Good afternoon, ladies and gentlemen, welcome to Kojamo's Q1 results news conference. My name is Niina Saarto. I'm investor relations director. Today's presenters are familiar faces. We have Jani Nieminen, our CEO, as well as Erik Hjelt, CFO, who will tell you shortly how the year has started for the company. After the presentation there is a chance to ask questions. First, we take questions from the live audience here in the room and then from the other participants. If you want to ask a question, please push the hand sign on the right corner on the screen. You will be put in the queue, and when it's your turn to ask a question, please unmute yourself. Let's move on, and first, I would like to invite Jani over here. Thank you.
Thank you, Nina. Good afternoon on my behalf as well. Nice to be here again, providing some color on what's going on here in Finland and in Kojamo, of course, especially. The agenda is a normal one. I'm providing a summary of what's been going on in January, March. Our CFO, Erik Hjelt, will provide a bit deeper color concerning the financial development, and then we wrap things up as a summary, and we'll move then to Q&A. A starting point, of course, is that the year has started along with our expectations. No big surprises anywhere. Our total revenue and rental income grew as we expected. Occupancy rate improved compared to the comparison period, as well compared to last year whole year figure. There it's good to understand that there's always some seasonality concerning the occupancy.
Typically in this industry, occupancy goes down towards the summer and then picks up speed during the summertime and we reach in industry the highest figures towards the autumn. That's the typical manner. Now what we have seen in the market is still supply coming to the market from existing projects, so there's a competition situation between the players in the market. On the other hand, we saw already last autumn that the number of new development projects went down severely. We did stop making new investment decisions and so have all the other players, and we already see that going forward, the supply coming from new development projects completed to the market will go down at the end of this year, and supply-demand balance will be totally different going to year 2024.
At the same time, as said, our occupancy was stronger than comparison period of time and even as there is some seasonality, I'm glad to tell that we have seen the bottom. We are not going down with our occupancy today. Looking forward, I expect our occupancy to pick up positive speed. Some changes made there. We've been successful in improving our housing management services. That's been impacting on 2 positive aspects. NPS, Net Promoter Score, is on the highest ever level, and we have witnessed that the tenant turnover has come down a bit. That of course helps us. Now we are moving at the moment towards the most hectic season in rental business. In that sense, things are looking today more positive at the moment and the further you look, the rental business looks the better.
No substantial changes in fair value of investment properties. There it's important to keep in mind that we actually did make an adjustment with the valuation parameters already during Q4 last year. The impact then was minus 9%. In my eyes, not all the players have been acting according to the market yet, but we did react already at Q4, and now no major changes there. In this current market environment, it is really important that our balance sheet is strong, and there we are proud. Of course, after a review period, we made a financial arrangement which actually makes us stronger both in liquidity and looking for the expiring loans. High hedging rates are still, there's been a positive impact, of course, reducing the impact of interest rates.
If you look at the whole operational environment, of course, the outlook for the world economy is still uncertain. Inflation remains rapid, and central banks have continued to increase interest levels. Even though Finland's economic growth is expected to be weak, the employment situation is good and that provides a solid base for us as landlord. On the other hand, on the right-hand side, we see figures, the official estimates. Today, the official estimate concerning residential startups this year is 27,000. When I was here last providing information, the official estimate was 36,000 apartments to be started this year. At that point I said that my personal view of the was that ain't gonna happen. Today, I'm saying that 27,000 apartments will not be started this year. High hopes is too and low figure.
That part of business is going towards quite cloudy weathers. Not many residential construction projects will be started this year. That of course provides the impact that the demand supply balance will rapidly change next year. At the same time, which is kind of surprising, is that we see construction costs increases leveling off, but they are not coming down, especially the material costs have not been coming down. That's a problem this construction business industry has to be able to solve before they have the capabilities to start new projects. Current environment as well impacting housing trade volumes. The official estimate today is that prices of old block of flats will go down between 1.5%-3%. I would estimate that the adjustment will be between 5%-6% downwards.
On the other hand, rental increases at the moment between 2%-2.5%. Looking forward, moving to 2024, it will pick up speed rapidly. Quite a different market whether you play on selling owner-occupied homes or whether you are at a rental apartments business today. For us, it's very important that actually the mega trends creating long-term demand for rental apartments are valid. The big cities in Finland are growing. It took a while after COVID-19 before Helsinki region started to pick up speed in order to grow. That started happening during the latter part of that last year. Now all the big cities are growing again.
On the other hand, we still have an increasing number of small households here in Finland, meaning 1 or 2 person households, and they typically tend to rent the apartments, not to buy the apartments. 1, I guess, piece of news to be told is that we are really capable to say from our data that pandemic did not change the demand for small apartments. People do rent studios and 1-bedroom apartments. Here in Finland, it did not happen. Not all the people are moving towards Lapland or living in very big homes. They prefer the efficiency of smaller homes. As said prior, even though Finland's been known as owner-occupied country, in the big cities, the truth is totally different. For example, in cities like Helsinki, Turku, and Tampere, actually more households live in rental apartments than in owner-occupied apartments.
That portion of rental apartments is still increasing. Additional what's been going on, if you combine these aspects, interest levels picking up speed, going upwards, uncertainty concerning economy, consumer confidence worrying people, makes people hesitating to buy apartments. There's lack of buyers in owner-occupied markets, nothing happening. Will create pressure towards the rental market. Actually, the appealing towards our business is growing. During pandemic, we saw that we were in a era where construction volumes were high. Volumes to the market were completed in high numbers. At the same time, all of a sudden, the population growth stopped. That created a temporary impact in the market. What's now happening is we are moving back towards a similar time as it was maybe 10 years ago. We are moving towards an era with an undersupply and overdemand.
The number of residential startups is most probably at the same level as 10 years ago. Looking, for example, 2014 if not the lowest number in 15 years. Moving to page 8 and our key figures. All things have been proceeding as expected. Total revenue grew by 8.8%, meaning EUR 8.7 million. Reasons behind that, three aspects: of course, completed apartments last year, providing now rental income for the full year. Completed apartments this year already. Of course, the acquisition made last summer, providing now turnover for the whole year. Last but not the least, the like-for-like growth, which is now positive 2.2%. Net rental income grew by 4.3%. There it's good to know that the maintenance expenses grew by EUR 5.8 million.
Of course, pricing issues concerning, for example, heating. Then, property taxes, a combination of the tax base, and the bigger portfolio, and then a minor growing in repairs. Then FFO, funds from operations, basically on the same level as comparison year, impacted by a combination of increased maintenance and then financing. Fair value of investment properties today, EUR 8.2 billion. No material changes there. Actually, if we compare the figure now at the year-end, it grew by EUR 46.8 million because of new development projects. Gross investments to the end of Q1, EUR 54.9 million. That's basically mainly new projects, and then EUR 8.5 million of modernization investments. Profit excluding changes in value, EUR 33 million. Biggest change there against the comparison year is the financing cost.
The loan portfolio is a bit bigger. Profit and loss before tax is EUR 24 million, and there, the explanation is that corresponding period, there was a positive impact from changes of fair values, EUR 27.9 million, and this year the figure was minus EUR 9 million. Taking a look at ongoing development projects. As said, at the moment, we do not make any new investment decisions. We are carrying on with ongoing projects. They all are proceeding in a normal manner as planned. Development gains there are still solid, about 15%. Basically 1,600 apartments under construction, and towards the year-end after Q1, a bit more than 1,000 units to be completed.
Then as we see, looking to the year 2024, the number of completions is going down severely as we have not made any new investment decisions since last autumn. Actually this will happen throughout the market that basically very limited number of new completions coming to the market starting next year. During Q1, we actually completed properties in 5 locations, 319 apartments. Here's 4 examples. Two properties located in Vantaa, 1 in Espoo, and 1 in Helsinki. Actually good, successful projects and the occupancy is on a high level in all these projects. We wanted to provide a piece of information concerning the customer base matching the housing portfolio. If we first start taking a look at the housing portfolio, 73% of the housing stock is either studios or one-bedroom apartments.
That's been the case throughout the years from 72.5, now 73%. If we look at our customers, it tells us a story that 76.8% of our tenants are households of 1 or 2 person. If we look at the customer base divided by age groups, it's quite well-balanced. That's the first thing to be noted. If we would calculate it in such a manner that we think that most often tenants above the age of 25 and below 65 are in a working life situation, the part of that group is close to 75% of our tenants, so excluding the youngest segment. Moving to page 12, and sustainability. Sustainability has always been a big part of our daily operations.
We've been proud to say that ESG is part of our DNA. We have committed to UN Sustainable Development Goals. Our target is that by 2030, our property portfolio will be carbon-free in terms of energy consumption. We're now providing a couple of figures concerning ESG, and I'm happy to say that we are proceeding systematically and successfully with our aims and targets, and we've been having some good results. For example, carbon dioxide reduction, -8.5%. Net Promoter Score on the highest level ever. On the other hand, the digital services, now 83% of our tenants use MyLumo services on regular basis. We know that 90% as a target is demanding. It's a high target, we now already are on a level of 83. If Erik will provide a bit deeper color on financial.
Thank you, Jani, and good afternoon, everybody, from my side as well. If you first look, total revenue growth, EUR 8.7 million. That's driven by like-for-like growth, 0.84%. There we have a positive side, rent and water charges increases 2.2%, and then a negative side, occupancy rate, 1.4%. The portfolio acquisition last summer has contributed EUR 1 million for the top-line growth, the rest comes from the mainly finalized developments 2022. Of course, we have completed 319 apartments already Q1 this year, but they are not contributing that much for the Q1 because they completed during the Q1. Last year completed apartments of course contributing for top-line growth.
Net rental income growth was EUR 2.5 million. Maintenance expenses increased EUR 5.8 million. Biggest items, growth items there were heating, EUR 2 million, and property taxes, EUR 2.4 million. Other items were quite small. If you look, maintenance expenses, euros per square meter per month, there the growth was 10.8%. Of course, the underlying portfolio grew during the Q1 when we were compared to last year's Q1 figures. If you look, profit before taxes, first, loss on fair value of investment properties, EUR 9 million. There were no relevant transactions in the market during Q1, and we kept all key parameters unchanged during Q1 valuation. There were some positive figures included in that valuation.
The development gain was clearly a positive side. These 4 process completed, there the development gain was well above 20%. There was one property where the restriction ended, and that contributed almost EUR 3 million. On the negative side, some changes in cash flows and aging that all were put together, the loss was EUR 9 million. No major changes there. If you look, profit before taxes, excluding the change in fair value investment properties, that was negative EUR 2 million, and mainly driven by higher financial expenses, EUR 4.3 million.
There's good to note that Q1 last year, there was unrealized change in fair value of derivatives, a positive EUR 3 million. On the right-hand side, we have these FFO figures. They're pretty much on the same level as last year Q1. Net rental income, a positive figure there, EUR 2.5 million. SG&A expenses pretty much unchanged. The change was only EUR 0.4 million. Financial expenses, EUR 2.8 million growth, because of the bigger portfolio, underlying portfolio. The average cost of financing stayed pretty much unchanged. Cash taxes, negative EUR 0.3, and others, EUR 0.2 million. Financial occupancy rate improved slightly, as Joni mentioned, compared to Q1 last year and a year, a whole year figure last year.
Our tenant turnover came down to 1.1 percentage points, a clear improvement there. I think we covered already this like-for-like rental growth. If you look our gross investments, EUR 54.9 million, EUR 50.3 million ongoing developments, EUR 125 million to be completed, these ongoing developments, then EUR 4.6 million modernization investments. Repairs growth there, EUR 0.5 million, and modernization investments, up EUR 3 million. If you then look, the value of investment properties, EUR 8.2 billion, pretty much on the same level as of year-end. As said, no significant transactions in the market. The average valuation yield 3.97 unchanged in Q1 valuation.
Going forward, it's good to keep in mind that there are a couple of positive items to keep in mind. One is that the development gain in this ongoing developments is still between 15% and 20%, and that will of course have a positive impact when completed. There's going to be an uplift in properties that comes out of the restriction of 1,200 apartments, and the uplift it will be between EUR 100 million and EUR 110 million. Those restrictions will gradually end by 2024. This year and next year. Biggest portion next year. Of course, the growing top line is going to have a positive impact on values as well. We have strong balance sheet.
We have set a target for loan-to-value to below 50 and equity ratio above 40. At the end of Q1, loan-to-value was 42.9, so quite sizable buffer against this 50% level. Our public rating, Baa2 from Moody's, is pretty much anchored to these levels as well. The buffer in loan-to-value figure against this 50% level where or was it the hurdle for current public rating from LTV-wise, is EUR 1.1 billion in value. Of investment properties. Quite sizable buffer there. Our financial key figures are strong. At the end of Q1, we had cash and cash equivalents plus financial assets put together EUR 166 million.
On top of that, we have committed unused credit facilities in place, EUR 300 million. We have EUR 250 million commercial paper program in place. Outstanding commercial papers at the end of Q1 was EUR 29.8 million. Interest-bearing liabilities in total, little more than EUR 3.6 billion. Hedging ratio is still very high, 84%. Average interest rate quite low in current circumstances, 1.9%. Of course, the high hedging ratio smoothen things for us. Average loan maturity and average interest, fixed interest rate period, both 3 or slightly above 3 years. We are extremely happy that after the reporting period, we completed two financial agreements, one with Aktia Bank, EUR 75 million unsecured, 5 years loan.
Another one syndicated EUR 425 million secured, 3 years maturity. On top of that, there is 2, 1 years extension options included in that loan. There we have 6 Nordic banks, our relationship banks, and we are extremely happy with both these financial arrangement. The maturity profile shown in this on this page is before these financial arrangement. The idea, of course, to use major part of these 2 loans to refinance existing loans. We basically don't have any additional financial needs for this year. EPRA NRV 19.23. Of course, compared to last year figures, the fair value decrease at the end of last year played a role there, the declining of EPRA NRV.
Page 23, we have our strategic KPIs, very strong actually. The top line growth, 8.8%. Investments, 54.9%. FFO against total revenue, 26.6%. There is good to keep in mind that the whole year's finance property taxes are already booked during Q1, and total amount on property tax is around EUR 41.4 million. Excluding that, so the if that's allocated for the whole year, I mean, the property tax is allocated for the whole year, the FFO against total revenue is clearly above this 36%. Loan-to-value, equity ratio strong as already mentioned. We are extremely happy that our Net Promoter Score improved and very strong figure there. Our outlook for this year, we kept that unchanged.
We estimate that the top line growth is going to be between 7% and 10%, and we estimate that the FFO is going to be between EUR 153 million to EUR 165 million. If you look first the top line growth guidance, to be there above 7% level, so the low end of that range, that requires that we are able to increase rents and water charges between 2.2% and 2.5%. That's what we've been doing, and more than half of this year's rent increases already happened. Acquisitions 2022 are of course contributing there because now they are generating cash flows for whole year. Last year completed developments and developments to be completed this year.
When you put these together, we are already above the 7% level. On top of that is coming the improving occupancy, and that of course is our plans. Q1 figures show, we are clearly above this 7% level. If we look the FFO guidance, that of course reflects the top line guidance range. The midpoint of this FFO guidance, we assume the normal weather for this year, no major price increases when it comes to the maintenance expenses, SGA expenses, repairs in line with 2022 figures, no new financing agreements arrangement this year.
One note there is that this outlook is given without taking into account a potential acquisition or disposals nor the impact of potential prematural funding of the Eurobond due in 2024. That remains to be seen, what is the time to refinance and that and then, and what is going to be the price of that refinancing. That said, we don't need to do any additional financing arrangement this year. Dividend policy, no changes there. The 60% of FFO paid dividend and decided yearly. Now back to Jani.
Thank you, Erik. Yeah, to summarize, I think it's easy to say that everything continued steadily. Revenue growth. Net rental income grew as we estimated and expected. I'm happy that we were able to improve our daily operations in housing management, especially here in Capital Region, providing a positive impact with the customers, impacting the Net Promoter Score. Occupancy rate developed positively. Demand for rental apartments is on the rise. Actually, if we combine the successful improvement in daily operations and a thing we did after the review period, we moved to an even, I would say, more agile, active pricing model on micro location level to really understand the problems in the vacancy. That seems to be providing positive impacts.
Only a couple of weeks ongoing project, on a daily basis, I'm happy to say that I can see the positive change there. Looking forward, expecting to have a positive impact on the occupancy, positive impact throughout this year, and as said, the overall market going forward to 2024 will actually improve in the rental markets. Our balance sheet is strong and liquidity has remained good. As earlier said, we are extremely happy after the arrangement we did after the review period. Thank you.
Thank you, Jani, and thank you, Erik, for the presentation. We can now jump to the Q&A part. Do we have any questions from the room here? Please go ahead, Svante.
Thank you for the presentation. Svante Krokfors from Nordea. A couple of questions. First one regarding the quite big supply of apartments to the market, especially Helsinki region. How do you look at how long it will take to digest that volume?
Till the end of this year. As said, we moved to a more agile, active pricing. I see now it as a temporary peak as a supply. Now reducing the vacancy builds up capabilities to actually increase the levels for rents next year. Now it's, I would say six to nine months still supply in the market. The biggest demand will start now, and will keep on going until the autumn, and then it's the right time to see what's going on with, with the supply in the market.
Thank you. Then on the transaction market, no deals obviously. What's your view of the interest in the market currently? I mean, have potential buyers disappeared or is it just that the spread is too big between buyers and sellers?
Yeah. It's true that no evidence in the market, a limited number of couple of small transactions. No data from the market, providing no reason to react. We reacted already during Q4. We follow the market. It seems that buyers are coming back to the market. It remains to be seen whether there's a need for some players to make fire sales. We don't have any needs at the moment to make fire sales. I think we will see a limited number of transactions with this year. At some point, things will settle down. I've seen this business for a long time. We're able to conduct reasonable, profitable business in different environments. It's been the uncertainty, where are the rates moving. Once they settle, we will see transactions.
Thank you. Regarding the new credit facility, EUR 425 million, could you tell a bit about the margins there? I don't think you disclosed it in the announcement. Also, a bit about the timing, how you will take it into use.
It's floating. The margin is mid 100 basis points. The availability period or in that loan agreed to be mid-October until mid-October, and we are allowed to take the loan in maximum 4 installments. It depends. We try to optimize when we really need the money, not with the 1 goal but not decided yet exactly when. Quite long availability period, of course, allows us to optimize when to take the money in.
Okay. Thank you. That's very clear. Perhaps also, I mean, the credit facility was a secured one. How do you look at your, I mean, unencumbered assets and secured solvency ratio? I mean, I guess in your covenants you have a 0.45 mention. I guess Moody's is a bit more quite more stricter on that. How do you look at.
We still have quite sizable buffer against these requirements by Moody's or requirements by the documentation existing financing. There's plenty of room left to do secured financing going forward if decided to do so. For us it has been important to have access different source of financing and it's. This is a good example that the bank financing seems to be there and banks seems to prefer a secured financing. Having said that, it's good to keep in mind that we just made a 1 agreement unsecured recently. But it's good to have that in your toolkit, and we are able to do quite sizable secured financing going forward as well.
In the longer term, we would prefer, of course, unsecured financing given the requirement by Moody's and given the fact that, at some point of time we want to tap the Eurobond market again. That market typically is operating unsecured, so we want to have access for that financing as well. It's good to have source of different financing, and we have the capability to use secured financing going forward as well, but we prefer unsecured. Not decided what is going to be the next financing arrangement, whether it's going to be bank financing or bond financing or secured, unsecured. I said, it's good to have all in your toolkit.
Thank you. Continuation on that, on your EUR 500 million Eurobond, maturing next year. What is your kind of timeline there? When can we start to hear something regarding that? Could you tell a bit what.
This finance arrangement we made this week is partly used for refinancing that. And, of course, not covering the whole. This gives us a flexibility to optimize what is the right timing to take care of the remaining part of that bond. I would say that the earliest we would do it late summer this year, and at the latest perhaps by the end of this year. That's quite large range. I like large ranges, but we need to look where the market is heading and what is the optimal timing for that. At the end of this summer at the earliest, but by the end of this year at the latest.
Okay. Thank you. That's all from me.
Seems we don't have any further questions from here, so we can start taking the other questions. If you wanna ask a question, please see the hand button and click that. When you hear your name stated, you should unmute yourself and see the left-hand side on your screen.
The first question comes from John Vuong. You can now unmute your microphone.
Hi. Good afternoon. Can you hear me?
Yeah.
Okay. Perfect. Thank you. Thank you for taking my questions. Just on the operational data, I appreciate that you reported that like-for-like top line coming in at +0.8%, but the NOI margin has also come down substantially because of the higher maintenance costs. Could you provide a bit more color on what like-for-like operating costs were, or maybe even like-for-like NOI growth?
If you look the cost side, as mentioned, the Europe square meter per month growth was 10.8%. That pretty much represents the price increases, what we've seen in the market. Biggest portion of the maintenance expenses is clearly heating and the heating cost were increased quite substantial during the Q1. These district heating providers, they typically send the pricing for next six or 12 months. Q1, of course, the pricing has been what decided late last year.
Now the new pricing is coming in, and it seems that the pricing today for the next 6-12 months is clearly lower than what we've seen, what we had at the end of or last year, so during Q1. That is 1 part going forward. Other thing is that, of course, weather plays a role there. The winter was quite mild this year. Now the winter is behind us and of course the remaining part of the year in our guidance is based on the midpoint, and guidance based on so-called average weather. During the summer usually nothing big happens but then a couple last months of the year plays a role.
What is the weather going to be like there? Electricity is of course one big part of the story as well and there the prices came down very much by the end of Q1. The electricity prices is going to be much lower level than we've seen so far. Property taxes plays a role there. The percentage of the property taxes didn't changed, but the tax authorities they take up the values used in property taxes. That's pretty much what you have in your books, because we already booked all property taxes during Q1.
The top line growth is there very strong and the margin is. I think the highest costs for this year most likely are now behind us given the what I just described regarding heating and electricity.
Okay. That's very clear. Thank you. Given the 2%-2.5% guidance on rent and water charge increases, I suppose that you're happy to absorb these costs as a landlord?
That's where we are right now and more than half of this year's rent increase or water charge increases already happened. Biggest portion. It is rotating and every month we send a new pricing for portion of the total portfolio. Still March is by far the biggest amount of customers receiving the letters, so more than half of this year increases already taking place. As Jani mentioned, so the supply demand balance is going to change towards the end of this year. We estimate that especially starting 2024 we are able to increase the rents more than what we have seen in last 2 or 3 years.
Okay. That's clear. maybe moving on to the units that are getting off restrictions. You mentioned that you get gains from EUR 100 million-EUR 110 million. Could you provide some color on what yield these assets will be repriced to?
The yield is pretty close to the average what we have in our portfolio.
Okay. That's clear. Thank you. That's it from my side.
The next question comes from Andres Toome. You can now unmute yourself. Andres, please unmute your microphone. Andres Toome, please unmute your microphone.
Sorry. Can you hear me now?
Yes. Thank you.
All right. Sorry about that. My first question is about the EUR 425 million secured loan you've signed. Firstly, to confirm, did you say that this is on a floating rate?
It's floating. Yes.
I'm just wondering, why did you decide to go on a floater? I guess your hedging ratio then as a result will come down to maybe more closer to 80% or below that.
Typically bank loans are floating, and we have a hedging strategy that 50%-100% of the loan portfolio all the times will be hedged. We used fixed loans, fixed financing, and interest derivatives to keep the hedging ratio high. It's an other decision by the company whether to and when to hedge that. It's the loan as such is floating, but we are able to hedge it by using interest swaps actually. That's something we are working. It doesn't make any sense to hedge it today when we are taking the loan in later. We are able to keep our hedging ratio high regardless of the fact that this is a floating floating loan.
Okay. I'm just wondering also in terms of the valuation that formed the basis for this loan. Did the bank do their own appraisal and was that different from your book value estimates of these assets?
We don't exactly know what Work Banks has done and, but I'm convinced that they have do their own values as well. In this type of agreements and arrangements, typically there's a third party, and in this case being Jones Lang LaSalle who gave their view on valuation.
Okay. Understood. In terms of generally looking at the banking financing market, are you seeing that LTV and ICR caps are getting tighter for new lending? Or how is the sort of criteria for banks at the moment?
We haven't actually used secured financing for quite some time. I can't comment what is the, all the value levels. Interest coverage governance are exactly the same what we have in our loan arrangements.
Okay. A final question, just trying to understand also about the rental demand in Helsinki, and you point to sort of longer term improvement in fundamentals because supply is coming off. Just wondering, is there anything in the data that you're observing showing you that there's improvement in the short term as well, in terms of demand and maybe, just on the number of apartments that are available for let?
You're of course able to collect data from commercial portals, which we do. Until the end of Q1, it seemed that the supply in the market was increasing, and April actually shows that the supply came a bit down throughout all the big cities. As said, we've been able to actually improve our processes and started a new way of active pricing in order to temporarily pick up speed with reducing vacancy. Most hectic period of year is now starting in rental markets. That will take away supply from the market. We are in a way getting ready towards the year-end to pick up speed with rent increases looking 2024. It remains to be seen whether that's possible already during the last quarter of this year.
Okay. Thank you very much. That's all from me.
There are no more questions in the talk back queue.
Okay. Thank you. We have some questions via chat. Let's see. About rating agency. Have you had any discussions with the agency? If so, have they flagged any issues or questions, or are they paying special attention to some specific metrics?
We had a management meeting with Moody's 2 months ago. After that meeting, they gave the same rating, Baa2, and they changed the outlook from stable to negative. I think that was a precautious because the key figures are in line what our current public rating requires. Of course, in their metrics there are several figures that they looked at total market, they looked at the company as such, the brand and the portfolio. It looks that the key parameters they are looking today are loan-to-value coverage ratio and net debt to EBITDA.
Thank you. About the valuation parameters, can you give some color? Is it still fair for your valuers to use occupancy rate assumption of 97% when yours is standing at 92%?
That is good to keep in mind that the parameters are for the next 10 years. That's a long-term vision concerning the market. As now said, we estimate that the market looks quite different starting next year. On the other hand, it's important to keep in mind that, yes, occupancy estimate is one parameter in that calculation. On the other hand, we've been, in a way, cautious that all the vacant apartments in Helsinki region, capital region, are kept vacant 12 months in that calculation in addition to that estimate. That kind of takes care of the short term difference.
Okay. We more or less discussed the new secured facility and its terms. The last question from here is about occupancy rate. It's standing at 92.2%. Do you think that you're on track to land at the lower end of your guidance range? What does it require to reach the upper end of the range?
Thank you for the question. I think Erik quite nicely explained our approach to the guidance. We are above the lower end of that range without changes in the occupancy. We are already above last year figures concerning the occupancy. I said that even though in this business we typically see seasonality in such a manner that occupancy goes down for the first 5, 6 months and then starts picking up speed, our occupancy is no longer going down, so we expect to improve the occupancy towards the year-end and get better figures throughout all the months than last year.
Okay. It seems that we got some additional questions while discussing. If you have to book additional fair value losses in the future and the LTV would increase, what would be the critical level to take actions? Would it be 50%?
Fifty percent is the level representative for current ratings of Aa2, and there we have a buffer of roughly EUR 1.1 billion in values, and that's a yield requirement change of 0.62, so 62 basis points. That's only 50. Then if you look where the hurdle for investment grade lies, it's somewhere between 55 even to 60. The buffer there is very, very large.
Thank you. Now maybe the final question about the new cost of debt. Now, the average cost of debt is 1.9%, as mentioned here. Are you able to reflect the new cost of debt, including the new facilities? Is it possible to comment or calculate that yet?
We are not guiding that. Of course, if you look, average cost of financing going forward, the hedging ratio plays a role there. Our hedging ratio is very high, 84%, but it's not 100%. So partly, of course, the higher interest rates comes through because of that. Then the pricing of these two transactions we made was quite attractive, but of course it's much, much higher compared to what we have on average. How that impacts for this year's average cost of financing depends on when we actually take the loans in. I said the availability period, this is quite long. So it's a combination on all these things.
I said we are not guiding the average cost of financing.
Thank you. Yet another question here. If there would be future equity injection, have you heard from the largest shareholder if they would be able to strengthen and support the equity injection?
I think that's one of the questions where it's more important to have many tools in a toolkit than only one tool. I haven't had those discussions yet. Throughout the last years it seems that all the big shareholders are keen to Kojamo and think that Kojamo is doing good business. Most often it's been about if we find something appealing enough, would we then move with equity rather than, as said in my eyes, there are quite many options available to move if we feel that there is a need, whether it's a dividend policy or selling assets or whatever. There's flexibility. In my eyes that's more important.
Okay. Thank you. That was the final question. Thank you for the excellent questions. It's time to conclude today. Thank you for joining us. We'll meet next time on 17th of August when our half year financial report is out. Until then, I wish you all a lovely summer. Thank you. Bye-bye.