Kojamo plc: Kojamo plc’s Interim Report 1 January – 30 September 2020
Kojamo Plc Stock Exchange Release, 5 November 2020 at 8:00 a.m. EET
Kojamo plc’s Interim Report 1 January – 30 September 2020
Growth continues, the number of apartments under construction has more than doubled
This is a summary of the Interim Report January–September 2020, which is in its entirety attached to this release and can be downloaded from the company’s website at www.kojamo.fi/investors.
Unless otherwise stated, the comparison figures in brackets refer to the corresponding period of the previous year. The figures in this Interim Report have not been audited.
Summary of July–September 2020
- Total revenue increased by 0.6 per cent to EUR 96.3 (95.7) million
- Net rental income decreased by 1.0 per cent, totalling EUR 68.9 (69.5) million. Net rental income represented 71.5 (72.6) per cent of revenue
- Profit before taxes was EUR 72.8 (66.6) million. The profit includes EUR 25.8 (18.4) million in net gain on the valuation of investment properties at fair value and EUR 0.0 (0.3) million in profits and losses from the sale of investment properties. Earnings per share was EUR 0.24 (0.22)
- Funds From Operations (FFO) increased by 5.9 per cent and amounted to EUR 42.0 (39.7) million
- Gross investments totalled EUR 85.1 (79.0) million, representing 88.4 (82.5) per cent of total revenue
Summary of January–September 2020
- Total revenue increased by 2.3 per cent to EUR 286.8 (280.3) million
- Net rental income increased by 3.5 per cent, totalling EUR 193.8 (187.2) million. Net rental income represented 67.6 (66.8) per cent of revenue
- Profit before taxes was EUR 198.0 (191.4) million. The profit includes EUR 74.1 (71.0) million in net gain on the valuation of investment properties at fair value and EUR -0.7 (0.2) million in profits and losses from the sale of investment properties. Earnings per share was EUR 0.64 (0.62)
- Funds From Operations (FFO) increased by 7.0 per cent and amounted to EUR 113.5 (106.1) million
- The fair value of investment properties was EUR 6.6 (5.4) billion at the end of the review period, including EUR 2.4 (0.0) million in investment properties held for sale
- The financial occupancy rate decreased year-on-year and stood at 96.3 (97.1) per cent
- Gross investments totalled EUR 264.1 (175.6) million, representing 92.1 (62.6) per cent of total revenue
- EPRA NAV per share (net asset value) grew by 31.3 per cent and amounted to EUR 15.90 (12.11)
- Equity per share was EUR 12.76 (9.72) and return on equity was 6.8 (8.6) per cent. Return on investment was 5.3 (6.3) per cent
- There were 2,532 (1,211) Lumo apartments under construction at the end of the review period
Kojamo owned 35,613 (35,061) rental apartments at the end of the review period. Since September of the previous year, 188 (117) apartments have been acquired, 446 (1,073) have been completed, 56 (548) have been sold and -26 (3) have been demolished or altered.
Key figures
| 7–9/2020 | 7–9/2019 | Change % | 1–9/2020 | 1–9/2019 | Change % | 2019 | ||||||||||
| Total revenue, M€ | 96.3 | 95.7 | 0.6 | 286.8 | 280.3 | 2.3 | 375.3 | |||||||||
| Net rental income, M€ * | 68.9 | 69.5 | -1.0 | 193.8 | 187.2 | 3.5 | 247.3 | |||||||||
| Net rental income margin, % * | 71.5 | 72.6 | 67.6 | 66.8 | 65.9 | |||||||||||
| Profit before taxes, M€ * | 72.8 | 66.6 | 9.4 | 198.0 | 191.4 | 3.5 | 1,031.3 | |||||||||
| EBITDA, M€ * | 87.2 | 80.1 | 8.8 | 240.8 | 231.6 | 4.0 | 1,083.1 | |||||||||
| EBITDA margin, % * | 90.6 | 83.7 | 84.0 | 82.6 | 288.6 | |||||||||||
| Adjusted EBITDA, M€ * | 61.4 | 61.4 | -0.1 | 167.5 | 160.3 | 4.5 | 210.3 | |||||||||
| Adjusted EBITDA margin, % * | 63.8 | 64.2 | 58.4 | 57.2 | 56.0 | |||||||||||
| Funds From Operations (FFO), M€ * | 42.0 | 39.7 | 5.9 | 113.5 | 106.1 | 7.0 | 140.7 | |||||||||
| FFO margin, % * | 43.7 | 41.5 | 39.6 | 37.9 | 37.5 | |||||||||||
| FFO excluding non-recurring costs, M€ * | 42.0 | 39.7 | 5.9 | 113.5 | 106.1 | 7.0 | 140.7 | |||||||||
| Investment properties, M€ 1) | 6,597.8 | 5,376.4 | 22.7 | 6,260.8 | ||||||||||||
| Financial occupancy rate, % | 96.3 | 97.1 | 97.2 | |||||||||||||
| Interest-bearing liabilities, M€ * | 3,137.6 | 2,640.7 | 18.8 | 2,674.2 | ||||||||||||
| Return on equity (ROE), % * | 6.8 | 8.6 | 30.3 | |||||||||||||
| Return on investment (ROI), % * | 5.3 | 6.3 | 20.5 | |||||||||||||
| Equity ratio, % * | 44.1 | 42.0 | 46.9 | |||||||||||||
| Loan to Value (LTV), % ²⁾* | 42.1 | 46.7 | 40.5 | |||||||||||||
| EPRA NAV, M€ | 3,928.4 | 2,993.3 | 31.2 | 3,828.0 | ||||||||||||
| Gross investments, M€ * | 85.1 | 79.0 | 7.7 | 264.1 | 175.6 | 50.4 | 259.9 | |||||||||
| Number of personnel, end of period | 309 | 293 | 296 | |||||||||||||
| Key figures per share, € | 7–9/2020 | 7–9/2019 | Change % | 1–9/2020 | 1–9/2019 | Change % | 2019 | |||||||||
| FFO per share * | 0.17 | 0.16 | 6.3 | 0.46 | 0.43 | 7.0 | 0.57 | |||||||||
| Earnings per share | 0.24 | 0.22 | 9.1 | 0.64 | 0.62 | 3.2 | 3.34 | |||||||||
| EPRA NAV per share | 15.90 | 12.11 | 31.3 | 15.49 | ||||||||||||
| Equity per share | 12.76 | 9.72 | 31.3 | 12.51 | ||||||||||||
| * In accordance with the guidelines issued by the European Securities and Markets Authority (ESMA), Kojamo provides an account of the Alternative Performance Measures used by the Group in the section Key figures, the formulas used in their calculation, and reconciliation calculations in accordance with the ESMA guidelines of the Interim Report | ||||||||||||||||
| 1) Including items held for sale | ||||||||||||||||
| 2) Excluding items held for sale | ||||||||||||||||
Outlook for Kojamo in 2020
Kojamo estimates that in 2020, the Group’s total revenue will increase by 2–5 per cent year-on-year. In addition, the company estimates that the Group’s FFO for 2020 will amount to between EUR 146–158 million, excluding non-recurring costs.
The outlook takes into account the effects of the completed housing divestments and acquisitions, the estimated occupancy rate and rises in rents, as well as the number of apartments to be completed. The outlook is based on the management’s assessment of total revenue, net rental income, administrative expenses, financial expenses, taxes to be paid and new development to be completed, as well as the management’s view on future developments in the operating environment.
Additionally, the outlook is based on strong demand sustained by migration, which will increase Like-for-Like rental income. The management can influence total revenue and FFO through the company’s business operations. In contrast, the management has no influence over market trends, the regulatory environment or the competitive landscape.
Effects of the COVID-19 pandemic on Kojamo’s outlook
Kojamo’s management estimates that the pandemic does not have a significant impact on the company’s outlook for the rest of the year.
CEO’s review
Our total revenue and net rental income grew during the first nine months of the year. FFO increased by as much as 7 per cent. Successful investments have supported our growth.
Supply in the rental housing market increased in the early part of the year due to the completion of new properties and apartments intended for short-term rental moving to the long-term rental market as a consequence of the pandemic. However, we believe that the impact of these factors has already fully materialised in the market. The pandemic has also temporarily slowed down migration. We neverthe-less believe that the trend of urbanisation will continue when the pandemic abates. Our occupancy rate is at a good level in spite of the circumstances and our NPS, which measures customer satisfaction, is strong. The number of new tenancy agreements was at a record-high level in July and has remained good thereafter. However, the effect of the new agreements will become evident gradually as they enter into force.
We are looking firmly into the future. The popularity of rental housing is growing. The number of rental households already exceeds the number of those living in owner-occupied housing in Helsinki, Tampe-re and Turku, and the number of households who rent their homes has increased in all of Finland’s ma-jor urban areas. People want to move to cities and they are increasingly attracted by the freedom pro-vided by rental housing. The need for new apartments is growing in the major urban areas. In addition to urbanisation, the need for new apartments is supported by the decreasing average size of house-holds.
The number of residential start-ups is predicted to be below the annual production need this year and next. In Helsinki, which is a significant market for us, the city has set an annual housing production tar-get of 7,000 apartments and indicated that the share of family apartments should grow. Considering the prevailing housing trends, this production target seems low. We also believe that the highest demand is for studios and one bedroom apartments, and efforts should be made to build enough of these. Our investments are aimed at responding to demand in the long term.
Our project portfolio has been strengthened further and we have started construction on 1,556 new homes this year. The number of apartments under construction has more than doubled from the com-parison period. I am also satisfied with the quality of our project portfolio: we have been able to make investments in projects that fulfil our requirements with regard to factors such as location, apartment size and profitability.
In addition to properties currently under construction, we have plot reserves in the Helsinki region, where the demand for new apartments is predicted to be the highest. Our balance sheet is strong and it enables future investments, even on a quick schedule. In addition to the properties already under con-struction, we have binding preliminary agreements on the construction of more than 1,000 apartments in the Helsinki region. Furthermore, our Metropolia real estate development project will see us create new homes in buildings previously occupied by educational institutions in Helsinki’s central business district and other good locations.
We will reach an important milestone in our sustainability efforts this year when we publish our sustain-ability programme on 2 December 2020. This date coincides with our Investors’ Day event, where we will present the programme and its objectives.
Jani Nieminen
CEO
News conference as a webcast
Kojamo will hold a news conference for institutional investors, analysts and media on 5 November 2020 at 10:00 a.m. as a webcast. The event will be held in English.
A recording of the webcast will be available later on the company website at https://kojamo.fi/en/investors/releases-and-publications/financial-reports/
The news conference can be streamed online at https://kojamo.videosync.fi/2020-q3-results
You can also participate in the press conference by calling:
FI: +358 981 710 310
SE: +46 856 642 651
UK: +44 333 300 0804
US: +1 631 913 1422
Please use the following PIN code to participate in the press conference by telephone: 76174123#
For more information, please contact
Maija Hongas, Manager, Investor Relations, Kojamo Plc, tel. +358 20 508 3004
Erik Hjelt, CFO, Kojamo Plc, tel. +358 20 508 3225
Distribution:
Nasdaq Helsinki, Irish Stock Exchange, key media
Kojamo is Finland’s largest private residential real estate company and a frontrunner in the housing business. Our mission is to create better urban housing. The Lumo brand provides environmental-friendly housing and services in Finland’s biggest growth centres. We actively develop the value 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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