows us to increase the rent once a year. Typically that means that after signing you will receive a letter 12 months has passed. We are sending these kind of letters on monthly basis towards different customers. And the maximum increase concerning rent is CPI plus 5%. And all the apartments are priced as individual, so meaning one by one. We use AI in order to get the right market pricing. There is varies between CPI plus maximum 5% providing the range concerning the rent increases. Okay. The very last question. You mentioned that startups are down. Will you also stop or slow development when the present book has been delivered to gain max value in increasing occupancy? I would say that for us it's important that we are able to grow by using multiple sources. We are optimizing the growth. This year the number of new startups been slightly lower than last year. On the other hand, we made a portfolio acquisition. Now looking forward a couple of months to the rest of this year, the market seems to be a bit cloudy. We are really picky. We don't want to start a project which don't meet our parameters. So it may mean that we are making a bit less new agreements during the next couple of months. On the other hand, as Erik provided color, we see that the demand for build to sell homes is going down. Typically, when this happens, it means that construction companies must cut down their volumes. At the end of the day, want. They want to continue their operations, start new projects, and then they start calling us. That may open possibilities to start new projects with attracting pricing. Okay, thanks. That was the last question. Thank you all for the questions, and thank you for joining us today. Kojamo's Q3 interim report will be published on 3rd of November. Hope you can join us then as well. Thank you, and have a great autumn. Thank you.