Kojamo plc: Kojamo is planning an initial public offering and listing on the official list of Nasdaq Helsinki

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Kojamo is planning an initial public offering and listing on the official list of Nasdaq Helsinki

Stock exchange release May 21, 2018 at 8:00 a.m. EET

Kojamo plc ("Kojamo" or the "Company," and together with its subsidiaries, the "Group" or "Kojamo Group") is planning an initial public offering ("IPO") and listing of its shares on the official list of Nasdaq Helsinki Ltd ("Nasdaq Helsinki").

Kojamo is the largest private residential real estate company in Finland measured by fair value of investments properties. It offers rental apartments and housing services for tenants primarily in the Helsinki region[1], the Tampere, Turku, Kuopio and Lahti regions as well as the cities of Oulu and Jyväskylä (together, the "Finnish Growth Centers"). As at March 31, 2018, Kojamo's portfolio comprised 35,697 rental apartments offering a wide range of rental housing alternatives. The fair value of its investment properties was EUR 4.9 billion[2] as at March 31, 2018.

The objective of the contemplated IPO is to enable Kojamo to pursue its growth strategy and to improve strategic flexibility. The IPO would allow Kojamo to obtain access to capital markets and broaden its ownership base both with domestic and foreign investors, which would increase the liquidity of Kojamo's shares. Furthermore, the IPO is expected to benefit Kojamo operationally, strengthen Kojamo's brand recognition and brand awareness among customers, prospective employees, investors and the real estate and rental markets in general, and, thus, enhance Kojamo's competitiveness. The IPO and increased liquidity of the shares would also enable Kojamo to use its shares more effectively as a means of consideration in potential acquisitions and remuneration of its personnel.

The contemplated IPO is expected to consist of a secondary share sale by certain existing shareholders and a primary offering by the Company. In the contemplated IPO, the Company would aim to raise gross proceeds of approximately EUR 150 million by issuing new shares for the purposes of supporting Kojamo's growth strategy, including residential property acquisitions, development projects and other growth investments, as well as for repayment of debts and general corporate purposes.

CEO Jani Nieminen:

"During the last seven years, we have gone through a significant transformation process and focused on commercial rental housing business. We have focused on the seven Finnish Growth Centers and our Lumo brand has taken a strong position in the market.

In accordance with our strategy, we find it important to generate long-term shareholders value and to provide the best customer experience. We aim to be the frontrunner in the rental housing business and customers' number one choice. A good example of our innovation is the Lumo webstore, which enables customers to rent an apartment around the clock.

Urbanization and the continuing growth in the number of one- and two-person households are expected to continue to support demand for rental apartments. Kojamo's apartment offering answers to this demand in an excellent way, as over 70 percent of the apartments are either studios or one-bedroom apartments.

Our mission is to create better urban living and promote work-related migration in the urbanizing Finland.

We have invested EUR 1.5 billion in developing the Lumo apartment offering during the period 2014 to 2017. The contemplated IPO would support our growth strategy and our target to own 38,000 apartments in 2021."

Kojamo in brief

Kojamo is the largest private residential real estate company in Finland measured by fair value of investments properties. It offers rental apartments and housing services for tenants primarily in the Finnish Growth Centers. As at March 31, 2018, Kojamo's portfolio comprised 35,697 rental apartments offering a wide range of rental housing alternatives. Approximately 98 percent of Kojamo's rental apartments are situated in the Finnish Growth Centers, approximately 82 percent in the Helsinki, Tampere and Turku regions and approximately 66 percent in the Helsinki region (all measured by fair value). In 2017, the construction of 983 apartments was completed and Kojamo estimates that 1,198 apartments will be completed during 2018 based on its ongoing projects.  

Kojamo has two business segments: Lumo and VVO. As at March 31, 2018, the Lumo segment included 34,468 apartments and the VVO segment included 1,229 apartments.

The Lumo segment offers commercial housing services and thus the majority of apartments included in the Lumo segment are free from restrictions under arava and/or interest subsidy legislation. The Lumo segment comprises the majority of Kojamo's rental business and Kojamo has focused its latest investments almost solely in the Lumo segment.

The non-commercial VVO segment includes the rental apartments subject to restrictions on rent levels under arava and/or interest subsidy legislation that will end after 2019.

Kojamo's core value-add business operations, including investment operations, real estate development and customer relations, are primarily organized in-house. Kojamo leverages its strong internal know-how and local expertise to manage and develop its assets through purchasing, selling and developing real estate as well as monitoring and increasing the profitability of its property portfolio. These and strong focus on the best customer experience create for Kojamo good possibilities for value creation.

Between 2014 and 2017, Kojamo's gross investments in new developments and acquisitions were in aggregate EUR 1.5 billion. Over the same period Kojamo launched construction of approximately 3,700 apartments. Since 2014, Kojamo has focused its investments almost solely to the Lumo segment.

Kojamo's aim is to create a superior customer-service experience for its customers and thus it has invested significantly in services. The Lumo webstore enables customers to rent a suitable apartment online, pay the first month's rent and move into the new apartment as soon as the following day. Kojamo's resident co-operation model gives residents an opportunity to influence the development of housing and Lumo services development. Lumo apartments offer numerous services such as free broadband connection, pets welcome, Lumo-lounges in some of the properties, a car sharing service in partnership with 24Rent and Lumo Caretakers with Lassila & Tikanoja in Helsinki region. In addition, to further strengthen the customer experience, Kojamo has piloted wellness coach services with Raatamo and Fysios and a SmartPost parcel service in partnership with Posti Group Corporation.

Kojamo's strengths

Kojamo believes that the following are among its key strengths:

  • Focused business and differentiated business model in the highly attractive Finnish market
  • High quality portfolio
  • Strong track record led by organic growth and acquisitions along with a robust development pipeline
  • Experienced and skilled management team as well as competent and committed personnel
  • Innovative, value-add operating platform
  • Attractive yield with sustainable growth backed by a strong and well-run balance sheet

Kojamo's strategy

Kojamo commenced its strategic transformation process in 2012, and it was completed in 2016. During the strategic transformation process, Kojamo has revised its strategic policies and identified changes in its operating environment and expectations of the customers and its shareholders.

The strategic focal points of Kojamo for the period 2018-2021 include generation of long-term shareholder value by focusing on the Lumo brand, by operating in the Finnish Growth Centers, anchored in the Helsinki Region and by growing the property portfolio through development activities and acquisitions. Furthermore, Kojamo aims to deliver the best customer experience and to be the leader on sustainable development while pursuing corporate social responsibility.

Kojamo's operating and financial targets

The Company's operating and financial targets by the end of 2021 are the following:

  • The fair value of investment properties is EUR 6 billion and the Company owns approximately 38,000 apartments.
  • Equity ratio is over 40 percent and the loan to value ratio below 50 percent.
  • Funds from operations (FFO) is at least 32 percent of total revenue.
  • Net promoter score[3] of 40.
  • Kojamo's objective is to be a stable dividend payer whose annual dividend payment will be at least 60 per cent of funds from operations (FFO), provided that the Group's equity ratio is 40 percent or more and taking account of the Company's financial position. 

Kojamo's financial performance and key figures

  As at and for the three months ended 
March 31,
As at and for the year ended
December 31,
  2018 2017 2017 2016 2015
In EUR million, unless otherwise indicated (unaudited) (audited, unless otherwise indicated)
KEY FIGURES    
Total revenue 88.2 83.6 337.0 351.5 370.9
Net rental income 55.5 52.6 216.0 222.0 227.4
Net rental income margin, % 62.9 62.9 64.14 63.24 61.34
Fair value change of investment properties 20.7 23.5 126.2 163.3 70.3
Profit for the period 44.6 46.9 212.9 232.3 179.4
Adjusted EBITDA 46.7 43.6 179.54 186.34 189.14
Adjusted EBITDA margin, % 52.9 52.2 53.34 53.04 51.04
Funds from operations (FFO) 29.2 21.0 107.84 112.24 129.44
Funds from operations margin, % 33.1 25.1 32.04 31.94 34.94
Operative result 28.5 26.6 107.6 116.9 121.4
Investment properties1 4,930.8 4,318.3 4,710.2 4,298.9 3,999.2
Loan to value ratio, %2, 3 49.2 45.1 46.0 47.1 39.8
EPRA NAV 2,549.6 2,360.3 2,548.8 2,365.5 2,207.7
 

1 Includes non-current assets held for sale.
2
Does not contain liabilities relating to non-current assets held for sale.
3
The formula used in the calculation was changed in 2017, and comparative figures have been changed to correspond to the current formula.
4 Unaudited.

The Company's disclosure on alternative performance measurements based on ESMA guidelines is located in the key figures section of the financial statements

Changes in Kojamo's Board of Directors

Kojamo's shareholders Nomination Board proposes to Extraordinary General Meeting (EGM) scheduled to be held on May 25, 2018 that the EGM elects Anne Leskelä and Minna Metsälä to the new Board of Directors for the period starting from the next Annual General Meeting (AGM) in 2019, conditional on the commencement of trading in the Company's shares on the official list of Nasdaq Helsinki Ltd. Current members of the Board of Directors Ann Selin, Olli Luukkainen and Jorma Malinen have informed the Company that they will resign from the Board of Directors, conditional on the commencement of trading in the Company's shares on the official list of Nasdaq Helsinki Ltd. Accordingly, the Company's Board of Directors would consist of Riku Aalto, Matti Harjuniemi, Anne Leskelä, Minna Metsälä, Mikko Mursula, Reima Rytsölä and Jan-Erik Saarinen, after the commencement of trading in the Company's shares on the official list of Nasdaq Helsinki Ltd.  

Information on the contemplated IPO

The contemplated IPO is expected to consist of a primary offering of new shares by the Company and secondary offering of existing shares by the eight largest shareholders, Ilmarinen Mutual Pension Insurance Company ("Ilmarinen"), Varma Mutual Pension Insurance Company ("Varma"), The Finnish Industrial Union ("Teollisuusliitto"), Trade Union for the Public and Welfare Sectors ("JHL"), Finnish Construction Trade Union ("Rakennusliitto"), Service Union United PAM ("PAM"), Trade Union PRO ("PRO") and Trade Union of Education in Finland ("OAJ") (Ilmarinen, Varma, Teollisuusliitto, JHL, Rakennusliitto, PAM, PRO and OAJ together the "Principal Sellers") and certain other existing shareholders of the Company. In the contemplated IPO, the Company would aim to raise gross proceeds of approximately EUR 150 million by issuing new shares. The Company, the Principal Sellers and certain other existing shareholders would be subject to customary lock-up arrangements in connection with the IPO. The Principal Sellers would remain significant shareholders after the IPO. In addition, the Company is planning a personnel offering in connection with the contemplated IPO in which the Company would offer new shares to its employees.

Goldman Sachs International, J.P. Morgan Securities plc and Nordea Bank AB (publ), Finnish Branch have been appointed to act as joint global coordinators and joint bookrunners (the "Joint Global Coordinators") in the contemplated IPO. OP Corporate Bank plc has been appointed to act as a Joint Bookrunner (together with the Joint Global Coordinators, the "Managers") in the contemplated IPO. Roschier Attorneys Ltd and Freshfields Bruckhaus Deringer LLP are acting as the legal advisers to the Company and White & Case LLP is acting as the legal adviser to the Managers.

Depending on market conditions, the contemplated IPO is expected to be completed during the second quarter of 2018.

Press conference

Kojamo will host a press conference today, May 21, 2018, at 11:00 am, at Nasdaq Helsinki Stock Exchange (Fabianinkatu 14, Helsinki).

Additional information

Jani Nieminen, CEO of Kojamo, +358 20 508 3201
Erik Hjelt, CFO of Kojamo, +358 20 508 3225

For interview and other information requests:

Irene Kantor, Marketing and Communications Director of Kojamo, +358 20 508 3589


Important information

The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy, fairness or completeness. The information in this announcement may be subject to change.

The information contained herein is not for publication or distribution, directly or indirectly, in or into the United States. These written materials do not constitute an offer of, or the solicitation of an offer to buy or subscribe for, securities in the United States, nor may the securities be offered or sold in the United States absent registration or an exemption from registration as provided in the U.S. Securities Act of 1933, as amended, and the rules and regulations thereunder. The securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any state securities laws. There will be no public offer of securities in the United States.

This announcement is not for release, publication or distribution, in whole or in part, directly or indirectly, in or into Australia, Canada, the Hong Kong Special Administrative Region Of The People's Republic Of China, Japan, South Africa or the United States or any other jurisdiction in which the distribution or release would be unlawful. The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein is received should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

The issue, exercise or sale of securities in the offering are subject to specific legal or regulatory restrictions in certain jurisdictions. Neither the Company nor the Managers assume any responsibility in the event there is a violation by any person of such restrictions.

The information contained herein shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities referred to herein in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any such jurisdiction. Investors must neither accept any offer for, nor acquire, any securities to which this document refers, unless they do so on the basis of the information contained in the applicable offering document prepared by the Company.

The Company has not authorized any offer to the public of securities in any Member State of the European Economic Area other than Finland. With respect to each Member State of the European Economic Area other than Finland and which has implemented the Prospectus Directive (each, a "Relevant Member State"), no action has been undertaken or will be undertaken to make an offer to the public of securities requiring publication of a prospectus in any Relevant Member State. As a result, the securities may only be offered in Relevant Member States (a) to any legal entity which is a qualified investor as defined in the Prospectus Directive; or (b) in any other circumstances falling within Article 3(2) of the Prospectus Directive. For the purposes of this paragraph, the expression an "offer of securities to the public" means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to exercise, purchase or subscribe the securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.

This communication does not constitute an offer of the securities to the public in the United Kingdom. No prospectus has been or will be approved in the United Kingdom in respect of the securities. This communication is directed only at (i) persons who are outside the United Kingdom, or (ii) persons who are investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). Any investment activity to which this communication relates will only be available to and will only be engaged with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

None of the Managers or any of their respective affiliates, directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for/or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith.

The Managers are each acting exclusively for the Company and for no-one else in connection with any transaction mentioned in this announcement and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to any such transaction and will not be responsible to any other person for providing the protections afforded to their respective clients, or for advising any such person on the contents of this announcement or in connection with any transaction referred to in this announcement. The contents of this announcement have not been verified by the Managers.

This announcement does not constitute a recommendation concerning the IPO. The price and value of securities and any income from them can go down as well as up. Past performance is not a guide to future performance. Information in this announcement or any of the documents relating to the IPO cannot be relied upon as a guide to future performance. There is no guarantee that the listing on Nasdaq Helsinki will occur and you should not base your financial decisions on the Company's intentions in relation to the listing at this stage. Potential investors should consult a professional advisor as to the suitability of the IPO for the entity concerned.

In connection with the IPO, each of the Managers and any of their respective affiliates, acting as investors for their own accounts, may purchase shares and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such shares and other securities of the Company or related investments in connection with the IPO or otherwise. Accordingly, references in the final prospectus, once published, to the shares being offered, acquired, sold, placed or otherwise dealt in should be read as including any offer, sale, acquisition, placing or dealing in the shares by any of the Managers and any of their affiliates acting as investors for their own accounts. In addition, certain of the Managers or their affiliates may enter into financing arrangements and swaps in connection with which they or their affiliates may from time to time acquire, hold or dispose of shares. None of the Managers intends to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

No representation or warranty, express or implied, is given by or on behalf of the Managers or any of their respective subsidiary undertakings, affiliates, agents or advisers or any of such persons' affiliates, directors, officers or employees or any other person as to the fairness, accuracy, completeness or verification of the information or the opinions contained in this announcement, and no liability is accepted for any such information or opinions. Each of the Managers or any such persons' directors, officers, employees or affiliates or any other person disclaim all and any responsibility and liability whatsoever, whether arising in tort, contract or otherwise, for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred howsoever arising, directly or indirectly, from any use of this announcement or its contents or otherwise in connection with this announcement.

Forward-looking statements

This announcement includes forward-looking statements, which include statements regarding the Company's business strategy, operating and financial targets, financial condition, profitability, results of operations and market data, as well as other statements that are not historical facts. Words such as "believe," "anticipate," "plan," "expect," "target," "estimate," "project," "predict," "forecast," "guideline," "should," "aim," "continue," "could," "guidance," "may," "potential," "will," as well as similar expressions and the negative of such expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying these statements. By their nature, forward-looking statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements. Except for any ongoing obligation to disclose material information as required by the applicable law, the Company does not have any intention or obligation to publicly update or revise any forward-looking statements after it distributes this announcement, whether to reflect any future events or circumstances or otherwise.

Information to distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Shares have been subject to a product approval process, which has determined that they each are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II (the "Target Market Assessment"); and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Appropriate Channels for Distribution"). Distributors should note that: the price of the shares may decline and investors could lose all or part of their investment; the shares offer no guaranteed income and no capital protection; and an investment in the shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the IPO.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the shares.

Each distributor is responsible for undertaking its own Target Market Assessment in respect of the shares and determining appropriate distribution channels.




[1] Helsinki region includes cities of Helsinki, Espoo, Vantaa, Kauniainen, Hyvinkää, Järvenpää, Kerava, Kirkkonummi, Mäntsälä, Nurmijärvi, Pornainen, Porvoo, Riihimäki, Sipoo, Tuusula and Vihti. 

[2] Fair value represents the fair value of investment properties and includes items held for sale. Investment properties include apartments, ongoing projects, land plots owned by the Company and ownership of certain assets through shares like parking spaces.

[3] Kojamo uses a method called the "net promoter score" to measure tenant satisfaction. In Kojamo's tenant satisfaction surveys, tenants are requested to respond to the following survey question: "How likely is that you would recommend company to a friend or a colleague?" on a scale from 1 to 10. Tenants giving a score 9 or 10 in the survey are called "promoters", tenants giving a score from 0 to 6 are "detractors", and tenants responding 7 or 8 are excluded when calculating the net promoter score. The net promoter score is calculated by deducting the total percentage of the respondents who are "detractors" from the total percentage of tenants being "promoters". As an illustrative example, if 65 percent of tenants are "promoters" and respond 9 or 10 in the survey and 25 percent of tenants are "detractors" responding a score between 0 and 6, the net promoter score is 40 (65-25=40).


About Us

Kojamo is Finland’s largest private residential real estate company and a frontrunner in the rental housing business. Our mission is to create better urban housing. We operate in Finland’s most significant growth centres and our Lumo brand provides rental housing and new services for urban housing with 50 years of experience. We actively develop the value and number of our investment properties by developing new properties and our existing property portfolio. We want to be the property market frontrunner and the number one choice for our customers. Kojamo’s shares are listed on the official list of Nasdaq Helsinki. For more information, please visit kojamo.fi/en/

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