Lumo Kodit Oyj (LUMO) Earnings Call Transcript & Summary

Good morning. Welcome to Kojamo's Q3 results news conference. I'm Niina Saarto, Treasury and Investor Relations Director. Today I have with me our CEO, Jani Nieminen; and CFO, Erik Hjelt, and they will shortly present the third quarter’s result. After that we have Q&A. [Operator Instructions] Let's start the presentation now with Jani's part. Welcome, Jani.

Good morning. Nice to be here providing a bit of color what's been going on through -- during the first 9 months of this year, what's been happening here in Kojamo and in the market. As usually, I will summarize a bit of operational environment, and then the key figures and CFO Erik Hjelt will provide a bit deeper color, and then we go to outlook. On Page 4, the big picture. It's easy to say that our operations developed as anticipated. During the third quarter, our key results are solid. We were able to grow total revenues, the net rental income, and as estimated already of the H1 results, we've been able to improve the occupancy. Actually in September, the occupancy rose about 94% and now the reported occupancy for the first 9 months as a consolidated figure was 92.7%. So the rental market has been active during the market and our operations have been quite successful there. Our cost saving programme is progressing as planned, and change negotiation with the personnel has been completed in line with our targets. So that part is proceeding quite nicely. Our balance sheet remains strong. And after the review period we made a financing agreement totaling EUR 425 million. Actually it means that we now already cover the maturing loans 2024. Couple of words otherwise, yes, there has been a very limited number of transactions in the market. So it's not easy to make the validations and we have based the yield requirement increase on the opinion of the [ outside ] expert. Then moving forward to Page 5, a couple of words concerning the operational environment. The outlook for the world economy is still in my eyes a bit uncertain, and at the same time 2-fold. In the U.S. economic growth has surprised positively, while in here, in Europe, the outlook is becoming a bit bleaker. Inflation has slowed down. Although we see that the core inflation is still high. There it's good to know that the latest news provide a bit of color that inflation might be going down. Let's see what's going to happen there. Here in Finland, the GDP growth will remain at 0 level this year. And we see that household spending and corporate investments have reduced. At the same time even if the employment will weaken in the short term, it's estimated that it will remain at high level here in Finland. So at the moment the unemployment rate is expected to be around 7%. The interest hike cycle is estimated to be nearing its end, but key interest rates might not come lower -- until much lower next year. So this might be the new normal for a while. Some of the industrial key figures have been changing. Our point of view has been quite clear for some time that a very limited number of new residential startups will happen here in Finland this year. Now the official estimate is that at most, 16,000 apartments would be started here in Finland. In my eyes it's still a positive thinking away. Most likely it will remain below that 16,000 apartments. I said after H1 results at top 15,000 apartments, still at the same opinion. There is -- good to know that the number of non-subsidized block-of-flats is estimated to remain below 4,000 apartments and that will have a severe impact throughout the market concerning the coming new supply starting next year and then 2025. Estimates are that price of old block-of-flats, meaning owner-occupied homes would go down between 1.5% to 3%. It seems that this estimate is way too low. We already witnessed here in Helsinki region during the last 12 months that home prices have been coming down around 9%, and that's more likely the level. Housing trade is low at the moment. Home buyers are really careful. That most likely will have a positive impact towards rental markets. On Page 6, it's easy to say that the old truth is still valid. So the megatrends creating long-term demand for rental apartments are valid. We do have an increasing number of small households, especially one person households, and these small households typically tend to live in rental apartments. We've been saying that urbanization is continuing. What we now see is that actually the population growth has been accelerating in so called growth triangle, meaning the capital region Turku and Tampere regions. And according to statistics which follow the population growth here in Helsinki region since 1990, the latest 12 months has been the fastest growth of population here in Helsinki region and that creates demand for new apartments and for existing apartments. Housing trade I said is low, and it seems that people more often choose to rent the apartment. Good to note on the lower right-hand corner that even though the national statistics tend to say that most of the Finns live in owner-occupied homes, more than 60%, actually, in the biggest cities, more households live in rental apartments than in owner-occupied homes and the number of households living in rental apartments is growing on an annual basis. For example, in Helsinki, Tampere and Turku, actually more households live today in rental apartments than in owner-occupied homes. As said, the number of new resi-startups has been going down rapidly, and we will see a historically low number of new resi-startups, providing an impact for new supply coming to the market starting next year. That will continue 2025 as well. Typically, it takes at least 18 months to complete a construction project. As we are now starting towards the year 2023, there will be less supply 2024 and 2025. At the moment, we don't see any signs or evidence that there would be a rapid recovery. And most likely, the volumes concerning new construction projects in residential part of the construction business will stay low as well 2024. That said, it means that we see a historically low number of new completions in the market. Urbanization will continue. And I would be surprised if we would not see significantly higher rental increases throughout the market starting next year and continuing 2025. On Page 8, a couple of words concerning the key figures. As said, operational figures are solid, actually strong. We were able to grow the total revenues by 7.6%, meaning EUR 23.2 million. A combination of 3 aspects. One is, of course, the completed apartments during the latter part of 2022 [ than ] 2023 this year, completed apartments that provided roughly EUR 30 million. Then the increased rents and improvement in occupancy provided EUR 4.7 million and the rest came from the portfolio acquisition made last year during the summer. Net rental income grew by 6.7%, meaning EUR 40 million. There is, of course, a positive impact from total revenue growth. On the other hand, we witnessed that there was a growth concerning maintenance cost and cost increase there in total was EUR 9.5 million. 2 biggest elements there are heating [ EUR 2.5 million ] and property taxes EUR 1.6 million. Funds from operations, the improvement there are 7.5%, ended up to EUR 128.9 million. Positive impacts there, of course, tender offer during Q2 this year and then the positive net rental income improvement. Fair value of investment properties, EUR 8.2 billion at the end of Q3, the comparison figure, EUR 8.9 billion last year. It is good to keep in mind that we already adjusted property values at the end of last year by 9% downwards. And now at the end of Q3 this year, there was a revaluation providing a negative impact of 1.7%. Gross investments, EUR 161.3 million, mainly new development projects close to EUR 131 million, and the rest EUR 30 million in big picture was modernization investments. Profit, excluding changes in value, EUR 143.9 million, improvement there was 4.5%. Of course, a combination of total revenue growth improvement in net rental income and FFO. Then profit before taxes ended up to be EUR 7.2 million there. It's good to keep in mind that now the change in fair value of investment properties was minus EUR 136.7 million, and the comparison figure 1 year ago was EUR 110 million positive. A couple of words concerning the ongoing development project. It's good to keep in mind that for time being we are not making any new investments. This is -- and so we are not starting any new construction projects. Of course, we are completing all the ongoing projects in a normal manner, and they are proceeding all as planned. At the end of Q3, we still had 779 apartments under construction and the cost of completing those projects is EUR 27.1 million. And as I said, all the projects are proceeding in a normal manner. What we have seen with our construction projects that it seems that construction companies are keen on completing the project rather early, not later. So many completions have been ready 30 days before the originally planned timetable. In our eyes, it's good that we have new supply to the market, and we get the cash flows in. The remaining 779 apartments, roughly half of those projects will be completed this year during Q4 and the remaining part during next year. Development gains still closing 10% at the moment. On Page 10, a couple of words concerning the housing stock and customer distribution. Still easy to say that the portfolio meets the demand really nicely. And if we consider the portfolio, it's good to keep in mind that 73% of the portfolio is either studios or one-bedroom apartments. Why? Most likely customer is always a small household looking for a one-bedroom apartment or a studio. Customers 3 out of 4 typically look for a studio one-bedroom apartment. 1 and 2 person household share in our customer base is at the moment 77.6%. Customers between 26 and 65 years, I would say, working people, that's roughly 75% of the customer base. What we saw during the summer was as expected that the age group below 25, there was a slight increase from 11% to 12.5%. That actually is the evidence that students are really back to the university cities and they want to rent the apartment. In my eyes, that's a typical seasonality in customer structure that somehow provides a bit younger customers. A couple of words concerning sustainability. As always said, sustainability is a part of Kojamo's DNA and important part of all our daily actions. We have committed to the UN sustainability development goals. And our target is that our property portfolio will be carbon-free by 2030, and we are proceeding very well with those targets. Actually, we do have a really strong result in the reduction of carbon dioxide, minus 15.3% this year. We have made some actions there. One thing to note is that we've been able to provide that data, is valuable. As I said, we've been using AI in order to optimize heating. We have sensors in 28,000 apartments outside the buildings, AI is combining that data against the weather forecast, able to optimize the amount of heating needed and the timing when to buy additional energy. Now we made a demand response agreement concerning district heating with [ Vantaan Energy ]. And actually, what it means is that we are able to provide exceptional data for [ Vantaan Energy ], and they are providing now carbon-free energy for us without additional costs. On the right-hand side, top corner, it's easy to say that our customers really like the digital services we are providing. So the utilization rate concerning My Lumo services is now 85% and the net promotor score is in my eyes at a good level, 51 at the moment. So the way we are approaching our customers has been successful. At this point, I will give it to Erik and he will provide a bit more detailed color.

Thank you, Jani, and good morning, everybody, from my side as well. So Page 13. As Jani already mentioned, we had operationally a very strong quarter this -- Q3 this year. So the top line growth year-to-date was EUR 23.2 million. And in Q3, the top line growth was EUR 6.1 million from the corresponding period. Like-for-like growth was 1.9% increase in rents and water charges contributed 1.8%. And now the impact of occupancy rate was actually on a positive side, not much, but anyway, on a positive side, 0.1%. Completed apartments. '22 and '23 completed apartments contributed year-to-date EUR 30 million, EUR 4 million during the Q3. Increase in rents and improving occupancy contributed EUR 4.7 million for year-to-date and EUR 1.7 million during the Q3. And acquisitions, actually, the portfolio we acquired in summer 2022 contributed year-to-date figures EUR 4.6 million. Only EUR 0.2 million for Q3 because, obviously, that was already included in Q3 figures last year. On net rental income side, so year-to-date growth there EUR 14 million, Q3 EUR 4.9 million there. Keep in mind that the underlying portfolio is, of course, bigger than in the corresponding period. Maintenance expenses increased EUR 9.5 million year-to-date, EUR 1.9 million during Q3 from the corresponding period. The biggest growing items there heating, as Jani mentioned, EUR 2.5 million, property taxes EUR 1.6 million, and water EUR 0.8 million and waste management EUR 0.7 million. The increase in heating pretty much came through during the first half of this year, given the price increases there. Now in the second half of this year, the prices are clearly on a lower level than in first half of this year. Page 14, if we first look the change in fair value of investment properties. As Jani mentioned, there were no relevant transactions in the market. And we changed the yield requirement by 10 basis points in capital region, and that translates into 7 basis points for the whole portfolio. On the positive side, we had the development gains of completed developments and those apartments where restrictions regarding valuation ended during the Q3. Then if you look profit before taxes excluding fair value investment properties, couple of those there [indiscernible] SG&A expenses up to EUR 2.7 million year-to-date, personnel expenses, EUR 1.3 million, marketing EUR 0.5 million and [ ICT ] EUR 0.9 million. And there it's good to keep in mind that during Q3 we didn't have any impact from this saving programme. So they are coming through a little later, towards the end of this year, especially 2024. On the FFO side, financial expenses was EUR 2.9 million. And on the profit before taxes side, it was up EUR 5.4 million, mainly because of the bigger loan portfolio that we had. And on FFO side, of course, we had a positive impact of this tender offer completed during the beginning of summer. Financial occupancy rate improved 1 percentage point from the corresponding period and tenant [ over ] down by 1.7 percentage point of view. As Jani mentioned, during the third quarter, the occupancy was already above 94%. I think we already covered this like-for-like. So investments, for the time being we are not making any new investments. No, we are not launching a new monetization project as part of the saving programme. These ongoing developments will be completed as agreed. There we have fixed prices. Those projects are proceeding as planned. And to finalize these ongoing developments, we need to invest EUR 27.1 million, EUR 10 million next year and EUR 17 million by the end of this year. If you look at [ modernization ] investments year-to-date, there's a growth of EUR 8 million from the corresponding period. But most of those modernization investments will be completed by the end of this year as well. So we estimate that as part of the same programme, we are not starting new modernization projects. So the modernization investments 2024 is going to be between EUR 1 million and EUR 2 million. Page 18, investment properties. So I said, we increased the yield requirement by 10 basis points in capital region, 7 basis points for the whole portfolio. There were no significant comparable transactions in the market. We still have 881 apartments where we have restrictions regarding the valuation, and those restrictions will end by the end of next year. And there's going to be an uplift between EUR 65 million to EUR 85 million. In this ongoing developments providing apartments 779 together, we already invested EUR 172 million. And as said, EUR 27 million to be invested in order to complete these projects. Development gain in this ongoing developments, give or take, 10% and still yield on cost [ 4-ish percent ] as in previous discussions we have provided the information. Loan-to-value equity ratio, still strong figures there. Well inside our targets, and we have quite sizable buffer against our targets. The target is to have equity ratio above 40% and loan-to-value below 50%. And at the end of Q3, the loan-to-value was 44.3%. We played with the figures -- what needs to happen to reach 40% level -- or a 50% level in loan-to-value or 55% level, and we looked only if yield requirements changed. Of course, it's important to keep in mind in valuation there are several other things as well. So increasing rents gives a positive impact for valuation. We have these restrictions and so on and so forth. But if we look only change in the requirement, we have buffer for this 50% loan-to-value level, almost EUR 1 billion in values, and that's a little more than 60 basis points. And then if you calculate what's the buffer against 55% loan-to-value, so that's 112 basis points. So [ I say ] quite sizable buffer against these 2 mentioned levels. Page 20. So the information here is pretty much how things were at the end of Q3. All exciting things actually happened after the reviewing period. But at the end of Q3, we had still strong financial KPIs, average interest rate 2.3%, and that's included in the cost of derivatives, quite strong hedging ratio still, a very slow maturity average interest [ rate ] fixed period close to 3 years. After the review period, we first draw the remaining part of the syndicated loan we made before the summer, so EUR 200 million and paid back the bond -- secured bond 17 October. So 2023 loans shown in the chart is already taken care of. And then Monday this week we actually signed a new syndicated secured loan with Nordic Banking Group, EUR 425 million. And that's secured as well the margin between 150 and 200 basis points. And we agreed there to have a 6-month availability period. And the idea is to draw that loan at the end of that period and to use the proceedings to pay back the remaining part of the June 2024 maturing Eurobond. So if we combine this on Monday's signed agreement, and the total saving programme, so taking account saving programme as such and the fact that the Board decided to propose the AGM not to pay dividend. So this put together will take care of the all loans maturing 2024. So now even 2024 maturing loans are covered by the company. So we are, in that sense, in quite a strong position as well. So EPRA NRV EUR 19.11 at the end of Q3, down by 15% basically because of change in fair values. And then Page 23, our outlook slightly specified. So now we estimate that the top line growth is going to be between 7% and 8%. And we estimate that the FFO is going to be between EUR 162 million to EUR 168 million. So if you look at the midpoint of this FFO guidance, so there we have assumed that the ongoing developments will be completed as planned, that we are increasing the rents in a normal manner and the average weather. So weather, of course, plays an important role when it comes to the maintenance expenses for the remaining part of this year. And then this guidance already takes into account the result of repurchase of Eurobond earlier this year, and the effect, on Monday, we signed new syndicated loan. Page 24. As a reminder, our strategic KPIs is in line with our targets. So top line growth 7.6%, investments EUR 161 million. FFO against total revenue, 39.2%, strong [ key figures ] regarding loan-to-value equity ratio as said. And then we are, of course, extremely happy with Net Promoter Score figure, 51. And at this point, I think, back to Jani.

Thank you, Erik. As a summary, it is to say that the operational figures were solid and actually strong. All the operations developed as anticipated and estimated. We've been able to grow revenues and net rental income. Balance sheet, as Erik mentioned, has remained strong, and we actually, as said, have now covered the maturing loans 2024 already. Rental market has been active. It's good to say that, yes, there are still supply in the market, competition in the market. But as prior said, we started new measures already spring time. We've been able to improve our operations, increase activities. And so in the way we've been beating the market, and we are successful at the moment. I'm very happy with our organization. Supply will come to the market at least until Q1 next year. Then there's a very limited number of new supply in the market. And that operational environment will only get better throughout the next 24 months, at least. So there was a positive development of occupancy. On the other hand, yes, we see that there is uncertainty in the financial and property transaction markets. And it has been continuing and not likely that will change in a couple of months, but we are following that situation and scanning opportunities, whether to sell or not. We've been saying that during the next 12 months we will most likely sell a [indiscernible] part of the portfolio, but that remains to be seen. We are not in a rush. And the saving programme is progressing as planned. We have actually all the measures already ongoing. At this point of time, I think we are ready to move to Q&A.

We can now start taking questions. And the first question comes from the room here. SEB, please?

A couple of questions, and I start with the fair values. And you mentioned that you made these adjustments based on external recommendations. So how should we think about the process? Like is it done now? Or will there be more in Q4? Or was this the total overhaul of the fair values?

We do, as always, valuation on quarterly basis. So we're not anticipating anything for Q4. That remains to be seen. We are following what's going on in the market. If there would be data from the market which is relevant, then that has to be taken into account. Valuation should be based on actual data from the market. It should not include any for selling. That's the reality, but we are following what's going on in the market. So we are not guessing what's going to happen.

And then about your savings programme, it's EUR 43 million in total. So just to remind us how big portion of this sum is affecting your fair values? Like is it EUR 9 million or how much was it?

So EUR 80 million out of the saving programme is coming on a direct cost side. So half of that in the ballpark on admin cost and half as savings in repairs and modernization investments. So that means half of that will have a impact in valuation.

And maybe if I continue on that, could you maybe remind us about the sensitivity table you have in your report, like how much is -- that is in euros, roughly speaking?

So I don't have the figures with me. So it's not -- We need to keep in mind that the valuation is a combination of several factors. And we look all parameters when we do the valuation and we take into account our cash flows at hand at that time. So it's not relevant to look one figure as such. It's better to look at the whole valuation.

Yes. And I would add that -- I would say, typically, the year-end is the right place to consider all the parameters concerning valuation, whether it's the estimate how the top line will improve, what's happening with the cost and what's the yield requirement. So it's a combination of going through all the parameters.

And the last one is about your potential rent hikes. Of course, we all know that there's a pressure to increase rents in Finland in the coming years. But what kind of magnitude we are talking about here going into 2024? And also, your new contracts, have you been implementing rent hikes or testing the market already?

Well, I'll start actually by saying that we are not providing any outlook yet concerning what's going to happen 2024. And as rents are -- total revenues, we will be providing an outlook if I would be commenting on our rental increases. So that's not something I would do. But as said, the balance between supply and demand will change radically next year. There's already information, for example, from social housing providers that the cost pressures are existing. And for example, Heka providing social housing here in Helsinki will increase the rents by 11% next year. I don't see that happening in commercial rental apartments, but I would be surprised if we don't see at least double increases compared to prior years throughout the market next year. When they start happening, that remains to be seen, but the rents are moving upwards.

Next question comes from here as well.

A couple of questions. Looking at your like-for-like rental income and the portfolio, and the impact from rents and water charges that is now below 2%, and it has been above 2%. So could you elaborate a bit around that? And also what's your balance in between -- or what has your balance in between rent increases and occupancy rate been?

As said already, during the summer, we started active measures in order to improve the occupancy as we see that the market conditions will change radically next year. And our aim has been to improve the occupancy as we know that we are able to increase the rents 12 months after every tenant moves into the apartment. So we've been using in a way agile pricing in some sense in some apartments. We see that the vacancy period has been in our eyes a bit long. That's always impacting. We've been close to normal in this environment, increasing the rents close to 2% around the stock. And we are waiting for the right moment to hit the bell.

And then regarding the transaction market. What kind of activity do you see among -- I mean, international investors, obviously, haven't been active, but they are probably looking at the market. What kind of movements have you seen?

It seems that there is still interest towards the Finnish market. Some process is ongoing. It seems that those processes take a bit longer time at the moment. And many buyers, according to my understanding, are at the moment a bit opportunistic and trying to find out whether they are able to do bottom fishing and provide aggressive pricing, and that seems to be the case at the moment. So those processes take a bit of time.

Has the bid ask spread narrowed at all or it's still wide?

As I said, there's no actual data from the market. So won’t be able to comment on that one.

And regarding your possible non-core disposals, do you have any portfolio that you actively market?

We are scanning the market, testing the market. There are several options. We are not a for seller. If somebody thinks that Kojamo would accept a low ball offer and we just have to sell at any price, there would be a huge misunderstanding. We would sell something during the next 12 months if the pricing is reasonable. We have one testing ongoing at an early phase. So not yet able to provide any comments on that one, but we will find a way where is the best appetite, where is the most reasonable pricing at the moment. And when we find that one, then we most likely will move forward.

It seems that we have one more question.

[indiscernible] from SEB again. Just about your financial targets and the 50% LTV, like is it so that if you would hit this limit, you would take actions immediately? Or would it be okay to exceed this 50% for like a short period of time?

So we have already communicated that we want to maintain our investment credit rating. Now it looks a little bit of a moving target, but according to the metrics of our rating agency the investment grade level is [ 55% ] actually. So in that sense, there's no hurry, no need to immediately do something. So it remains to be seen what is the right level, what is the right target. But the key here is that we are committed to keep the investment rating as such.

But is this LTV like the most critical like number here? Or do you think that there should be some other number we should be looking at when we are trying to estimate that is your investment grade at risk?

Yes. I would say good luck with that because it is a little bit tricky to try to estimate. But of course, in metrics, there are several figures and they look at the total market and the company's position and management and so on and so forth. But today, it looks that they are extremely concentrating on looking loan-to-value coverage ratio and liquidity situation. This seems to be the 3 most important at the time.

And it's good to keep in mind that concerning the LTV, there's still a significant buffer.

Now we can move on to audiocast line questions.

Next, we will have Andres Toome from Green Street.

My first question is on potential immigration policies in Finland. Can you just give an update on that? And how do you see that potentially cutting into otherwise the strong net migration figures?

Sorry, there's quite a big echo going on. Could you wait a moment and then repeat?

My question was, if you can give an update on the proposed more restrictive immigration policies in Finland? And how do you see that potentially cutting into otherwise strong net migration figures?

Yes, there's been an ongoing discussion concerning migration. And in my eyes, it's not hurting the immigration and demand for rental homes. It's mainly a discussion concerning what kind of people will be moving towards Finland. We know that we need people in Finland in order to start working here. So working force is needed here, and limitations would be concerning the minimum salary. So mainly that people would come to Finland in order to start working, not in order to benefit from the strong social security system.

And then my second question is around the margin on the bank loan you've signed. Is it more or less in line with the previous agreement that you did earlier this year? Or is it a bit different now?

The margin is between 150 and 200 basis points. So it is slightly higher than in the previous one.

And then my third one, just thinking about your cost structure going into next year, and I know you don't want to give guidance, of course, but how do you see cost increases as you stand here today, and if you think about the next year, and that's sort of on a like-for-like basis because, of course, we're doing the cost-cutting program as well, but things around heating, staff costs and maintenance? And again, on a like-for-like basis, if you think about it?

So of course, this saving programme plays a big role here, but on -- some comments on top of that. The heating is, of course, the biggest portion of maintenance expenses. And what we've seen so far is that this district heating providers in Finland, they typically give the prices for next 6, 9 or 12 months, and late last year we got the new prices from those companies and the highest price increases was 30%. Lowest was 0%. So it's a mixed bag. And before the summer we started to get new prices from these district heating providers for the next 6 months or so. And there, the prices came down by almost 20%. Those ones were increased 30% by the end of next year. So prices seems to be -- or estimates for the pricing, those prices we already know and those prices that we estimate is going to be lower compared to the last winter. But then, of course, it's good keep in mind that the weather factor is very, very important. So depending on [ how winter ] we are going to have that, of course, plays a role. But the prices are now looking more positive compared to late last year.

Next we have [indiscernible].

The question is, on the one hand, your revenue guidance has been narrowed towards the lower end of the range, but at the same time, there's an increase in FFO guidance without any additional one-offs. So where on the operational side of the business do you see the improvement coming from?

So the top line growth, as you said, is narrowed from the upper end of the range, and that's where we estimate the rent increases and development process and so on and so forth. But the FFO positive -- or more positive FFO outlook is based on the cost savings already occur. Then the fact that we managed to agree a 6-month availability period for this latest syndicated loan. So of course, that means that the financial costs for the remaining part of this year and first quarter next year is going to be lower than anticipated. So these are the 2 main factors. And then there are other savings on FDA and on the maintenance cost as well they taken into account when specifying this new guidance.

We have something left here in the chart. We already discussed the new facility we signed this week, but there is a question about 2025 bond refinancing. Can you comment on the plans for refinancing that one?

So yes, we are extremely happy that now 2024 maturing loans are all covered. And that's, of course, extremely good situation. And now we are focusing the 2025 maturing loan. And again, it's important to have access for different sources of financing. So we are looking different options and not yet decided which way to go, but that's the next one that we are approaching.

Then a question about private homeowners who are not able to sell their home. Is that impacting the rental market? Is there some risk involved?

I would say it's not impacting the rental market in a negative manner, that homeowners are not able to sell their homes. It means that they have to stay put at the moment, so they are not able to move. On the other hand, as home sellers are not able to sell, home buyers are not willing to buy. Those homebuyers are more likely to move towards the rental market if we see this high interest levels.

Then a question regarding the new development starts. How are you looking at this? And how are your capabilities impacted by the cost-cutting program?

We are a company which keeps the readiness. We will start investing again once we see it is clearer and reasonable. We did not start a cost-saving programme because we are between a rock and a hard place. We started it because we saw it as a reasonable thing to start. We are a strong company, and we want to keep the company strong. And by keeping the company strong, you are actually keeping the capabilities to start investing once it is reasonable.

There has been questions about the cost-cutting program in general. We already discussed it. But can you remind how fast it will be impacting net operating income? Do we see savings already this year or will they be for 2024?

So some savings already by the end of this year, but clearly, the way it is 2024. So as I said in the programme, it's just the saving programme for 2024. The full impact is going to be next year, but already minor impacts, positive impacts this year given the fact that these layoffs in Finland, when they start, you actually stop paying salaries quite fast and that, of course, is going to have a positive impact already at least in December, given the fact that we have finalized these changed negotiations already.

That was actually the last question. Thank you for attending today. Kojamo's financial statements will be released 15th of February next year. So thank you for today and see you next year. Bye-bye.