Kojamo Oyj (LUMO) Earnings Call Transcript & Summary

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.