Kojamo Stock

Good morning, ladies and gentlemen. Welcome to Lumo Capital Markets Day. We are today in Helsinki at the Finlandia Hall. We have live audience here. Thank you all for coming. Also, many are following our event via webcast. Warm welcome to all of you as well.

I'm Niina Saarto, I'm Treasury and Investor Relations Director. I will be hosting you today. Also our management team members are here today. They have presentations coming and they will be here for further discussions during the breaks.

So indeed, this is the first Lumo CMD for us. Last Friday, our company name was changed from Kojamo plc to Lumo Homes plc or Lumo Kodit Oy in Finnish. Today, you will hear the reason why we have changed the name and why we have one brand, Lumo going forward.

We have divided today's agenda to 2 sessions. First speaker today is our CEO, Reima Rytsölä. He starts today with the updated strategy, works us through the key drivers supporting the business and the strategic focus areas, why these particularly have been chosen. Second speaker is also a familiar face CFO, Erik Hjelt. He focuses more on the financials. We'll hear about the financial targets, how they've been set, how they are connected. And also Erik explains how we approach financing in general in our company. After these 2 presentations, we have the first Q&A and then a short break.

In the second session, we have 4 more presentations coming, and these go a little bit deeper under the surface. Then there's another Q&A for the whole management team, and that ends the webcast.

So you can send questions via chat. You can start doing that already. In the Q&A, we also take audience questions, and we take them first. But now we can start the presentations. Once again, welcome. Enjoy the day.

Very good morning on behalf of myself and the whole management team. It's really -- I'm really glad to see you, so many physically present here and also like to welcome on the audience via the webcast.

We create better urban living is our mission in Lumo Homes plc, and if I think about Niina went through a little bit of a structure of today, and if I would -- if there's one target we would like to accomplish today is that we could illustrate to you that how we're actually going to create value through better customer experience.

But let's run it through. So as I said, that our mission, we create better urban living. And it's actually quite significant mission as such that given the -- given our scale and presence in Finland, so we actually have a very good possibility to be kind of a thought leader of a residential market, but also kind of, how would I say, simply kind of a -- be able to form the housing market in Finland. And that's, of course, very kind of ambitious position to achieve to be, but we truly have a very good standing point on that. And in that respect, I would say that we truly live the mission in reality.

Our brand promise, simply the right home. We come to that and what does it actually mean from a customer perspective and how it will evolve in different situations.

And our values are still the same. We haven't changed that. So happy to serve, strive for success and courage to change. We thought that these values are very good groundings for our new strategy as well.

But as Niina said that I will go through a little bit on, how would I say, more of a title level of our strategic focus areas, and then my colleagues will dig deep more deeper into those. But if we go for our focus areas and our strategy, so seamless customer journey enabled by data, technology and AI. So both Tuomas and Janne will discuss this about more and more concrete way that what we're actually doing and how we create a seamless customer journey. But this is kind of a key component to delivering the best customer experience.

And then again, a truly kind of a customer-centric portfolio renewal and growth. So Ville will talk about this and what does it mean that we actually -- both when kind of shaping our portfolio, what kind of divestments we do, what kind of acquisitions we do, it's truly focused on where the customers will be, where the customer demand will be. And also then kind of CapEx allocations that it's commercially based and what kind of CapEx do we allocate and how do we convert that to commercially successful assets and to achieve that is kind of a prerequisite that the customer demand is there.

And then industry-leading operational excellence is kind of probably goes without saying in a business like ours, but I think that this is kind of a two-folded focus area. It both creates a better customer experience, but it also gives us a better standing point for profitability and kind of cost efficiency. And then and Ville and Janne will touch this as well in a more detailed way.

And then the strong contribution to sustainable urban living, I will come back to that later in my presentation. But what we have done here is that we kind of renewed our sustainable program and together with our strategy. And it's not kind of a stamp on top of the -- or on the bottom of the strategy paper, but it's fully integrated in our strategy as such. But I'll come back to that later.

But to achieve this and to be able to kind of compete with a very tough environment as we had at the moment. So it's kind of a prerequisite that we have a most capable and dynamic professionals in the housing market. And all this and to kind of boost delivering the best customer experience, and Katri will tell you later about the one common brand, as we are now named Lumo or Lumo Homes plc. So it's kind of both from our personnel point of view, but also the kind of whole strategy point of view that we are aiming for one direction in our operations. And that's creating value through customer experience and better kind of, how would I say, to deliver best possible customer experience is kind of a key tool for value creation.

I won't go too much into the detail of this slide, but just want to say that we are a 57-year-old company, starting with the name of VVO. And you need to remember because I'm born myself at 69 as well. So we are exactly the same age. What this slide tries to illustrate is actually that kind of might sound a bit arrogant, but we have been around, and don't want to be arrogant, but we have been around, and this is kind of -- this is truly a -- kind of urban living has always been a core of our operations. And that's why it's -- we think that we have a kind of a knowledge of residential market, especially in Finland, the knowledge is very deep, and it's embedded in the organizational skills.

As I said, that we want to be a bold shaper of urban living. We have more than 97% of our assets in 7 biggest cities in Finland. Finland is a, square meter wise, is a large country, even though the population is still less than 6 million. But on square meter wise, as you very well know, it's a very large country. And that's why it's even more important that your portfolio is focused on the growth centers.

And we have, at the moment, a little bit less than 39,000 apartments. And after the -- in 2 weeks' time when the Varma portfolio acquisition is closing so it will be close to 44,000 apartments then. But the urbanization as such is the main driver of our strategy. And the whole kind of a Finnish economy is dependent on cities and mobility. So that kind of scarce resources can allocate to kind of where the growth is and where the jobs are. And we think that we have a true role in ensuring flexible housing options and enable the mobility that is needed.

And it's, of course, that we need to be in cities that are growing because the growth in Finland is, whether it's good or bad, I don't take a stance on that, but it's happening in the biggest cities. And that's why it's -- the job creation is in the biggest cities, and that's why kind of a landlord like us need to be in the biggest cities. But it's not only that we are in the biggest cities, it's also that inside the cities, we are in the right locations, right micro locations and also that the kind of mix of the apartments are the correct one. And for example, at the moment, as we all know, there's a kind of -- if not over those, but at least over supply of studios here in Helsinki market area and that in the future, we need to be more kind of mindful on that as well that -- what's the kind of mix that actually our customer needs.

And that's why it's once again super important that we are very close to our customer that we have that insight that what will be the demand and the kind of trends in our customers' minds. And one important point that actually is changing the market is that Finnish attitudes towards rental living are shifting. And more and more homeowners are also thinking about living rental. And obviously, the housing market overall hasn't been in a great shape for the last couple of years, that also has caused that actually, as a homeowner or apartment owner, you probably not, how would I say, considered that as a super good investment as such, your own apartment. As it has been, especially in biggest cities, it has been the case that it's kind of, if not the license to print money, but it has been kind of a tradition that as soon as you have fundability or bankability so you buy your own apartment and so on.

But that's definitely changing. And we can see it in our own portfolio that, for example, our premium assets here in Helsinki area. So they are actually -- their occupancy is much higher than our general portfolio. And the rent levels in those premium assets are actually already that high that if you can afford to pay that rent, so you can easily -- you are easily bankable as well, so to say. But all in all, I would say that the most important part is that to kind of get a grip of this, how the market is evolving and how the demand is changing, so we need to be close to the customer.

The operating environment is still -- there is still lower supply. That's for sure. Kind of new residential start-ups are on low level and the forecast for '26, as you see in the bottom right corner is 20,000. I honestly don't believe it that to myself. I think it will be less than last 3 years. So closer to 15,000, and it has been always quite optimistic but it's the Construction Companies Association forecast. But this will -- even though it has taken more time than we anticipated in the first hand. So this will kind of balance out the supply because the population growth in the biggest cities is happening all the time.

And as I already told that actually the, how would I say, attitude towards rental living is changing as well. And on the other hand, even though I said that there's a little bit too much of studios in Helsinki market area at the moment. So actually, the one-person households, number of one-person households are growing all the time. So that's supporting as well the balancing process.

But all in all -- and behind the, how would I say, the brand change as well. So what we try to do and what we are going to do is that we embed customer-centricity deeper into our value creation model. And I already started from that. And I think it's kind of a natural that when customer experience Lumo as simply the right home as our brand promises, it drives occupancy, pricing power and long-term asset value. So basically, the churn, the more satisfied our customers are, the more lower the churn is and better premium we can earn from rental living. And like I said already earlier that the kind of link between the assets is that if we drive the assets as well, remind -- keeping in mind that the customer and customer demand is always the key poll of our strategic decisions so we can better formulate or modify our portfolio so that it fulfills the customer demand better.

So these slides try to illustrate that what is the kind of our strategic focus areas and how they are actually linked to the -- both the customer and meeting the objectives of both the customer and portfolio. And I would say that all in all, real estate industry as such haven't been too focused on customers. Of course, there's exceptions. And that's kind of a natural that due to the fact that you have so much capital deployed in this business so that the assets kind of take over the thinking of management and especially on management thinking.

But what we try to do here is that we actually run the residential business where the customer creates the value and not to kind of take care of the asset portfolio. And that might sound [ sematic, ] but actually, I think it's -- that's the kind of the core of our strategy. And Janne will tell you later on that -- what's the kind of logic of that or path that -- how we see that actually better customer experience creates more value for our shareholders as well. But all in all, I would start to kind of summarize that simply the right home from -- our brand promise from a customer perspective, it converts to higher occupancy and better price premium from a portfolio side.

The kind of -- I already mentioned the broader addressable market. This is something that we need to focus more. And from our kind of -- based on our own research that the market has changed there quite rapidly. We are not fully aware that whether it's because of the homeowners think that actually asset that your own home is not as good investment as you thought, and that has changed in the last couple of years, or is there some bigger thing. We do know that the younger generations are more favorable for rental living that it gives more flexibility and more mobility as well.

And then another thing that I would like to kind of highlight is that this data enabled value creation mindset. So we have plenty of data. And we actually -- when we analyze the data, so we get better and better tools to kind of form our offering as well. And Tuomas will go through in his presentation the kind of capabilities that we have already created using AI, but also the kind of -- what we can do. And AI has, of course, the data and you need to take care of the data and how it's stored and so on. But AI gives you much better and cheaper tools to analyze that and utilize that data. So we see a big potential there. And given the fact that we are, by far, the biggest operator, the biggest landlord in Finland. So we have the best capabilities also to invest technological and digital development and using AI as well. And we have as well, by far, the most data in our company.

Jumping then to the sustainability. So as I said that we kind of updated our sustainability program as well and released that already on last year's side, but we did it simultaneously with our strategy work. And as you can see that in the slide, so we have 6 targets. And still the core of our sustainability program is the kind of reducing the emissions of heating our properties. But also the reducing the water usage and overall improved energy efficiency is a key metric.

We know that the sustainabilities, I don't know, you are probably better answering this than I am, but it feels from a corporate CEO perspective and former investor perspective that it's kind of out of fashion, the sustainability from an investor community. But we actually think that this is very much of the core of our operations and our strategy. There's, of course, kind of a natural explanation as well that these parameters and as you can see, the targets and, for example, 2 social metric. One of the customers that when we asked our customers that what is the main, how would I say, what is the main factor in sustainability when talking about landlords, it's safety that the homes are safe and comfort. And well, that's direct linked to our customer experience, of course, and then the reducing the emissions have direct linked to our profitability.

And as we talk about already the strategic focus areas, so we definitely do care about our own staff. So it's super important that actually the, how would I say, our employees are feeling good and have a good energy to -- because it's, in my thinking, it's impossible to create best possible customer experience if your own staff is not happy because they are the interface of the customer, whether it's digital or in person.

Still about the brand. I won't steal Katri's presentation. But as I already said that we are kind of -- we don't think that this is just a name change or just even not the brand change. It's kind of boosting our strategy that we are truly -- the whole our organization is kind of focusing on our customers and are customer-centric, even though you take care of the assets and there's plenty of things that you need to focus on assets. But given the fact that we are all working under the brand of Lumo, so that kind of crystallize all of us that we are here for our customers, and we are taking care of our assets that they would better serve our customers. And through that, better serve our shareholders.

And all the strategy of this is kind of a -- need to kind of link to the financial targets and how these actions that I told on a kind of a title level and my colleagues will tell about more of a detailed level, but all these figures need to convert to our financial targets.

But then that I will hand over to Erik, our CFO, and Erik will tell more about that, what are the figures behind the strategy. Thank you.

Thank you, Reima, and good morning, everybody, from my side as well. So it's so great to see so many familiar faces here in Helsinki and with Lumo today. So I'm going to speak about our financial targets, figures behind the strategy, actually. And then we have set targets for strategic period 2026 to 2028. And we have 4 cornerstones there, if you like.

So I'll start with the customer satisfaction, as Reima already discussed, the customer satisfaction is going to be core in our new strategy. So it's quite natural that we set the target for -- related to customer as well. And there, the target is to have a Net Promoter Score of 65. I'm not going to discuss this further, given the fact that Janne will go to the customer agle later. One note though, so at the end of last year, our Net Promoter Score was all-time high. But as this figure shows, we are not satisfied with that figure. So we want to improve that further.

On the left-hand side, growth. So we think that the growth is an important part of the strategy of the company. And then, of course, customers already discussed. And then profitability is the third one. And the fourth cornerstone is risk management. And we have set the target for growth. So based on average annual growth of total revenue to be between 5% and 7%.

And for profitability, we've discussed a lot what -- how we should set this target, and we think that, that cash flow based target is still valid. And we used to have FFO as well. But today, we want to have that FFO per share. And the background for that is actually now there is that business as such has gone to the basics. So the financing has a price, and you need equity if you want to grow. So that's why we want to make sure that if we want to grow in big time and improve our profitability, it's important to have positive impact of FFO per share. And now we have set a target to have average annual growth of FFO per share, 3% to 5%.

And then risk management, so loan to value to be below 45%. And it's important to note that it's not that our target is 45%. It's that we want to be below that. We used to have a loan-to-value target and it was below -- to be below 50%, and we lowered the target.

Discussing with analysts and investors, we get the mixed feedback, whether you should be focusing on FFO, cash flow or should you be focusing on balance sheet. And we think actually that you need to have both. And that's why we have both FFO and loan-to-value. And this loan-to-value is, of course, you may say it's leverage based and it is cash flow -- it's a balance sheet focusing target, but it's actually very much linked to the cash flows. It's not here as a target, but it's very important to have your ICR in line with your expectations. And in current operating environment, actually, when the price of the financing goes up, and there's still oversupply in the market. So only way actually to lower your -- in total financial cost is actually to have less debt in your balance sheet.

So that's why it's, yes, loan to value is, of course, balance sheet-based target, but is directly linked to the cash flows and [ ICR. ]

Then we discussed a lot the dividend policy, and now the policy is to pay 20% of FFO either as a dividend or as a share buyback or a combination of these 2. So there's 2 changes now compared to the previous one. So we think that it's important for us that company to pay dividend. That was the starting point. But we felt that taking the dividend down from 60% to 20% of the FFO is important because now the bigger portion of the FFO is left inside the company, either to pay back loans or to do investments, and they are both benefits for the company, and that's why for the shareholders as well.

And the share buybacks is an important part to have that in your toolkit as well given the deep [ NAV ] discount that we are trading at the moment. So now we have the flexibility to use both. But the key is, of course, that 20% is the maximum payout, if you like.

So then next question is, of course, how to achieve these financial targets. If we start with the growth. So first of all, of course, further improvement occupancy. So the whole year last year, we were able to improve the occupancy at the end of last year, Q4, actually, occupancy was already north of 96. We think that in a balanced market situation, it can be 97-ish or up to 98. So there's still room to improve that even from the Q4 figure. But when you look at the top line growth, it's good to keep in mind that whole year cumulative figure last year for occupancy was 94.8. So even if we are keeping the occupancy at the same level through the year this year, that it was Q4 that will contribute for the top line growth.

Then positive rental growth, we've been increasing the rents for existing customers between 1.2%, 1.4%. That's the average. So for example, Tampere, where the occupancy in our portfolio is higher than average, and the market, this occupancy is high as well. There, we've been increasing the rents for existing customers already between 2% and 3%. And yes, we've been flexible when it comes to the rents when an apartment comes vacant and we start to find a new tenant there. So in many cases, we've been lowering the rents compared to the rent was before it was terminated, the agreement was terminated.

Of course, in the first stage, when the market balanced, then we start to give less of this lowering the rent cases, and the lower the cases, volumes is going to be smaller. And when the market is really balanced, that will go away. So that is one way. And then, of course, we start to increase the rents for existing tenants more than we are doing today.

And this portfolio acquisition to be closed 1st of April, of course, that will have an impact for top line growth this year. But still because the occupancy was quite low, and we are very, very confident that we are able to improve the occupancy given the in-house leasing operations and improved track record, what we have shown. But it will have an impact for the top line growth next year as well. So that plays a role for this year growth and next year growth. And then net investments. We do have some noncore assets to dispose, but when we do little more investments compared to the disposal then, of course, that will contribute to growth as well.

Then profitability. When we increased revenue that has an impact or positive impact of profitability. And we expect to have moderate improvement in net rental yield as well. So that is a positive for profitability. And then leveraging our operational efficiency. So we need only couple of new people when we take in almost 5,000 units. So that, of course, improves our operational efficiency. And then we want to have our own existing operations to be conducted more efficient going forward.

Net investments with the free cash flow, as already discussed, will have a positive impact for profitability. And then if we find opportunistic investment opportunities, we will look then from the FFO per share accretion perspective as well. It has to be positive for FFO per share. Otherwise, we are not going to do that. And then, of course, on the negative side, in profitable way is the refinancing. We don't need any additional financing going to the strategy. But when we do refinancing, the cost of new loans is higher compared to the one we are paying back.

And then risk management. Retaining FFO, whether we pay back loans or do investments that is supportive for loan-to-value, selling noncore properties whether we use it to pay back loan or do new investments that will have a positive impact. And then this moderate payout ratio is an important part of keeping the loan-to-value in line with our target.

Then a couple of notes regarding how we approach financing. So the starting point is that we want to maintain investment rating, whatever it takes. Currently, we have Baa2 from Moody's, and they stabilized our outlook late last year. And that, of course, very, very positive. When we decided the leverage target and the investment credit rating target as such. So we looked at what we think that plays for debt finance providers, and you need to have some leverage in order to enhance the equity per share parameter. So it's a combination of these 2. Of course, we looked it from the weighted average cost of capital point of view as well.

So moderate leverage already discussed. And then we have conservative but flexible interest rate hedging policy. So all the time, hedging must be between 50%, 100%. At the end of last year, it was 99%, so quite high. We have -- we use both fixed loans, typically bonds and then [ interstate spots ] there.

We have a target to have access for different sources of financing. So we want to have access for bank financing. We want to have access for point financing and local commercial [ paper ] market. That's why the portion of unencumbered asset comes into play. So we want to keep that portion above 60, and we were almost close to 80. The other way to look at this, what is the portion of secured financing, and we want to keep that below 20. And these are the results from Moody's as well to keep Baa2 rating and to serve for the investors. FX risk, we don't have any. So we operate in euros, in euro market.

Of course, this liquidity comes into play. So Moody's requirement is to have 60 months liquidity, needs covered all the times. We are in line with the target. So at the end of last year, EUR 540 million liquidity available, so cash, cash equivalents and then unused credit lines, EUR 275 million committed. And half of the loans today is from the bond market and half is from the bank market. And if you look 4, 5 years back, it's been very, very beneficial for the company to have access for both sources of financing.

Pricing is different, the availability is different and maturities seem to be different in different markets. So we can combine this 2, and that's a policy going forward as well. And our aim is to have a balanced maturity profile. So not all the loans maturing the same year. Of course, the volumes are big. So also the maturities are big as well. So next upcoming financial arrangements are actually linked to the bridge facility takeouts, the bridge facility will be drawn 1st of April at -- when we finalized this transaction and then take-outs later. And then we are looking to refinance 2027 maturing loans as well, most likely both before the summer that to be in line with the Moody's requirement from a liquidity perspective. Otherwise, we don't need to do that as soon as before the summer, but it makes a lot of sense to do that, of course, subject to market conditions.

So these are the figures behind the strategy and then how we approach our financing.

Thank you, Erik. Now we have time for questions. Please take a seat. We take audience questions, and please raise your hand. We have microphones here. If we have time, I'll take something from the chat as well.

So Anssi, go ahead.

Anssi Raussi from SEB. A couple of questions. And first, I think you mentioned that you have a chance to acquire additional portfolios if conditions are right. So can you maybe talk about how much debt capital you could use during the strategy period and what kind of role equity financing could play here.

Well, it depends like it always is. So I think it's as Erik told in his presentation. So it depends on the kind of divestment profile as well that how can we do the noncore asset divestments. We still have some room, according to our calculations, we still have some room for debt financing, not too much in a sense, and when talking about the equity financing. So as long as we meet the hurdle that we are FFO per share accretive, so then we might consider doing the kind of similar type of structure of a transaction than we did with the Varma.

I don't know if you want to elaborate.

So if you want to do the math also on the FFO side. So if you take the midpoint of this year's FFO guidance and then you deduct 20% dividend and EUR 30 million, EUR 40 million for modernization investments. So that gives you EUR 80 million, EUR 90 million for additional investments. So there's -- we can use that for investments. We can use possible disposal proceedings from those. And then if we find something meaningful size like this Varma portfolio. Then, of course, the question of additional equity comes into play as we did in this Varma transaction. But as Reima said, it's very important then to look that it has to be FFO per share accretive.

And could you maybe remind us what kind of noncore asset portfolio you have right now?

Well, Ville will come to that in his presentation in more detail. But we do have a some nonyielding assets in our portfolio. And then we have roughly a little bit over 2% of our portfolio in the cities that we are not considering as a core of our business. .

Jonathan Kownator, Goldman Sachs. So in your growth plan, obviously, from a rental perspective, first question is, can you help us understand what type of like-for-like rent growth you're envisaging given the current conditions and potentially the split between occupancy and pricing would be helpful.

Second question, do you still have development projects that you could consider or given your supply, that's not on the agenda at this stage? And what type of acquisition volume? So is it that guidance, the -- well, guidance, that volume of EUR 80 million, EUR 90 million per year of investments, that's essentially what we need to think about that is integrated in your plan at this stage?

So this, if you first take this like-for-like, I'm not a great fan of that given the fact that it's backward looking measurement, and it's not working ideally in a general situation as we've been in. But if you look at the building blocks of the like-for-like, so if you take first last whole -- last year's occupancy, 94.8%. And at the end of last year, the Q4, it was 96.3%. And we expect to be slightly improved that going forward as well. So the delta is 94.8% and something, you get that. And the other thing is that at the moment, we are increasing the rents for existing tenants between 1.2% to 1.4%. And that should go up when the market will be more balanced.

We don't know in which quarter that is going to happen. But anyway, so north of those figures is going to be rent increases for existing tenants. And gradually, we are going to give a less and less [ lowering the rentals cases ] for customers. So these are the building blocks for like-for-like as such.

Yes. So let me rephrase then. You said, I think, 1.4%?

1.2% to 1.4%.

1.2% to 1.4%, so you want to achieve higher than that on pricing?

Higher than that, yes. And then the acquisition, so yes, this EUR 80 million, EUR 90 million per year is the free cash flow, if you like, FFO-wise that we can use for investments. And it then, of course, depends whether we find something to invest or do in first stage pay back loans and invest later, of course, the capacity comes there as well. And then the...

And you would leverage that or?

No, not -- if we use FFO to pay back loans, then the capacity to take more loans is the same amount that we pay back loans. So we don't want to exceed the FFO generated by the company for investments. Then of course, disposal of it remains to be seen when we are able to, that gives us additional investment capacity. And then this opportunistic growth. We don't know whether there's going to come like Varma cases or [indiscernible] cases, but then that's perhaps another story.

And when talking about those new developments. So at the moment, the math won't work with the new development.

Okay, very clear. Perhaps one more question in terms of product mix. I mean obviously, you highlighted the studio being still quite oversupplied. Is that -- I mean, how much of the vacancy that you currently have in the portfolio linked to studios versus the rest of the mix?

Well, I would say that it's a little bit higher for studios than rest of the portfolio, not significantly higher on the other hand.

And in your new acquisition, is that the case as well?

I would say that in Varma's portfolio that we have acquired. So it's pretty much balanced with the -- with our current portfolio or similar to our current portfolio.

Simen Mortensen from DMB. Carnegie. Following up on the same questions from the previous asker here. In terms of achieving this revenue growth, 5% to 7%, can you try to quantify a bit that how much of that you can actually achieve with the existing portfolio through occupancy improvement, price improvement? This is an annual target of 5% to 7%. And how much you actually have to need to start new developments and acquisitions to achieve those targets?

So we already discussed the impact of the occupancy and rent increases, and that's average target what we set for whole strategy period. We don't need to do any additional acquisition. Of course, we can -- we need some of the FFO to spend for acquisition, but not the whole EUR 90 million, EUR 80 million we already discussed.

Okay. And you also say in the new strategy under the new name, customers centrification is much more important, one element. It sounds very generic. Can you tell us also but why is that different from before? Will it come with CapEx to improve the assets? Will there be anything different in the way you've done it before? I assume you wanted satisfied customers all the time?

Yes. That's totally true, and I have often said that to say for company presentation that customers is in the center of our strategy. So that's not very unique, so to say. But I would say that in our case, first of all, we have already a Net Promoter Score for -- measured by our customers or from our customers is relatively high, I would say, 57 at the moment. We still see plenty of room to improve that. And I think that we are already, even though the comparability with the peers are not that great. But I think we, in our industry, we are one of the top performers in that case.

But coming back to your initial question that what are the concrete measures. So I would like to take that question after the second session. So that we hope that we can illustrate with our colleagues' presentations those measures. And if not, so then we would be willing to answer your question, if that's okay to you.

I'll come back with that one. I'll come back to the other questions later.

[ Franca Rucet from Inderes. ] The rent development has been really weak in the Finnish rental market over last year according to the statistics and market occupancy rates are increasing, but slowly. If we take this as the -- like the going forward basis that the market situation doesn't improve greatly in the coming years. Do you still see that your targets and increasing the rents are achievable during this rental strategic period?

Well, if I start, and then Erik can continue. But I would say that our strategy is not built on that the market improves significantly. But of course, when you have a 3-year period, so we're not expecting either that '28 is as bad as it has been or as market is at the moment. But the vast majority of the improvement is considered to be done by our own actions.

Of course, if the market is supportive, so everybody is better off and life is easier. But we have actually demonstrated that even with the oversupply situation in the market last 18 months, we've been able to improve the occupancy. Starting figure was somewhere around 91%. And at the end of last year, we were north of 96%, and no tailwind from the market. So based on our own operations and what we are doing. So that's why we are confident that we are able to keep on that even if there's no tailwind from the market. So we think that in the midterm, it's clear that if you take the volume of start-ups and the urbanization, the market has to balance in some point. But we haven't based on the strategy on that.

The other part is that this comes -- the discussion most likely that what we are doing in customer interface. The target there is to have more satisfied customers and to be more efficient. And that allows us, actually, based on our service, our brand, our own operations to have higher rents compared to what you see in the market. So that's a very, very important part of that. So we think that we are able to do a good result regardless of the market situation based on these actions we plan to do.

And this question might be also maybe for the later section. But if we think of the big picture, thinking of the customer experience, how do you differ currently? How do you want to differ going forward compared to your key competitors in the premium segment?

Well, it's obviously the kind of -- due to lack of data, difficult to kind of compare, for example, customer experience data as such and especially when the questionnaires are often a bit different in NPS methodology as well. But we have identified in our own process, in our own customer experience kind of a certain weak spots that to fix those, we can -- we will be able to improve that customer experience. And that's why it's -- I would say that it's -- even though it was kind of a fair question earlier that what is the difference that isn't it so that you and all the others have always kind of focused on customer experience.

But even though we have, and now that we identify the kind of our relationship with our customers. So we have spotted kind of obvious points that to kind of change those so we can improve the customer experience.

[indiscernible] from Barclays. I've got two questions, please. I'll take them one by one. The first one is on your opportunistic opportunities that you're guiding to market you see. Given the change in regulation for pensions, do you think we'll see more deals like Varma going forward?

Well, it's definitely a possibility, and there's a certain driver behind the pension funds and at least the discussions which we had with Varma. So it kind of appeared to be the kind of a very good fit for them that they are not exiting the residential exposure totally, but kind of converting to a different format in case of equity at the moment and the kind of to better serve there their new regulations.

So that's definitely a possibility. Whether that will happen in our case remains to be seen. But I think there's still -- the transaction market has definitely improved or [ cheered ] up. And there's -- we see that there's kind of other sellers as well than pension funds.

Okay. So that's going to my second question. If there are more deals like this coming through. If we take a step back and we look at what you've done with Varma, I don't think the deal was accretive day 1 as it was with the occupancy that it is at the moment. And you've made a big point about deals going forward will have to be accretive FFO per share. So why was there an exception made for this deal in particular?

Well, first of all, we haven't communicated that it's not accretive either. We have said that we expect it to be accretive. So that's for one point. And I think another kind of rationale behind the Varma deal is that it was kind of a unique opportunity as such that given the size and especially, I would say, the quality of the portfolio. And I think it's a good fit with our capabilities, our competencies that we have proven last year that we will be able to kind of raise the occupancy.

Now we take last questions from the audience.

It's Svante Krokfors from Nordea. Two questions. The first one regarding your possible divestments and the definition of noncore properties. Looking at Slide 9, clearly, Lahti is the city with population decline in the coming years. Is there any other areas that you consider as noncore? Is that fair to assume that Lahti is the majority of that?

Well, we do have assets even in smaller cities than Lahti. So inside that, a little bit over 2%. Ville will go through that in more detail in his presentation, but we do have assets in the smaller cities as well, and that's definitely a noncore. On the other hand, as we have said many times earlier, so with the current market conditions, we need to be mindful that we are not kind of forcing the divestments on the market where there's no demand. So that's why it's kind of a balancing act that -- how to find proper avenues for those divestments.

And the second question might be that we return to that at a later stage also. But could you elaborate a bit on the time line and measures on the Varma portfolio and what -- or what would the time line measures are for reaching the stabilized, I guess, 95% issue level from 83%?

Well, we haven't given exact time line. I have said earlier that probably, the job is not done by end of this year, but it should be done by end of next year. So that's kind of a range that we anticipated. And that, of course, are also dependent on the market conditions. But even with the market conditions would stay as they are or even get a little bit worse. So we think that by the end of '27, it should be done.

You asked the measurements as well. So when we look at the portfolio, and of course, we knew it already before, but we looked at it in very -- in details during our [indiscernible] and dig in that if there's something wrong, if you like, in the portfolio. And the conclusion was there's nothing wrong with the portfolio. And then we think that the reason why the occupancy in that portfolio is so low is actually that they have outsourced all the leasing activities and other activities as well related to that portfolio. And they have changed their partner 3 times in 6 years.

And so I assume they are not too satisfied with the partners and their performance. And now we are taking the portfolio and we have the capacity and competencies in-house and we have the proven track record that we are able to improve the occupancy in this market condition. So we don't need to do any magical tricks. We just do keep up the good work we've been doing. So we are confident that we are able to improve the occupancy.

One more question from the chat. How is this upfront change visible for the customers? Is there any change? And how about the personnel?

Well, it's -- I would say that not that much to the customers because the customer brand has been already from 2014 Lumo. Of course, we hope that when I talked about the rationale behind the brand change, so that shows up for our customers as well more kind of a customer-centric approach and improve the kind of a customer experience.

But then, of course, for our own staff, Lumo people, it's a big change. The employer has been so far Kojamo. So that will change. And of course, the people who have been working customer interface have already felt like they are more of a Lumo people, but people who have worked in more on an asset portfolio side. So it's a change, and that's why we are actually doing it.

Okay. Thank you. Now we conclude the first Q&A. We will have roughly 10 minutes break. And we will continue webcast quarter past 11.

[Break]

So welcome back from the break. Now we have 4 more presentations coming, and we take a look at the strategic focus areas, and we start with customer experience.

Janne Ojalehto, EVP of Housing, is here today, and he tells what the customers value. Last year, we were able to improve the Net Promoter Score significantly. But is there more work to be done, how can we further enhance the customer experience.

Second topic today is data technology and AI, and Tuomas shares development projects on that. In our company, when we develop these areas, it's not just that we improve operational efficiency. But in many cases, we can see clear direct link to the customer experience.

Third topic today is our portfolio. We will hear about how this current portfolio is aligned with our strategy, how we actively manage our portfolio and how we see further growth opportunities. And to conclude, we tie all these themes to get open the new brand strategy.

After the presentations, as I mentioned, we have another Q&A, and then you can ask questions from all the management team members.

Now we can start and let's welcome Janne on stage.

Good morning also from my behalf. Niina, I think we have a wrong slide over here. So I need to -- yes, I need to roll it a bit. Okay. Sorry for the inconvenience. Nice to see you all here today. And let's kick it off with the best customer experience. Let's go back a bit. Okay. Now we have the right slides so we can kick off. Don't you worry. It's going to be all fine.

I'm going to talk to you about the perspective from how we look at the customer experience. Of course, we want to achieve the rent premium. We want to make our customers feel that they are really happy. They don't want to move out. From the international studies, you can find out that 78% of tenants show increased loyalty after a positive service experience. I think it's a big factor. 52% of the tenants are willing to pay more for a better customer experience. 65% of customer churn is driven by experience related factors, not price. So it's not price related. It's service-related. Companies that invest in customer experience can achieve up to 15% rental or occupancy premium compared to market averages. I think those are very critical factors for us and our company and for our operations.

So that's the international studies. Of course, we want to know how the customers in our market feel about the customer experience. What kind of basic factors do customers in general in Finnish market value, what they want to get? They want the renting process to be easy and quick. You can go to lumo.fi, we get great feedback from our online store, it's working well. So let's tick the box.

I would like to browse my options and get comparison. Of course, you can use the portals. We are active in the portals. We are competitive over there. Price per value should be in line with the market. That, we have seen recently when there's a lot of supply, we need to be in line, and then there's other factors that we are able to do to attract the customers to choose us. Location and public transportation options are the key. My colleague, Ville, will tell you more about the portfolio. And I think we are on the spot over there.

Well, if those are the basic factors and you're asking how are you going to generate the premium on rents. So then we are touching, I think, a bit more complex matters. We ask from 4,000 customers, our customers, customers that have left us and the potential ones. They said that the neighbors and the neighborhood is nice. How do you create a nice neighborhood? How do you make sure that the neighbors are nice, the cleanliness? Those of you are today going to visit our asset tour, I hope that you will find out that tidiness, cleanliness, safetiness has been our core factor for 2 years. I think it will show today, but you will make the comparison.

Feeling of being safe, Reima told us about the sustainability survey. Our customers feel that feeling of being safe is part of sustainability work and it creates nice neighborhoods that they love. For us, it means that we need to pick the right customers. We have been able to increase the occupancy, of course, because we're great doing sales, but still we need to pick the right customers. We are able to raise the occupancy to 99% tomorrow, but it will generate a lot of problems. You can't just play along with anyone. So we choose the best customers. We make sure that we build nice neighborhoods. It takes a lot of time and effort, also data, but you're able to do it. So I would say it's a balance between occupancy and expectations and time consumed.

How do we meet the expectations? You could see from the strategic slides that our core value, one of those is happy to serve. It should show in everyday interaction. And I think we are proud to say that employee satisfaction score is high. So it shows that we are actually doing the right work, and it will eventually also show to our end customers. We systematically train our people and partners. Two years ago, we had some issues with the maintenance companies, and we were not sure what was the problem, but actually, we find out that it's basic training, it's bringing our values to their work. We are able to do it, and now it shows as a higher NPS score.

Lumo Service Center, that's state of the art in Finland. We are able to resolve tickets 24/7. Of course, it's not labor intense during the night times, during the evenings. But there are AI-based chat functions in place at the moment that we are able to solve around 50% of incoming chat messages through AI.

We have AI-assisted platform crunching data from our customer feedback. That's really great. And we are moving towards the operations that we are able to forecast what kind of issues we are going to have to tackle within 2 weeks or 1 month or 2 months.

Lumo.fi and My Lumo Services receive very strong customer feedback on a monthly basis. I'm very proud of the platform. Of course, there's a lot of things to do. We see a lot of improvement through AI. Tuomas will tell you more about those.

And what is in the pipeline? We are moving towards an AI-driven omni-channel customer services based on solid data platform. We realized that that's the key factor if we are going to be successful. And then we are in the point that we are able to tackle a lot of customer-related issues end-to-end without so much labor intense.

What are the key metrics for our operational excellence or customer centricity? The number one, we want to maintain now and in the future. We want to be #1 when we compare our admin plus marketing expense to revenue. We are now on a good level, although we're going to get a lot of new very nice apartments. For our potential customers, we are able to maintain the same levels.

NPS is very high. The comparison between companies is, of course, a bit difficult. But I can tell you that where we are at the moment, we still see room for improvement, and we have been able to identify the little process pieces that we need to improve so that those sections inside the NPS that are now dragging a bit will be higher.

Fastest sales cycle from termination to new contract. In our business, it's the key for a successful renting process and getting customers in very fast after termination. We are able to track on a minute level when the termination comes in, when are we -- when it's online to be rented, when it's going to -- when we are going to do the first showing and when the actual deal is closed. That's a key factor. We are really interested in good new potential customers. Our goal is to take the sales lead, be able to send the offer and set up the showing within the same business day.

So how we do it, how we keep it, how we keep the investments so that we don't spend too much on all of this. We see the picture so that we keep the expertise in-house. So resident management, basic sales functions, second-line customer services. So that's the tricky ones, not the easy ones, but the tricky ones and also renovation management.

Because we do have a lot of seasonalities, for example, summer or the peaks during the end of month, weekends evenings, we need to outsource, and we outsource those volumes that don't require the expertise. So there's maintenance and cleaning, scalable sales resources, churn detection and win back actions, that's also a new function that we are now piloting and it's running quite well, and also first-line customer services. So that's the basic issues that we tackle every day.

So I would say. Of course, when you set up a new building, you build a block building, you build it for 100 years. But from an operational excellence, from customer experience point of view, you need to operate it 24/7 on a minute level.

I hope most of you will join the asset tour today. You will see our people in action. You will see different kind of apartments. And the most wonderful thing is that you are going to see the new refurbished Lumo One lounge and get to see the scenery and a little bit bite to eat. Thank you.

Now I will hand it over to Tuomas.

Hello, everyone. A seamless customer journey enabled by data and technology and AI. Janne mentioned that we are targeting to further improve our NPS. We are targeting to further accelerate our lease cycle from termination to new contract. And we will further improve in -- when it comes to admin and marketing costs per revenue. Technology can genuinely improve customer experience and operational excellence. And let's have a look how.

Some background facts. First of all, our processes at Lumo Homes are highly digitalized already. This means that there are no papers flying in our core business processes, hasn't been flying for a long time. To give you an example, we started digital signing already in year 2012. So we have been digitally signing rental contracts and lease agreements already 14 years.

Another example is that we have been having a so-called offer automation in place already since 2023. This means that when a sales representative schedules a showing, our rental ledger and customer management system starts automatically analyze the most potential leads and start automatically send offers to these leads and invite them to the showing.

Janne mentioned that we have top-notch digital services to potential customers in lumo.fi, and we have feature-rich functionality to our tenants in My Lumo services, 91% of our tenants are utilizing the My Lumo services, and there are awful lot of functions that they can use and that provide value for their everyday living.

And the lumo.fi, we have been providing, as Reima already showed in his slides, we have been providing a so-called direct renting functionality already since 2015. And the digital NPS in lumo.fi portal is really tremendously high. For example, last month, the NPS level was 94. And there has been even months where the NPS level has been 100. So it's really a smooth way to browse available vacant apartments and perform a direct trend.

Then we have identified a number of business improvement possibilities. This means that Lumo has put together a so-called enterprise architecture plan. Enterprise architecture plan might sound complicated, might mean something that I don't understand or something difficult, but it's not. Lumo's enterprise architecture plan is actually a description how the core functions operate. And moreover, most importantly, it is a list of business improvement ideas per process area.

We have put together this kind of a plan, how we can improve our operational excellence and customer experience. And for that, in order to achieve those targets to achieve those business improvements, we utilize technology. And naturally, when it comes to our architecture, we have like commercial software solutions in place. We are operating in the cloud, have been operating quite a while already in the cloud. We do have customized bespoke functions and functionality and information systems in place as well. And we are actively already utilizing AI, and I will further elaborate on that.

And we are prepared to invest in AI, in digitalization and technology. And we will be doing so steadily during the strategy period. And the investment figures are already included in the strategy figures that Erik was presenting.

A company that rents out EUR 7.6 billion of apartments relies on new technology. That's us, Lumo Homes plc. The main financial newspaper in Finland, [indiscernible] made an article about us, about our advanced way of utilizing technology. I will tell you about our existing AI footprint, how we utilize AI already today. Then we will address what we have in our development pipeline, what kind of an AI and other technology solutions there will be.

I have picked up an AI framework from Digia plc. This framework is just like depicting what is it that AI is good at, for what AI can be utilized in a company. We see that AI is good at in knowledge management, you can do analytics, classification, forecasting, anomaly detection and so forth. You can utilize AI for process optimization. Similarly, you can improve customer experience and customer service. And naturally, there are also so-called daily aids that are helping and assisting all the employees like more generic AI functions.

So now let's have a look what is it that we already have today. How are we benefiting from AI. I will not go through all of the areas where we utilize AI, but I will pick and choose some of them. And let us start from the knowledge management area. There, we have a machine learning-based pricing tool. We have been utilizing our pricing tool already since 2018. Then if we move to the right to the process optimization, I can pick up an AI optimized heat controlling solution. That is a win-win-win solution from many perspectives. Lumo Homes save in energy costs. The energy providers save and reduce their energy peaks, thanks to forecasting and prediction. And our tenants get better living conditions in their apartments when we have an advanced system forecasting the warming needs. And naturally also the environment wins in this kind of a setup.

Then I could mention more. And actually, we have been running this AI optimized heating already since 2017. But then let's move to the bottom right corner and talk about lumo.fi and My Lumo chatbot functionality. This is a fairly recent new introduction. We introduced our Gen AI-powered chatbot in June 2025. And that was like the time of the year where we have the sales peak, which is absolutely the busiest time of the year for whole Lumo, and also a very busy time for our service desk and contact center.

When we introduced the chatbot and utilized and used the chatbot for 3 months, we learned that the amount of live chat requests from the chatbot forwarded to a person working in the service desk. We managed to cut down the number of live chat requests with 60%. So with the introduction of new Gen AI powered technology, the amount of manual charts to be performed by our service desk, they had 60% less chat requests. And when there were 60% less chat requests, our service desk, our contact center was able to focus on other incoming requests, that there were lots of requests coming in as it was the high sales peak season. And we were able to run through the whole summer with a record high NPS levels in our contact center. So this is a concrete example how technology contributes on improving NPS.

There are many other things as well, but I will point out the lumo.fi apartment agent. There's even a small picture on the right bottom corner. So the lumo.fi apartment agent is a machine learning-based solution developed by ourselves for registered customers in lumo.fi portal. The purpose of the apartment agent is to engage customer, is to recommend and find the most suitable dream Lumo Home that suits the customer needs. And our apartment agent has been doing so since 2023.

Why do we try to engage our customers in lumo.fi? Well, there's a good reason for that. Our statistics, our web analytics show that our registered users who have locked into lumo.fi, they convert really much better to lease agreements. They actually convert 678.4% better than the nonregistered users. That's a good reason to engage customers, to personalize, to provide extra services for the potential customers.

And there are many other areas as well. I will not go into the details, but AI is really enabling a lot of things when it comes to near real-time customer experience analysis, which we do already, and we have development possibilities for that as well. But rather than focusing on the current state, what we already have, what you might have already heard, let's have a look to the future. What is it that we have in our development pipeline that might be cool and fancy that might even be changing some of the game happening in real estate business.

First of all, when I talk about development, as there are real estate professionals among us, I do not mean a property development. I mean development of Kojamo's processes and services. And again, I will not go through all the areas, but first, I will focus on the ones which we are developing and which are currently in an implementation phase. Typically, you can divide development into 2 stages. There's the first stage where you analyze, where you define the idea and kind of analyze that, is this good, do I have a business case, does it make sense to implement it?

And then the latter phase of the implementation that when you have discovered the idea, you have defined the idea, you have found the business case for the idea, then you actually implement it. You code it or you configure it. You test it and you deploy it to be used by the potential customers or our tenants.

So now on this slide, we have like the ones which are in the implementation phase. And a good start with the process optimization area with the apartment inspection and enrichment of the property data area. We have a cool AI-powered tool under development that will be used for apartment inspections. We have been running a pilot with this tool. We have been inspecting almost 300 apartments with the tool. We have learned that the tool is easy to use, can be learned quickly by our housing managers. And the data shows that they are at least 20% more effective than compared to the current situation. And this is a fairly conservative estimate.

So when we sum up this 20% improvement in apartment inspections, if we would be running with a new tool, the whole year 12-month period, that would sum up to 1,600 hours of time saving. We can perform 1,600 hours of more apartment inspections with an improved and enhanced technology. And that's not all. We are working to further develop the tool to be used by our tenants for move-in and move-out inspections. We are targeting to be in a situation that 30% of our apartment inspections will be carried out by the customers themselves. This sums up 2,400 hours more of time saving.

And even though I'm talking about time-saving and hours and so forth, the most important factor, the most important thing with the apartment inspection is actually having to do with the customer experience. Janne was talking about the importance of having clean rooms and so forth available when new tenant goes in. That's the most biggest gain that when the apartments are properly inspected, then that will positively impact on our customer experience.

Then we also do an improvement in the area of pricing. There are certain dedicated AI functions there. We are doing development with AI agents, and we do have dedicated functions. For example, we developed the way how our tenants contact Lumo. So when the tenants contact Lumo utilizing the My Lumo digital services, have identified very concrete use cases where we can make advantage of Gen AI to make our like customer experience to be more smooth and moreover, the process of handling the customer requests and conducts to be more effective. And naturally, we also further expand the usage of everyday tools like M365 Copilot to our employees.

Then a few words about development items that we are working with, which are in the first phase of the development cycle in the analysis and experimentation phase. We have already implemented so-called RAG implementations. RAG implementations stands for retrieval augmented generation. Roughly speaking, it means ability to make AI to talk with our information systems to make the AI to be knowledgeable on the information that resides in our information systems. And when we have a RAG solution in place, we can make our AI chatbots and others to interact based on that information in our operative information systems. And that will enable a better customer experience that will make our customer issues and contacts to be resolved regardless of the time and place immediately when they happen. Naturally, RAG doesn't send out a technician to be at the apartment. But many of the contracts that we get into our company are not technician related. They are like simple questions as well that need to be answered.

Then briefly, I will mention that not everything is AI. We are developing a lot. We have a long list of business improvement ideas, and some of the business improvement ideas will be implemented utilizing traditional technology. To point out some. First of all, there's an area to further develop when it comes to optimization of field tasks. The tasks that are happening on-site at the property. The work that our sales persons, the technicians, housing managers do at the property. We have seen improvement potential there.

Likewise, we see that business improvement possibilities reside also in the area how we order renovations and various other orders and how we handle the related invoicing as well. And also cool stuff will be coming when it comes to our lease and sales automation activities. We can fine-tune our operations and better leverage the technology that we already have in place.

So to sum up, what I can say is that we are utilizing AI a lot. It is providing business value already today. I have given you an overview to some of the real concrete use cases that we are working with that will really resolve real business problems, like very concrete AI use cases. And at the end, I mentioned that it's not all AI, it's also traditional technology development. And this is the way how we make our NPS to be better, how we accelerate our sales cycle, and how we make our operational excellence to be more advanced.

Thanks. I will hand over to Ville Raitio.

Good morning, everyone. Fantastic to be here today in the new fancy Lumo colors. Let's switch gears and talk a little bit about investments and the way we're approaching investments from a customer-centric mindset. I'm going to touch up on 3 areas. So let's talk about the investment strategy first. Where do we see the growth opportunities and how do we go about implementing that growth.

Secondly, I want to take an example out of our existing portfolio. We run a big portfolio. And we need to be very efficient over the strategy period in terms of making sure that we operate the portfolio in the best possible way. So I have one case study to talk about there. And I think that brings together the way we also run our CapEx program in a nice way because we've been able to both find ways to enhance the NOI, improve the customer experience. And then finally, improve the ESG profile of the portfolio. So we'll get to that in a minute.

And then finally, it wasn't so hard when I was putting the presentation together to think about what else should we talk about in terms of growth. And that's, of course, the Varma portfolio that's got a fair bit of airtime already today. So a little bit more color to the acquisition. That's going to be closing in around 15 days. And also then really to kind of acid test the portfolio approach as well because we'll be talking about how do we go with the asset selection, how do we go with the portfolio buildup, and then we can contrast it next to what we've actually done just recently.

So when we then look at the investment selection, we say we want to be able to provide the right homes in the right locations. To be able to do that, we need to answer 2 questions. So first of all, which cities do we want to be in? And then secondly, where, in what micro locations within those cities we want to be?

Which cities is, in a way, maybe the easier part. We want to be where the customer is. So we want to be in the larger cities. We want to be in the growing cities. So for that -- that, for us, that means being in the Helsinki Metropolitan area, so Helsinki, Espoo, Vantaa, and then the other large cities, Tampere and Turku.

What about the micro locations then? This is then more about what the customer wants. So we want to be where the customer wants to be, where there are good transport connections, good services, good shop. We look at nature and recreation. And then, of course, at the asset selection and more from an investment viewpoint, we look at the ESG profile of the assets.

So then for the first 3 items, we use geospatial data. So we have data on the whole country, and we're able to look at all these metrics in a consistent way across all of the assets that we already own, but then also as we're evaluating new acquisition opportunities.

And then finally, as it comes to ESG, the key issues there would be the EPC rating of the properties, but then we'll also look at the carbon footprint of the assets and what we can do with the assets. And so if this is the question of where then the question of how, the #1 thing when we are looking for the new investments is to ensure that we'll be able to provide FFO per share growth with the acquisitions. We look at other things as well. We look at price per square meter, we look at yields, both going in, stabilized. We look at total returns. We contrast that to our average cost of capital. So we do a lot of work in terms of the analysis.

But if you -- we should think about where do we see the opportunities and how we categorize them. The first and perhaps the obvious one is the direct acquisitions of standing assets. So either individual assets or as in the Varma case portfolio. So that's where we still see opportunities. I think there are pension funds who are still thinking about with the regulation changes, what they should do with their real asset portfolio, what they potentially should do with the apartments that they own. There are special investment funds that have stayed long closed for new redemptions. So perhaps there are opportunities on that side as well. So we continue to look at what's available in the market, and we continue to talk to the main players in the market.

Secondly, if the primary way to grow is through existing assets. The second one would be what we call portfolio intensification. So where we essentially can generate new building rights and therefore, find attractive investment opportunities. From a return profile viewpoint, this is highly attractive. The downside is that it's not very scalable. So we see right now, and we'll probably be able to share more details during this -- the course of this year about 2 opportunities in Helsinki. But again, compared to the overall portfolio, not a scalable opportunity but an interesting opportunity nevertheless. And again, part of the active asset management work and part of the development work that we do.

And then finally, kind of the traditional model of buying projects from construction companies or from developers. We see a lot less opportunity there. And 2 main reasons for that. First of all, pricing. So it's not really attractive compared to what we can buy in the market in terms of the standing assets. So that has to change for the projects to be more attractive to us. Then the second thing is that it's a drain on the balance sheet. So you put a lot of capital to work. You go through the construction for, say, at least 18 months and only then you'll be able to get to that FFO growth that we were talking about. So not really on the agenda for today. But if this is the approach then, how does the portfolio look like compared to that? I'll do a little bit of explaining about the chart here, and let's start.

With what the different axes are actually telling us. So the horizontal one is the easy one. So that is the long-term population growth estimate. So again, like I said, we want to be in places where the cities are growing, so all good there. The second line, the vertical one. This is an index calculated by a consultancy, MDI. So they focus on the health and attractiveness of municipalities, and the index that they are calculating this brings together a lot of, let's say, qualitative data in terms of the number of businesses, education, income level, employment level. So we'd like to use that because again, it gives a slightly different flavor to just plain growth, but it qualifies the growth a little bit. So that's why we use these axis. And as you can see, we stop at 60. So the index goes from 0 to 100. So there are municipalities that drop out below that line. And equally, there are municipalities that have population decline. So that's clearly not in the strategy.

And what you see then in the bubbles is the size of the existing portfolio. We've added the Varma assets already here. So you see that the portfolio is about 95%, 96% where it needs to be. We have the remaining slightly more than 4% of the portfolio in significantly smaller locations. As we discussed earlier, we're looking to sell those assets. We expect to work on some of the disposals already now during the strategy period. But if I should contrast, say, '26 to '25, where in '25, we did a significant disposal. There's probably less in terms of the volume during '26. But again, we take an opportunistic view there. So if an opportunity comes along and we can make the numbers work in a sensible way, of course, we're open to business also on the disposal side.

So that's where we are with the portfolio. And if we should then turn the view to looking at what we do in terms of the active asset management, I'll go back to some of the ESG themes that we already discussed in the first presentation with Reima, purely from a portfolio management viewpoint. We are really focused on these 3 targets. So reducing the carbon, the CO2 emission of the portfolio. We already set a target back in 2020 that we want to bring the emissions to 0 by 2030. We've done about 60% of that work. So we're on plan. Of course, we know that the final years will probably be a bit more challenging than the first ones, but it's looking good. And I think we will have a good chance of bringing the CO2 emissions down even further.

The second thing is energy efficiency. So not only is it about emissions, but it's also about the energy consumption. We are part of a national energy savings agreement where we are targeting to reduce the emissions in the scale of that agreement for the next decade. And then finally, reducing water consumption.

I'll share the case study in terms of the water consumption, but just to put that into perspective, if you look at our overall maintenance expenses, water and wastewater is about 15% of our maintenance expense. So it's quite significant. And if we can do something about bringing that cost down, that's obviously great news for the portfolio.

So there's the case study. This is really about an idea of bringing water metering and then charging water fees based on the consumption into a big part of the portfolio. So if you think about the conventional way of doing this, if you rent a home, go to Lumo's website today and you'll be in the new home tomorrow, we're going to ask how many people are moving in with you because we want to know what to charge for the water. So you pay EUR 27 per person per month. So it's a fixed fee and then it's free for you to consume as much as you want. So there really isn't an incentive for our customer to try to save on the cost.

We've looked at this idea in the past as well, but then the technology was quite expensive. So it just didn't make sense commercially. But at the same time then, when we talked about the occupancy increase already, so that's part of the drive with the increased consumption. But we saw that this is being a growing cost for us, and we wanted to do something about it. So that's where we wanted to move into introducing the water metering.

So right now, you can go to My Lumo and see -- that's the picture on the right-hand side, see what the consumption is, both the hot water as well as the cold water, and then you actually pay for what you use. With this, and we know because we've done this across around 2,000 units already and are in the process of now getting all the 13,000 done by October. We know that we can get to a 30% reduction in the water consumption. We know that we can add another EUR 2 million, close to EUR 2 million annually on the NOI. And that's on the back of a EUR 5 million investment. So if you do the numbers, that's quite attractive at the end of the day. And then for the customer, it's actually fair. So you pay for what you use. If you have someone next door who sort of keeps the tap open all the time, it's no longer your problem, and it's no longer Lumo's problem either.

And then finally, with the solution, we're able to meet that 5% reduction target by 2030. So there's a lot of important things that come together from a technology viewpoint, from the customer service viewpoint, from the profitability as well as then for the ESG with this solution.

Let's sort of spend the final part of the presentation and then talk a little bit about the Varma portfolio. I think most of you will recognize this slide from some of the earlier presentations, but if we should just start from the right-hand side and look at the portfolio composition. So we just talked about the strategy we talked where we want to be, and we are about 98% in the large cities. The other 2.5% these in places like [indiscernible], Jyväskylä and Lahti, but very good micro locations in those cities as well. So overall, a very good fit if you think about the geography and if you think about the cities of the portfolio.

In terms of the construction year, about 60% of the apartments built in this millennium and then the older stock, especially the one where you would expect a bit of CapEx, sort of the ones built in the 60s, 70s, 80s and 90s, that's a smaller share of the total about a quarter. So a lot to like here in terms of the portfolio quality.

The acquisition will be accretive to FFO per share growth. So again, that's an important starting point for us. We talked about the locations. The quality of the apartment is actually very good. And we'll be able to leverage and scale the operating model that we have already now. So that's very attractive to us, and that's part of the transaction and the rationale as well.

And then finally, we are well positioned to assume that lease-up. So the portfolio at the time of acquisition is around 83% let, and we have a good plan and a good approach to bring that occupancy to a stabilized level where the rest of the Lumo portfolio is.

And just a little bit more in terms of looking at the assets. So we talked about the attractiveness. This is only the Helsinki assets, which is about 25 assets or 2,000 apartments. Espoo is here on the left-hand side, there will be assets there as well, but let's focus on just Helsinki for the purpose of this slide.

So the green snake there, for those of you visiting Helsinki, that's the metro line. And then the red lines show the main rail connections. And again, a lot of assets in the southern part of Helsinki in very nice, attractive central locations and very good transportation connection. So again, the portfolio, when we talked about that, this is a very good match from a strategy viewpoint, this is really one of the features that we are talking about with the portfolio.

And then finally, let's wrap up and look at the actual assets. I'm a real estate investor so I couldn't avoid doing that. So this is just a selection of assets in Espoo, Tampere and Turku, very attractive locations, for example, the Espoo assets, that's really next to the metro line. So great transportation connections. And then when I talked about the micro locations previously, this is where you now see it in action. So we have a score for transportation, for the services and nature and recreation. So this is part of the geospatial data that we use as part of our investment analysis.

Now don't get too confused with the scaling because the way it works that, for example, with transportation to get 6 out of 6, you literally need to be at the Helsinki main railway station. So you get the train, you get the metro, you get the tram, you get the buses. So it's adding up all the different modes. Even if you get a 2 out of 6, that means that there are sort of 2 different transportation modes. You might get buses, you might get trams, but that's still 2 out of 6. So don't get too confused about that. But I really wanted to show this example so that you get a bit more understanding in the way of how we work with the actual investment selection and then also on the micro level with the assets.

But with that, I hope I've given you a good overview of the investment strategy, the way we approach the market, the opportunities that we are seeing. And I will hand it over to Katri to talk about the Lumo brand. Thank you.

Over the last 2 hours, you have heard all of the elements, strategy and targets, operations, portfolio growth and technology. And now I will show how One Lumo brand will bring all of this together. Until now, we have operated with 2 brands. Lumo as a consumer brand and Kojamo as a corporate brand. And now we are unifying these together into one unified brand, Lumo. Like Reima said, this is not just a branding exercise or just name change. It's obvious that one brand reduces complexity and one brand strengthened the link between customer value and asset value.

Before looking ahead, it's good to understand where we are today. Lumo is already a strong brand. It has been built brick by brick over the last decade. And today, Lumo is the most recognized, the most trusted private rental housing brand in Finland. So this is a really good platform to start the next phase.

We see that our role goes beyond providing homes. Just like Reima said, Finland's growth depends on vibrant cities and people's ability to move. And this requires safe, flexible and sustainable housing solutions. And as One Lumo, we can contribute more strongly. And I think that when Lumo is present in broader societal topics and discussions, it builds trust. And this trust supports customers' experience by making it easier to choose Lumo.

We want to be known as a bold shaper of urban living. Like Janne showed, our customers want a fast and easy renting journey and drive value for money. So Lumo brand is the promise, and our customer experience is the proof. And from the customer's point of view, value is simple, freedom to move, freedom to adapt in different life situations and possibility to live in the right place at the right time.

Being closest to the customer. This is not a slogan. This is how we work. And at the moment, we are really developing our internal culture. Our customer experience is something what you see and feel in every interaction with our customers and residents' every day life. And 1 brand us to deliver this in a consistent way in everywhere.

So last page. How do we want to be known? We are bold shaper of urban living. We create freedom and flexibility for urban life, and we are always closest to the customer. And when all of this comes together, it is what One Lumo stands for. Value for society, value for customers and investors, and value for employees and partners.

Thank you. And now I will ask rest of the management team back to the stage.

Thank you all. Now we have the second Q&A, and there is still time to send questions also by our chat, if you like. But let's start with Jonathan.

It's Jonathan Kownator from Goldman Sachs again. Interesting presentation on AI and how you're using AI right now. So the first question is from here on today, what do you -- are you able to quantify the impact? Or do you have a target impact in terms of using AI to, I don't know, margins or whatever it is, how you want to quantify that? But can you help us understand the impact on your business that is going to have?

And the second question is, there was obviously a difficult occupancy patch over the last couple of years, obviously, oversupply. But the key question is do you have an understanding perhaps of when [indiscernible] into the operational processes that you had in place because as you have been highlighting, you've had technology for quite a while. So what have you changed in your operational setup and perhaps in your technology approach or AI approach to take care of that?

Well, would you like to take the first one?

Yes. So there's a disappointment coming. So I'm not giving you any figures. But when we start this type of development, regardless of what these ones we are starting, we always make a business case and look whether it's beneficial. And I need to be -- we need to see the money as well. So whether it's more turnover, whether it's cost savings or whether it's creating more efficiency in our own operations. And that's obviously the target.

But if you put them all together, so I'm not able to give you any figure at how much cost savings, so how much more efficient we are going forward when we do all these things. How we see this is more a holistic way, if you like. So we do believe that if the service is there and the brand is there and we are more efficient and we use AI for wherever we can. So we are able to get higher premium in rents. And that's the key. So we have tried to do the math and put a number for that. And that's something we are not able to do. But we are confident that if you put all these together, that means that we are able to take care of a bigger portfolio with the same employee amount, same head count or even less headcount, be more efficient and provide a better customer experience, and that allowed us to charge premium rents and have higher occupancy.

Okay. So if I summarize that, you expect both a revenue impact and a cost impact?

Both actually.

You just don't have a figure for us?

Yes, exactly.

And if we go to the lifting up the occupancy and if I understood correctly your question that how we're going to kind of utilize the technology on that. So I would say that technology is obviously one thing, especially in our kind of webstore, so to say. So how kind of good platform is that the rent apartment. But I would say that, for example, last year's performance, even bigger was a bigger factor was the kind of changing the sales process overall. And then when talking about technology, as Tuomas talked about the pricing tool, and we are still developing the pricing tool so that it would be as dynamic as possible. So these are the kind of factors that directly affecting the occupancy, and it's a very good performance in last year.

Okay. So pricing tool. And so in the sales process, what else have you changed beyond the pricing tool?

Well, I don't know if you want to, Janne?

Yes. I can elaborate a bit. So we have worked a lot on the sales culture side, also done a lot of process work, also set up new meters, how we do efficient sales. I think there's a lot to do still, but we've been able to check all the seasonalities better. We are actually monitoring the sales leads on minute levels. So I would say, process, culture and attitude, those are the 3 key factors.

John Vuong from Kempen. So talking about this premium to market averages, you are really focusing on customer experience. Just to quantify it, what's the premium that you're seeing today? And what's -- do you see scope to increase this over the next 3 years?

Well, at the moment, we are receiving roughly 4% premium from the market overall. And then comparing to kind of a similar institutional landlords, it's roughly 1%. It has been a bit higher due to -- when the market was better. We are not giving you a figure that what is our target, but it's definitely higher than we see the potential that it could be much higher, the premium. .

Okay. Clear. And looking at the platform overall, you're saying there's scope to run more apartments, say, investment opportunities aren't there. Have you looked into more capital-light approaches, for example, third-party capital management, their externally managed apartments for others. You mentioned that Varma had 3 different external managers. It sounds like you can do it better. Is this something you've explored?

Well, I would probably word explore is that we have explored, but kind of very initial thoughts, and we concluded that at the moment, we are not enlarging our scope. But that's, of course, in a future opportunity. But I would say that at the moment, we have plenty of doing our own operations to set up the kind of a platform in a kind of a top-notch condition. And then because we also wanted to make it this 3-year strategy period, so that we are not dependent on the market conditions as such that we are -- we can execute the plan, even though the market improves. So that's why we wanted to keep it relatively, how would I say, focused and simple. And that's probably a later stage thinking that whether we want to enlargen the scope overall.

Anssi, go ahead.

Anssi Raussi from SEB. So if you look at your digital and AI capabilities and talk about physical assets, are there any differences between older buildings and new buildings, how you can source data and adjust your way of doing things, for example, this heat controlling in these buildings?

Yes, if I should take that. No, I don't think that it's so much age related. So a lot of this, for example, the heat controlling solutions that you are referring to, that's actually where we see better opportunities is precisely with the older stock to improve. So it's not necessarily directly age related.

And as you have a lot of data, can you utilize this data, like externally, for example? I think you had at this cooperation with [indiscernible], at least at some point. So do you have these kind of opportunities?

Yes. So what you're referring to is this when we use the heating solution, we generate a lot of data on the heating needs of those apartments. And then that's valuable for the district heating company. So what we've been able to actually do is I talked about the CO2, zero CO2 emission targets in 2030. And we've been able to use that data as kind of a, if you like, bargaining chip with the district heating companies that, hey, if we're able to share this, and of course, it's not -- you can't recognize anyone. So GDP are everything good. But we can use the data then to actually get free of charge, the CO2 neutral energy.

So that's been -- it's one of these examples that you start working on something, which was initially just focused on energy saving. But then it has this spin on FX that, hey, actually, you can use the data in different ways that you didn't think about in the beginning when you were making the investment case. So a good example.

And maybe I could also add that when it comes to achieving these targets, what we have been presenting, it's not only managing the property data. As Janne was presenting, we are building the apartment. The house is for 100 years, but we operate 24/7 on a minute level. This operation is more like the tenant behavior, potential customer behavior, the market development-related data that has less to do with the properties themselves.

And one final question from me. So we have seen these cities where you want to operate in. And we have seen this Finnish Rental Market Day that we had actually quite a nice trend of declining number of available rental apartments for some time. But it seems that this trend has somewhat stalled during the last year. So what kind of headwinds do you see in this, your core markets today?

Well, I don't know if it's -- I don't know if we have considered that the headwind has gotten stronger in -- so we do not share that view, but probably the kind of favorable development has stalled a little bit. I think there's probably a couple of reasons behind that. One is that even though the construction or residential start-ups have been in a relatively low level, especially on nonsubsidized area, but there has been a relatively decent amount of a subsidized production in residentials. So that has probably affected somewhat given the fact that actually the macroeconomical situation in Finland has gotten worse in the last year or 18 months, which has affected that probably more people are eligible for subsidized apartment as well.

But then it's good to bear in mind that actually the legislation is going to change. And actually, the new start-ups for subsidized construction will come down this -- already this year and probably next year as well. So that will kind of -- that's why at least in my estimation is that the kind of new startups in residentials are lowest this year than the last 3 years.

Simen, go ahead.

Simen Mortensen from DNB Carnegie. A question on the strategy. One thing I don't find in the strategy, and you have done this last year is share buybacks. Clearly, one of the most profitable thing you can buy at the moment would be your own shares. Why are you talking about buying assets in the market? Why is that not included in the strategy? Again, please elaborate a bit on why you haven't mentioned that on stage today?

It was actually there in our dividend policy. So we have an opportunity to buy back our shares as well. We haven't decided a new program. And that's -- but that's definitely a tool for our capital allocation as well that what we can use. I think there's a little bit of a kind of a perspective or time line of that, whether if you look at on the long run, like we tend to do. So then the market offers properly relative decent opportunities to acquire assets as well. And then on the other hand, if you do the buybacks, so whether it has kind of an effect on share price or not. But we truly understand the yield math behind the buybacks, and that's why that was the one reason why we did it last year, the EUR 75 million, roughly EUR 75 million buyback.

But it still -- will still be in the toolbox, if I understand you correctly then?

It will. Yes.

There's a lot also of things happening in the world at the moment, far especially in the Middle East, impacting energy costs. We've seen interest rate movements spiking in recent weeks. You're talking about divestments also. How do you think this one can impact the strategy to divest? One thing also, you have a bridge financing after the Varma transaction. Are you hedging that position at all, given the recent movements in interest rates? Or how are you handling those risks and that risk factors?

Well, if I take the first kind of take out, of course, we have to look at that if we do the divestments that what would be the kind of most value creative way of using those funds. And in a case that interest rate level would be kind of permanently rise, for example, or what is permanent in this current world, but in the medium term, so to say. So then it would be, of course, one alternative to use those funds for paying back the debt and what is -- when discussing about the bridge funding of Varma deals. So we haven't particularly hedged that interest rate, but we have plans to take out relatively soon.

And to fall back on the first question from earlier, the customer satisfaction CapEx, for instance. Is that -- will that be at the current level you have? Or will you upgrade your portfolio, especially on the new assets? Do you see any changes to that?

Well, it probably will rise a little bit. But not in a meaningful way in a sense that -- you always have to be careful when you talk to analysts that we are going to invest something in a customer experience and then you pencil in the millions of -- but for example, those -- if we talk about the technological investments that Tuomas presented. So yes, we have to spend a little bit more than we have done. But it -- I would say that not a meaningful way. I don't know if you have a better non-answering answer?

Perhaps I'll follow suit not giving you any real answer. But of course, these investments in digital development items are booked as part of our SG&A expenses. And we penciled in the total amount, so including head count and all these investments and we expect the SG&A expenses going forward to be slightly more than it's today. And I'm not going to give any figure for that slightly, but...

My job is asking you.

So if you pencil in let's say, inflation plus something. It's that perhaps give at least some color there. So not a big thing, not a big time, but some increases there. .

I could shortly also mention when it comes to technology investments. The business improvement list that I was mentioning is a long one, but there are really different sizes of development activities. Some are small, some are bigger. We have already seen that some of the development items that we have introduced have actually cut down our cost level, that has actually cut down our technology spending. So it's not only like CapEx investments needed, it's also more like an advanced way of operating with that technology.

[indiscernible], Barclays. I did appreciate all the insight, that was really helpful. My first question is to you, Reima and Ville. Did I pronounce that correctly, Ville? I know that you are not keen on construction anymore, and that kind of makes sense given the current environment of interest rates. But what is the yield on cost that would make you want to go back into construction again? And what needs to change for the economics to work again?

Well, good question. I would say that we, first of all, we haven't totally ruled out them because, as Ville mentioned in his presentation, so we might have some, for example, some plots or some assets that we can utilize the extra landing -- construction permits there and then it makes more sense. But in general levels, so we have -- if I give a rough estimate, roughly 20% cap at the moment comparing to acquiring the assets. So at the moment, it doesn't look very, very kind of...

So that would be above 8% yield on costs, is that correct?

Sorry?

That would be above 8% yield loan cost? You think that would be doable? Because you used to build on 6.

Yes. Well, I would say that probably 8% is not it is not correct. The -- how would I say, overall yield and the cost level of a construction hasn't come down that much as you would anticipate. And it's actually pretty hard to say why is that, but it is what it is, and that's why it's roughly 15% to 20% more expensive to the start-up.

I don't know if you want to elaborate a little more.

Yes. Maybe a different way of looking at it is I talked about a couple of projects that we're now looking at in terms of the portfolio intensification. So what happens there is that we essentially get the land almost for free. But that's roughly in the same ballpark as this 15% to 20%. But what I would add is this kind of the extra strain on the balance sheet then with having that construction project going on. So that kind of adds on to it. And so that's why we're not just looking at it as a yield on cost measure.

Okay. I think that makes sense. Over time, you guys implemented a big cost reduction program and that led to departure or reduction in headcount. And I was wondering if that was quite focused on the construction team and that's the reason why you don't want to do construction again anymore?

No, not really. I think we start with what makes best sense and what's best for the investment strategy. If we thought today that it would be constructing, then that's what we would be doing. And we would -- it's true that we have a rather narrow team now but it's the right size to what we're doing. And if we thought that it would be a better deal for the shareholders to ramp up that team and ramp up the development pipeline, then that's what we would do. But we don't think that that's the case today.

Right. So the key word is consolidation, you want to consolidate the markets?

Yes.

And I think it would be the kind of fair to say that for our construction team as such. So we haven't gotten rid of that competencies totally. So we still have that competencies in place and the team in place. It's just much lighter team than it used to be.

So a couple of additions, if I may. So it's not about all about net initial yield. But of course, you need to look how much you are able to increase the rents going forward. That plays a very important role when you do these decisions. And one thing is that when you are in oversupply in the market, so perhaps not the wisest thing to help that is to start to build new product. And then if you just look today, so if you are able to acquire a good portfolio, good properties, net initial yield of 5. And you take the burden of development and first, you invest and then you start to enjoy the cash flows in later, as Ville explain. Today's cost of construction, you might get low 4s, and you get quite new product with 5-ish if you acquire something. That's today. It may change, but that gives you an idea that the construction cost today need to come down between 15% and 20% to even match what you achieved just acquiring quite new product from the market.

Well, Erik, I'm glad you mentioned rental increase because my next question was going to be for you on the guidance. So you've mentioned a rent increase of 1% to 2% for this year with the aim of getting to, I believe, 3%, 2% to 3%. And for the medium term, if we look at the top line guidance of 5% to 7%, how much of that is actual rental growth price increase?

So the rental growth as such is in this year's guidance is 2-ish percent.

2-ish percent. Okay. And for the medium term?

And for medium term, it is slightly more than that.

Sorry, can you quantify that? 2.5%?

Between -- we like wide ranges, so between 2% and 2.5%.

Fred from Inderes. For Tuomas, first, maybe this question, how much are you developing your AI tools and other development like in-house compared to buying from the service providers, for example, the AI chatbot?

We are utilizing external service providers a lot, but we also have in-house developers operating our business support systems. And there, we also do like experimentation. And I was actually giving some of the examples that are being done by our internal team. So it's a mixture of both.

Yes. And then Janne mentioned in your presentation that you can -- like from the termination to new tenant, you can do it in one business day. Could you tell like what is the average time around here? And how much upside do you see in this current?

I can't disclose the actual time, but I can tell you that we see that if we are able to tackle 90% of new sales leads within the same business day, it generates a lot of new lease agreements, opportunities, and we are seeing that in our conversion. We also track down very carefully the termination apartment inspection. And when we publish it on our online store and the conversions are going up. So I'm very glad that we are concentrating on that process part of our termination to sales to agreement.

Any more questions? Svante?

Svante Krokfors, Nordea. Two questions there related to each other slightly. But could you give -- I know it's difficult, but a rough estimate of how much of your occupancy rate improvement, say, over the last 18 to 24 months has come from more dynamic pricing of apartments coming available and customer satisfaction that has gone up and reduced the churn?

I think it's really difficult to quantify that what has been actually the factor. Of course, we can look at that the churn figure has come down. And if you calculate that to the occupancy. So it has also a meaningful effect, but also the pricing dynamism has definitely affected.

I don't know if you have a better?

Yes, I'm sure it's a combination of several things. So it's dynamic pricing. It's how we manage the operations. We have more staff working evening hours and during the weekends, and we have established a team in our service center to support the renting operations. And our repairs are more focused on supporting the renting and all these things that Janne already explained.

So I'm confident that if we didn't do all these things, we wouldn't be able to improve the occupancy like we did. So of course, the dynamic pricing plays a role there. It's an important part of that. But if we did only that, I think the result has been -- would have been very, very poor. So we needed all these things. So it is impossible to say that this amount came because of this action and this came because of this action. But I'm confident that it required all these things I mentioned.

And then relating to that slide, you mentioned that your premium to market rent is 1%, 4%, depending on how you define it. What was it back in, say, summer 2024 when your occupancy rate was at the lowest in your opinion?

I think it was at least double.

And you intend to take it back there?

Our intent is to go beyond that, so have more. And it was 1%, 2% if you compare to institutional investors pricing. But if you look at the total market, so it's already perhaps 4-ish, so it's much more than that compared to only a couple of institutional players. And we want to be clearly higher than that.

Any more? Seems that no more questions. I think we could move on to closing remarks. What would you like people to take home from today?

Well, as I said in the very beginning, so the kind of initial -- our initial target to accomplish today was that you guys would kind of figure out that there's kind of a strong connection between delivering the best customer experience and value creation.

We know that and we have tried to kind of concretize the factors behind the -- also the operational excellence and the kind of customer, improving customer experience. We do know and recognize and understand that there's -- we are not able to disclose every component and you are not probably not been able to put every figure into your Excel spreadsheet that how it's going to affect. There are some parts that even we don't know the magnitude of it, but it's -- we are kind of confident that this will be the right way, and this company needs to be run like a proper business where the customer creates value and not just kind of taking care of the portfolio.

And that's the kind of an important message and hopefully, we have been able to give you an idea that what are the concrete measures behind our strategic focus areas, and we are now here to deliver those targets. So we have plenty of work to do, but we are, as I said, we are confident that we can do it. Thanks a lot for your interest.

Now we're going to end the webcast. But if you have any questions coming up later on, please contact Investor Relations team. Thank you, everyone.

Good morning, all. Welcome. This is Kojamo's Full Year Results webcast. I'm Niina Saarto from Investor Relations. Today, we have 2 presenters. We have CEO, Reima Rytsola; and we have CFO, Erik Hjelt.

We will first present last year's results and the outlook for this year. But then we have interesting news we want to share. We have, after the review period, announced that we will acquire a big housing portfolio. And shortly, we will tell you more on that. Additionally, this morning, we announced updated strategy and financial targets for years '26 to '28. We will also present this briefly today. So lots of topics coming. We have a Q&A after the presentation, and we take both live questions and questions via chat. I believe we can now start the presentation.

Thank you, Niina, and a very good morning on behalf of me as well. We have had very exciting 24 hours here in Kojamo and happy to tell you the latest news as well. But we start with the Q4 and the whole year '25 results. I think it's fair to say that we had a strong quarter behind us the last quarter of '25 and the kind of total revenue and net rental income grew in the year '25. FFO decreased the whole year due to higher financial costs. But for example, Q4 FFO was already increasing.

Our balance sheet is still strong, and that enabled us as well to enter the transaction market, which we will tell you -- which we did tell you yesterday evening and tell you more about later this morning. But I would say that the key highlight of the last year in Kojamo was definitely the very good development of occupancy rate. And the last quarter occupancy even rose to 96.3%, even though the seasonal effect is always a bit of a kind of a burden in rental market as a last quarter of the year.

Our like-for-like rental income also turned clearly positive at 2.6%. We have previously communicated that it's a very backward-looking indicator, and we haven't seen that fitting that well in -- especially in a turnaround situation, which Kojamo had with the occupancy rate, but that's definitely kind of proving as well that our development has been really good on that side.

Also, the Net Promoter Score was 57 and improved from last year. As I said already earlier that our strong balance sheet enabled us to kind of enter the transaction market and back to the growth path as well. And we still see that our financial position is very strong. And we get back to the latest acquisition and new strategy in a later stage of the presentation.

The operating environment, first, if we take a kind of a macroeconomic view. So we've definitely seen a kind of improvement in Eurozone. Even global growth has improved. Finnish economy is still muted. We do have some signs whether they are weak or a bit stronger, but we do have seen some signs of a recovery now. Hopefully, that will carry on. We don't know that yet going to the rental market as such. So there's definitely oversupply still, especially in the capital region.

We haven't kind of -- the balancing of oversupply has somewhat postponed still, and it hasn't eased up. We kind of repeat the kind of confidence that we have in the medium term and then long term that it will balance out because of the fact that actually the new start-ups have been already 3 years, very low level, especially non-subsidized market, but even on new counting on subsidized market, and it's forecasted that actually subsidized market will come down this year due to legislation changes.

This statistics is forecasted that actually private start-ups or nonsubsidized apartment start-ups would increase in forecast-wise, even doubled from 4,500 to 9,000. We actually are not that optimistic. We think that on '26 on nonsubsidized side, the market will be kind of very muted in the new start-ups.

So all in all, the kind of mega trends that are backing up the rental market is that the urbanization is kind of continuing and kind of population growth -- population is growing all the time in the biggest cities and with the match of a Kojamo's portfolio and with the addition to the new acquisition, which is even more concentrated on this growth triangle, Helsinki area, Tampere and Turku area. So it's very well fitted to the kind of demand that the population growth and urbanization will create in the future.

I will skip that and due to the fact that we have plenty of news to cover. So I would like to ask Erik on the stage and just to kind of highlighting the last figures of last year. So especially the kind of FFO was very strong in Q4. Having said that, we have to bear in mind that December was very warm, which the January and February hasn't been so far in Finland, but that was improving the net rental income as well. But all in all, I would say that kind of a very solid quarter for Kojamo and very kind of a very good year to '25 in a sense that -- I would like to say that we are kind of a backing business in a sense. Erik, please.

Thank you, Reima, and good morning, everybody, from my side as well. So Page 11, top line. So top line grew EUR 2.8 million the whole year 2025 compared to 2024 despite of the disposal that we made during the summer. And Q4 growth was EUR 1.9 million negative compared to Q4 2024. Net rental income grew EUR 4.8 million the whole year compared to previous year. And Q4 last year, the net rental income grew EUR 1.6 million compared to Q4 2024.

So repairs, the whole year repairs were in line with the previous year and Q4 repairs were EUR 1.5 million less than in the corresponding period. Maintenance side saw EUR 2.1 million down from the corresponding year whole year and actually EUR 2.1 million for Q4 as well. And biggest items driving the changes in maintenance expenses, so heating EUR 2.8 million down. Actually, the weather was quite mild, both during the first quarter and fourth quarter last year. Now it seems to be more cold and snow is coming nicely down as well.

And credit losses down by EUR 1.3 million, electricity down by EUR 0.6 million and waste management EUR 0.3 million. On a growing side, so water expenses was up by EUR 1.2 million, maintenance EUR 0.6 million and cleaning EUR 0.6 million. And of course, these growing items, they are because of the higher occupancy. So customers are spending more water or using more water, and we need to clean a little bit more because there's more customers. So that's actually a positive thing.

So Page 12 on the right-hand side, our FFO. The whole year FFO down by EUR 7.3 million. But if you look only Q4, so it's already on positive side, EUR 0.3 million. So whole year, net rental income contributed EUR 4.8 million. SG expenses increased by EUR 0.4 million and then financial expenses is the biggest driver, bringing the whole FFO figure whole year down. So FFO expenses grew EUR 8.9 million.

Occupancy improved. So very strong performance there. Whole year figure up by 3.3 percentage points, ended cumulative the whole year figure 94.8%. We are extremely proud that the Q4 figure was already 96.3% and actually, it increased even from the third quarter despite of the seasonal effect in the market. Our tenant turnover came down 1.8 percentage point, and that's pretty much driven by our all-time high Net Promoter Score.

Like-for-like, as Reima already explained, so we are not great favor of this KPI in a general situation because it's really backward looking. But as anticipated, now the impact of occupancy rate is very, very strong, positively strong, and that's driving the whole like-for-like rental income growth to 2.6%, and the impact of occupancy was 3.7%. The impact of rents and water charges, negative 1%. So we are still increasing the rents of existing tenants, 1.2%, 1.3%, Q4 actually even more -- slightly more than that. But the negative impact is coming through because of the fact that we are more flexible what comes to the pricing in renting. So that is the driver behind the negative figure. But I said, impact of the occupancy very, very strong there.

Page 15, investments were on a low level. So we have only ongoing development project, 119 apartments, and that will be complete actually by the end of this month. And as already said, we made this disposal, larger disposal in July. Modernization investments increased close to the EUR 30 million the whole year. And the driver there is that we started a couple of new bigger modernization investment project and repairs, EUR 24.1 million as in the previous year.

Then Page 16, value of investment properties. We didn't change actually our valuation parameters. So valuation remained the same and the slight negative impact came through because of the modernization investments actually. So the money spent there is negative. And once the project is completed, then most likely a slight positive figure coming through there.

Loan to Value coming down. So moving in the right direction in that sense. We are very happy with the current level. And then Page 18, our financial position has remained strong. In autumn, Moody's actually affirmed our Baa2 credit rating and stabilized our outlook. We are very happy with that. Net debt down more than EUR 200 million from the corresponding period. Cash and cash equivalents including financial assets at EUR 239 million, that covers nicely all 2026 maturing loans. So the next refinancing is to refinance 2027 maturing loans. Perhaps we start to address that before the summer, but we have plenty of time to do that.

Financial KPIs remain stable. So average interest rate, same as in Q3, 3.2%, and coverage ratio 2.4 and to make our figures more comparable with our peers. So our coverage ratio, excluding repair expenses, 2.6.

And then equity per share and EPRA NTA, not that great excitement there, very, very flattish. And then Page 20, outlook for this year. So now we estimate that top line is going to be between EUR 484 million and EUR 497 million, and we estimate that the FFO is going to be EUR 147 million to EUR 157 million. And in this outlook, we have taken in account the acquisition. So the acquisition of 4,761 apartments, and we estimate that, that transaction will be completed 1st of April. So that impact is included in this outlook.

Otherwise, in the top line growth, if you look at the midpoint of the top line growth guidance, so there we estimate some improvement in occupancy, moderate rent increases and still flexible in new rents. And then, of course, the FFO guidance echoing the range of our top line guidance. And now back to Reima.

Thanks, Erik. So yesterday, we -- yesterday evening, we announced that we have signed a deal with Varma Mutual Pension Insurance company to acquire 4,761 apartments. And here, you can see on the slide the kind of breakdown of a split on geographical split and also the split between the kind of -- by the construction year. It's 60 properties. And as you can see that 75.5% of those properties are in Helsinki region and Helsinki region plus Tampere and Turku is 97.6%. So this is kind of a super good fit for our strategic scope and only 2.4% in Lahti and Jyvaskyla, where actually we do have real estate apartments of our own as well.

So we signed this deal yesterday. And as Erik said, that we expect that to close on 1st of April. The debt-free transaction price was approximately EUR 900 million. And the transaction will be paid partly through directed share issue to the seller and with the subscription price of EUR 1,186, so close to 24% premium to market price.

We also have signed a EUR 600 million bridge facility with the Goldman Sachs, Nordea and Skandinaviska Enskilda Bank. And so we are grateful for those counterparties and those banks for our support in a very important acquisition like this. And we have planned to take the acquisition facility to take out with the debt capital markets financing.

Then the transaction rationale. Well, of course, this is a unique opportunity and very sizable portfolio and very -- both sizable and also very good portfolio. As I noted and [indiscernible] mentioned the split between the construction years. So it's worth of noting that in the 2000 and later constructed buildings are the far most majority of the portfolio. So we think that this is a very kind of a quality portfolio. And this will kind of position Kojamo on a growth path again.

Also, it's very positive that Varma as already existing shareholder of Kojamo is kind of -- demonstrates confidence to invest even more in Kojamo and even with the kind of premium price to market price. This transaction as such kind of demonstrates very well the operational leverage that we have in Kojamo as a platform. And we kind of -- there will be kind of a marginal incremental costs to kind of absorb this sizable portfolio, and this will definitely improve our EPRA cost ratio.

We also have systematically developed our sales and pricing process. And I think those kind of improvements have been verified already last year when we were able to raise our occupancy significantly during the year. And that's why we are actually confident that even though the portfolio has relatively low occupancy at the moment, so with our kind of organization and with our capabilities, we are in a very good position to improve that and to kind of stabilize the occupancy in a similar level than Kojamo overall has.

We also think that -- or expect that this will be FFO per share accretive deal and the yield -- stabilized yield of this transaction is approximately 4.9% and stand-alone as a 4.9%, not including the premium price to be paid for the shares. And also the LTV is expected to remain lower than 45%, which is our new strategic target for LTV. So all in all, I would say that very comprehensive and well-structured package.

Then a couple of words of our strategy and we will -- I will be relatively brief with the strategy. We have booked already and we have sent already the invitations. We have 17th of March, the Capital Markets Day. So we want to kind of leave something there as well and be much more concrete on our strategy on that side. But on the high-level side, as I have many times communicated during last year that this strategy will be more of reviewing the current strategy or existing strategy and make the tuning for that.

And our mission is still to create better urban living. But the kind of focus points where we want to kind of further improve is to build a seamless customer journey enabled by data technology and AI. We have plenty of initiatives going on there, a truly customer-centric portfolio renewal and growth and the transaction I just described is, of course, a concrete example of a growth. We want to have kind of the most capable and dynamic professionals in the housing market, and we want to build the industry-leading operational excellence and strong contribution to sustainable urban living. And with all these kind of initiatives or focus areas, we aim to deliver the best customer experience in a housing market. And this will kind of crystallize in our brand promise that -- which is simply the right home, help us [indiscernible] in Finnish.

And this whole strategy is backed very well with the megatrends, especially the urbanization. And we think that, as I already described the kind of a trend effect on housing market and the urbanization is continuing all the time here in Finland and even on an accelerated pace or the pace is more speedy than our peer countries, for example. We have been kind of lacking on that trend a little bit in recent years, but we are at the moment, catching up. And obviously, the Finnish growth will kind of require mobility of workforce, and that's why the kind of operating and dynamic housing market is one key parameters for that.

And the kind of a new technology and the kind of new solutions to help and improve both the customer experience and operational excellence. So you need to have a scale enough to kind of be a market leader on those solutions to provide to your customers. And we think that we have that scale, and we are very well equipped in a sense to kind of answer those needs or opportunities.

But all in all, I would say that one of the key themes is that this strategy will further kind of -- further focus on customer experience and put customer in the center of our strategy. And that's -- I would say that it's -- of course, it's not revolutionary, but in the real estate business overall, it's often very, very kind of asset driven. And we see that actually kind of serving the customer best possible manner, you will be able to kind of charge a premium rents and bring down the churn and create value to our shareholders.

Then all of these focus areas are, of course, leading to the financial targets that we have renewed. And our new growth target is average annual growth of the total revenue from 5% to 7%, Net Promoter Score to be bigger than 65, and as you probably noted in the previous presentation that it's 57 at the moment. Then on profitability, average annual growth of FFO per share is 3% to 5%. And then on a risk management perspective or balance sheet perspective, so we target the LTV to be lower than 45%.

Also, we have renewed our dividend policy and our objective is to be a stable dividend payer whose annual dividend payment and/or share buybacks will be at least 20% of FFO, provided that group's equity ratio is 40% or more and taking account the company's financial position. So we also see that actually the -- to kind of grow the cash flow and to grow the FFO per share, it requires a little bit more of a capital. And with these market circumstances, I think it's best for shareholders to kind of cut down a little bit of a dividend policy and to kind of be more creative on cash flow side in the future.

And then last, but definitely not least, so as you probably noticed already from our invitation to AGM, so our Board of Directors proposes the name change to Annual General Meeting, and we will accelerate our strategy execution with one brand strategy. And the name will be Lumo Kodit Oyj, Lumo Homes plc and the kind of brand will be Lumo. So similar one brand strategy. And this is not just a name change or even kind of a brand rehearsal as such, but to create a very customer-centric culture here in future -- hopefully, future Lumo that AGM will decide it so that our focus is in customers, and we are kind of very united as an organization as well.

And also to kind of even further strengthen the brand power with the one brand strategy. I think that was pretty much in a nutshell of both the acquisition that we announced yesterday and also a brief wrap-up of our strategy. And as I said that we definitely would like to give more color on the 17th of March of CMD. But I think it's now time to Q&A.

Thank you. So now we can start with questions coming over the phone line. Do we have any?

[Operator Instructions] The next question comes from John Vuong from Van Lanschot Kempen.

Just on the portfolio, why has the occupancy been so low compared to market occupancy as well as your own portfolio? And how do you expect it to be different? And over what time frame do you expect to reach the more normalized occupancy?

Well, I think it's good to ask for the seller that why it's actually so low. So we haven't identified any kind of specific reasons. Probably sometimes the pricing hasn't been as dynamic as in this current market it has to be. But I would say that we are kind of optimistic that we will be able to kind of lift up the occupancy in a similar level than our own.

How fast that will happen? So we haven't we haven't kind of released or given information of a specific time line, but we, of course, be mindful that how to kind of balance the pricing and so on. But we are confident that we will do it in probably not this year totally when we start -- able to start the kind of 1st of April, but I would say that latest by the end of '27.

One additional note, if I may. So during the diligent process, of course, we wanted to have a clear view on the portfolio and the reason for are there any specific reasons why the occupancy is so low, but we didn't find anything there because we think that the portfolio is high quality, great location and there's nothing wrong. So it's a very high-quality portfolio. One thing may be behind that. We, of course, don't know it, but they have outsourced. I mean, the seller has outsourced all renting activities and that might play a role in the fact that the occupancy is where it is.

Okay. That's clear. And when you're referring to dynamic pricing or that pricing has been as dynamic it should be, looking at that stabilized annual rental income of EUR 63 million, I assume that that's probably already at market rents and so adjusted for the dynamic pricing?

Yes. That's our view of the market rents, yes.

And then when you're referring to refinancing the acquisition facility via capital market debt financing, is it fair to assume that you're using plain vanilla bonds? Or could you also be looking more exotic instruments?

So we haven't decided yet. So in the capital market, there are several productions and -- products. And of course, we are looking at them. So we'll come back to that later stage.

The next question comes from Andres Toome from Green Street.

A few questions from my side. Firstly, on just your thinking around how you look at these acquisition opportunities? And maybe you can explain what sort of metrics do you focus on and what made this specific portfolio attractive for you? And I guess, linked to that, how do you think about your cost of capital when you look at where your share price is trading at around 5.3% net initial yield roughly. How does that feed into your thinking about external growth?

Well, I think, first of all, if we start -- I don't know if your question was concerned on general kind of portfolio market. But if I comment on this portfolio, especially, so obviously, the kind of quality of the assets were one key part of that portfolio acquisition and which made it from our perspective, very interesting. And as I said, that the geographical split is kind of optimal to our strategic scope. And then again, the kind of assets seem to be in a good condition and relatively kind of young assets.

And then a question of cost of capital and Erik, you might correct me if you disagree, but we have kind of tried to build this as a comprehensive package. And if you calculate all the aspects of both the yield of our asset portfolio as such on a stabilized basis and then kind of the financing with the premium subscription to market price. And then again, of course, the kind of future potential for kind of rent hikes as well. So we think that this is kind of a compelling package as such.

And is it fair to say that it's presented as a premium subscription, but ultimately, Varma will just get [ more ] shares. And yesterday, the share price was EUR 9.5 and I see it opening at EUR 9.9. So isn't that the right price to look at the equity component really, which would also mean that actually the yield on the acquisition is actually better as you presented it?

Well, it's -- I would say that -- I don't know if there's correctly right or wrong answer how to look at it. But I think in a sense, you're correct that you can view it in a many way and depends on how do you want to calculate. But I don't know if you, Erik had...

Well, there's -- I would say there's no right or wrong approach here. But definitely, if you issue shares with a strong premium, almost 24%, and if you look at the spot figures, of course, you may want to pencil in your calculation that as a part of the positive things as a whole transaction. And that -- of course, that was a very important part of the total package. But I'm not saying that you should do it, but there's good ground to do so -- to price at the premium against the purchase price.

Okay. Understood. And maybe then on your sort of medium-term guidance now on revenue growth of 5% to 7%, which translates into FFO growth of 3% to 5% FFO per share that is. Maybe you can just explain how does that work? So is it the case that the financing headwind is quite meaningful there that there's sort of negative spread between revenue growth and FFO per share growth? Or how are you penciling that?

That's exactly the reason. So we penciled in that the cost of -- we don't need additional financing on top of this transaction, but refinancing plays a role there. And definitely, the cost of refinancing the new facilities is higher compared to what we are replacing, and that plays a role there. So of course, with today's figures, but indications from the banks for just a reference for 5 years bond market is coupon for 3.6% and something.

So that's -- whether it's that figure or slightly higher or lower figure is clearly higher than those loans in those bonds that we are refinancing. So that's exactly the reason why the FFO is not growing that much as the top line growth. But it's still positive, and our aim is to grow FFO per share.

And then my last question is just on the announced long-term incentive plan as well and the targets there, they are still very much earnings focused. And I guess, especially when I look at the total revenue target, it is perhaps a big question and maybe makes the management team be incentivized to pursue sort of external growth. And I guess my question is, was there even consideration of tying the compensation package on LTIP to total shareholder returns such that, that incentive plan is also commensurate to what your shareholders are getting in terms of returns?

Yes, I would -- just to kind of elaborate that there was, of course, in discussions of many kind of angles and how to kind of define the parameters. The conclusion of our Board of Directors is that actually, to achieve these parameters, they would definitely drive the kind of shareholder value as well. So they are aligned with the shareholders. And I think one key change was that the FFO is now FFO per share growth.

And one additional note. It's good to keep in mind that in our -- the earnings potential is decided as number of shares, and it's number of shares set today. So in 3 years' time, if the share price goes up, the earning potential euro-wise is actually more. So in that sense, actually, the management is incentivized to drive share price up. So in that sense, it's already included in the system.

Right. So the FFO per share then, I suppose that would not -- or the starting point is 2025 share count, right? Is that correct? And then the new shares that will come into issue with the acquisition would sort of almost be a drag to the earnings potential here, so making it more aligned perhaps with shareholders.

So this FFO per share target is including last year actual figures and [ Jupiter ] and it's built on top of that. So yes, you are right that if the growth is driven or supported by share issues, then the management need to look what is the impact for FFO per share. And that's a very important part of the LTA KPI package. And I think it is important -- the FFO per share is important because it's cash flow item. And because it's per share, it takes into account if the amount of shares changed.

Right. And just to confirm, the starting point for that FFO per share calculation is 2025 share count?

It's beginning of 2026.

Yes. So before the portfolio acquisition share addition, right?

So the acquisition is included in the targets.

The next question comes from Svante Krokfors from Nordea.

A couple of questions left. The first one regarding your LTV. I guess it goes quite to the -- close to the 45%, which you -- in your new strategy, want to keep it below. Do you target some kind of disposal still to improve the LTV? I guess there could be some valuation headwinds on residential markets in '26, if there's, for example, the open funds that will sell assets. So basically, I mean, what do you -- do you have some plans to secure keeping LTV below 45%.

Yes, we aim to keep it below 45%. That's for sure. So that's why we kind of took it as a financial target. When it comes to the disposals, so we do have plans to further focus our portfolio. So what does it mean that obviously, we are looking for opportunities to kind of sell noncore assets. But as I have said earlier that that's kind of very much of a market -- you need to take into account the market circumstances as well and be mindful with that, that you are not pushing kind of illiquid assets in the smaller cities for a kind of -- as a forced seller. So that's why we need to be patient, but that's definitely our aim to kind of focus the portfolio further.

And then regarding the FFO guidance, what assumptions do you have for -- I mean, the EUR 600 million facility that you will take from 1st of April roughly. What should we assume regarding the interest rate on that? You talked about the bond assumption of 3.6%. Is it similar?

When we decided this guidance, we penciled in the price for takeouts based on today's indications -- or actually last week's indications, but today's indication.

Okay. That's clear. Then regarding the -- correct me if I'm wrong, but I think you paid around EUR 3,800 per square meter for the Varma portfolio and your average own valuation is EUR 3,550 roughly. Does that reflect the age structure? What was the biggest difference there?

I think it's -- there's both. Of course, age split is one thing. And then I would say that even further is -- or even bigger significance is the geographical split.

The next question comes from Celine Huynh from Barclays.

I've got 3 questions, please. The first one is on your new target. To get to your new total revenue growth target, I'm assuming you will start new construction given the weakness of the market. So am I right in assuming further portfolio acquisition? And in that case, Varma has agreed in this instance to take some shares. But for the next acquisition, do you think you will have to come to the market for equity to keep your LTV below 45%? So that would be my first question.

My second question, simple. Can you just confirm if you see the transaction accretive on day 1, even if you do not increase the occupancy rate? And my third question is how did you agree on the price for the new shares issued to Varma? How did you get to EUR 11?

Okay. If I take the first one, so the kind of further revenue target. So of course, the portfolio acquisitions are kind of one tool to achieve that revenue target. New start-ups are also one. But as you very well pointed out, at the moment, it looks like that the market doesn't encourage that much to make new start-ups and you get a better yield from -- with the acquisitions.

And then with the kind of a possible raising of equity. So I think it depends on obviously, the terms, and that's why the kind of financial targets are combined with the revenue growth and the FFO per share growth. So that's kind of have to be FFO per share accretive the transactions as well if the kind of equity funding is kind of planned to be used, which plans we don't have at the moment.

And then a second question was about the FFO. So can you repeat the question number 2, so...

Yes. It was -- can you confirm if the transaction is accretive on FFO day 1, even if you do not increase your occupancy rate?

What we have said that we expect it to be FFO accretive. We haven't said that it's FFO accretive in day 1. We haven't either said that it wouldn't be. So we have said that we expect that to be FFO accretive.

As a whole, I guess the question is, as you rightfully pointed out as well, the market is not in a great shape at the moment. So I guess we're in the right to ask what if you can't increase the occupancy, what happens? Is it still a good transaction?

Well, we actually think that it will be a good transaction. But of course, we -- our aim is to kind of raise the occupancy as fast as it's wise and doable. But then again, I would say that given the fact that even though the occupancy would be higher and if the market is really bad, so the occupancy might drop and then so on. So that's why we actually think that the kind of the transaction is good at the moment according to our view.

Sorry, can you get to my third question, which was on the share price that you agreed with Varma?

So we agreed with the seller that what is the premium. And then we agreed that the price is going to be based on 10 last trading days before the signing. So then we just did the math when we got the figures.

Sorry. So I guess my question was, how did you agree on that 24%?

So we agreed that with the seller and it was normal business negotiations.

[Operator Instructions]

The next question comes from Neeraj Kumar from Barclays.

So just a quick one on my side. Can you please help us understand what's your current margin on the bank loans? And what is the all-in cost on those financing? And how does that compare with the current bond market financing for you? You have a lot of debt maturities coming up over the next couple of years, including the EUR 600 million acquisition facility. So just wanted to understand if you plan to increase the share of bond market debt in your debt stack?

Average cost of financing at the end of Q4 was 3.2%, and that includes the cost of derivatives and our hedging is quite high. And the indication from the bond market, as already said, for 5 years maturity last week was 3.6% something. So that is the key figures actually.

Yes. My question is the marginal financing from the banks today. If you were to access the bank market, what would be 5-year all-in cost from banks?

The indications from the banks for bank financing is pretty much in line with the indications from the bond market.

And do you have any preference in terms of like what's the ideal split between those 2 financing, just to understand how you're looking at this over the longer period of time because your average debt maturity is like around 3.1 years now. Would you like to extend this? Or do you think that's the comfortable level for you guys?

So for us, it's important to have access for different sources of financing. So we want to have bond financing, and we want to have bank financing as well. Today, our preference is actually on the bond market, given the fact that you can get longer maturities there, and it's unsecured as this bridge facility as well. But these are the reasons why today, preference is towards bond market.

There are no more questions at this time. So I hand the conference back to the speakers.

Thank you. I think we have gone through most of these questions coming via chat, but a couple of questions about the acquisition. What kind of key initiatives do you plan to do with the vacant apartment? Do you have anything concrete you can mention?

Well, I think that, as I already in my presentation said that we are confident that our sales and pricing process are kind of a proper tool to kind of solve this vacancy issue in this portfolio. And that's -- I think that's pretty much what we have done in our portfolio as well. with the last year. So it's active sales and marketing, obviously, and then dynamic pricing, and we need to kind of assess apartment by apartment that how does that price reflects to market price, and that's pretty much about it.

How about -- do you think there's a lot of CapEx needs for those properties? Or do you need to repair those vacant apartments?

I would say that the CapEx needs are very much in kind of a calculated path and with a similar or in some cases, might be even less than in our current portfolio. So we -- and the apartments are in relatively good shape. Of course, there will be apartments as well that you need to repair, but we don't expect anything kind of extraordinary on that side compared to our current portfolio.

About the outlook for 2026. What is the contribution from the acquisition to the revenue and FFO?

So we haven't actually disclosed the split. So we penciled in the transaction assuming that the closing will be 1st of August and then these are the total figures...

1st of April.

Sorry, 1st of April, and that's why we released the total figures.

Okay. And final question. Did you have any discussions with Moody's prior to the acquisition? And if so, what were the key topics you discussed?

We discussed with Moody's this transaction, and they know the key parameters and what the structure look like. And they say that they don't see any specific topics related to this transaction.

Good. Thank you. That was it. So Q1 report, we will publish that in May. And as we mentioned, we will have this Capital Markets Day coming on 17th of March. We are really excited to have that, and we have already opened the registration for this event. It will be in Helsinki at Finlandia Hall, and you are more than welcome to join in person or of course, there's this webcast you can follow. The whole management team will be there presenting all these topics more in detail and all those there's a possibility to see some of our properties following the event. So we wish to see you all in March. Thank you very much. Bye-bye.

Thanks so much.

Thank you.

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" Kempen & Co. N.V., Research DivisionKempen & Co. N.V., Research Division

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" Goldman Sachs Group, Inc., Research Division

Good afternoon, ladies and gentlemen, and welcome to Kojamo's News Conference. I'm Niina Saarto from Investor Relations. Today, we have two speakers, our CEO, Reima Rytsola, starts with key highlights for the period and with the operating environment. And then CFO, Erik Hjelt, continues. We're going to hear more about the financial development. We have Q&A following the presentation, and then we take live questions and questions coming via chat. 

Now let's go handing over to you.

Thank you, Niina, and very good afternoon on behalf of myself as well. We released an hour ago of our Q3 results, and happy to say that it was a solid quarter, even though the market conditions are still more or less challenging, even though kind of a bit improving. 

I think the highlight, again, on this Q3 was the kind of recent occupancy rate. We had a very good performance and our occupancy rate raised in Q3 to 96.1%. We also, due to that fact, were able to kind of grow our revenues and net rental income. And also the leakage that we discussed last quarter in Q2 that net rental income didn't grow as much as revenue. We said at that time that we see it as a seasonal adjusted issues there, and it remains to be true. And this time, the net rental income grew in the same pace than revenues. 

FFO decreased due to the fact that the financing costs are way higher than last year, and repair expenses are a bit higher than previous year. The balance sheet as such is in a strong shape. And we -- during the quarter, we closed the sale of close to 2,000 apartments to Apollo funds, and we kind of paid our debt for EUR 200 million and launched also the share buyback. The market as such is still, as I said in the very first sentences, is still kind of in a challenging mode, but I think we have a slight or minor signs of improvement, even though the kind of recovery has postponed already many times. 

One very positive topic for Kojamo during the Q3 was as well the -- that Moody's affirmed the Baa2 rating for us, and that's very kind of an important factor for a company like Kojamo that its financing capabilities remain very solid. 

We also started the strategy review. But as I said already in Q2 release that we expect that to be more of a revising of our current strategy or tuning the current strategy, not as such as a totally new strategy. Then if we talk about a little bit the operating environment. So the economical growth in Finland remains muted, even though there's slight optimism in different kind of forecasts. The global economy is more optimistic, and also the Eurozone. But in Finland, the unemployment has risen lately. And all in all, I would say that our equity story can't build on Finnish economic growth as such, but more of an operating environment in the context of supply and demand in the long run. 

So as we can see here in this graph, so we can note that the residential start-ups are still very low in Finland, and especially the nonregulated or nonsubsidized apartment start-ups have stayed low level. And there's some kind of rumors or initiatives that the legislation will change in subsidized apartment buildings as well. So we see how it develops, but it probably will come down in the future as well. So in a sense that if we have kind of a basic need for 35,000 new apartments in Finland, and even though you might question that whether it's a correct one or should be 30,000 or 35,000, but still given the fact that our start-up -- new start-ups level has been less than 20,000 for three consecutive years now. 

And even though there's some forecast that it will pick up in the next year, but it won't be significantly higher. So it's easy to say that it's definitely underneath the kind of constant need for apartments as such. And why the need is still there? So in the biggest cities, the population grows constantly, and the immigration is obviously a big factor of that. And the kind of a megatrend that is backing up the story -- equity story here in Kojamo is obviously the population growth. 

One thing that has been in discussions that is why the supply-demand balance out taking so long. Probably the one reason is that even though immigration has grown a lot in the last 3 to 4 years in Finland. So the number of households hasn't increased at the same pace as population growth. So that has been one factor that has kind of slowed down the melting process of supply. 

Kind of old story as such, which we have been explaining for quite a long time, but more than 97% of our portfolio is 7 biggest cities and the urbanization and the population growth overall is in big cities are supporting the Kojamo's portfolio locations. And here, we can see that it's kind of a very, very good fit for the urbanization process as such.

Overall, I would say that this quarter, as I described it was solid. I think in, how would you say, if you take a comprehensive view of our results, so all the factors were performing as expected. As I said, the market conditions haven't eased up significantly, so the performance of our own has been good in Q3.

So I would like to hand over to Erik now, and then we can go to Q&A.

Thank you, Reima, and good afternoon from my side as well. So Page 12, if you look at the total revenue first. So the total revenue grew EUR 4.8 million year-to-date compared to 3 quarters last year. And the Q3 growth was EUR 0.4 million compared to Q3 2024. The whole improvement actually came through because of the improved occupancy. It's good to keep in mind that because of the disposal we completed at the end of July, it has an impact on the top line of EUR 3.7 million. So we lost that, if you like, in a top-line growth way. 

So net rental income year-to-date growth was EUR 3.2 million, and in Q3, it was positive of EUR 0.3 million. Maintenance expenses are pretty much flat in year-to-date and a EUR 0.8 million decrease during  Q3. Repairs year-to-date, up by EUR 1.5 million and EUR 1 million during Q3. If you then look at maintenance expenses,  there are positive or negative figures there. On the positive side, heating down by EUR 1.8 million, credit losses down by EUR 0.8 million, and electricity down by EUR 0.5 million. On the negative side, if you like, is water up by EUR 1.2 million and cleaning up by EUR 0.6 million. Both water and cleaning are impacted by the improved occupancy. 

Page 13. On the right-hand side, we have FFO. So FFO declined by EUR 7.7 million year-to-date. and net rental income contributed EUR 3.2 million. SG expenses increased by EUR 0.7 million, and finance expenses on the FFO side grew by EUR 8.6 million. On the P&L side, the finance expenses growth was EUR 9.1 million. And current taxes were up by EUR 2.7 million. And in these current taxes, we are not including current taxes due to the disposal of assets. 

So Page 14, we are extremely proud that we were still able to improve our occupancy. If you look year-to-date figures, so cumulative figures, so there, the growth is 2.9 percentage points, but more important is actually to look at what happened third quarter compared to the second quarter this year. So the third quarter figures were 96.1% and it was 94.4% in Q2. So there's an improvement of 1.7 percentage points that I would call quite an achievement in the current market position. 

Tenant turnover is down by 2.4 percentage points. Main drivers there, of course, is that our Net Promoter Score is at the moment, all-time high. And then we have enhanced our interaction with our customers. So that, of course, plays a role in the financial occupancy rate angle as well. 

Page 15, like-for-like rental income. In this type of turning point, I'm not even today, any good fan of this like-for-like calculation is prepared according to EPRA best practice recommendations, but figures it's backward-looking. So in this type of turnaround situation, it's not that representative of what's really going. But actually, if you look at our figures, they are improving exactly how we estimated. So now the impact of occupancy rate is visible in this figure is a positive 1.7% impact of rent and water charges down by 0.5% and others are negative 0.2%. So the total like-for-like rental income growth is positive 1.1%. 

And then if you just do the math and look at our Q4 figures and the Q4 last year, that will be rebased in the calculation in our Q4 calculation this year. So the impact of the occupancy will improve further. 

So Page 16, we completed the disposal of almost 2,000 apartments at the end of July, and we have one ongoing development, so 119 apartments in Helsinki region that will be completed early next year, and there's EUR 4.1 million to be invested in order to complete that ongoing project. 

Repairs, we estimate that the repairs this year is going to be slightly above the last year figures, so a little more than EUR 24.1 million. And the modernization investments already clearly higher than last year, so now EUR 19 million year-to-date. Last year, it was EUR 4.1 million. And we estimate that the modernization investments the whole year is going to be around EUR 30 million, EUR 30 million. The increase in modernization investments is mainly due to the fact that we have started a couple of bigger modernization investment projects this year.

Next page. So the value of investment properties, quite stable there. So we didn't change any valuation parameters. We didn't change the yield requirement or any other valuation parameters. The outcome in the valuation was negative EUR 16.4 million, almost all that came through because of the ongoing modernization investments. So on the P&L side, the money invested is a negative figure in the valuation. And then, of course, once these projects are completed, the outcome of this project will be booked when completed.

Loan-to-value and equity ratio, quite strong figures there. And actually, our loan-to-value decreased by 2.5 percentage points on back of this -- the completed disposals and the fact that we paid back EUR 200 million of outstanding loans on back of this transaction as well.

Page 19. So very important piece of information is that Moody's actually affirmed our Baa2 rating and they stabilized our outlook, and we are extremely pleased of that. And the thing is that the next financing arrangements will be to refinance 2027 maturing loans. So in that sense, our liquidity position is quite strong because we have EUR 240 million cash or finance assets put together and EUR 275 million committed, unused credit lines in place.

And we've been active in financing other ways as well. So we actually refinanced 2 loans during the Q3. So EUR 100 million loan with OP Banking Group and EUR 75 million credit line with Danske Bank.

Our equity per share and EPRA NRV moved sideways. So no major changes there. Page 22, we actually kept our outlook for this year unchanged. So we estimate that top-line growth is going to be 0 -- between 0% and 2% year-on-year. And then we estimate that our FFO this year is going to be EUR 135 million to EUR 141 million. If we take the midpoint of the revenue growth outlook, so there, we estimate that, of course, the occupancy has improved, moderate rent increases remaining part of this year, but the fact that we are still flexible when it comes to renting when apartments come vacant, and we try to find a new tenant.

Then if you look at the midpoint of FFO guidance, so of course, the guidance as such is reflecting the range for revenue growth guidance. And in the midpoint of FFO guidance, we assume the average weather for the remaining part of this year that SG expenses and repairs broadly in line what we had in 2024 and no additional financing arrangement to be done end of -- during the end of this year.

And now at this point, I hand it back to Reima.

Thanks, Erik. I think it's more or less time for a Q&A. But as we told that on the other hand, not uneventful quarter, but kind of a steady quarter, so to say. And obviously, the kind of highlights still the recent occupancy rate and ending on Q3 to 96.1%. So we are pleased on that. But happy to take the questions.

Okay. Thank you. Do we have a question from the audience?

Yes, I would like to ask. Franca Rucet from Inderes. First, I would like to ask about the occupancy rate increase, which have been significant, like you said. What have been the key actions? It seems like you didn't have to make significant rent concessions during the Q3. And like what have you changed during this year to achieve such a quick turnaround in this market situation?

Well, I think the kind of dynamic pricing is one of the key aspects. And then on the other hand, as we showed in one of our slides that our NPS is a record high level. So actually, our churn has come down as well. So we have been both kind of an attractive landlord to our existing tenants. So the churn has come down, and then we have been able to attract the new tenants. Of course, we have had to kind of reprice the rents in some cases of new tenants due to the fact that as yourself as well said that the market condition is not that good. But overall, I think it's -- we have -- which we told already Q2 that we have put quite a lot of effort on our sales operations and how does that process work, and also try to put focus on the customer experience as such. So that has paid off, I would say. I don't know if Erik has something to add on that.

Yes, I fully agree. And I think it's a combination of several things. So we are more flexible when it comes to rating. We have enhanced how we manage the actual operations, and we are more active meeting our customers, and we are more -- we have better staffed the evening hours and weekends, and we have established a special team in our service center to support the renting operations. So I would say it's a combination of several things that we've been doing.

And then I could ask about the transaction market. And in Finland, as you very well know, we struggle a bit with the capital shortage. But how have in your opinion now developed the interest of the foreign investors? Like how has their interest to the Finnish residential market developed this year?

I would say that it's picking up. And the one catalyst was obviously our deal in late July, which we closed late July. So, and was it end of June when we signed, and yes, so end of June. So after that, there definitely have been kind of picking up the interest. But on the other hand, it's fair to say that it started on a very low level, the interest. So even though it has picked up, so it's not, how would I say, in very good shape, the transactional market as such. But I would say that it's improving.

Okay. Then let's move on to phone line questions. Do we have any? [Operator Instructions] The next question comes from Anssi Raussi from SEB.

A couple of questions, and I start with the occupancy and rent. So as you said, quite an improvement in Q3 regarding occupancy. So how should we think about your rents going forward? And is it like your next plan to start to implement some modest hikes there? Or what's your plan?

Yes. We do not guide any kind of target rents or rent levels as such. But obviously, we -- there's a, how would I say, embedded need for rent hikes from a landlord perspective, that's not news for anybody. But on the other hand, I think we need to be very, very kind of very sensitive with the market balance overall that we are not kind of pushing too high rent hikes to the market, which is not absorbing those. But definitely, that's given the occupancy rate has risen and we are more on a kind of a normalized level at the moment. So then we have a kind of better capabilities from our end to raise the rents as well.

And yes, maybe can you give us any comment on how your occupancy developed during the quarter? Like is this 96.1% a good estimate as your -- for your current run rate?

Yes. Well, as you can probably calculate throughout the end of June figure and so it was rising during the quarter going forward, so kind of a normal pattern or seasonal effect in occupancies is that they tend to come down a little bit in the latter part of the year. So we don't know that yet, but that's kind of a normal pattern, I would say.

And maybe finally, about your repair and maintenance expenses, like how would you describe your current levels? And of course, I'm thinking here about the next year, like is 2025 so-called normal level?

So we are not guiding next year at this point, but a general comment. So repairs most likely will remain roughly on the same level that is going to be this year, if you look next year, given the fact that repair seems to be on a decent level at the moment. And we haven't really decided what is going to be the monetization investment level. But most likely, we are going to start a couple of monetization investment project next year as well. So either remain on the current level or slightly up. But as said, we are not at this point guiding anything next year, but this is our current thoughts regarding repairs and monetization investments.

The next question comes from John Vuong from Van Lanschot Kempen.

So you've mentioned a couple of times that the market remains challenging. At the same time, occupancy is 96%, which you say is normalized. You're also mentioning that rental growth could perhaps be possible at these levels. So just how do you reconcile that with the challenging market?

You mean how do we view the market as such? Was that the question?

Yes. Just trying to understand what you mean by challenging, if you are saying that 96% is a normalized level for occupancy and that you could see rental growth.

Yes. Well, we don't know yet how will the -- what I meant that when we have a closer to normalized level in occupancy rate, so we are in better position to start pushing the rent hikes to the market.

But as I said, at the moment, the market remains challenging, and there's still oversupply, especially in Helsinki and Vantaa area, which differs from city to city. So, for example, Tampere and Turku, and Espoo are much better than the bigger cities, but we need to be kind of sensitive to how the market is absorbing the rent hikes as such. So that's why I didn't say that we are able to push significant rent hikes for the market. I said that, our own perspective, we are in a better position to start to kind of try that in the future, so to say. That's what I meant by the combined recent occupancy rate.

And when you say in Tampere and Turku, much better, what rental growth are you achieving over there?

Well, I don't know if we have disclosed the city-by-city rental growth, but I think the oversupply perspective, they are better, and that's why the kind of a market is absorbing a better rent hikes, whether they are in any city at the moment, very significant, so I wouldn't say so, but at least some kind of rent hikes are going through.

That's ahead of inflation?

Sorry?

Are those rent hikes ahead of inflation?

Yes. Well, it doesn't require much in Finland to be more than inflation. So if we have a 0.4% at the moment, forecasted inflation. So that's very low. And still, there are in Turku and Tampere as well, there are in some single apartments, there might be cases where the new tenant's rent is lower than the existing ones, but the market as such is absorbing better the minor rent hikes.

And just on the actions that you're taking to support leasing. You mentioned better service, having a bit more evening hours. How are you looking at that impacting your cost structure?

So actually, we've been more efficient when it comes to our operations. So, the headcount is pretty much the same as it was 12 months ago, and we are just more efficient here. So it really hasn't had any impact on the cost side.

The next question comes from Robert Phillips from Green Street.

I just had 2 questions, which I'll ask one at a time. So just firstly, could you give a little more color on the strategic review? I know it's still early days, but could you just share what the main areas of focus might be for this?

Yes. As you said, it's early days, even though I said that our balance sheet is in good shape and our loan-to-value is 42.2%, I think it was the latest figure. So it's in a strong shape. Still, we are more or less constrained by the cash flow, and that gives limitations for a strategic renewal as well, in a way. And that's why I said that it's more of a tuning of the existing strategy. What does it mean, then, of course, there are some operational focus points where we should focus more. 

And as I said, the customer experience and operational excellence, which also the customer experience will be the key cornerstones of our strategy in the future as well. And we expect that to be a kind of an important factor in the future, at least in the long term, to be able to create a rent premium that we have satisfied customers. And then, of course, there are topics that we need to kind of go through, especially from a capital allocation point of view.

And then just could you also comment on the use of tenant incentives? Are you still seeing incentives being used to support leasing activity? Or have they started to ease slightly?

Well, we do see on the market several types of incentives, and whether they are 3 weeks, rent-free weeks, or a free month, or some kind of vouchers. So there are still some. Actually, our interpretation of the market and customer kind of behavior has been that, actually, the kind of correct rent price as such is more appealing from a tenant's point of view than different kinds of one-off incentives, so to say.

[Operator Instructions] The next question comes from Jonathan Kownator from Goldman Sachs.

Just to follow up on this pricing. I mean, obviously, you've talked about dynamic pricing. You've talked about the correct level of rent. Can you help us understand how you changed your pricing on average to be able to improve the occupancy level?

Sorry, can you repeat? How do we see the pricing? How much have we changed? Did you mean how much we have changed the pricing?

Yes, to improve occupancy, I mean, obviously, you've been very successful. And just keen to understand where the correct rent is versus what you were trying to charge before, and where a little bit less successful.

Yes. It obviously depends a lot on apartment by apartment, and some real estate is more challenging than others. But the new tenant's kind of rent levels have been something like 3% to 5% lower in some cases, and on average wise and then which comes to that our actual rent roll has decreased a little bit during the year. But we have been able to push small rent hikes for existing tenants as well during the same time. And on the other hand, there are some new tenants that we have been able to raise the rents as well.

The next question comes from Anssi Raussi from SEB.

Yes, one more from me. If I may continue on this capital allocation topic. So I understand that you have not finished your strategic work yet. But if we think about buybacks, dividends, and additional deleveraging, maybe to prepare for the growth at some point. So how does this go together? And what kind of, let's call it, pecking order you see here?

Thanks, Anssi. You pretty much described the elements of a capital allocation, and those are exactly the ones that we are trying to fit together, but we do not have any news for that at this stage. But as I have said earlier as well that we fully recognize how important the growth is from a value creation point of view, and we are definitely working hard to find our way back to the growth path as well.

Okay. But do you think that dividends should or could be part of your plans in the near future?

They could be, yes.

There are no more questions at this time. So I hand the conference back to the speakers.

Thank you. Very good questions. And when I look at the chat questions, I think we covered all topics already. So it's time to conclude. Thank you for joining us today. Our full-year results will be published 11th of February. Hope to see you all then. Thank you very much, and have a nice evening.

Thanks a lot.

Thank you. Bye.

Very good morning and welcome. This is Kojamo's Half Year Results Webcast. I'm Niina Saarto from Investor Relations. Today, we have 2 presenters namely our new CEO, Reima Rytsola. He starts the presentation with the highlights for the review period, and he also discusses the operating environment. Then, CFO, Erik Hjelt continues with financial figures and the outlook for this year.

As usual, we have Q&A after the presentation. And there, we take questions via chat. And then we also open the phone line for live questions. So I guess we are now ready for the presentation.

Thank you, Niina, and a very good morning on behalf of myself as well. It's -- I'm excited to be here for my first quarterly release. I calculated that it's roughly 12 years ago since I was last on this side of the table on investment, meeting investment community. I was then in Pohjola Bank plc's Division Head of Banking. And so last 12 years, been sitting on another side of the -- your side of the table, but very happy to be here, and it has been kind of a very positive start for me. It has been kind of a great to notice that Kojamo people are very energized and competent. And even though the market conditions haven't been that great in the last 2 years, but hopefully getting better.

So as Niina said, that I recently started -- so started on 1st of June, actually 2nd of June, Monday. And obviously, 2/3 of the quarter has already done at that stage, but happy to present main key points of the quarterly result. I think the highlight of our first half year has been that we have been improving significantly our occupancy rate, and that has been really kind of a positive development both the revenue and net rental income increased. And there was obviously in Q2, some leakage from gross revenue to net rental income, and that was mainly due to some one-off allocations. But of course, some of the effects were also in inflation picking, still affecting the maintenance and repair costs, but we assume that those costs overall will be around about same level this year than they were previous year. FFO decreased mainly due to higher financial costs. Maintenance and repair expenses caused some decline of FFO. But as I said, the majority of the impact came from financial costs.

As I told in the very beginning, so the occupancy rate development has been really good, and it has been kind of a very conscious strategy so that we were lacking in our occupancy rate, and we have worked really hard and made some changes in our processes, especially pricing and sales process as such so that we have been able to achieve a very good development. Market hasn't helped that much in that respect. And there's still oversupply in the market, especially in the capital area. But at least it looks like so that -- how would I say, growth of oversupply has stalled now, and you might expect that at some point, it will turn around.

We also signed in June and closed the deal in July, the 1,944 apartment sale. And as we already have earlier communicated, the proceeds of sale will be used reducing debt and starting the share buyback program. And of course, this transaction and usage of proceeds will kind of strengthen our balance sheet. And also with the buyback, we aim to also kind of neutralize the FFO effect for the shareholders and through that kind of give a better kind of a chance for value creation.

Our financing position is very, very strong. And both in June and actually this month, we have closed over EUR 200 million bank loans refinancing and next refinancing arrangements will focus on loans that are maturing in 2027. So -- and then of course, starting those refinancing operations next year. So it's a very solid base for the business where we are.

Operating environment, I think many of us who follow the kind of global economy and indicators are somewhat confused at what's going on. There has been a lot of hassle around tariffs and their effects on global economy. It certainly brings some uncertainty. Still, even though there's an expectation that U.S. economy will slow down a bit, but there's still some kind of a positive upbeat in the expectations of euro area growth and Finland has been forecasted as well that the growth will be better this year.

Inflation in Finland is very modest. And it's -- I think it's fair to say that given the circumstances, our own growth prospects in Finland and inflation, so the monetary policy as such is tighter than Finnish economy would kind of required. And some might argue that there's a room to cut rates further is also from euro area perspective, but anyhow, the kind of rate cut expectations have, if not vanished, but at least expectations are definitely not there in that extent than they were some months ago. Even though the kind of macroeconomic outlook is not as kind of boosting as we all would hope, I would say that the kind of mega trends are still there when talking about housing and 2 main drivers of that is, of course, the startups of a new residential and then the kind of population growth in major cities.

And if you look at this graph of -- basically housing starts. So it's very, very kind of a low level at the moment and even the expectation of residential start-ups this year, 20,000, I would say that it's probably on optimistic side. And for example, today, this morning, it was in Finnish newspaper Helsingin Sanomat article of legislation changes concerning the subsidized apartment building and if that will be cut as well. So given the fact that it has been estimated that the kind of a need for a new apartment is roughly 35,000 a year in Finland. So -- and the current level is 20,000 or less than 20,000. So -- and it has been already for a couple of years underneath the 20,000. So that's obvious that it will affect the supply.

And at the same time, the population growth in the major cities in Finland has even picked up. And for example, Helsinki just posted that over 700,000 inhabitants in Helsinki. So -- and also the kind of -- overall, the capital area is growing. Of course, the big driver in that sense is immigration. And even though the trend of decreasing average household size is still there, but immigration as such is a little bit kind of affecting that trend kind of slowing down because it seems to be the case that many immigrants are living more intense in apartments than the Finnish ones.

But overall, the urbanization megatrend, I think, is definitely there. And the biggest cities like Helsinki capital region and Tampere, Turku are the ones who are the clear winners in that sense. And then if you look at the kind of -- I'll give a glance for our own portfolio, Kojamo's portfolio. So it's very well fit to that trend and roughly 87% of our fair value of our real estate is in Helsinki region, Tampere and Turku. So it's -- I would say that it's a very good strategic fit in that sense.

ESG as such, has kind of, if not faded away from investors' interests, but at least the significance is not there in that extent as it used to be a couple of years ago. But we still think that it's a super important topic. And we keep on doing constant work for achieving carbon neutrality in 2030. We are well in time in that schedule. And for us, it's, of course, also kind of matter of profitability, so to say. So more energy efficient than we are. So we can cut down our maintenance costs. And even though we speak about Scope 2 here, so it's good to notice that actually heating is included in our figures. So it's, in that sense, relatively comprehensive Scope 2, so to say. Of course, we all know that the last mile is the most difficult here and -- but there's still some room to kind of develop different kind of technologies as well, which could enable the achieving the carbon neutrality in that sense.

I would say, overall, very, very kind of a solid first half year. And as I said, that the most kind of positive point is to picking up the occupancy rate and create revenue growth even though the rent levels are kind of -- development in rent levels are muted or even in negative territory, some locations. But one thing that I would like to highlight here as well in this screen is the Net Promoter Score, which is 58 for us, and it's all-time high. And the customer experience and developing customer experience is -- will be kind of a key factor for us in the future as well. And we truly believe that put the customer in the center, we can create service and kind of a clue for our customer relationships that in the future, we're even able to kind of improve our rent premium, hopefully.

I think this is pretty much the part that I should cover, and I would like to now hand over to Erik for the financial development, and then we will take together with the Q&A. So thank you very much.

Thank you, Reima, and good morning, everybody, from my side as well. So Page 12, if we first look at the total revenues, total revenue growth first half of this year compared to first half last year was EUR 4.3 million and Q2 was EUR 3.3 million, up compared to Q2 last year. And you may say that growth came entirely thanks to improved occupancy. On the net rental income side, H1, the growth was EUR 2.9 million and Q2, EUR 0.7 million. On the maintenance side, the cost increase was EUR 0.8 million in the first half. And on the repair side, it was EUR 0.6 million.

In the maintenance expenses, they are both positive and negative figures. So on the positive side, heating, EUR 1.5 million below last year's figures, mainly came through during the Q1 this year. So electricity down by EUR 0.4 million and credit losses EUR 0.5 million. So on the other side, there's water that went up EUR 0.9 million. That's actually quite logic when you have more customers, they spend more water. So maintenance up by EUR 0.7 million and outdoor maintenance up by EUR 0.6 million. As Reima already mentioned, there are some allocations in the cost side, and we still expect the whole year maintenance expenses and repairs to be broadly in line last year figures.

Page 13. If you first look left-hand side, profit and loss before taxes. I come to the change in values later. So the profit, excluding change in values. So it's down by EUR 12.3 million. Net rental income contributed EUR 2.9 million, as said, SG&A expenses increased by EUR 0.2 million. Financial expenses up by EUR 8.8 million. And then depreciation, EUR 7.3 million. I come to that figure later when discussing value changes. On the right-hand side, FFO down by EUR 6.2 million. Most of the items are same as in profit calculation, so net rental income, SG&A and finance expenses. And then in FFO calculations, current taxes up by EUR 1.7 million.

So Page 14, as Reima mentioned, there was a strong growth in our occupancy rate and that our focus has been quite a long time already to improve the occupancy. There has been discussions whether we should release quarterly figures as well. Now they are here. So this 93.6% is cumulative figure year-to-date. But you can, of course, always calculate the quarterly figures as well, but now it's released here. So the Q2 occupancy rate was already 94.4%. And in June alone, it was 94.8%. So quarter-on-quarter, the growth was 1.6 percentage points. And if you compare Q4 to Q2 this year, so the growth was 3.3 percentage points. At the same time, our tenant turnover came down by 1.9 percentage points.

Page 15, like-for-like calculations. This is backward-looking calculations because we compare latest 12 months against the previous 12 months period and in a turnaround situation where we clearly are at the moment, and so this is clearly lagging behind. And this is especially true if you look at the occupancy rate because in this type of calculations, you have the tail of previous quarters. So in these calculations, Q3, you compare actually Q3 2024 against Q3 2023. So that's why it's really backward looking. Of course, rents and water charges are better representative. We are still increasing the rents for existing customers, the rent increases on average are between -- somewhere between 1.2, 1.3 percentage. And some of that is eaten, if you like, because we are now -- we've been more flexible when it comes to the renting. But in total, in this calculation, we are still -- the impact of rents and water charges on positive side.

Investments remained at the low level. We have only 1 ongoing development, 119 apartments, 1 project to be completed January, February 2026. And for the time being, we are not making any new investment decisions as part of the saving program as we are not anymore talking about saving program as such, but we are still in the mode that we are at the moment, we are not making any new investment decisions. And of course, the disposal side, almost 2,000 apartments completed after a review period, but the agreement was signed during the period. Modernization investments now up to EUR 10.4 million, and we estimate that the modernization investments this year will grow from last year, estimates are around EUR 30 million because we have started a few larger modernization projects. And as said, repair is expected to be in line with last year figures.

Page 17, fair value of investment properties. There hasn't been any changes in calculation parameters, no changes in what comes to the yield requirements. All transactions, small or bigger ones, they are taken into account in these calculations. And those ones completed after the review period are pretty much in line with these parameters. During second quarter this year, the fair value change was negative EUR 48 million. Biggest portion of that, EUR 33.8 million is related to value change in non-yielding assets, particular Metropolia properties, and we estimate that this is -- this will not have any impact for valuation of values of apartments.

On top of that, there's an impairment loss of EUR 7.3 million due to the write-down of our own office premises, so head office here in Helsinki where we currently are, but that is booked on a different line, or that's a change in fair value of investment properties. Loan-to-value equity ratio, quite stable on loan-to-value side, 44.4%. That includes the noncurrent assets held for sale. Now biggest portion of that already sold as we speak.

Page 19, next financing arrangement needed for us is to refinance 2027 maturing loans. So no need to do any additional financing arrangement in the short term. Our average interest rate came down to 3.2%. We have made 2 different agreements, 1 during the review period and 1 after that. So they were actually both extending existing loans. So in that sense, no new the agreements, no new financing agreements. Net debt came down and our financial key figures are strong. Equity per share and EPRA NAV quite stable this quarter.

And then Page 21, our outlook. So when we released the closing of the divestment, we updated our outlook and we restate that outlook. So compared to that, no changes. So we estimated that the total revenue growth for this year is going to be 0% to 2% and then FFO to be between EUR 135 million to EUR 141 million. Why we restated this? Why we made the update in outlook in connection with the disposal? So always, our outlook is given excluding the potential impact of potential transactions. So that's why linked to the transaction, we updated our outlook. And it's good to keep in mind that the outlook doesn't take into account taxes resulting from the transactions because they are considered to be nonrecurring items.

But then a couple of notes regarding the outlook. So if we take the midpoint of the top line outlook, so there we estimated that the occupancy will improve even going forward. We estimated that the rent increases are going to be moderate, and we are flexible in rents. And we don't expect any support from the market. It may happen that the market is going to be more supportive going forward. But in this guidance, we haven't anticipated any support from the market. And then the midpoint of the range for FFO, that, of course, reflects the range for top line outlook. And in the midpoint of this FFO guidance, we expect will be penciled in that repairs and SG expenses are going to be broadly in line last year figures, maintenance expenses broadly in line with last year figures, as already discussed, and then average weather for the remaining part of this year.

So at this point, back to Reima.

Thank you, Erik. I think overall, we have tried to cover as well as possible at the moment, the H1 results and maybe a couple of words of -- before we went to Q&A that how to go forward, and we have decided to start to review our strategy during latter part of the year.

I would say that as a non-native English speaker, I'm not 100% sure is reviewing correct word. It's more of a tuning, but anyhow tuning to reviewing as you can take it, but we definitely do that. I think a couple of themes that will be in a spotlight for going forward as well is customer experience and operational excellency. And we definitely kind of understand that growth importance from a value creation perspective, and we will kind of work hard to kind of assess that what's the way to grow in the future and what's the good timing for that. So definitely not taken even before the note was given.

So I think we are more or less ready to start the Q&A.

Yes, we are, definitely. Do we have any questions from the room here? No. Then in that case, we start with questions from the phone line. Go ahead, please.

[Operator Instructions] The next question comes from Anssi Raussi from SEB.

Yes. I have a few questions, and I go one by one. So first one is about your rents. So reported rent per month decreased a bit year-over-year, and you mentioned that the rents actually increased in existing agreements. So can you maybe discuss a bit these underlying elements here like the impact of campaigns? And should we expect that this level out towards the end of this year? That's the first one.

Maybe if I start and Erik can continue that -- obviously, the kind of obvious outcome is that when we have gained so much in occupancy rate, so with the market conditions that haven't eased that much, so it's obvious that we have had to reprice the kind of new apartments as such. And -- but as we discussed already earlier, the kind of market conditions that we expect that oversupply at least stalled and there might be a good chance that it will ease a little bit in the coming months. But -- so that's why it's difficult to say that whether -- how is the rental increase developing in the coming months. But I would say that we see kind of next -- going next year that there is a room for rental increase. But on the other hand, the amount probably will be relatively modest.

I don't know if you want to kind of add some, Erik.

So we have changed our approach how we price apartments that become vacant. And now we are doing it when it becomes vacant not before that. And in some cases, it turned out that the market conditions are such that the new rent is lower than the one in the contract that expired. So that plays a role there. And then some campaigns, yes, we do use -- in some cases, we give 2 or 3 weeks rent-free period in the beginning of tenancy. The market standard has been actually 1 or 2 months, and we've never done those, but 2 or 3 weeks is something that we use.

So this is the impact on top of the rent increases we do for existing customers. And we started this new approach for pricing when we concluded that we are focusing now to improve the occupancy, and we wanted to be more flexible in the rents given the market conditions. And now we -- as part of expanding our or enhancing our own operations, thanks to the more flexible in the rent levels. And now we've been improving very strongly the occupancy. And of course, the idea is going forward that once our occupancy is on a high level and then once we see that the market conditions are improving, then we start to increase the rents more. Already today, in some cases, we are able to increase the rents. So these are average figures depending on the local supply-demand situation.

And if I still add a couple of words. So we have made the changes for our pricing methodology as such and make it more dynamic, and that will obviously work on both sides. So expect it to work on another when the market will pick up to another side as well.

Okay. That's really helpful. And maybe the next question related to this fair value change, especially in this Metropolia property or properties. So what triggered this fair value change? And maybe do you have plans regarding this property? And also maybe if you can comment on other plans, if you have any related to possible future divestments?

Can you repeat the first part of the question, so I kind of missed it. So about the Metropolia assets. So what was your first question?

Yes. So basically, what triggered this fair value change, how it -- triggered your plans?

Yes, sorry, I didn't hear. I think it's -- of course, we -- me as a new CEO wanted to kind of do the kind of thorough due diligence as well. And we discussed quite a lot of kind of possibilities of those nonyielding development assets as Metropolia assets are. And of course, the market has changed quite dramatically when talking about development assets as such and their pricing. And then we did kind of a thorough analysis and kind of readjusted the valuations more on a level that we think that kind of a fair market prices. As you know, when we talk about the non-yielding assets, the valuation is more of a kind of -- depending on very many kind of criterias and inputs. But we think that at the moment, they are in fair value.

Okay. Got it. And yes, the final question was that basically, do you have any initial discussions regarding possible future divestments, additional divestments?

Well, we keep on focusing our portfolio and concentrate even further with the kind of major cities in Finland. And that's what we keep on doing. We are definitely -- as we both with Erik stated earlier that we think that we are in a strong financial position. So we are -- we don't have kind of any urgency to divest further. But on the other hand, you can't kind of focus the portfolio even further if you don't do any divestments. So in that respect, there's still some on the agenda of divestments.

One additional comment. So we -- after this transaction completed during the summer, we still have 4 assets in assets held for sale, and those discussions are proceeding quite nicely.

The next question comes from John Vuong from Van Lanschot Kempen.

So you've been regaining quite some market share as you move up in occupancy. But at the same time, it sounds like you still aren't really happy with the [ of ] occupancy you're at. So what's exactly the next step in your view? And what's the level that you'd be a bit more happy with where you wouldn't necessarily have to do these marketing campaigns anymore?

Well, I think we still have some room to do in -- to improving the occupancy. It's fair to say that we're progressing well on that. And our plan is, of course, that our occupancy will be in more of a kind of, would I say, normalized levels when the market will pick up and we have kind of a better capability to go with the rent hikes as well.

What would you consider more normalized levels? That's like 97% or...

Well, we haven't communicated any kind of a target level for our occupancy. But I would say that around about 96% to 97% sounds much better to me than 94.8%.

That's fair. And just on the Net Promoter Score, I think you mentioned that you're also seeing room for a rent premium given that you have such a good score. So just trying to understand here, what's the difference between your in-place rents and market rents? And how much more of a premium do you expect to get in this market?

So we do get a premium compared to market rents still even being more flexible when it comes to the renting. And that is the current situation. And going forward, of course, our aim is to get even more of premium. And as I said, when the occupancy rate is higher and the market improves and our Net Promoter Score, so customer feedback improves as well. So that gives us more space to start to increase the rent score going forward. So yes, we get premium pricing at the moment, but we definitely want to get more premium in the future.

And I think that's, as Erik said, the kind of a focus in the future as well, the customer experience is one key part of that, that we will be able to charge kind of a premium rent that our customers will value our apartments and services so that they are willing to pay premium.

Okay. That's clear. And just 1 last question. As you start your share buyback program, I suppose you sent a signal that you're comfortable with your leverage. How should we think about restarting the dividend distributions?

Well, that's a discussion that we have to go through in -- with our Board of Directors in the latter part of this year. Of course, we aim to get back on paying dividends as well. That has definitely been a kind of a temporary period that we didn't proceed any dividends in the last 2 years. But of course, then we need to kind of adjust as well the market price and valuations so that what is the kind of best and optimal way to proceed funds back to owners.

The next question comes from Rob Phillips from Green Street.

I just had 2 questions on my end. So firstly, following your recent disposal, how do you kind of see the broader transaction market developing? And are you observing other potential deals? And should we expect future transactions at similar discounts to balance sheet value?

And then secondly, could you share some thoughts on your capital allocation road map going forward? And should we expect more disposals and balance sheet discipline? Or are you starting to tilt towards growth? And how do you think about the role of new equity in that context as well?

Well, I think if we start with the transaction that we made and the feedback since that and kind of market reactions. Of course, it was a very big transaction given the kind of a recent history of Finnish real estate markets. It definitely has created some kind of more interest around the transactional market, and there's kind of a picking up of interest to invest in Finnish real estate market or in general, I would say that as we discussed or answered already previous questions. So we do have kind of some thoughts to divest further.

It depends on how it will match our strategy and portfolio and more of an aim to even more further focus the portfolio. We wouldn't take the kind of any kind of a stance of a possible discount in future transactions. But of course, everything depends on the quality of the disposed assets and so on. But on the other hand, I would consider that when the -- at least it looks like, so that the market conditions are getting better. So in that respect, I think if something, so it would be kind of -- with the kind of a like-for-like type of portfolio, the discount should be smaller. I don't know if you have anything to add.

So of course, the transaction volume has been quite muted, 6 or 7 small transaction last year and the beginning of this year, 1, 2, 3, even 4 assets each. Based on discussions after our transaction with the brokers, it looks that this transaction is actually creating momentum because there seems to be more international investors who are really scanning the Finnish property market. So they've been here early as well, but in most cases, what we heard and we know some of those, they have filed in so-called local offers.

But now it looks that the discussions are around more relevant levels. And our transaction was the biggest transaction or the only bigger transaction after 2022, and that really was positive for the whole market. And after our transaction, there was one bigger transaction in the market as well. And as I said, there's more realistic discussions at least at the moment, thanks to our transaction.

The next question comes from Neeraj Kumar from Barclays.

My question is in regards to Moody's rating. So I see the negative outlook from Moody's has been there for nearly 2.5 years now. And we see that you have started a share buyback program as well. So is it fair to say that you see no risk of Moody's downgrade from here?

So yes, the negative outlook has been there quite long time already. And that's quite unusual to be frank. But based on discussions with the Moody's, they think that all our other KPIs and ICR is very strong in line with requirements for Baa2. They do share our view that the market is about to change, and they have noticed the same as we have that the interest rates came down, and they seem to like the company.

And they are more focused now on the big picture, not only 1 KPI. And they appreciate all the actions taken by the company. So the saving program not to start new developments and not paying dividends for 2 years in a row. And so they view that the company is moving in the right direction, and they wanted to give the company time to show that this is really, really happening. So that's what's that all about.

We are going to have a management meeting with Moody's Friday this week. So perhaps we learn something more. We really didn't discuss this disposal and how to use the money with Moody's, but we say that our aim is the same as we released in the Q4 report that our aim is to dispose something. And first priority is to pay back loans. Second priority is to buy back own shares. And now that's something we've done and we are doing. So the biggest portion of the proceedings received used to pay back loans. And on top of that, we are about to start this share buyback.

So they are aware of this. And as I said, the negative outlook has been there quite a long time. And as what I explained is the reason why they kept that so long time. So they wanted to give the company time to show that all the actions taken by the company are really paying off as they are doing.

Got it. And my second question is in regards to the valuation yields and the valuation assumptions. So I see that you're assuming a value -- occupancy of 97.2%. And looking at last 5 years of occupancy numbers, it's nowhere close to 97.2%. And also in light of your recent transaction where you disposed at around 10% discount to book values, do you think it warrants a rethinking on how you're valuing your portfolio and if there is more valuation declines to be taken?

Yes. I think we are kind of confident of our valuation parameters, and that's true that our occupancy rate hasn't been there as on the parameters, but we have done that adjustment. Would you like to elaborate a little bit, Erik, the adjustment that...

So the adjustment as such was made when we moved the portfolio assets held for sale. But before the transaction and when the transaction discussions was ongoing, we discussed with Jones Lang Laselle the potential impact of this transaction if it is completed on these levels where we're talking about at that time. And the feedback from Jones Lang Laselle was that it's not going to have any impact for the valuation. And actually, they say that the yield we were discussing about was even better than they expected. So in that sense, it was actually a positive thing.

So that transaction is according to our stand is not going to have any impact on the valuation going forward. Yes, we do believe that the valuation is made correctly and reflecting the fair value of these properties. And of course, the yield requirement has been one topic that we have been discussing 2 or 3 years already. And now since the interest rates came down quite nicely, so at least the pressure to increase the yield requirement in the valuation has gone away. So -- and Jones Lang Laselle share our view regarding that.

The next question comes from Svante Krokfors from Nordea.

Svante Krokfors from Nordea. A couple of questions left from my side. First one, regards the market balance. I think you have earlier this year also mentioned that the market balance, I guess, for the capital region could be reached, I mean, a similar level as witnessed before the pandemic, could be reached already in H2. So that doesn't seem to be what you comment now. So what has changed and perhaps not changed for you to have a more cautious view on the market balance?

I think it's partly because I don't know what's called in English, but [Foreign Language], so to say, in Finnish, so that when you kind of forecast that it will balance and there's a kind of very good reasons from a megatrends like -- trends like population growth in major cities. And on the other hand, very low level of start-up of new residential. So that will eventually kind of balance the supply-demand pattern. And we are confident that it will do, but we have kind of probably stopped guessing now that what is the quarter or what is the half that it will happen. But I think it's fair to say that our confidence that it will happen hasn't decreased as such.

So perhaps I'm guilty for saying something regarding the balancing the market situation. And as I said earlier, we are not guiding anything. And as Reima mentioned, [Foreign Language]. But what I said was actually that we expect to be on a market situation in the same level, so available apartments in the portal on same level before COVID-19 by the end of this year. And I haven't changed my view. It remains to be seen whether that happens or not.

So overall situation of Finland is one thing. But if you then look available apartments in the portals, Helsinki, Espoo and Vantaa, the volume has gone down beginning of this year. So in that sense, we are moving in the right direction. And the gap between -- in these cities, the gap of available apartments today compared to the volumes before COVID-19, it's not that huge. But now at the moment, it's rather challenging to comment whether this trend at the moment is thanks to the situation really changing because it has to change in some part. If you look at the volumes of new start-ups over the last 3 years or so and estimates for population growth, in some point of time, it has to change.

Is it thanks to this expectation coming through? Or is it because of the seasonality because during the summer, you typically make more lease agreement. We've been making very strong improvement in occupancy despite of the seasonality earlier this year and despite of the oversupply in the market. But as I said, this is the situation that in Helsinki, Espoo and Vantaa. We've been moving in the right direction in the market beginning of this year. But as I said, it remains to be seen where we are by the end of this year and in what quarter we are in that type of balanced situation.

Okay. That is very helpful. The second question is regarding your churn, that seems to have come down quite clearly and still you're raising rents on existing contracts in a difficult market. So what are the reasons behind that?

I think that's one thing that we are actually targeting to kind of bring the churn somewhat down, and we have kind of focused on the -- already now on the improving the customer experience. And as I showed the NPS figure. So we have -- we seem to have kind of succeeded to do that. And of course, that will help the kind of bringing the churn figure down. We are in a kind of early days in that respect, but that's definitely something that we try to kind of bring down in the future as well. Of course, there's -- that can't be kind of -- as an intrinsic value type of target, the churn, but it definitely -- every new customer, you have an acquisition cost as well. So it's -- in that respect, I think it's -- from a company point of view, it's kind of profitable to bring the churn down.

And I think our own doings plays an important role there as well in improved NPS. So we have actually changed many things what we are doing. One is that now we have better cooperation with service providers, and we're leading them in a more efficient way. We have developed our operations when it comes to the Lumo service center. And now we are faster and more effortless services giving to our customers because we have changed how we manage the actions in the customer interface. So I think this plays an important role in improving Net Promoter Score.

And the last question, Reima, you mentioned growth and obviously, the most profitable growth in history for you has been own new developments. What needs to change in the market for you to be attracted to make new developments again? I guess we are quite far from that point currently.

Yes. I agree that's kind of not the next step or next tool for growth because already in the market, there's a very good existing assets to be acquired if there's a will. So that's more attempting at the moment than developing and starting up new developments of our own. It's very difficult to say that when -- it definitely needs a better market conditions than at the moment, but it's very difficult to say kind of -- give a kind of a time line when that would happen. But at the moment, the kind of development margin don't tend to work as well as they did before the interest rates start to rise.

The next question comes from [ Paul Gori ] from [ CTI ].

Paul Gori from [ Terms of Capital ]. I had a quick question on the cash tax related to the disposal. I just wanted to understand, we don't always see cash tax actually crystallized as part of these transactions. So I wanted to understand why it's crystallized here? And is it that the company doesn't have kind of tax losses carried forward to offset against that?

So we have quite sizable amount of deferred tax liabilities in the balance sheet, almost EUR 1 billion. And that's, of course, due to the depreciations and due to the positive value changes in the history. And when you dispose something, of course, those deferred tax liabilities will crystallize as cash taxes. So that's how it works.

Okay. And so future developments, would it be the same structure? So if you did another transaction tomorrow of roughly the same size, I could expect the same level of kind of cash tax to come through.

So there's clearly going to be a cash tax as well, but what amount depends on what properties we are disposing because it depends on the value changes and depreciations in the history. In some cases, the impact is 0. In some cases, it's the same level as in this one. In most cases, somewhere in between.

Yes. Yes. Okay. That makes sense. I guess I was thinking about it from the perspective of disposals and share buybacks. So the logic is you do the disposal at NAV roughly. I mean, a 10% discount in this instance, but at NAV and then buy back the shares at a big discount. But once you factor in the discount -- potential discount to book and then the tax impact, it kind of negates. So would you say that kind of future developments, the tax element has a big implication as to whether you would then do additional share buybacks with the proceeds? Or are the 2 -- you don't really relate the 2?

So of course, we take into account and consideration the potential tax implications, but we are not running the company based on taxes and tax implications. So there are other drivers behind disposals and share buybacks.

There are no more questions at this time. So I hand the conference back to the speakers.

Yes. Thank you. Excellent questions. I think we have a few more here left, although we covered quite many.

But coming back to the rent increases, could you give some color regarding your ability to increase or the pressure to decrease rent in different areas and different cities? Is there a lot of variation between cities?

Yes, I think there is. And definitely, the market is not the one and the same, and that's why I think it was also important that we have changed our pricing methodology so that it goes to basically in the end for a single flat. And it depends on -- of course, if you look at the occupancy rates in different cities, they are different and that kind of indicates as well the pricing power in the future.

So -- and as we have discussed quite a lot of capital regions. So there we have had kind of difficulties with the kind of oversupply. But as we discussed earlier about the market outlook and probable timing for balancing that supply/demand. So that will definitely help with the pricing power as well.

Yes. A little bit same theme is as you mentioned, occupancy levels are different in different cities and the supply-demand balance is different. But does this influence your future portfolio allocation? And would you see any potential to invest outside Finland?

Well, to invest outside Finland is not at the moment on the cards. I think we have plenty to do here in Finland as well. I would say that the current occupancy rates in different cities are not affecting that much of our future kind of a portfolio consistency so that content -- so that -- I would say that it's more of those megatrends or trends that are affecting that where is the population growth and which will drive the -- our portfolio -- focusing our portfolio and that will come to the which I earlier mentioned that we are focusing more of the bigger cities here in Finland.

Right. Okay. Then practical question about the share buyback program. Has it started? Or what is the current status?

We are about to start it.

Okay. Then you mentioned you might have some disposals in the pipeline. Do you expect them to impact negatively your guidance?

Well, we haven't indicated any and we will definitely -- if that would happen, so then we would kind of rephrase our guidance, but not at the moment the kind of anything to kind of inform in that respect.

And these 4 assets held for sale, they are quite small compared to the transaction we completed already. So the impact is going to be, in any case, quite limited.

Then a question about maintenance and repair expenses. When you mentioned that they are expected to be on the last year's level, do you mean in absolute terms or relative terms, taking into account, for example, the divestments?

Euro-wise.

Euro-wise. Yes. And can you comment anything about '26 repairs or long-term level?

So we are not guiding '26 or years beyond that. So in due course, we are going to give a guidance for 2026.

Okay. So that was the final question. Thank you very much for active participation. Q3 report is published on October 30. Thank you all for joining us and hope to see you in October. Have a lovely autumn.

Thank you very much.

Thank you.