Kojamo Oyj : Q3 2023

Interim Report

1 January-30 September 2023

Kojamo plc's Interim Report 1 January-30 September 2023

Total revenue and net rental income increased, occupancy rate improved

Unless otherwise stated, the comparison figures in brackets refer to the corresponding period of the previous year. The figures in this Interim Report have not been audited.

All statements made in this report regarding the company or its business are based on the views of the management, and the

sections addressing the general macro-economic or industry situation are based on third-party information.

If there are differences between different language versions of the Interim Report, the Finnish version is the official one.

Summary of July-September 2023

• Total revenue increased by 5.7 per cent to EUR 111.5 (105.4) million
• Net rental income increased by 6.3 per cent totalling EUR 83.1 (78.2) million. Net rental income represented 74.6 (74.1) per cent of total revenue
• Result before taxes was EUR -88.5 (90.8) million. The re- sult includes EUR -141.8 (35.8) million net result on the

valuation of investment properties at fair value. Earnings per share was EUR -0.29 (0.29)

• Funds From Operations (FFO) decreased by 0.4 per cent and amounted to EUR 48.5 (48.6) million
• Gross investments totalled EUR 45.0 (78.1) million, repre- senting 40.3 (74.1) per cent of total revenue

Summary of January-September 2023

• Total revenue increased by 7.6 per cent to EUR 328.6 (305.4) million
• Net rental income increased by 6.7 per cent to EUR 221.6 (207.6) million. Net rental income was 67.4 (68.0) per cent of total revenue
• Result before taxes was EUR 7.2 (248.6) million. The re- sult includes EUR -136.7 (110.9) million net result on the valuation of investment properties at fair value and EUR -0.1 (0.2) million in profits and losses from the sale of in- vestment properties. Earnings per share was EUR 0.02 (0.81)
• Funds From Operations (FFO) increased by 7.5 per cent to EUR 128.9 (120.0) million
• The fair value of investment properties was EUR 8.2 (8.9) billion at the end of the review period

• The financial occupancy rate was 92.7 (91.7) per cent for the review period
• Gross investments amounted to EUR 161.3 (416.5) mil- lion, or 49.1 (136.4) per cent of total revenue
• Equity per share was EUR 15.18 (17.96), and return on equity was 0.2 (6.1) per cent. Return on investment was
• 1. (5.1) per cent
• EPRA NRV (Net Reinstatement Value) per share fell by
• 1. per cent to EUR 19.11 (22.63)
• There were 779 (2,012) Lumo apartments under construc- tion at the end of the review period

Kojamo owned 40,192 (38,983) rental apartments at the end of the review period. Since September of last year, Kojamo has acquired 0 (985) apartments, completed 1,273 (1,562) apart- ments, sold 73 (0) and demolished or otherwise altered 9 (-48) apartments.

Interim Report 1 January-30 September 2023

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Outlook for Kojamo in 2023 (specified)

Kojamo estimates that in 2023, the Group's total revenue will increase by 7-8 per cent (previously 7-9 per cent) year-on- year. In addition, Kojamo estimates that the Group's FFO for 2023 will amount to between EUR 162-168 million, excluding non-recurring costs (previously EUR 158-167 million).

The outlook is based on the management's assessment of total revenue, property maintenance costs and repairs, administrative expenses, financial expenses, taxes to be paid and new development to be completed, as well as the management's view on future developments in the operating environment.

The outlook takes into account the estimated occupancy rate and rises in rents as well as the number of apartments to be

completed. In addition, the outlook takes into account the result of the repurchase of eurobonds and the effect on FFO of the financing arrangement made after the review period.

The outlook does not take into account the impact of potential acquisitions or disposals on total revenue and FFO.

The management can influence total revenue and FFO through the company's business operations. In contrast, the management has no influence over market trends, the regulatory environment or the competitive landscape.

Effects of Russia's war of aggression in Ukraine on Kojamo

The continuation of Russia's war of aggression is still reflected in the recovery of the world economy. In particular, there is still uncertainty associated with the energy market. The development of the Finnish economy has continued to be weak this year. Energy prices, which had risen sharply due to the war,

have fallen during the year, but in general, inflation has remained high. The rise in prices has affected Kojamo's maintenance costs, especially in the beginning of the year regarding heating costs and electricity prices.

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Key figures

	7-9/2023	7-9/2022	Change %	1-9/2023	1-9/2022	Change %	2022
Total revenue, M€	111.5	105.4	5.7	328.6	305.4	7.6	413.3
Net rental income, M€ *	83.1	78.2	6.3	221.6	207.6	6.7	280.1
Net rental income margin, % *	74.6	74.1		67.4	68.0		67.8
Profit/loss before taxes, M€ *	-88.5	90.8	-197.5	7.2	248.6	-97.1	-499.8
EBITDA, M€ *	-67.9	105.1	-164.7	55.0	291.0	-81.1	-441.3
EBITDA margin, % *	-60.9	99.7		16.7	95.3		-106.8
Adjusted EBITDA, M€ *	73.8	69.3	6.5	191.8	179.9	6.6	240.4
Adjusted EBITDA margin, % *	66.2	65.7		58.4	58.9		58.2
Funds From Operations (FFO), M€ *	48.5	48.6	-0.4	128.9	120.0	7.5	160.7
FFO margin, % *	43.5	46.1		39.2	39.3		38.9
FFO excluding non-recurring costs, M€ *	48.5	48.6	-0.4	128.9	120.0	7.5	160.7
Investment properties, M€				8,171.4	8,857.1	-7.7	8,150.2
Financial occupancy rate, %				92.7	91.7		92.0
Interest-bearing liabilities, M€ *				3,650.3	3,582.9	1.9	3,678.2
Return on equity (ROE), % *				0.2	6.1		-9.9
Return on investment (ROI), % *				1.2	5.1		-5.7
Equity ratio, % *				45.0	48.7		45.3
Loan to Value (LTV), % *				44.3	39.9		43.7
EPRA Net Reinstatement Value (NRV), M€				4,722.9	5,592.3	-15.6	4,825.9
Gross investments, M€ *	45.0	78.1	-42.4	161.3	416.5	-61.3	501.6
Number of personnel, end of the period				311	309		304

Key figures per share, €	7-9/2023	7-9/2022 Change %	1-9/2023	1-9/2022	Change %	2022
FFO per share *	0.20	0.20	0.0	0.52	0.49	6.1	0.65
Earnings per share	-0.29	0.29	-200.0	0.02	0.81	-97.5	-1.62
EPRA NRV per share				19.11	22.63	-15.6	19.53
Equity per share				15.18	17.96	-15.5	15.55

• In accordance with the guidelines issued by the European Securities and Markets Authority (ESMA), Kojamo provides an account of the Alterna- tive Performance Measures used by the Group in the Key figures, the formulas used in their calculation, and reconciliation calculations in accord- ance with ESMA guidelines section of the Interim Report

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CEO's review

Our operations developed as anticipated during the third quar- ter. Total revenue and net rental income grew, and occupancy rate improved from previous year. Our balance sheet remained strong.

During the summer and autumn, the rental market has been active as expected, and our cumulative occupancy rate im- proved. In the third quarter of the year, our occupancy rate rose to above 94 per cent. A large number of rental and owner-occupied apartments from construction projects started in previous years are being completed in the market still this year. Owner-occupied housing sales are subdued, increasing the number of unsold new apartments, and investors' interest for new rental housing investments is very low. The supply of completed rental apartments will continue to be high until the beginning of next year but will decrease sharply after that.

The outlook for construction has become bleaker. The number of new residential start-ups has collapsed during this year, and there are currently no signs of a significant increase in the number of start-ups next year. This will be reflected in the entire housing market in the next few years as a very low amount of new supply.

The shrinking supply and the continuation of urbanization and immigration are expected to have a positive effect on the rental market. The shrinking supply and the increased maintenance and financing costs will likely be reflected in the market during 2024-2025 as more strongly increasing rents.

Our saving programme announced in August is progressing according to the plan. Our goal is to achieve total savings of EUR 43 million in costs and investments in 2024, of which the

share of costs is estimated to be EUR 18 million. The personnel change negotiations related to the saving programme have been completed in accordance with the goals in October. We renewed our organization, especially in Housing department, to bring even better efficiency to our operations. The vast majority of personnel cost savings are realised through layoffs, and it is important for us to ensure the company's agile reaction ability when the situation on the market improves and our growth continues.

With regards to other savings, the plan is ready and its implementation has started. For the time being, we are not launching new development projects or modernization projects, and we are focusing our repairs to support renting. At the end of the review period, we still had 779 apartments under construc- tion, most of which will be completed this year. As part of measures to strengthen the company's financial situation, the company's Board of Directors decided that it will propose to the spring 2024 general meeting that no dividend for 2023 be paid.

We were able to utilize our development contributions from previous years when we made a demand response agreement with Vantaan Energia regarding district heating for the majority of our properties located in Vantaa. The room temperatures of Kojamo's properties are monitored using smart technology, and the use of heating in the properties can be optimized directly from Vantaa Energia's district heating network. The solution brings a total emission reduction of up to 20 percent to Kojamo's properties.

After the review period, we signed a EUR 425 million secured syndicated loan agreement with Nordic banks. The arrangement made with the five relationship banks is proof of the strength of our banking relationships. We had previously made financing arrangements for loans maturing in 2023, and the financing agreed on now will cover the loans maturing in 2024, including the bond maturing in June.

The uncertainty in the financial and real estate transaction markets has continued, and interest rates are not expected to decline in the near future. There were limited number of transactions in the market, and we have based the yield requirement increase of 0.07 percentage points on the opinion on an external expert. Adapting to the challenging situation and the new interest rate environment is still in progress for many play- ers. I believe that with active and proactive measures, we can ensure a strong position and our ability to grow in the future as the market situation turns more favourable again.

Jani Nieminen

CEO

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Operating environment

General operating environment

As Kojamo operates in the residential real estate sector, the company is affected particularly by the situation in the residential property market and development in Finnish growth cen- tres. The company is also affected by financial market situation

and interest rates, as well as macroeconomic factors, such as economic growth, employment, disposable income, inflation, regional population growth and household sizes.

Operating environment key figures

%	2023E	2022
GDP growth	0.0	1.6
Unemployment	7.1	6.8
Inflation	6.2	7.1

Source: Ministry of Finance, Economic survey 10/2023

According to the economic survey published by the Ministry of Finance in October, the situation of the global economy is two- fold. In the United States, economic growth has surprised positively due to the strong employment situation and the recovery of real incomes. In Europe, the outlook is becoming bleaker, and especially the situation in the service sector is deteriorating rapidly in the wake of industry. Inflation has slowed down, although core inflation remains high in many economies. Geopolitical tensions cast a shadow over the outlook of global economy.

In the United States and Europe, the central banks' interest rate hike cycle is estimated to be nearing its end. The lowering of key interest rates might not occur until much later next year,

and the market interest rates are expected to remain higher than in previous years.

The Finnish economy will contract during the year-end. The rise in prices and interest rates has reduced household consumption and investments, which is why economic growth will remain at zero this year. However, the Ministry of Finance estimates that the recession will remain mild and short-lived, and that the economy will turn to growth next year. Slowing inflation and wage increases boost the purchasing power of house- holds, and exports also start to grow. Employment will weaken in the short term, but it is expected to remain high.

Industry operating environment

Industry key figures

	2023E	2022
Residential start-ups, units	<16,000	37,200
of which non-subsidisedblock-of-flats	3,800	20,881
start-ups in the capital region	n/a	10,917
Building permits granted, annual, units *	23,115	36,775
Construction costs, change % **	1.9	5.3
Prices of old block-of-flats in the whole country, change, %	-2.5	-0.1
	-3.0-	-1.4-
Prices of old block-of-flats in the capital region, change, %	-1.5	-0.8
Rents of non-subsidised apartments in the whole country, change, %	2.3	0.9
Rents of non-subsidised apartments in the capital region, change, %	2.0-2.4	0.3-0.8

* Rolling 12 months, August 2023; ** 2023E: building cost index, September 2023

Sources: Confederation of Finnish Construction Industries (CFCI), economic forecast September 2023; Housing production information of the municipalities in the capital region; Statistics Finland, Building and dwelling production; Statistics Finland, Building cost index; Pellervo Economic Research PPT, Housing 2023 forecast

According to the Confederation of Finnish Construction Industries CFCI's economic forecast published in September, the number of residential start-ups this year will fall to a historically low level of around 16,000 apartments and will remain almost as low also next year. Based on the interim reports published

by construction companies, the number of start-ups during this year may be significantly lower than this.

CFCI estimates that the supply of apartments will continue to be high until the beginning of next year due to the ongoing

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housing production. However, due to the low start-up volumes, the supply will fall sharply in the next few years. In 2024 and 2025, the number of completed apartments is predicted to drop to a level lower than even during the financial crisis and the depression of the 90s.

The outlook for renovation construction, which usually grows more steadily, has also weakened, and its volume is estimated to shrink in the current year. Renovation construction, like new

construction, is weighed down by both rising interest rates and increased costs.

According to Ministry of Finance's construction-related report published in August, the sharp increase in construction costs that started in 2022 has calmed down significantly since the second quarter of 2023. The increase is expected to slow down further during the year-end.

Effects of urbanisation

	Population	Share of rental
	growth		household-
	forecast, %	dwelling units, %
Area	2022-2040	2010	2022
Helsinki	22.4	47.1	50.4
Capital region ¹⁾	25.9	41.9	46.6
Helsinki region ²⁾	n/a	37.7	42.6
Jyväskylä	8.0	40.2	46.0
Kuopio	3.5	36.5	42.1
Lahti	-0.2	37.3	42.0
Oulu	9.6	36.7	43.3
Tampere	17.6	42.2	51.5
Turku	18.1	43.0	51.8
Other areas	n/a	23.8	26.8

¹⁾ Helsinki, Espoo, Kauniainen, Vantaa

²⁾ Capital region, Hyvinkää, Järvenpää, Kerava, Kirkkonummi, Mäntsälä, Nurmijärvi, Pornainen, Porvoo, Riihimäki, Sipoo, Tuusula, Vihti Sources: Statistics Finland, Dwellings and Housing Conditions 2022; MDI, Population forecast 2040 (urbanization scenario), September 2023

According to the population forecast published by MDI in Sep- tember 2023, urbanization continues strongly, and regional differences are increasing. In the future, the population will be concentrated in large city areas largely with the rest of Finland weakening. In addition to migration within the country, immigration that has increased in the 2020s will advance urbaniza- tion. If immigration remains at the current level, it would maintain the slow growth of the population and the working-age population. Immigration is strong to the capital region as well other large cities.

Business operations

Kojamo is the largest private residential real estate company in Finland measured by the fair value of investment properties. Kojamo offers rental apartments and housing services for residents in Finnish growth centres. At the end of the review pe- riod, Kojamo's property portfolio comprised 40,192 (38,983) rental apartments. The fair value of Kojamo's investment properties at the end of the review period was EUR 8.2 (8.9) billion. Investment properties include completed apartments as well as development projects and land areas.

Measured at fair value on 30 September 2023, 97.8 per cent of Kojamo's rental apartments were located in the seven largest Finnish growth centres, 88.2 per cent in the Helsinki, Tampere and Turku regions and 76.3 per cent in the Helsinki region.

According to Nordea's Housing Market Review published in September 2023, population growth has accelerated during the year in the so-called growth triangle, i.e. the capital region, Tampere and Turku. The population growth of these municipalities has been this year the strongest in 30 years. At the same time as demand increases due to population growth and supply shrinks as construction slows down, the oversupply situation in the housing market is expected to level off.

Kojamo's share of the country's entire rental housing market is about four per cent.

Kojamo aims to create the best customer service experience for its customers, which is why the company has made significant investments in services. The Lumo webstore allows customers to rent a suitable apartment by paying the first month's rent, after which they can move into their new home as soon as the next day. Kojamo's resident cooperation model gives the residents an opportunity to influence the development of housing and Lumo services. Lumo apartments offer a range of different services, such as broadband internet connection included in the rent and a car sharing service.

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Financial development July-September 2023

Total revenue

Kojamo's total revenue increased to EUR 111.5 (105.4) mil- lion. Total revenue is generated entirely by income from rental operations.

Total revenue increased especially due to the rental apartments completed in 2022 and 2023 by around EUR 4.0 million, due to the development of rents and the financial occupancy rate by around EUR 1.7 million and due to the properties acquired in the summer of 2022 by around EUR 0.2 million.

Result and profitability

Net rental income increased to EUR 83.1 (78.2) million, which corresponds to 74.6 (74.1) per cent of total revenue. The

growth in net rental income was positively impacted by a EUR

6.1 million increase in total revenue and negatively impacted by EUR 1.8 million increase in maintenance costs.

Result before taxes was EUR -88.5 (90.8) million. The result includes EUR -141.8 (35.8) million net result on the valuation of investment properties at fair value. Result before taxes and excluding the net valuation result on the fair value assessment of investment properties decreased by EUR -1.7 million.

Financial income and expenses totalled EUR -20.3(-14.0) mil- lion. Financial income and expenses include EUR 0.2 (1.5) million in unrealised changes in the fair value of derivatives.

Funds From Operations (FFO) amounted to EUR 48.5 (48.6) million.

Financial development January-September 2023

Total revenue

Kojamo's total revenue increased to EUR 328.6 (305.4) mil- lion. Total revenue is generated entirely by income from rental operations.

Total revenue increased especially due to the rental apartments completed in 2022 and 2023 by around EUR 13.0 mil- lion, due to the development of rents and the financial occupancy rate by around EUR 4.7 million, and due to the properties acquired in the summer of 2022 by around EUR 4.6 mil- lion.

Result and profitability

Net rental income increased to EUR 221.6 (207.6) million, which corresponds to 67.4 (68.0) per cent of total revenue. The growth in net rental income was positively impacted by a EUR 23.2 million increase in total revenue and negatively impacted by a EUR 9.5 million increase in property maintenance costs, of which heating costs, credit losses and property taxes in particular were higher than in the comparison period.

Result before taxes was EUR 7.2 (248.6) million. The result includes EUR -136.7 (110.9) million net result on the valuation of investment properties at fair value and EUR -0.1 (0.2) million in

profits and losses from the sale of investment properties. The net result on the valuation of investment properties at fair value was mainly attributable to yield increase. The yield requirements are based on the opinion of an external expert since no significant comparable transactions were made in the market during January-September 2023. Valuation yields of the investment properties were increased on average by 0.07 percentage points during the third quarter. Result before taxes and excluding the net valuation result on the fair value assessment of investment properties increased by EUR 6.2 million.

Financial income and expenses totalled EUR -46.9(-41.5) mil- lion. Gains and losses on the valuation of investments amounted to EUR 1.1 (-2.4) million and the unrealised change in the fair value of derivatives EUR 0.4 (6.6) million. A profit of EUR 8.7 million was recorded in financial income as the difference between the nominal value of the repurchased bonds and their purchase prices. Interest expenses increased by EUR 12.0 million year-on-year due to the higher amount of interest -bearing liabilities and the increase in interest rates.

Funds From Operations (FFO) amounted to EUR 128.9 (120.0) million. The increase in FFO was attributable especially to the improvement in net rental income and the profit from the repurchase of bonds during the review period.

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Balance sheet, cash flow and financing

	30 Sep 2023	30 Sep 2022	31 Dec 2022
Balance sheet total, M€	8,348.4	9,125.5	8,482.3
Equity, M€	3,751.9	4,438.8	3,842.7
Equity per share, €	15.18	17.96	15.55
Equity ratio, %	45.0	48.7	45.3
Return on equity (ROE), %	0.2	6.1	-9.9
Return on investment (ROI), %	1.2	5.1	-5.7
Interest-bearing liabilities, M€	3,650.3	3,582.9	3,678.2
Loan to Value (LTV), %	44.3	39.9	43.7
Coverage ratio	3.9	3.9	3.8
Average interest rate of loan portfolio, % *	2.3	1.7	1.9
Average loan maturity, years	2.9	3.7	3.5
Cash and cash equivalents, M€	32.4	53.2	119.4

* Includes interest rate derivatives

Kojamo's liquidity was good during the review period. At the end of the period, Kojamo's cash and cash equivalents stood at EUR 32.4 (53.2) million and liquid financial assets at EUR 27.9 (108.3) million.

EUR 29.8 (29.9) million of the EUR 250 million commercial paper programme was in use at the end of the review period. Kojamo has committed credit facilities of EUR 300 million and an uncommitted credit facility of EUR 5 million that were unused at the end of the period. In addition, EUR 200 million of the syndicated loan mentioned below had not been drawn at the end of the review period.

The following financing arrangements were made during the review period:

In April, Kojamo plc signed a new EUR 75 million credit agreement with Aktia Bank Plc. The credit agreement is unsecured

and has a maturity of five years. The loan was used for the re- financing of a EUR 50 million credit agreement with Aktia that matured in summer 2023, as well as for the group's general financing needs.

In May, Kojamo plc signed a new EUR 425 million credit facility agreement linked to its sustainability targets together with six relationship banks. The syndicated loan is secured and has a maturity of three years with two one-year extension options. The loan will be used for the refinancing of company's existing indebtedness as well as for the group's general financing needs.

In June, Kojamo plc announced that it would repurchase with a public tender offer a maximum of EUR 150 million of its bonds maturing in 2024 and 2025. The bond maturing in 2024 was repurchased for EUR 65.5 million and the bond maturing in 2025 for EUR 84.5 million.

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Real estate property and fair value

M€	30 Sep 2023	30 Sep 2022	31 Dec 2022
Fair value of investment properties on 1 Jan ¹⁾	8,150.2	8,327.5	8,327.5
Acquisition of investment properties ¹⁾ ²⁾	141.4	403.9	478.9
Modernisation investments	20.6	12.6	22.5
Disposals of investment properties	-7.5	-1.3	-1.3
Capitalised borrowing costs	3.5	3.6	4.6
Profit/loss on fair value of investment properties ¹⁾	-136.7	110.9	-682.0
Fair value of investment properties at the end of the period	8,171.4	8,857.1	8,150.2

¹⁾ Includes leases for plots of land

²⁾ Includes the existing apartment stock and the acquisition costs of new projects under construction

Kojamo owned a total of 40,192 (38,983) rental apartments at the end of the review period.

The fair value of Kojamo's investment properties is determined quarterly on the basis of the company's own evaluation. An external expert gives a statement on the valuation of Kojamo's investment properties. The latest valuation statement was issued on the situation as at 30 September 2023. The criteria for determining fair value are presented in the Notes to the Financial Statements.

At the end of the review period, the plot and real estate development reserve held by the Group totalled about 217,000 floor sq.m (164,000 floor sq.m). The fair value of the plot and real estate development reserve (including the Metropolia proper- ties) was EUR 194.9 (138.7) million at the end of the review period.

Rental housing

Apartments	30 Sep 2023	30 Sep 2022	31 Dec 2022
Number of apartments	40,192	38,983	39,231
Average rent, €/m²/month	17.76	17.49	17.55
Average rent, €/m²/month, yearly average	17.72	17.22	17.30

Kojamo responds to the trends of urbanisation, digitalisation and communality in accordance with its strategy, providing its customers with apartments with good locations and services that make daily life easier, increase the attractiveness of housing and improve the sense of community. Kojamo's properties

form a networked service platform that enables agile innovation implementation in cooperation with other operators.

All Lumo rental apartments are also easily available for rent on the Lumo webstore.

Rental housing key figures

%	1-9/2023	1-9/2022	1-12/2022
Financial occupancy rate	92.7	91.7	92.0
Tenant turnover rate, excluding internal turnover	22.1	23.8	31.1
Like-for-Like rental income growth *	1.9	-0.1	0.3
Rent receivables in proportion to revenue	1.5	1.3	1.5

* Change of rental income for properties owned for two consecutive years in the past 12 months compared to the previous 12-month period

The financial occupancy rate was 92.7 (91.7) per cent for the review period. At the end of the period, 109 (267) apartments were vacant due to renovations.

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