YIT Oyj (YIT) Earnings Call Transcript & Summary

So hi, everyone, and welcome to YIT's Analyst Call preceding the silent period of our second quarter 2024 results. My name is Essi Nikitin. I'm heading the Investor Relations at YIT. Together with me here is our CFO, Tuomas Makipeska. We will first hear a short intro from Tuomas, and then we will have time for questions. And as a reminder, this call will be recorded and the recording will be published on our website after the call. At this point, I will hand over to Tuomas. Please go ahead, Tuomas.

Thanks, Essi, and good morning on my behalf as well, everybody. We will be covering into introduction a couple of topics today. We'll start with the market update regarding Housing business and first of all, CEE countries and then Finnish situation in the market. Then we will cover the market update regarding the other segments, Business Premises and Infrastructure. And after that, we will be moving on to the cash flow and financial position, and then finalizing the introduction by the transformation program update. And starting with the market update regarding housing and moreover, CEE countries. First of all, in our guidance and outlook for the rest of the year, we stated that the housing market recovery in Central Eastern Europe is expected to continue. And in Finland, the housing market is expected to continue to be weak in the second and third quarter of this year. The housing sales has continued strong in the Central Eastern Europe with the Baltics also picking up, anticipating continued strong performance for the year in these markets. As we commented in our Q1 earnings call, our apartment sales increased for the fifth consecutive quarters in the Baltic and Central Eastern European countries in Q1. During Q1, our number of start-ups doubled compared to the previous quarter to almost 500 units, and all of them were initiated in our operations in the Baltic and CEE countries. The number of start-ups in the Baltics and CEE countries is well balanced with the sales to maintain a healthy balance between demand and supply. And over 70% of our apartments will be completed in our Baltic and CEE operations this year. Thus, the good market conditions are key to the group's performance. In April, we also announced the signing of the agreement to establish 3 joint ventures with the Czech investment group, RSJ Investments in Lithuania, Latvia and Slovakia. The joint venture will be implemented through a co-partnership model with YIT and RSJ Investments each owning 50% of the joint venture. RSJ Investments is a long-standing and important partner we have worked with on similar partnership projects in the past. And we are very pleased to extend our collaboration to Latvia and Lithuania in addition to Slovakia and Czech Republic. These transactions are important part of YIT's efforts to develop increasingly capital-efficient ways of conducting self-financed housing development business. The Finnish housing market has seen positive developments in terms of reservations, ongoing negotiations and completed transactions, although the overall market has still remained on a low level. The 25 basis points interest rate cut by ECB 2 weeks ago was certainly a positive sign for the industry, and is expected to impact the consumer confidence positively. The market has received our 5-year 2% interest rate cap and rent-to-buy campaigns very well, and both of the campaigns have led to dozens of deals so far. Based on the experiences we have received through the campaigns during the spring and early summer, we see that there is clearly consumer demand in the market waiting for the uncertainties related to interest rates and overall economy to ease. We have a healthy inventory of apartments to sell to the market in Finland during '24 and early '25. Our total unsold portfolio of completed apartments in Finland was 1,000 units at the end of Q1. There has been considerable demand among investors for these apartments in large quantities and even for the whole stock. So far, the offers have not been financially attractive enough, but it is good to see there is capacity and appetite at the market. We see the apartment stock as an asset for the following quarters as completions of consumer units will be at a historically low level for at least 1.5 years ahead. The portfolio continues to be well balanced and located in attractive areas in major growth cities in Finland. And with the population growth continuing in all the major cities this year, the lack of supply will eventually turn the market situation to be balanced. If the sales continue at the pace we have seen in the past few months, the stock of these 1,000 apartments will last somewhere between 12 to 16 months. This presents a promising outlook for us. Then moving on to the market update regarding other segments, and starting with the Business Premises. In Business Premises, the underlying operational performance is expected to improve during this year, and the work continues to strengthen segment's profitability. In Q1, we saw an improvement in the underlying performance as a result of lower material costs and improved overall project management. The negative margin deviations have decreased significantly from previous year's levels. Revenue improved, supported by a healthy order book of the segment as well. The plan forward for the segment is rather straightforward: releasing the capital employed, securing healthy order book and improving operating profit. The real estate market on our operating countries continues on a normal level, and we see activity both in industrial and public sector to remain normal. Then in Infrastructure, the overall performance continued to improve during Q1 and ended up with solid quarter with the decrease in capital employed, supported by the successful divestment of the equipment business and the release of capital from the operations in Sweden. We see this development very positive. Also, the Finnish infrastructure market is exceptionally strong at the moment, and there are several large tenders ongoing that might match our capabilities well, such as rail projects where YIT has an excellent track record from example -- for example, the Raide-Jokeri project and the Tampere tram. On top of this, there are multiple large projects in tendering phase in the industrial sector as well. Then moving on to the third topic on cash flow and financial position. We have had several successful transactions during the past months, improving our liquidity and safeguarding the company's financial position up until 2027. As discussed earlier, in late Q1, YIT had executed a substantial financing arrangement, including equity and enhancements to existing loan terms, leading to an improvement in liquidity in excess of EUR 100 million. The newest transaction is the successful issuing of EUR 100 million green notes announced to the market last week. The majority of the new notes is 3 years, and the notes carry a margin of 7.5% per annum over 3 months Euribor and the issue price of the notes was 100%. The investor demand for the notes significantly exceeded the size of the offering, which clearly indicates the trust for YIT among investors. The notes were allocated to a balanced mix of domestic and international investors. This entity was an important transaction in proactively managing our upcoming debt redemptions and extending the average net debt maturity profile. I'm very pleased about the issuance of the notes under new Green Finance Framework as it further mobilizes our net capital to support the company in efforts to reach our climate and sustainability targets. Our financing is secured for a healthy period of time, which gives us possibility to concentrate on our business. And also as communicated earlier, in April, we redeemed the EUR 100 million bond with proceeds from previous asset disposals and capital release measures. Then for the cash flow, we have guided for the year that the operating cash flow after investments is expected to be positive in 2024. The cash flow improved significantly in the first quarter of the year, and we were able to reach positive results in Q1, even though seasonally the first quarter cash flow has been lower than the other quarters. The efforts made to improve cash flow have continued also in the second quarter of the year. Then I would like to once again highlight that our underlying asset base is very strong. Key assets totaled to EUR 1.8 billion at the end of Q1. We have a land bank of over EUR 800 million to serve as a platform for future operations and profits. Some EUR 650 million of the portfolio are our own plots, and inventory assets under production decreased to under EUR 320 million in Q1 from over EUR 400 million at the end -- at the year-end, reflecting the declining number of apartments under construction and the completed apartments and real estate inventory amounted to EUR 435 million. Investments were worth of EUR 281 million. There, the biggest single item being is the ownership stake in Tripla Mall, which is under strategic evaluation, as communicated many times. Approximately EUR 510 million of our gross debt is related to IFRS 16 lease liabilities, including leased plots and long maturity housing company loans that are transferred to buyer when their apartments are sold. So the adjusted net debt was consequently only EUR 260 million at the end of Q1. In big picture, we see that running our business profitably requires clearly less capital than before. And we aim to release capital significantly from our operations going forward. Since the second half of the last year, we have achieved a positive trend downwards in our capital employed despite the fact that the completed apartments in Housing Finland have tied up more capital. And this is the path we aim to continue on. Sale of these apartments from inventory will release capital, and low construction volumes will slow down the amount of additional capital tied to apartments in the upcoming quarters. Then we will move on to the fourth topic and the transformation program, including the capital release. The program has continued to progress faster than originally expected. And as we communicated in April of this year, and with the actions taken by the end of Q1, we will gain annualized run rate cost savings of EUR 30 million, which will be fully realized by the end of 2024. Already in Q1, we reached 15% lower fixed costs than in the comparison period. In addition to the cost savings, we are expecting to achieve a significant amount of project related and capital efficiency gains. Competitiveness is improved by increasing efficiency in procurement and project management and improving productivity. We already see tangible results related to the direct cost savings from the procurement and lower project margin deviations, driven by improved project management and procurement. With the changes implemented during the program, we will be able to clearly improve our competitiveness in the long term. As a part of the program, we are executing capital release measures. The latest action in the first quarter was the successful sale of our stake in joint venture, Tieyhtiö Vaalimaa Oy to the company's other owner, Meridiam. We established a joint venture back in 2015 to manage the E18 Hamina-Vaalimaa highway project, which was completed in 2018. And in the project, YIT oversaw the construction of the road, and we continue that work as a project partner in road maintenance. The cooperation with Meridiam and the Finnish Transport Infrastructure Agency in the implementation of the project was excellent, and we are pleased to continue as a partner in road maintenance. All in all, we will provide more details on the progress of the transformation program in accordance with the second quarter results announcement. So to conclude, the reintroduction part of this call has been discussed. Supported by secured financing position and strong asset base, we have a firm focus on delivering full impact of the transformation and the capital release measures, taking the performance of the company to a new level. We are in excellent position to utilize the operational diversification across different business segments and geographies and at the same time, building acceleration capacity for the point in time when it is visible that the Finnish housing market is starting to turn around. But that concludes the introductory part here.

Thank you, Tuomas. So we're ready now for questions. [Operator Instructions] And the first question comes from Olli Koponen.

A few questions, and they're both on the financing side. Could you kind of elaborate your reasoning on issuing the EUR 100 million secured green notes? Did you kind of underestimate your liquidity needs earlier this year? Or what is the kind of reasoning behind this?

Yes. Sure. Thank you, Olli. As a part of refinancing and a part of the big plan, what we have had already during the spring, so it was clear for us that we would like to return to the bond market. That was also stated back then. And as a part of managing our debt maturities and actually the debt structure as well, so this was planned that we come back to the bond market. And also, what we did, we, of course, redeemed the EUR 100 million bond back in April. But now with the proceeds from this new bond, we will be amortizing EUR 40 million of term loans and EUR 50 million of RCF at the same time, canceling the EUR 50 million of the total EUR 300 million RCF in use. So that was the big plan altogether. Also probably to add on that. So at this position, where we are in this cycle, so it's -- for us, it was very important to have long enough maturities in our facilities altogether.

But if I understand correctly, you meet your maturities longer on your term loans and RCFs earlier this year and now you got some quite expensive loan to pay those back, correct?

Well, as I mentioned, so this was part of the overall plan that we would return to the bond market, and we had in our term loan on RCF, a plan of amortization as well. So now with this bond, so we are able to manage the amortization both in the term loans and RCF. So we are happy to have completed this new transaction to manage our total debt portfolio and actually increasing altogether the maturity.

Okay. Second question also on the financing. Could you clarify a little bit what kind of benefits you see or you get from your Green Finance Framework and financing you get out of it? An example, why would you issue a green bond instead of a normal bond?

Thanks. Altogether, the kind of a Green Finance Framework that was launched in combination with the new transaction, I think that was kind of a natural continuum after our earlier Green Finance Framework. We wanted to kind of stay on the green financing domain with that one. Not probably commenting directly on the terms and regarding that being green or not. But anyway, for us, on the sustainability agenda, we see that it is important that also we continue in our financing on the green agenda.

Thanks, Olli. And the next question comes from Anssi Raussi.

Thank you for the update. A few questions left, and the first one is about reconciling our model. So what is your assumption for annual interest rate expenses going forward, if we think about the current run rate?

That's naturally something that we are not disclosing. But if I kind of give you a little bit of a background, so part of the financing is kind of moving or floating interest rate, part of them are hedged and part of them are in fixed interest rates. So that's kind of managing the balance with them. And based on that, we see that we have quite a good capability of forecasting our financing expenses for the 5 or 6 quarters forward. So that's -- we are basing our forecast on.

But if you think about the Q1 numbers, was there anything extraordinary in financing expenses if we just add the latest transaction to those numbers?

No, nothing extraordinary. As communicated already back then, kind of one-offs from the transaction -- from the bigger transaction financing solution that we executed in Q1. So expenses related to that deal are included in the numbers in Q1, but no other kind of that is different from normal expenses that we have regarding our financing.

Okay. That's clear. And maybe then about Tripla related to this, your long-term leverage target. So sorry if you commented this one already and I missed it, but what is the situation with Tripla Mall right now? So any negotiations ongoing or any promising activity on that side? And then on the other hand, like how much deleveraging you would think that would be like the best way to go forward if you think about the coming years, let's say, a few years forward from this?

Yes. Regarding Tripla, first of all, it's -- I'm happy to say that the mall is actually doing very well itself commercially. It is growing. Also, the whole area around Tripla is growing. There is small residential housing to be constructed and also office premises and so on. So the Tripla Mall itself, it's on a growth track and still kind of improving its NOI quite heavily, actually. And it is very good to see that we are continuing on the same track as we have discussed earlier as well. So that's one thing. The other thing is our ownership there and kind of the discussions that has been ongoing during this and last year with the other owners. So we have active dialogue with the other owners, and as stated earlier, so we have possibilities to exit from that asset. The thing is that it's quite a big deal also from kind of in a European level, not that many deals of that size have been executed during the last, let's say, 2 years or so, yes, 2 years. So it's -- you need to find the right buyer and right time and then, of course, right commercial terms that would take place for us to execute the deal. So that's probably all that we can comment from that perspective. And then regarding the deleveraging and probably, it's wise to talk about the gearing ratio that we have. We have communicated that less than 50% gearing is our target level, and that is intact. So that's definitely a place that we want to be in the coming years. And it's both, of course, related to the kind of the cash flow from the capital release program and also the cash flow from the Finnish housing market pickup. And kind of the gearing development from now on depends on basically those two things. But of course, it's very important to note, we have been talking about 4 cylinders in our company. One is Business Premises. The other one is Infrastructure. They are performing well, providing good cash flows and very steady cash flows, [ not signed ] capital operationally. And then the CEE countries, kind of a cash flow that they can produce. Those are the 3 kind of components or cylinders in our engine. They are working well. And those are, of course, supporting the cash flow, enabling us to lower the gearing level. But 50% gearing target is intact.

Great. And maybe final one from me. As you mentioned, tight capital. And if you think about the future, do you think that you will actually change your business plan a bit, for example, that you would use less your own balance sheet in the future? And on the other hand, do you think that you will require higher reservation rates before you would start a new project because we are living uncertain times?

Yes. That's -- those are very good questions. Starting with the first one. First one, so definitely, we see that we are aiming at the business models that would be more capital efficient. I think we are -- we have also kind of tried to explain that our operations are currently tying too much capital, and we see that there is a lot of potential in running our -- all of our businesses with less capital tied. Again, I'm referring to the contracting segments here. So over the cycle, both Business Premises and Infrastructure business can be run with the negative capital employed and producing steady cash flows. Then in the housing businesses, both in Finland and CEE countries. So definitely, we are aiming at more capital-efficient way of working. What was already in the introduction stated that we are happy to have formed joint ventures with RSJ. And the reason behind there is that we are -- actually, we have sold plots or -- and/or development projects to the joint ventures to be able to actually maintain or even increase the construction volumes so that it won't tie too much capital and then kind of the bottleneck would be removed, which has been the capital employed. So basically, what we are aiming at is that kind of releasing capital, but maintaining profitable volumes over the cycle. So that's definitely where we want to be. Then I'm sorry, Anssi, you had a second question. What was that regarding?

Yes. I just asked that have you changed your required reservation rates before you start new projects?

Yes. So yes, very good. Definitely, we have changed kind of the reservation level that will be required before starting up already, let's say, 2 years ago, 1.5 years ago because of the situation. And that's why also we haven't had any start-ups in Finland basically, self-developed projects. It's also kind of there is a link for the RS financing to be available. That's typically related to the pre-reservation rates. From our part, what we see now is that we are very carefully monitoring the consumer demand and the reservation rates increasing to the levels that would kind of allow us starting up with the lower risk. So that's definitely what we have been actually doing for the last 1.5 years, and we continue on the same track.

Thanks, Anssi. Our next question from Simen Mortensen.

I'll drill back to the first question or from the first guy here in terms of the rationale for the bond, which was just issued based on my calculation, close to 11%, you will pay on that. But you also say the reason for it is to pay down on the term loan and the revolving credit facilities, Isn't this one paying down debt with more expensive debt? And second, how should we look at this versus the capital tied in housing and other divisions where you have the potential to cut the price, but instead borrow at 11% per annum? Is this a reflection of the prices you can expect to sell in the market? Is that the bids? And how should we look at this combined one, the debt, replacing debt and versus borrowing at 11% versus discounting out homes? I'll start with that.

Yes. Thank you very much. It's a very good question, Simen. And I think you're basically laying out the whole kind of a simulation out there, and this is definitely the kind of the simulation that we have done. Regarding the financing itself, it is true that the interest rates are on a quite a high level for us, but for the whole industry and also in general. That's for sure. But as mentioned already earlier, so we had a plan already during the spring that this would happen, and we would be returning to the bond market. We also back then had already kind of agreed on certain amortizations regarding the RCF and term loans. So that was in the plan originally already. Also, what comes to the kind of the other options of releasing capital, we see that altogether, this bond was financially a very attractive solution for us. Since the market situation, especially here in Finland now is what we see, it's at least very near or even after a significant turning point. And in this kind of a market, trying to let's say, dumped a lot of the apartments to the market or sell some of the assets that are kind of included in the capital release program. Doing those transactions at the wrong time with the wrong price would actually destroy value more. So that's basically what we have considered. We have -- what I already mentioned, so we have also capacity in the market or we see the demand or capacity in the market to buy actually the whole stock of the apartments, but not kind of attractive enough terms. And that situation may change quite rapidly actually. Also regarding we have talked about the Mall of Tripla here. That's also kind of the same logic there. So we are basically seeing that at this market situation in Finland, we see that it's going to change in any case. It's a question of timing and optimizing the kind of the financing or the financial kind of a simulation altogether. Pretty long answer for your very good question, but that's definitely what we are -- what we have simulated. And we really think that executing this bond was very good option for us in this market situation, at least in short term.

[ Quite quickly ], you're putting a lot of structural bets here on the recovery in the housing market, et cetera, and the transactional property market. However, September is increased VAT in Finland and the housing allowance to students, et cetera, is also being cut. How do you look at those 2 elements for your case of a recovery in the Finnish housing market in Q4? Could you please give us a few details on what your views are on the increased VAT taxation and the cuts in housing allowance also and how you think that might impact the market?

Well, very good question that as well. And as we all know, it is extremely difficult to foresee what kind of impact on the VAT increase would be on the housing market. At the same time, what we really see is that the consumer confidence all together is the kind of a triggering factor for the market pickup to happen. And the consumer confidence is very much related on the uncertainties or the certainties of the cost of housing. In near history, it has been related to the energy prices, but now it's more on kind of relying on the interest rates. What we saw, the interest rate cut of 25 basis points ECB, that was, of course, forecasted beforehand. We see that as one trigger that increases the confidence amongst the consumers. Also other factors and probably forthcoming rate cuts by the ECB, those would trigger the -- or let's say, decrease the uncertainty amongst the consumers. We see those triggering factors. Regarding VAT, we won't -- we don't anticipate that will have a big impact on the housing market itself. So that's basically what we can comment here.

Yes. Okay. My last few questions. One, both the JVs, the one with RSJ Investments and the infra road maintenance divestment. Can you give us an indication of the volume and size of those joint ventures, please?

Starting with the latter one regarding the sales of the -- that was -- actually, we didn't sell the road maintenance. We actually stay as a maintenance partner for the Meridiam. We sold our stake of the road itself. We owned actually 20% of the whole asset together with the Meridiam. Meridiam had 80%. And kind of as a part of our capital release, it's not in the core of our strategy to own any roles or so. So we sold our ownership there. From cash flow perspective, I would argue that it's not that material. It's not a -- it wasn't a big deal for us. It's kind of continuing on the capital release tracks and finding kind of ways of capital release is more important. The deal size wasn't that big that we can argue, but not -- no any numbers that we can just disclose here.

And the Baltics?

Sorry?

Yes, and the other investments with RSJ?

Yes, the joint ventures. Yes, now the joint ventures that have been formed, they are material. They are for the longer period, those joint ventures and the assets that we have sold to the joint ventures, they are larger area projects in these countries that had tied quite a lot of capital for the plot and development of the projects. So that's more material. We cannot disclose any numbers regarding those, but we are planning to kind of provide a little bit of a more insight of the capacity of these joint ventures during the next couple of years in conjunction with the Q2 earnings release. So -- but those in size, those are more significant than the part of the road that we owned.

Okay. And my last question is in terms of being positive after investments on cash flow in 2024. What can you say, what is the major moving apartment? Are we -- how much of that will be existing homes, which is completed, being divested? And does it at all include Tripla?

I would like to actually repeat what I already said that 3 of the 4 cylinders in our engine are working. So we expect positive cash flows from the 3 of the 4 cylinders here. That's for sure. Then on top of that, selling the apartments from the inventory here in Finland, we have -- we anticipate that we are able to decrease the inventory level by doing attractive enough deals of the apartments, both to the consumers and investors. But we are not expecting -- as we have already said that we are not expecting that the market would heavily pick up during this year since we have now guided or stated in the outlook, actually, that Q2 and Q3 would stay on a pretty low level. So we are not basing our forecasts and simulations on a very kind of a heavy pickup of the housing market in Finland. So that's for sure. In CEE countries, we see that the market is in quite a steady state, and we expect the market to continue on good level and actually increasing or picking up even more in the Baltics. So those are kind of on which we are basing our forecasts. We are not basing our forecast on the sale of Mall of Tripla. That's for sure. But then again, we have stated that we have -- we evaluate our options regarding that asset, and we are continuing the active dialogue with the other owners as well. But we are not basing kind of our case on selling our stake this year.

Thanks, Simen. And next, Svante.

Actually a couple of questions left. Could you repeat what you said about the investor demand for your consumer apartments? Did you say that you basically had the bids for all of it? I'm just thinking of could you elaborate a bit on what kind of investors those are? Because I guess it's quite a limited number of investors who want to buy 1 apartment there and another elsewhere rather buying entire blocks.

Yes. Thank you, Svante. We see that there are investors in the market, mainly international investors that would be willing to buy the whole stock. And that's what we kind of said in our comment. There is capacity in the market. There is also interest and actually demand for those assets in the market. And that's a very good place to be from kind of -- from that perspective, that if we would be in the situation that we would like to and want to sell the whole stock, it seems that it would be possible. So that we can comment. First priority for us is definitely to continue the consumer sales and what has been stated before. Then on top of that, we are -- we have already actually this year executed a couple of smaller so-called bundle deals of apartments. There is also, for those kind of smaller deals, there is capacity and demand in the market. That has actually picked up from last year, and that we commented already in Q1. So definitely our first priority, sell consumers -- sell to consumers and second priority is to do smaller bundle deals. Third, would be a bigger deal to sell, let's say, a larger share of the stock or even the whole stock to the market. And that's also possible. But as you can see, so we haven't executed that kind of a deal so far. And that's based on the terms available so far.

That is clear. Then I mean, with your consumer apartments and you expect, was it 12 to 16 months to empty with current base? How do you look at -- I mean, at the same time, we also have quite big supply of rental apartments in the market, especially where you have unsold apartments. How do you look at the competition with that kind of -- in this light of that, perhaps the interest rate decline is slowing up a bit compared to half year ago, what the expectation was?

Yes. That is a very interesting one. First of all, regarding our own stock. So even with the current pace of sales, which has been, as we all know, on a quite low level, even with that base, the inventory would be sold out to consumers in 16 months or so, 12 to 16 months. And it's not a long time. It's 2025 spring or summer or latest during the autumn. At the same time, we see that there is very low supply -- new supply to the market from us and from the industry as a whole. And there is kind of a pent-up demand for new housing in the cities where we have the inventory. So for us, it's clear that there will be a situation where the demand would actually exceed the supply. And that's why we see that we are not that worried about our own inventory. So that's one thing. Then kind of comparing to the rental market, it's definitely a competition for us. Referring back to the other campaign, what we have, rent-to-buy campaign where we have 2 years' time frame on which the consumer can buy or actually, the consumer signs a letter of intent of buying the apartment, and then start to kind of pay as a rent. But then if the consumer decides eventually buy the apartment, those rents, so-called rents would be then deducted from the final price. So that has actually solved pretty much the problems, what we have seen both in capital area, but also in the growth cities like in Tampere. That has been very promising. And as we today have said that we have kind of -- we have completed dozens of deals by that campaign as well. So we really think that provide this kind of a new product or way to enter owning an apartment is quite an attractive comparing to the option of fully renting one. And that's something what we are, we want to accelerate on that track and compete with the kind of the rental option that the consumer has.

Thanks, Svante. And then from Emil.

Just to continue on the investor demand for your apartments. Can you a little bit highlight or open up what kind of prices they are offering? Because we haven't really seen a decline in new apartment prices, so I would assume that the investors are trying to really cherry-pick here and want to pay very low prices for the apartments.

Yes. Thank you, Emil. Well, we cannot, of course, comment on exact prices here. Sorry about that, but try to give you color on that. So when looking at the market situation here in Finland, so we really see that kind of the rock-bottom moment was already last year, both in terms of consumer demand but also investor demand. Back then, also kind of the price indications. Now I'm talking about last year, the price indication from the investors were pretty aggressive, and we didn't see that much potential in that in executing any bigger deals. It is clear now during this spring and early summer, these kind of investors have increasingly returned to the market. Also that has had an impact on the indicated prices upwards, I mean. So the situation is actually a lot better in the investor market, and this kind of an investor market during this year. But then again, as you can see, so we haven't so far executed any larger kind of deals regarding the stock, and that indicates that the terms and the prices are not attractive enough for us at least so far. But the -- let's say the development has continued to the right direction, and we see that we have actually passed the kind of the lowest point of demand, both in consumer and investor side. So that's a good place to be at the moment. And again, I will repeat that it's very kind of comforting to see that there is demand and the terms are not outrageous, to put it this way, to sell larger shares of the stock.

Okay. Could you just comment on are the prices offered, are they below the balance sheet value or above that?

We can comment that first of all, probably it's clear for everybody, but just for clarification. So the EUR 435 million in our balance sheet, the apartments, they are valued on the construction price on our balance sheet. We haven't been selling apartments below the balance sheet value. What we can comment that the price indications, some of them have been even lower, lower than the balance sheet value, probably more referring back to the last year's kind of indications. But anyway, so we are not in the situation that we would like to and we would have to sell below balance sheet values at these apartments. So that's clear for us.

Okay. Excellent. And then just last question on the sales you've had. Have you had any discounts on the prices in Finland, Baltics or CEE? Or is it just the kind of campaigns you have?

Yes, we have -- as mentioned, so we are basing and kind of accelerating our sales by the campaigns because it's not -- kind of the price sensitivity of demand is not working well in this kind of abnormal market situation. Giving direct price discount hasn't actually -- what we have seen, what some of the players in the market have done, it hasn't actually increased that much sales and demand. So that's why we are kind of continuing on the same track that we are willing to solve the problem that the consumer has at hand, and that's mainly related to kind of removing the uncertainty of doing apartment deals. Both of the campaigns are actually tackling that topic very well. That's why we see that both of the campaigns, what we are running now are supporting our sales. That's for sure. Then we have one which has been in the media, where we have one project in Estonia, where we have actually tried giving publicly 10% discount of the apartments. So that's one, that's kind of a pilot in Estonian market, what we have done. But then on top of that, Emil, your question, so we are negotiating one by one with the consumers. And I think it's fair to say that by these negotiations and using the campaigns, we have also negotiated on the price. So that's clear. But we don't see a viable option to give kind of a direct public discount since that hasn't actually increased sales, and we stay on the same track.

Thanks, Emil. And then we have a question from Mika Karppinen.

What kind of thoughts you have about new housing starts for consumers in Finland and any time table indications? And then do you have already some premarketing project ongoing?

Thank you, Mika. We are looking at the market very closely at the moment since we think that we are kind of near to the situation where there would be acceptable and lower risk levels and kind of a solid consumer demand. We have several projects ready to be started. That's very good to note that we have then when the time is right, so we have acceleration capability to put it this way. So we have several projects ready to be started. We have also -- we are -- there are presales going on at the moment as well. We have projects where we have pre-reservations already. And we see that during the second half of the year, we anticipate that the market would be in the situation that start-ups in Finland as well would make sense. But as said, so we are very closely monitoring the situation, and that's really city by city. For example, the situation in Tampere and Turku, it's very different from the capital area and cities like Jyväskylä and like that. So there are situation where we don't actually have any stock left. We probably have one apartment unsold in Tampere or even that could have been sold by now. So we don't have any inventory left there and there is consumer demand. So in these kind of cases, where we have the pre-reservations high enough and we have the financing in place, so then that would trigger new self-developed start-ups in Finland.

Okay. Are there any more questions? If not, thank you all for the excellent discussions. We will publish our second quarter results on the 26th of July. Wish you a great summer, and talk to you again in late July. Have a nice day.

Thank you very much.