Good morning, ladies and gentlemen. Welcome to Lumo Capital Markets Day. We are today in Helsinki at the Finlandia Hall. We have live audience here. Thank you all for coming. Also, many are following our event via webcast. Warm welcome to all of you as well. I'm Niina Saarto. I'm Treasury & Investor Relations Director. I will be hosting you today. Also, all management team members are here today. They have presentations coming, and they will be here for further discussions during the breaks. Indeed, this is the first Lumo CMD for us. Last Friday, our company name was changed from Kojamo plc to Lumo Homes plc, or Lumo Kodit Oyj in Finnish. Today, you will hear the reason why we have changed the name and why we have one brand, Lumo, going forward. We have divided today's agenda to two sessions. First speaker today is our CEO, Reima Rytsölä.
He starts today with the updated strategy, walks us through the key drivers supporting the business and the strategic focus areas, why these particularly have been chosen. Second speaker is also a familiar face, CFO Erik Hjelt. He focuses more on the financials. We hear about the financial targets, how they've been set, how they are connected, and also Erik explains how we approach financing in general in our company. After these two presentations, we have the first Q&A and then a short break. In the second session, we have four more presentations coming, and these go a little bit deeper under the surface. Then there's another Q&A for the whole management team, and that ends the webcast. You can send questions via chat. You can start doing that already in the Q&A. We also take audience questions, and we take them first.
Now we can start the presentations. Once again, welcome. Enjoy the day.
Very good morning on behalf of myself and the whole management team. It's really I'm really, really glad to see you, so many physically present here, and also like to welcome the audience via the webcast. We create better urban living is our mission in Lumo Homes plc, and if I think about Niina went through a little bit of a structure of the day and if I would if there's one target we would like to accomplish today is that we could illustrate to you that how we actually going to create value through better customer experience. Let's run it through.
As I said that our mission, we create better urban living, and it's actually quite significant mission as such that, given our scale and presence in Finland, so we actually have a very good possibility to be a kind of a thought leader of a residential market, but also kind of a, how would I say, simply kind of a be able to form the housing market in Finland. That's of course very kind of a ambitious position to achieve and to be, but we truly have a very good starting point on that.
In that respect, I would say that we truly live the mission in reality. Our brand promise, simply the right home, we come to that, then what does it actually mean from a customer perspective and how it will go, how it will evolve in different situations? Our values are still the same. We haven't changed that. Happy to serve, strive for success, and courage to change. We thought that these values are very good groundings for our new strategy as well.
As Niina said that, I will go through a little bit on how would I say, on more of a title level of our strategic focus areas, and then my colleagues will dig deeper into those. If we go for our focus areas in our strategy, seamless customer journey enabled by data technology and AI. Both Tuomas and Janne will discuss this in a more concrete way what we actually doing and how we create the seamless customer journey. This is a kind of key component to delivering the best customer experience. Then again, a truly kind of customer-centric portfolio renewal and growth.
Ville will talk about this and what does it mean that we actually both when shaping our portfolio, what kind of a divestments we do, what kind of acquisitions we do, it's truly focused on that where the customers will be, where the customer demand will be. And also then kind of a CapEx allocations that it's commercially based and what kind of a CapEx do we allocate and how do we can convert that to commercially successful assets and to achieve that is kind of a prerequisite that the customer demand is there.
Industry-leading operational excellence is kind of probably goes without saying in a business like ours, but I think that this is kind of a two-fold focus area. It both creates better customer experience, but it also gives us a better standing point for profitability and kind of a cost efficiency. Ville and Janne will touch this as well, more detailed way. The strong contribution to sustainable urban living, I will come back to that later in my presentation.
What we have done here is that we kind of renewed our sustainable program and together with our strategy, and it's not kind of a stamped on top of the or on the bottom of the strategy paper, but it's fully integrated in our strategy as such. I come back to that later.
To achieve this and to be able to kind of compete with the very tough environment as we had at the moment, it's a kind of a prerequisite that we have a most capable and dynamic professionals in the housing market and all this to kind of boost delivering the best customer experience. Katri will tell you later about the one common brand as we are now named Lumo or Lumo Homes plc. It's kind of the both from our personnel point of view, but also the kind of a whole strategy point of view that we are aiming for a one direction in our operations.
That's creating value through customer experience and better to deliver best possible customer experience is a kind of a key tool for a value creation. Won't go too much into the detail of this slide, but just want to say that we are 57-year-old company, starting with the name of VVO. Easy to remember because I'm born myself at 69 as well, so we are exactly the same age.
What this slide tries to illustrate is actually that it might sound a bit arrogant, but we have been around and don't want to be arrogant, but we have been around, and this is truly our kind of urban living has always been a core of our operations. That's why we think that we have a kind of a knowledge of a residential market, especially in Finland. The knowledge is very deep and it's embedded in the organizational skills. As I said, we want to be a bold shaper of urban living, we have more than 97% of our assets in seven biggest cities in Finland.
Finland is on square meter-wise a large country, even though the population is still less than 6 million. On square meter-wise, as you very well know, it's very large country. That's why it's even more important that your portfolio is focused on the growth centers. We have at the moment a little bit less than 39,000 apartments, and, in two weeks time, when the Varma portfolio acquisition is closing, so it will be close to 44,000 apartments then. The urbanization as such is the main driver of our strategy.
The whole kind of Finnish economy is dependent on cities and mobility so that kind of scarce resources can allocate to kind of where the growth is and where the jobs are. We think that we have a true role in ensuring flexible housing options and enable the mobility that is needed. It's of course that we need to be in cities that are growing because the growth in Finland is whether it's good or bad, I don't take a stance on that, but it's happening in the biggest cities.
That's why it's that the job creation is in the biggest cities, and that's why kind of a landlord like us need to be in the biggest cities. It's not only that we are in the biggest cities, it's also that inside the cities we are in the right locations, right micro locations, and also that the kind of mix of the apartments are the correct one.
For example, at the moment we all know, there's a kind of a, if not overdose, but at least oversupply of studios here in Helsinki market area, and that in the future we need to be more kind of mindful on that as well that what's the kind of a mix that actually our customer needs. That's why it's once again super important that we are very close to our customer, that we have that insight that what will be the demand and the kind of a trends in our customers' minds.
One important point that actually is changing the market is that Finnish attitudes towards rental living are shifting and more and more homeowners are also thinking about living rental. Obviously the housing market overall hasn't been in great shape for last couple of years. That also has caused that actually as a homeowner or apartment owner, you probably not, how would I say, consider that as a super good investment as such, your own apartment.
It has been especially in biggest cities the case that it's kind of a, if not the license to print money, but it has been a kind of a tradition that as soon as you have a affordability or bankability, so you buy your own apartment and so on. That's definitely changing and we can see it in our own portfolio that, for example, our premium assets here in Helsinki area, so they are actually. Their occupancy is much higher than our general portfolio.
The rent levels in those premium assets are actually already that high that if you can afford to pay that rent, you are easily bankable as well, so to say. All in all, I would say that the most important part is that to kind of get a grip of this, how the market is evolving and how the demand is changing, so we need to be close to the customer. The operating environment is still. There is still oversupply, that's for sure. A new residential startups are on low level and the forecast for 2026, as you see in the bottom right corner, is 20,000.
I honestly don't believe it that to myself. I think it's it will be less than last three years, so closer to 15,000. It has been always quite optimistic that, but it's the Construction Companies' Association forecast. This will, even though it has taken more time than we anticipated in the first hand, so this will kind of balance out the supply because the population growth in the biggest cities is happening all the time. As I already told that, actually the how would I say, attitude towards rental living is changing as well.
On the other hand, even though I said that there's a little bit too much of studios in Helsinki market area at the moment. Actually the number of one person households are growing all the time. That's supporting as well that balancing process. But all in all, behind the, how would I say, the brand change as well, what we try to do and what we are going to do is that we embed customer centricity deeper into our value creation model, and I already started from that.
I think it's kind of natural that when customers experience Lumo as simply the right home as our brand promise is, it drives occupancy, pricing power, and long-term asset value. Basically, the journey.
The more satisfied our customers are, the lower the journey is and better premium we can earn from rental living. Like I said already earlier, the kind of a link between the assets is that if we drive the assets keeping in mind that the customer and customer demand is always the key pull of our strategic decisions, we can better formulate or modify our portfolio so that it fulfills the customer demand better.
These slides try to illustrate that what is the kind of our strategic focus areas and how they are actually linked to both the customer and meeting the objectives of both the customer and portfolio. I would say that all in all real estate industry as such haven't been too focused on customers. Of course, there's exceptions. That's kind of natural that due to fact that you have so much capital deployed in this business, so that the assets kind of take over the thinking of a management and especially on management thinking.
What we try to do here is that we actually run the residential business where the customer creates the value and not the kind of take care of the asset portfolio. That might sound semantic, but actually I think it's the kind of a core of our strategy. Janne will tell you later on what's the kind of logic of our path, how we see that actually better customer experience creates more value for our shareholders as well.
All in all, I would say, to kind of summarize that, simply the right home from our brand promise from customer perspective. It converts to higher occupancy and better price premium from a portfolio side. I already mentioned the broader addressable market. This is something that we need to focus more. From our kind of research based on our own research, the market has changed there quite rapidly.
We are not fully aware whether it's because of that, the homeowners think that actually asset your own home is not as good investment as you thought and that has changed in last couple of years or is there some bigger thing? We do know that the younger generations are more favorable for rental living, that it gives more flexibility and more mobility as well. Another thing that I would like to kind of highlight is that this data-enabled value creation mindset. We have plenty of data, and we actually, when we analyze the data, so we get better and better tools to kind of form our offering as well.
Tuomas will go through in his presentation the kind of capabilities that we have already created using AI, but also the kind of what we can do. AI has of course the data, and you need to take care of the data and how it's stored and so on. AI gives you much better and cheaper tools to analyze that and utilize that data. We see a big potential there.
Given the fact that we are by far the biggest operator, biggest landlord in Finland, we have the best capabilities also to invest in technological and digital development and using AI as well. We have as well by far the most data in our company. Jumping then to the sustainability. As I said, we kind of updated our sustainability program as well, and released that already on last year's CMD, but we did it simultaneously with our strategy work.
As you can see that in the slide, so we have six targets, and still the core of our sustainability program is the kind of reducing the emissions of heating our properties. Also, reducing the water usage and overall improve the energy efficiency is a key metric. We know that the sustainability is. I don't know, you are probably better answering to this than I am, but it feels from a corporate CEO perspective and former investor perspective that it's kind of out of fashion, the sustainability from investor community. We actually think that this is very much of a core of our operations and our strategy.
There's of course kind of a natural explanation as well that the these parameters, and as you can see the targets and our for example to social metric of one of the customers that when we ask our customers what is the main how would I say? What is the main factor in sustainability when talking about landlords? It's safety that the homes are safe and comfort. That well that's direct link to our customer experience, of course. Then the reducing the emissions have direct link to our profitability. As we talk about already the strategic focus areas, we definitely do care about our own staff.
It's super important that actually our employees are feeling good and have a good energy. Because it's in my thinking, it's impossible to create best possible customer experience if your own staff is not happy, because they are the interface of the customer, whether it's digital or in person. About the brand, I want to steal Katri's presentation, but as I already said that we are kind of we don't think that this is just a name change or just even not a brand change. It's kind of boosting our strategy that we are truly.
The whole our organization is kind of focusing on our customers and are customer-centric, even though you take care of the assets and there's a plenty of things that you need to focus on assets. Given the fact that we are all working under the brand of Lumo, that kind of crystallize all of us that we are here for our customers, and we are taking care of our assets that they would better serve our customers. Through that, better serve our shareholders.
All the strategy of this is kind of need to kind of link to the financial targets and how these actions that I told on a kind of a high level and my colleagues will tell about the more of a detailed level. All these figures need to convert to our financial targets. Then I will hand over to Erik, our CFO, and Erik will tell more about that, what are the figures behind the strategy. Thank you.
Thank you, Reima, and good morning, everybody from my side as well. It's so great to see so many familiar faces here in Helsinki and with Lumo today. I'm going to speak about our financial targets, figures behind the strategy actually. We have set the targets for strategy period 2026 to 2028. We have four cornerstones there if you like. I start with the customer satisfaction. As Reima already discussed, the customer satisfaction is going to be core in our new strategy. It's quite natural that we set a target related to customer as well, and there the target is to have Net Promoter Score above 65.
I'm not going to discuss this further given the fact that that Janne will go to the customer angle a little later. One note, though, at the end of last year, our Net Promoter Score was all-time high. As this figure shows, we are not satisfied with that figure, so we want to improve that further. On the left-hand side, growth. We think that the growth is the important part of the strategy of the company. Of course, customer as already discussed. Then profitability is the third one. The fourth cornerstone is risk management. We have set a target for the growth, so based on average annual growth of total revenue to be between 5% and 7%. For profitability, we've discussed a lot what
How we should set this target, and we think that cash flow-based target is still valid. We used to have FFO as well, but today we want to have that FFO per share. The background for that is actually now the real estate business as such has gone to the basics, so the financing has a price, and you need equity if you want to grow. That's why we will want to make sure that if we want to grow in big time and improve our profitability, it's important to have positive impact for FFO per share. Now we have set a target to have average annual growth of FFO per share 3%-5%. Then risk management, so loan-to-value to be below 45%.
It's important to note that it's not that our target is 45, it's that we want to be below that. We used to have a loan-to-value target, and it was below 50, and we lowered the target. Discussing with analysts and investors, we get the mixed feedback whether you should be focusing on FFO, cash flow, or should you be focusing on balance sheet. We think actually that you need to have both, and that's why we have both FFO and a loan-to-value. This loan-to-value is of course, it's you may say it's leverage-based and it is cash flow, it's balance sheet focusing target, but it's actually very much linked to the cash flows.
It's not here as a target, but it's very important to have your ICR in line with your expectations. In current operating environment actually, when the price of the financing goes up and there's still oversupply in the market. Only way actually to lower your total financial cost is actually to have less debt in your balance sheet. That's why it's, yes, loan-to-value is of course balance sheet-based target, but it's directly linked to the cash flows and ICR. We discussed a lot the dividend policy. Now the policy is to pay 20% of FFO either as a dividend or as a share buyback or a combination of these two. There's two changes now compared to the previous one.
We think that it's important for real estate company to pay dividend. That was the starting point. We felt that taking the dividend down from 60% to 20% of the FFO is important because now bigger portion of the FFO is left inside the company, either to pay back loans or to do investments. They are both beneficial for the company, that's why for the shareholders as well. The share buybacks it's important part to have that in your toolkit as well, given the deep NAV discount that we are trading at the moment. Now we have the flexibility to use the both. The key is of course that 20% is the maximum payout, if you like.
Next question is of course how to achieve these financial targets. If we start with the growth, first of all, of course, further improvement occupancy. The whole year, last year, we were able to improve the occupancy. At the end of last year, Q4 actually, occupancy was already north of 96%. We think that in a balanced market situation, it can be 97%-ish or up to 98%. There's still room to improve that even from the Q4 figure. But it's when you look the top line growth, it's good to keep in mind that whole year cumulative figure last year for occupancy was 94.8%.
Even if we are keeping the occupancy at the same level through the year, this year, that it was Q4, that will contribute for the top line growth. Positive rental growth, we've been increasing the rents for existing customers between 1.2%-1.4%. That's the average. For example, Tampere, where the occupancy in our portfolio is higher than average and the market, this occupancy is high as well. There we've been increasing the rents for existing customers already between 2%-3%. Yes, we've been flexible when it comes to the rents when an apartment comes vacant and we start to find a new tenant there. Many cases, we've been lowering the rents compared to the rent was before the agreement was terminated.
Of course, in the first stage when the market balanced, then we start to give less of these lowering the rents cases. The lowering cases volumes is going to be small. When the market is really balanced, that will go away. So that is one way. Then of course, we start to increase the rents for existing tenants more than we are doing today. This portfolio acquisition to be closed first of April, of course, that will have an impact for top line growth this year. But still, because the occupancy was quite low and we are very confident that we are able to improve the occupancy given the in-house leasing operations and proved track record what we have shown.
It will have an impact for the top line growth next year as well. That plays a role for this year growth and next year growth. Net investments. We do have some non-core assets to dispose, but when we do a little more investments compared to the disposal, then of course that will contribute to growth as well. Profitability. When we increase revenue, that has a positive impact for profitability, and we expect to have moderate improvement in net rental yield as well. That is a positive for profitability. Leveraging our operational efficiency. We need only a couple of new people when we take in almost 5,000 units. That, of course, improves our operational efficiency.
We want to have our own existing operations to be conducted more efficient going forward. Net investments with the free cash flow, as already discussed, will have a positive impact for profitability. If we find opportunistic investment opportunities, we will look them from the FFO per share accretion perspective as well. It has to be positive for FFO per share, otherwise we are not going to do that. Of course, on a negative side, in profitable way is the refinancing. We don't need any additional financing, going into this strategy, but when we do refinancing, the cost of new loans is higher compared to the one we are paying back. Risk management. Retaining FFO, whether we pay back loans or do investments that is supportive for loan-to-value.
Selling non-core properties, whether we use it to pay back loan or do new investments, that will have a positive impact. This moderate payout ratio is important part of keeping the loan-to-value in line with our target. A couple notes regarding how we approach financing. The starting point is that we want to maintain investment grade rating, whatever it takes. Currently we have Baa2 from Moody's, and they stabilized our outlook late last year. That of course very positive. When we decided the leverage target and the investment grade rating target as such, so we looked at what we think that plays for debt finance providers, and you need to have some leverage in order to enhance the equity per share parameter.
It's a combination of these two. Of course, we looked it from the weighted average cost of capital point of view as well. Moderate leverage already discussed. We have conservative but flexible interest rate hedging policy. All the time, hedging must be between 50-100%. At the end of last year, it was 99, so quite high. We use both fixed loans, typically bonds, and then interest rate swaps there. We have a target to have access to different sources of financing. We want to have access to bank financing. We want to have access to bond financing and local commercial paper market. That's why the portion of unencumbered asset comes into play.
We want to keep that portion about 60%, and we were almost close to 80%. Other way to look at this, what is the portion of secured financing, and we want to keep that below 20%. These are thresholds from Moody's as well to keep Baa2 rating and to serve bond investors. FX risk, we don't have any, so we operate in euros in the Euro market. Of course, this liquidity comes into play, so Moody's requirement is to have 60 months liquidity needs covered at all times. We are in line with the target. At end of last year, EUR 540 million liquidity available, so cash equivalents, and then unused credit lines, EUR 275 million committed.
Half of the loans today is from bond market and half is from the bank market. If you look four to five years back, it's been very beneficial for the company to have access for both sources of financing. The pricing is different, the availability is different and maturity seems to be different in different markets. We can combine these two and that that's a policy going forward as well. Our aim is to have balanced maturity profile. Not all the loans maturing same year. Of course, the volumes are big, so also the maturities are big as well. Next upcoming finance arrangements are actually linked to the bridge facility takeouts.
The bridge facility will be drawn first of April when we finalize this transaction, and then takeouts later. We are looking to refinance 2027 maturing loans as well. Most likely both be before the summer. That to be in line with the Moody's requirement from liquidity perspective. Otherwise, we don't need to do that as soon as as before the summer, but it makes a lot of sense to do then, of course, subject to market conditions. These are the figures behind the strategy and then how we approach our financing.
Thank you, Erik. Now we have time for questions. Please take a seat. We take audience questions, and please raise your hand. We have microphones here. If we have time, I'll take something from the chat as well. Anssi, go ahead.
Yes. Thank you. Anssi Rauste from SEB. A couple of questions, and first, I think you mentioned that you have chance to acquire additional portfolios if conditions are right. So can you maybe talk about how much debt capital you could use during the strategy period, and what kind of role equity financing could play here?
It depends like it always is. I think it's as Erik told in his presentation. It depends on the kind of a divestment profile as well that how we can do the non-core assets divestments. We still have some room. According to our calculations, we still have some room for debt financing. Not too much in a sense and when talking about the equity financing. As long as we meet the hurdle that we are FFO per share accretive, then we might consider doing the kind of a similar type of structure of transaction than we did with the Varma.
I don't know if you want to elaborate.
If you want to do the math, it's on FFO side. If you take the midpoint of this year's FFO guidance, and then you deduct 20% dividend and EUR 30 million-EUR 40 million for monetization investments. That gives you EUR 80 million-EUR 90 million for additional investments. We can use that for investments. We can use a possible disposal of proceeds from those, and then if we find something meaningful size like this Varma portfolio, then of course the question of additional equity comes into play as we did in this Varma transaction. But that, as Reima, is very important then to look that it has to be FFO per share accretive.
Thanks. Could you maybe remind us what kind of non-core asset portfolio you have right now?
Well, Ville will come to that in more detail in his presentation, but we do have some non-yielding assets in our portfolio. We have roughly a little bit over 2% of our portfolio in cities that we are not considering as a core of our business.
Okay, Thank you.
Thank you. Eric Sheridan at Goldman Sachs. In your growth plan, obviously from a rental perspective, first questions, can you help us understand what type of like-for-like rent growth you're envisaging, given the current conditions and potentially the split between occupancy and pricing, would be helpful. Second question, do you still have development projects that you could consider or given the oversupply that that's not on the agenda at this stage? What type of acquisition volume? Is it that guidance. That volume of EUR 80 million-EUR 90 million per year investments, that's essentially what we need to think about that is integrated in your plan at this stage. Thank you.
This if you first take this like-for-like, I'm not great fan of that given the fact that it's backward-looking measurement, and it's not working ideally in a general situation as we've been in. If you look at the building blocks of the like-for-like, if you take first last year's occupancy 94.8% and at the end of last year, the Q4, it was 96.3%, and we expect to be slightly improve that going forward as well. The delta is 94.8% and something. You get that.
The other thing is that at the moment, we are increasing the rents for existing tenants between 1.2%-1.4%, and that should go up when the market will be more balanced. We don't know in which quarter that is going to happen, but anyway, north of those figures is going to be rent increases for existing tenants. Gradually, we are going to give less and less lower independence cases for customers. These are the building blocks for like-for-like as such.
Yeah. Let me rephrase then. You said, I think 1.4%?
One point two to one point four.
One point two to one point four.
Yeah.
You want to achieve higher than that.
Higher than that, yes.
on pricing. Okay.
Yeah.
Very clear.
Then the acquisition. Yes, this EUR 80 million-EUR 90 million per year is the free cash flow, if you like, FFO wise, that we can use for investments. It then, of course, depends whether we find something to invest or do we first pay back loans and invest later. Of course, the capacity comes there as well. Then these.
You would leverage that or?
If we use FFO to pay back loans, then the capacity to take more loans is the same amount that we pay back loans. We don't want to exceed the FFO generated by the company for investments. Of course, disposal, it remains to be seen when we are able to do that. That gives us additional investment capacity. This opportunistic growth. We don't know whether there's going to come like Varma cases or similar cases, but that's perhaps another story.
When talking about those new developments, at the moment, the math won't work with the new developments.
Okay. Very clear. Perhaps one more question in terms of product mix. I mean, obviously you highlighted the studio being still quite oversupplied. I mean, how much of the vacancy that you currently have in the portfolio linked to studios versus the rest of the mix?
Well, I would say that it's a little bit higher for studios than rest of the portfolio. Not significantly higher on the other hand.
In your new acquisition, is that this case as well?
I would say that in Varma's portfolio that we have acquired, so it's pretty much balanced with our current portfolio or similar to our current portfolio.
Thank you so much.
Thanks.
Hi. Simen Mortensen from DNB Carnegie. Following up on the same questions from the previous asker here. In terms of achieving this revenue growth 5%-7%, can you try to quantify a bit that how much of that you can actually achieve with the existing portfolio through occupancy improvement, price improvement? This is an annual target of 5%-7%, and how much you actually will have to need to start new developments and acquisitions to achieve those targets?
We already discussed the impact of the occupancy and any rent increases, and that's average target what we set for whole strategic period. We don't need to do any additional acquisition. Of course, we need to some of the FFO to spend for acquisition, but not the whole EUR 80 million-EUR 90 million we already discussed.
Okay. You also say in the new strategy, under new name, customer satisfaction certification is much more important. It sounds very generic. Can you tell us also about why is that different from before? Will it come with CapEx to improve the assets? Will there be anything different in the way you've done it before? I assume you wanted satisfied customers all the time.
Yeah. Yeah. That's totally true. I have often said that to say for a company presentation that the customer is in the center of our strategy. That's not very unique, so to say. I would say that in our case, first of all, we have already a Net Promoter Score from our customers, measured by our customers, is relatively high. I would say 57 at the moment. We still see plenty of room to improve that, and I think with that we are already in.
Even though the comparability with the peers are not that great, but I think we in our industry, we are one of the top performers in that case. Coming back to your initial question that what are the concrete measures? I would like to take that question after the second session, so that we hope that we can illustrate with our colleagues' presentations those measures. If not, then we would be willing to answer your question, if that's okay to you.
I'll come back with that one. Thanks. I'll come back with the other questions later.
Okay.
Frans Rostedt from Inderes. The rent development has been really weak in the Finnish rental market over last year according to the statistics, and the market occupancy rates are increasing but slowly. If we take this as the, like, the going forward basis that the market situation doesn't improve greatly in the coming years, do you still see that your targets in the increasing the rents are achievable during this strategic period?
Well, if I start, and then Erik can continue. I would say that our strategy is not built on that the market improves significantly. Of course, when you have a three-year period, we not expecting either that 2028 is as bad as it has been or as market is at the moment. The vast majority of the improvement is considered to be done by our own actions. I don't
Of course, if the market is supportive, so everybody is better off and life is easier. We have actually demonstrated that even with the oversupply situation in the market last 18 months, we've been able to improve the occupancy. Starting figure was somewhere around 91%, and at the end of last year, we were north of 96%, and no tailwind from the market. Based on our own operations and what we are doing. That's why we are confident that we are able to keep on that even if there's no tailwind from the market. We think that in the midterm, it's clear that if you take the volume of startups and the urbanization, the market has to balance in some point.
We haven't based on a strategy on that. Other part is that.
This comes to the later discussion most likely that what we are doing in the customer interface, the target there is to have more satisfied customers and to be more efficient. That allows us actually based on our service, our brand, our own operations to have higher rents compared to what you see in the market. That's very important part of all that. We think that we are able to do a good result regardless of the market situation based on these actions we plan to do.
This question might be also maybe for the later section, but if we think of the big picture, thinking of the customer experience, how do you differ currently? How do you want to differ going forward, compared to your key competitors in the premium segment?
Well, it's obviously the kind of due to lack of data difficult to kind of compare, for example, customer experience data as such, and then especially when the questionnaires are often a bit different in NPS methodology as well. We have identified in our own process our own customer experience kind of certain weak spots that to fix those we will be able to improve that customer experience.
I would say that it's even though it was kind of a fair question that earlier that what is the difference that isn't it so that you and all the others have always kind of focused on customer experience. Even though we have and now that we identify the kind of our relationship with our customers, so we have spotted the kind of obvious points that to kind of change those so we can improve the customer experience.
Thank you.
Good morning. Céline Soo-Huynh from Barclays. I got two questions, please. I'll take them one by one. The first one is on your opportunistic opportunities that you're guiding to market that you see. Given the change in regulation for pensions, do you think we'll see more deals like Varma going forward?
It's definitely a possibility. There's a certain driver behind the pension funds, at least the discussions which we had with Varma. It kind of appeared to be a very good fit for them that they are not exiting the residential exposure totally, but kind of converting to a different format in case of equity at the moment and to better serve their new regulations. That's definitely a possibility.
Whether that will happen in our case remains to be seen, but I think there's still this transaction market has definitely improved or geared up. We see that there's a kind of other sellers as well than pension funds.
Okay. That's going to my second question. If there are more deals like this coming through, if we take a step back and we look at what you've done with Varma, I don't think the deal was accretive day one, as it is with the occupancy that it is at the moment. You've made a big point about deals going forward will have to be accretive and therefore per share. Why was there an exception made for this deal in particular?
Well, first of all, we haven't communicated that it's not accretive either. We have said that we expect it to be accretive. That's for one point. I think another kind of a rationale behind the Varma deal is that it was a kind of a unique opportunity as such that given the size and especially, I would say the quality of the portfolio. I think it's a good fit with our capabilities, our competencies that we have proven last year that we will be able to kind of raise the occupancy.
Thank you.
Now we take last questions from the audience. Thank you.
Thank you. Svante Krokfors from Nordea. Two questions. The first one regarding your possible divestments and the definition of non-core properties. Looking at slide number nine, clearly Lahti is the city with the population decline in the coming years. Is there any other areas that you consider as non-core? Is that fair to assume that Lahti is the majority of that?
Well, we do have assets in even smaller cities than Lahti. Inside that little bit over 2%, Ville will go through that more detailed in his presentation. We do have assets in smaller cities as well, and that's definitely a non-core. On the other hand, as we have said many times earlier, with the current market conditions, we need to be mindful that we are not kind of forcing the divestments on the market where there's no demand.
That's why it's a kind of a balancing act how to find proper avenues for those divestments.
Thank you. The second question might be that we return to that at a later stage also, but could you elaborate a bit on the timeline and measures on the Varma portfolio and what the timeline measures are for reaching the stabilized, I guess, 95%-ish level from 83?
Well, we haven't given an exact timeline. I have said earlier that probably the job is not done by end of this year, but it should be done by end of next year. That that's kind of a range that we anticipated. That of course are also dependent on the market conditions.
Thank you.
Even with the market conditions would stay as they are or even get a little bit worse also, we think that by the end of 2027 it should be done.
You asked the measurements as well. When we look at the portfolio, of course we knew it already before, but we looked at it very in detail during the DD and then dug in to see if there is something wrong, if you like, in the portfolio? The conclusion was there's nothing wrong with the portfolio. We think that the reason why the occupancy in that portfolio is so low is actually that they have outsourced all the leasing activities and other activities as well related to that portfolio, and they have changed their partner 3x in six years. I assume they are not too satisfied with the partners and their performance.
Now we are taking the portfolio, and we have the capacity and competencies in-house, and we have the proven track record that we are able to improve the occupancy even these market conditions. We don't need to do any magical tricks. We just keep up the good work we've been doing. We are confident that we are able to improve the occupancy.
Thank you.
Thank you. One more question from the chat. How is this brand change visible for the customers? Is there any change, and how about the personal?
Well, it's, I would say, that not that much to the customers because the customer brand has been already from 2014, Lumo. Of course, we hope that. When I talked about the rationale behind the brand change, so that shows up for our customers as well, more kind of a customer-centric approach, and improve the kind of a customer experience. Of course, for our own staff, Lumo people, it's a big change. The employer has been so far, Kojamo, so that will change.
Of course, the people who have been working customer interface have already felt like they are more of a Lumo people, but people who have worked in more on an asset portfolio side, so that it's a change, and that's why we are actually doing it.
Okay, Thank you. Now we conclude the first Q&A. We will have roughly 10 minutes break, and we will continue webcast at 11:15 A.M. Welcome back from the break. Now we have four more presentations coming, and we take a look at the strategic focus areas, and we start with customer experience. Janne Ojalehto, EVP of Housing, is here today, and he tells what the customers value. Last year we were able to improve the Net Promoter Score significantly, but is there more work to be done? How can we further enhance the customer experience? Second topic today is data technology and AI, and Tuomas shares development projects on that. In our company, when we develop these areas, it's not just that we improve operational efficiency, but in many cases we can see clear direct link to the customer experience.
Third topic today is our portfolio. We will hear about how this current portfolio is aligned with our strategy, how we actively manage our portfolio, and how we see further growth opportunities. To conclude, we tie all these teams together and open the new brand strategy. After the presentations, as I mentioned, we have another Q&A, and then you can ask questions, and from all the management team members. Now we can start, and let's welcome Janne on stage.
Good morning also from my behalf. Niina, I think we have a wrong slide over here, so I need to-
You need to roll it.
Yeah, I need to roll it a bit.
I think if we will do it.
Okay. Sorry for the inconvenience. Nice to see you all here today, and let's kick it off with the best customer experience. Let's go back a bit. Okay. Now we have the right slides. We can kick off. Don't you worry. It's going to be all fine. I'm going to talk to you about the perspective from how we look at the customer experience. Of course, we want to achieve the rent premium. We want to make our customers feel that they're really happy, they don't want to move out. From the international studies, you can find out that 78% of tenants show increased loyalty after a positive service experience. I think it's a big factor. 52% of the tenants are willing to pay more for better customer experience.
65% of customer journey is driven by experience-related factors, not price. It's not price-related, it's service-related. Companies that invest in customer experience can achieve up to 15% rental or occupancy premium compared to market averages. I think those are very critical factors for us and our company and for our operations. That's the international studies. Of course, we want to know how the customers in our market feel about the customer experience. What kind of basic factors do customers in general in Finnish market value? What they want to get. They want the renting process to be easy and quick. You can go to Lumo.fi. We get great feedback from our online store. It's working well. That's tick the box. I would like to browse my options and get comparison. Of course, you can use the portals.
We are active in the portals. We are competitive over there. Price per value should be in line with the market. That we have seen recently. When there's a lot of supply, we need to be in line, and then there's other factors that we are able to do to attract the customers to choose us. Location and public transportation options are the key. My colleague, Ville, will tell you more about the portfolio, and I think we are on the spot over there. Well, if those are the basic factors and you're asking, "How are you going to generate the premium on rents?" We are touching, I think a bit more complex matters. We ask from 4,000 customers, our customers that have left us, and the potential ones. They said that the neighbors and the neighborhood is nice.
How do you create a nice neighborhood? How do you make sure that the neighbors are nice? The cleanliness. Those of you are today going to visit our asset tour. I hope that you will find out that tidiness, cleanliness, safety has been our core factor for two years. I think it will show today, but you will make the comparison. Feeling of being safe. Reima told us about the sustainability survey. Our customers feel that feeling of being safe is part of sustainability work, and it creates nice neighborhoods that they love. For us, it means that we need to pick the right customers. We have been able to increase the occupancy, of course, because we are great doing sales, but still we need to pick the right customers.
We're able to raise the occupancy to 99% tomorrow, but it will generate a lot of problems. You can't just play along with anyone. We choose the best customers. We make sure that we build nice neighborhoods. It takes a lot of time and effort, also data, but you're able to do it. I would say it's a balance between occupancy, and expectations, and time consumed. How do we meet the expectations? You could see from the strategic slides that our core value, one of those is happy to serve. It should show in everyday interaction, and I think we are proud to say that the employee satisfaction score is high, so it shows that we are actually doing the right work, and it will eventually also show to our end customers. We systematically train our people and partners.
Two years ago, we had some issues with the maintenance companies, and we were not sure what was the problem, but actually we find out that it's basic training. It's bringing our values to their work. We're able to do it, and now it shows as a higher NPS score. Lumo Service Centre, that's state-of-the-art in Finland. We are able to resolve tickets 24/7. Of course, it's not labor intense during the night times, during the evenings, but there are AI-based chat functions in place at the moment that we're able to solve around 50% of incoming chat messages through AI. We have AI-assisted platform crunching data from our customer feedback.
That's really great, we are moving towards the operations that we are able to forecast what kind of issues we are going to have to tackle within two weeks or one month or two months. Lumo.fi and My Lumo services receive very strong customer feedback on a monthly basis. I'm very proud of the platform. Of course, there's a lot of things to do. We see a lot of improvement through AI. Tuomas will tell you more about those. What is in the pipeline? We are moving towards an AI-driven omni-channel customer service based on a solid data platform. We realize that that's the key factor if we are going to be successful. We are at the point that we are able to tackle a lot of customer-related issues end-to-end without so much labor-intensive.
What are the key metrics for our operational excellence or customer centricity? The number one we want to maintain now and in the future, we want to be number one when we compare our admin plus marketing expense to revenue. We are now on a good level. Although we're going to get a lot of new, very nice apartments for our potential customers, we are able to maintain the same levels. NPS is very high. The comparison between companies is of course a bit difficult, but I can tell you that, where we are at the moment, we still see room for improvement, and we have been able to identify the little process pieces that we need to improve so that those sections inside the NPS that are now dragging a bit will be higher. Fastest sales cycle from termination to new contract.
In our business, it's the key for a successful renting process and getting customers in very fast after termination. We are able to track on minute level when the termination comes in, when it's online to be rented, when it's going to, when we are going to do the first showing, and when the actual deal is closed. That's a key factor. We are really interested in good new potential customers. Our goal is to take the sales lead, be able to send the offer, and set up the showing within the same business day. How we do it, how we keep it, how we keep the investment so that we don't spend too much on all of this. We see the picture so that we keep the expertise in-house.
Resident management, basic sales functions, second-line customer services, so that's the tricky ones. Not the easy ones, but the tricky ones. Also renovation management. Because we do have a lot of seasonalities, for example, summer or the peaks during the end of month, weekends, evenings, we need to outsource. We outsource those volumes that don't require the expertise. There's maintenance and cleaning, scalable sales resources, churn detection, and win back actions. That's also a new function that we are now piloting, and it's running quite well, and also first-line customer services. That's the basic issues that we tackle every day. I would say, of course, when you set up a new building, you build a block building. You build it for 100 years.
From operational excellence, from customer experience point of view, you need to operate it 24/7 on a minute level. I hope most of you will join the asset tour today. You will see our people in action. You will see different kind of apartments, and the most fun, wonderful thing is that you will going to see the new refurbished Lumo One Lounge and get to see the scenery and a little bit bite to eat. Thank you. Now I will hand it over to Tuomas.
Hello, everyone. Seamless customer journey enabled by data and technology, and AI. Janne mentioned that, we are targeting to further improve our NPS. We are targeting to further accelerate our lease cycle from termination to new contract, and we will further improve in when it comes to admin and marketing costs per revenue. Technology can genuinely improve customer experience and operational excellence. Let's have a look how. Some background facts. First of all, our processes at Lumo Homes are highly digitized already. This means that there are no papers flying in our core business processes, hasn't been flying for a long time. To give you an example, we started digital signing already in the year 2012.
We have been digitally signing rental contracts and lease agreements already 14 years. Another example is that we have been having so-called offer automation in place already since 2023. This means that when a sales representative schedules a showing, our rental ledger and customer management system starts to automatically analyze the most potential leads and starts to automatically send offers to these leads and invite them to do the showing. Janne mentioned that we have top-notch digital services to potential customers in Lumo.fi, and we have feature-rich functionality to our tenants in My Lumo.
91% of our tenants are utilizing the My Lumo services, and there are an awful lot of functions that they can use and that provide value for their everyday living. The Lumo.fi, we have been providing, as Reima already showed in his slides, we have been providing so-called direct renting functionality already since 2015. The digital NPS in Lumo.fi portal is really tremendously high. For example, last month, the NPS level was 94, and there has been even months where the NPS level has been 100. It's really smooth way to browse available vacant apartments and perform a direct rent. We have identified a number of business improvement possibilities.
This means that Lumo has put together a so-called enterprise architecture plan. Enterprise architecture plan might sound complicated, might mean something that I don't understand or something difficult, but it's not. Lumo's enterprise architecture plan is actually a description how the core functions operate, and moreover, most importantly, it is a list of business improvement ideas per process area. We have put together this kind of a plan how we can improve our operational excellence and customer experience. For that, in order to achieve those targets, business improvements, we utilize technology. Naturally, when it comes to our architecture, we have like commercial off-the-shelf software solutions in place. We are operating in the cloud. Have been operating quite a while already in the cloud.
We do have customized, bespoke functions and functionality and information systems in place as well. We are actively already utilizing AI, and I will further elaborate on that. We are prepared to invest in AI, in digitalization, in technology, and we will be doing so steadily during the strategy period. The investment figures are already included in the strategy figures that Erik was presenting. A company that rents out EUR 7.6 billion of apartments relies on new technology. That's us, Lumo Homes plc. The main financial newspaper in Finland, Kauppalehti, made an article about us, about our advanced way of utilizing technology. I will tell you about our existing AI footprint, how we utilize AI already today.
We will address what we have in our development pipeline, what kind of an AI and other technology solutions there will be. I've picked up an AI framework from Digia Plc. This framework is just like depicting what is it that AI is good at for what AI can be utilized in a company. We see that AI is good at in knowledge management, you can do analytics, classification, forecasting, anomaly detection, and so forth. You can utilize AI for process optimization. Similarly, you can improve customer experience and customer service. Naturally, there are also so-called daily aids that are helping and assisting all the employees, like more generic AI functions. Now let's have a look what is it that we already have today.
How are we benefiting from AI? I will not go through all of the areas where we utilize AI, but I will pick and choose some of them. Let us start from the knowledge management area. There we have a machine learning-based pricing tool. We have been utilizing our pricing tool already since 2018. If we move to the right, to the process optimization, I can pick up an AI-optimized heat controlling solution. That is a win-win-win solution from many perspectives. Lumo Homes save in energy costs. The energy providers save and reduce their energy peaks thanks to forecasting and prediction. Our tenants get better living conditions in their apartments when we have advanced system forecasting the warming needs.
Naturally, also the environment wins in this kind of a setup. I could mention more, and actually we have been running this AI-optimized heating already since 2017. Let's move to the bottom right corner and talk about Lumo.fi and My Lumo chatbot functionality. This is a fairly recent, a new introduction. We introduced our Gen AI-powered chatbot in June 2025. That was like the time of the year where we have the sales peak, which is absolutely the busiest time of the year for whole Lumo, and also very busy time for our service desk and contact center.
When we introduced the chatbot and utilized and used the chatbot for three months, we learned that the amount of live chat requests from the chatbot forwarded to a person working in the service desk, we managed to cut down the number of live chat requests with 60%. With the introduction of new Gen AI-powered technology, the amount of manual chats to be performed by our service desk, they had 60% less chat requests. When there were 60% less chat requests, our service desk, our contact center was able to focus on other incoming requests that there were lots of requests coming in as it was the high sales peak season.
We were able to run through the whole summer with record high NPS levels in our contact center. This is a concrete example how technology contributes on improving NPS. There are many other things as well, but I will point out the Lumo.fi Apartment Agent. There's even a small picture on right bottom corner. The Lumo.fi Apartment Agent is a machine learning-based solution developed by ourselves for registered customers in Lumo.fi portal. The purpose of the Apartment Agent is to engage customer, to recommend and find the most suitable dream Lumo home that suits the customer needs. Our Apartment Agent has been doing so since 2023. Why do we try to engage our customers in Lumo.fi?
Well, there's a good reason for that. Our statistics, our web analytics show that, our registered users who have logged in to Lumo.fi, they convert really much better, to lease agreements. They actually convert 678.4% better than the non-registered users. That's a good reason to engage customers, to personalize, to provide, extra services, for the potential customers. There are many other areas as well. I will not go into the details, but AI is really enabling lots of things, when it comes to near real-time, customer experience analysis, which we do already, and we have development possibilities for that as well.
rather than focusing on the current state, what we already have, what you might have already heard, let's have a look to the future. What is it that we have in our development pipeline that might be cool and fancy, that might even be changing some of the game happening in real estate business? First of all, when I talk about development, as there are real estate professionals among us, I do not mean property development. I mean development of Kojamo's processes and services. Again, I will not go through all the areas, but first I will focus on the ones which we are developing and which are currently in an implementation phase. Typically, you can divide development into two stages.
There's the first stage where you analyze, where you define the idea and kind of analyze that, "Is this good? Do I have a business case? Does it make sense to implement it?" The latter phase of the implementation, that when you have discovered the idea, you have defined the idea, you have found the business case for the idea, then you actually implement it. You code it or you configure it, you test it, and you deploy it to be used by the potential customers or our tenants. On this slide, this slide we have, like, the ones which are in the implementation phase. I could start with the process optimization area, with the apartment inspection and enrichment of the property data area.
We have a cool AI-powered tool under development that will be used for apartment inspections. We have been running a pilot with this tool. We have been inspecting almost 300 apartments with the tool. We have learned that the tool is easy to use, can be learned quickly by our housing managers, and the data shows that they are at least 20% more effective than compared to the current situation, and this is a fairly conservative estimate. When we sum up this 20% improvement in apartment inspections, if we would be running with a new tool the whole year, 12-month period, that would sum up to 1,600 hours of time saving.
We can perform 1,600 more hours of apartment inspections with the improved and enhanced technology. That's not all. We are working to further develop the tool to be used by our tenants for move-in and move-out inspections. We are targeting to be in a situation that 30% of our apartment inspections will be carried out by the customers themselves. This sums up 2,400 hours more of time saving. Even though I'm talking about time saving and hours and so forth, the most important factor, the most important thing with the apartment inspection is actually having to do with the customer experience. Janne was talking about the importance of having cleaned rooms and so forth available when new tenant moves in.
That's the most biggest gain that when the apartments are properly inspected, then that will positively impact on our customer experience. We also do an improvement in the area of pricing. There are certain dedicated AI functions there. We are doing development with the AI agent, and we do have dedicated functions. For example, we develop the way how our tenants contact Lumo. When the tenants contact Lumo utilizing the My Lumo digital services, we have identified very concrete use cases where we can make advantage of GenAI to make our like customer experience to be more smooth and moreover the process of handling the customer requests and contacts to be more effective.
Naturally, we also further expand the usage of everyday tools like M365 Copilot to our employees. A few words about development items that we are working with which are in the first phase of the development cycle in the analysis and experimentation phase. We have already implemented so-called RAG implementations. RAG implementation stands for Retrieval-Augmented Generation. Roughly speaking, it means ability to make AI to talk with our information systems, to make the AI to be knowledgeable on the information that resides in our information systems. When we have a RAG solution in place, we can make our AI chatbots and others to interact based on that information in our operative information systems.
That will enable better customer experience. That will make our customer issues and contacts to be resolved regardless of the time and place immediately when they happen. Naturally, RAG doesn't send out a technician to be at the apartment, but many of the contacts that we get into our company are not technician-related. There are, like, simple questions as well that need to be answered. Briefly, I will mention that not everything is AI. We are developing a lot. We have a long list of business improvement ideas, and some of the business improvement ideas will be implemented utilizing traditional technology. To point out some, first of all, there's an area to further develop when it comes to optimization of field tasks.
The tasks that are happening on site at the property. The work that our salespersons, the technicians, housing managers do at the property. We have seen improvement potential there. Likewise, we see that business improvement possibilities reside also in the area how we order renovations and various other orders and how we handle the related invoicing as well. Cool stuff will be coming when it comes to our lease and sales automation activities. We can fine-tune our operations and better leverage the technology that we already have in place. To sum up, what I can say is that we are utilizing AI a lot. It is providing business value already today.
I have given you an overview to some of the real concrete use cases that we are working with that will really resolve real business problems like very concrete AI use cases. At the end, I mentioned that it's not all AI, it's also traditional technology development. This is the way how we make our NPS to be better, how we accelerate our sales cycle, and how we make our operational excellence to be more advanced. Thank you. I will hand over to Ville Raitio.
Good morning, everyone. Fantastic to be here today in the new fancy Lumo colors. Let's switch gears and talk a little bit about investments and the way we're approaching investments from a customer-centric mindset. I'm gonna touch upon three areas. Let's talk about the investment strategy first. Where do we see the growth opportunities, and how do we go about implementing that growth? Secondly, I want to take an example out of our existing portfolio. We run a big portfolio, and we need to be very efficient over the strategy period in terms of making sure that we operate the portfolio in the best possible way.
I have one case study to talk about there, and I think that brings together the way we also run our CapEx program in a nice way, 'cause we've been able to both find ways to enhance the NOI, improve the customer experience and then finally improve the ESG profile of the portfolio. We'll get to that in a minute. It wasn't so hard when I was putting the presentation together to think about what else should we talk about in terms of growth. That's of course the Varma portfolio that's got a fair bit of airtime already today. A little bit more color to the acquisition that's gonna be closing in around 15 days.
Also then really to kind of acid test the portfolio approach as well, 'cause we'll be talking about how do we go with the asset selection, how do we go with the portfolio build-up, and then we can contrast it next to what we've actually done just recently. When we then look at the investment selection, we say we want to be able to provide the right homes in the right locations. To be able to do that, we need to answer two questions. First of all, which cities do we want to be in? Secondly, where in what micro locations within those cities we want to be? Which cities is in a way maybe the easier part. We want to be where the customer is. We want to be in the larger cities.
We want to be in the growing cities. For that, for us, that means being in the Helsinki metropolitan area, so Helsinki, Espoo, Vantaa, and then the other large cities, Tampere and Turku. What about the micro locations then? This is then more about what the customer wants. We want to be where the customer wants to be, where there are good transport connections, good services, good shops. We look at nature and recreation. Of course, at the asset selection and more from an investment viewpoint, we look at the ESG profile of the assets. For the first three items, we use geospatial data.
We have data on the whole country, and we're able to look at all these metrics in a consistent way across all of the assets that we already own, but then also as we're evaluating new acquisition opportunities. Then finally, as it comes to ESG, the key issues there would be the EPC rating of the properties, but then we'll also look at the carbon footprint of the assets and what we can do with the assets. If this is the question of where, then the question of how. The number one thing when we are looking for the new investments is to ensure that we'll be able to provide FFO per share growth with the acquisitions. We look at other things as well.
We look at price per square meter, we look at yields both going-in stabilized, we look at total returns, we contrast that to our average cost of capital. We do a lot of work in terms of the analysis. We should think about where do we see the opportunities and how we categorize them. The first and perhaps the obvious one is the direct acquisitions of standing assets. Either individual assets or as in the Varma case, portfolio. That's where we still see opportunities. I think there are pension funds who are still thinking about, with the regulation changes, what they should do with their real estate portfolio, what they potentially should do with the apartments that they own.
There are special investment funds that are stale, long closed for new redemption, so perhaps there are opportunities on that side as well. We continue to look at what's available in the market and we continue to talk to the main players in the market. Secondly, if the primary way to grow is through existing assets, the second one would be what we call portfolio intensification. Where we essentially can generate new building rights and therefore find attractive investment opportunities. From a return profile viewpoint, this is highly attractive. The downside is that it's not very scalable. We see right now, and we'll probably be able to share more details during the course of this year, about two opportunities in Helsinki.
Compared to the overall portfolio, not a scalable opportunity, but an interesting opportunity nevertheless. Again, part of the active asset management work and part of the development work that we do. Then finally, kind of the traditional model of buying projects from construction companies or from developers. We see a lot less opportunity there and two main reasons for that. First of all, pricing. It's not really attractive compared to what we can buy in the market in terms of the standing assets. That has to change for the projects to be more attractive to us. The second thing is that it's a drain on the balance sheet.
You put a lot of capital to work, you go through the construction for, say, at least 18 months, and only then you'll be able to get to that FFO growth that we were talking about. Not really on the agenda for today. If this is the approach then, how does the portfolio look like compared to that? I'll do a little bit of explaining about the chart here and let's start with what the different axes are actually telling us. The horizontal one is the easy one. That is the long-term population growth estimate. Again, like I said, we want to be in places where the cities are growing. All good there. The second line, the vertical one, this is an index calculated by a consultancy MDI.
They focus on the health and attractiveness of municipalities. The index that they are calculating this brings together a lot of, let's say, qualitative data in terms of the number of businesses, education, income level, employment level. We like to use that because again, it gives a slightly different flavor to just plain growth, but it qualifies the growth a little bit. That's why we use these axes. As you can see, we stop at 60. The index goes from 0 to 100. There are municipalities that drop out below that line, and equally, there are municipalities that have population decline. That's clearly not in the strategy. What you see then in the bubbles is the size of the existing portfolio. We've added the Varma assets already here.
You see that the portfolio is about 95%-96% where it needs to be. We have the remaining, slightly more than 4% of the portfolio in significantly smaller locations. As we discussed earlier, we're looking to sell those assets. We expect to work on some of the disposals already now during the strategy period. If I should contrast, say, 2026 to 2025, where in 2025 we did a significant disposal, there's probably less in terms of the volume during 2026. Again, we take an opportunistic view there. If an opportunity comes along, and we can make the numbers work in a sensible way, of course, we're open to business also on the disposal side. That's where we are with the portfolio.
If we should then turn the view to looking at what we do in terms of the active asset management, I'll go back to some of the ESG themes that we already discussed in the first presentation with Reima. Purely from a portfolio management viewpoint, we are really focused on these three targets. Reducing the carbon, the CO2 emission of the portfolio. We already set a target back in 2020 that we want to bring the emissions to zero by 2030. We've done about 60% of that work. We are, we're on plan.
Of course, we know that the final years will probably be a bit more challenging than the first ones, but it's looking good, and I think we'll have a good chance of bringing the CO2 emissions down even further. The second thing is energy efficiency. So not only is it about emissions, but it's also about the energy consumption. We are part of a national energy savings agreement where we are targeting to reduce the emissions in the scale of that agreement for the next decade. Then finally, reducing water consumption. I'll share the case study in terms of the water consumption, but just to put that into perspective, if you look at our overall maintenance expenses, water and wastewater is about 15% of our maintenance expense.
It's quite significant. If we can do something about bringing that cost down, that's obviously great news for the portfolio. There's the case study. This is really about an idea of bringing water metering and then charging water fees based on the consumption into a big part of the portfolio. If you think about the conventional way of doing this, if you rent a home, go to Lumo's website today, and you'll be in the new home tomorrow, we're going to ask how many people are moving in with you because we want to know what to charge for the water. You pay EUR 27 per person per month. It's a fixed fee, and then it's free for you to consume as much as you want.
There really isn't an incentive for our customer to try to save on the cost. We've looked at this idea in the past as well, but then the technology was quite expensive, so it just didn't make sense commercially. At the same time, we talked about the occupancy increase already, so that's part of the drive with the increased consumption. We saw that this is being a growing cost for us, and we wanted to do something about it. That's where we wanted to move into introducing the water metering. Right now, you can go to My Lumo and see that's the picture on the right-hand side, see what the consumption is, both the hot water as well as the cold water, and then you actually pay for what you use.
With this, we know because we've done this across around 2,000 units already and are in the process of now getting all the 13,000 done by October. We know that we can get to a 30% reduction in the water consumption. We know that we can add another EUR 2 million, close to EUR 2 million annually on the NOI, and that's on the back of a EUR 5 million investment. If you do the numbers, that's quite attractive at the end of the day. For the customer, it's actually fair. You pay for what you use. If you have someone next door who's sort of keeps the tap open all the time, it's no longer your problem, and it's no longer Lumo's problem either.
Then finally, with the solution, we're able to meet that 5% reduction target by 2030. There's a lot of important things that come together from a technology viewpoint, from the customer service viewpoint, from the profitability, as well as then for the ESG, with this solution. Let's sort of spend the final part of the presentation and then talk a little bit about the Varma portfolio. I think most of you will recognize this slide from some of the earlier presentations, but if we should just start from the right-hand side and look at the portfolio composition. We just talked about the strategy. We talked where we want to be, and we are about 98% on in the large cities.
The other 2.5% is in places like Kerava, Jyväskylä, and Lahti, but very good micro locations in those cities as well. Overall, a very good fit if you think about the geography and if you think about the cities of the portfolio. In terms of the construction year, about 60% of the apartments built in this millennium. The older stock, especially the one where you would expect a bit of CapEx, sort of the ones built in the sixties, seventies, eighties, and nineties. That's a smaller share of the total, about a quarter. A lot to like here in terms of the portfolio quality. The acquisition will be accretive to FFO per share growth. Again, that's an important starting point for us. We talked about the locations.
The quality of the apartment is actually very good. We'll be able to leverage and scale the operating model that we have already now. That's very attractive to us, and that's part of the transaction and the rationale as well. Then finally, we're well-positioned to assume that lease-up. The portfolio at the time of acquisition is around 83% let, and we have a good plan and a good approach to bring that occupancy to a stabilized level where the rest of the Lumo portfolio is. Just a little bit more in terms of looking at the assets. We talked about the attractiveness. This is only the Helsinki assets, which is about 25 assets or 2,000 apartments. Espoo is here on the left-hand side.
There will be assets there as well, but let's focus on just Helsinki for the purpose of this slide. The green snake there, for those of you visiting Helsinki, that's the metro line. The red lines show the main rail connections. Again, a lot of assets in the southern part of Helsinki in very nice, attractive central locations, and a very good transportation connection. Again, the portfolio. When we talked about that, this is a very good match from a strategy viewpoint. This is really one of the features that we are talking about with the portfolio. Finally, let's wrap up and look at the actual assets. I'm a real estate investor, so I couldn't avoid doing that.
This is just a selection of assets in Espoo, Tampere, and Turku. Very attractive locations. For example, the Espoo assets, that's really next to the metro line, so great transportation connections. Then when I talked about the micro locations previously, this is where you now see it in action. We have a score for transportation, for the services, and nature and recreation. This is part of the geospatial data that we use as part of our investment analysis. Now, don't get too confused with the scaling, because the way it works that, for example, with transportation, to get 6 out of 6, you literally need to be at the Helsinki main railway station. You get the train, you get the metro, you get the tram, you get the buses.
It's adding up all the different modes. Even if you get a two out of six, that means that there's sort of two different transportation modes. You might get buses, you might get trams, but that's still two out of six. Don't get too confused about that. I really wanted to show this example so that you get a bit more understanding in the way of how we work with the actual investment selection and then also on the micro level with the assets. With that, I hope I've given you a good overview of the investment strategy, the way we approach the market, the opportunities that we are seeing, and I will hand it over to Katri to talk about the Lumo brand. Thank you.
Over the last two hours, you have heard all of the elements, strategy and targets, operations, portfolio growth, and technology. Now I will show how one Lumo brand will bring all of this together. Until now, we have operated with two brands, Lumo as a consumer brand and Kojamo as a corporate brand. Now we are unifying these together into one unified brand, Lumo. Like Reima said, this is not just the brand, a branding exercise or just name change. It's obvious that one brand reduces complexity, and one brand strengthen the link between customer value and asset value. Before looking ahead, it's good to understand where we are today. Lumo is already a strong brand. It has been built brick by brick over the last decade. Today, Lumo is the most recognized, the most trusted, private rental housing brand in Finland.
This is a really good platform to start the next phase. We see that our role goes beyond providing homes. Just like Reima said, Finland's growth depends on vibrant cities and people's ability to move, and this requires safe, flexible, and sustainable housing solutions. As one Lumo, we can contribute more strongly. I think that when Lumo is present in broader societal topics and discussions, it builds trust, and this trust supports customers' experience by making it easier to choose Lumo. We want to be known as a bold shaper of urban living. Like Janne showed, our customers want a fast and easy renting journey and right value for money. Lumo brand is the promise, and our customer experience is the proof.
From the customer's point of view, value is simple. Freedom to move, freedom to adapt in different life situations, and possibility to live in the right place at the right time. Being closest to the customer, this is not a slogan. This is how we work. At the moment, we are really developing our internal culture. Our customer experience is something what you see and feel in every interaction with our customers and residents, everyday life. One Brand helps us to deliver this in a consistent way everywhere. Last page, how do we want to be known? We are bold shaper of urban living. We create freedom and flexibility for urban life, and we are always closest to the customer. When all of this comes together, it is what One Lumo stands for.
Value for society, value for customers and investors, and value for employees and partners. Thank you. Now I will ask rest of the management team back to the stage.
Thank you all. Now we have the second Q&A, and there is still time to send questions also via chat if you like. Let's start with Jonathan.
All set. Thank you for taking my question. It's Jonathan Kownator from Goldman Sachs again. Really interesting presentation on AI and how you're using AI right now. The first question is, from here on today, are you able to quantify the impact, or do you have a target impact in terms of using AI to, I don't know, improve margins or whatever it is, how you want to quantify that? Can you help us understand the impact on your business that it's gonna have? The second question is, there was obviously a difficult occupancy patch over the last couple of years, obviously oversupply. The key question is. Do you have an understanding perhaps of when runs into the operational processes that you had in place?
Because as you've been highlighting, you've had technology for quite a while. What have you changed, in your operational setup and perhaps in your technology approach or AI approach to take care of that? Thank you.
Well, would you like to take the first one of
Yeah, there's a disappointment coming, so I'm not giving you any figures. When we start this type of development, regardless of what these ones we are starting, we always make a business case and look whether it's beneficial, and we need to see the money as well. Whether it's more turnover, whether it's cost savings, or whether it's creating more efficiency in our own operations, and that's obviously a target. If you put them all together, I'm not able to give you any figure at how much cost savings or how much more efficient we are going forward when we do all these things. How we see this is more a holistic way, if you like.
We do believe that if the service is there, and the brand is there, and we are more efficient, and we use AI for wherever we can, so we are able to get higher premium in rents, and that's the key. Unfortunately, we have tried to do the math and put a number for that, and that's something we are not able to do. We are confident that if you put all this together, that means that we are able to take care of bigger portfolio with the same employee amount, same headcount or even less headcount, be more efficient and provide better customer experience. That's allowed us to charge premium rents and have higher occupancy.
Okay. If I summarize that you expect both a revenue impact and a cost impact.
Both, actually. Yeah.
But you.
Yeah. Right
you just don't have a
Yeah
Quantity for us.
Exactly.
If we go to lifting up the occupancy and if I understood correctly your question that how we're gonna kind of utilize the technology on that. I would say that technology is obviously one thing, especially in our kind of web store, so to say. That how kind of a good platform is that to rent an apartment?
I would say that, for example, last year's performance. Even bigger was a bigger factor: the kind of a changing the sales process overall and then when talking about technology too, as Tuomas told about the pricing tool and we are still developing the pricing tool so that it would be as dynamic as possible. These are the kind of factors that directly affecting the occupancy and it's a very good performance in last year.
Okay. Pricing tool. In the sales process, what else have you changed beyond the pricing tool?
Well, I don't know if you want to, Janne.
Yeah. I can elaborate a bit. We have worked a lot on the sales culture side, also done a lot of process work, also set up new metrics, how we do efficient sales. I think there's a lot to do still.
We've been able to tackle the seasonalities better. We are actually monitoring the sales leads on minute levels. I would say process, culture, and attitude, those are the three key factors.
Okay. Thank you.
Ding Boer from Van Lanschot Kempen. Talking about this premium to market averages, you are really focusing on customer experience. Just to quantify it, what's the premium that you're seeing today, and do you see scope to increase this over the next three years?
Well, at the moment, we are receiving roughly 4% premium from the market overall, and then comparing to kind of similar institutional landlords, it's roughly 1%. It has been a bit higher due to when the market was better. We are not giving you a figure that we're what is our target, but it's definitely higher, and we see the potential that it could be much higher, the premium.
Okay. Clear. Looking at the platform overall, you're saying there's scope to run more apartments. If investment opportunities aren't there, have you looked into more capital-light approaches? For example, third-party capital management or externally managed apartments for others. You mentioned that Varma had three different external managers. Sounds like you can do it better. Is this something you've explored?
Well, I would say probably that we have explored, but kind of very initial thoughts. We concluded that at the moment we are not enlarging our scope. That's of course in a future opportunity. I would say that at the moment we have plenty to do in our own operations to set up the kind of a platform in a kind of a top-notch condition.
Because we also wanted to make it this three-year strategy period so that we are not dependent on the market conditions as such, that we can execute the plan even though the market improves. That's why we wanted to keep it relatively, how would I say, focused and simple. That's probably a later stage thinking that whether we want to enlarge the scope overall.
Okay. Thank you.
Yeah.
Anssi, go ahead.
Yes. Anssi Rauste from SEB. If you look at your digital and AI capabilities and talk about physical assets, are there any differences between older buildings and new buildings, how you can source data and adjust your way of doing things? For example, this heat controlling in these buildings.
Would you like to.
Yeah, if I should take that. No, I don't think that it's so much age-related. A lot of this, for example, the heat controlling solutions that you are referring to, that's actually where we see better opportunities is precisely with the older stock, to improve. It's not, necessarily directly age-related.
As you have a lot of data, can you utilize this data like externally? For example, I think you had this cooperation with Vantaa Energy at least at some point. Do you have these kind of opportunities?
Yeah. What you're referring to is this, when we use the heating solution, we generate a lot of data on the heating needs of those apartments. That's valuable for the district heating company. What we've been able to actually do is, I talked about the CO₂ zero CO₂ emission targets in 2030, and we've been able to use that data as kind of a, if you like, bargaining chip with the district heating companies. That, hey, if we're able to share this. Of course it's not you can't recognize anyone, so GDPR, everything good. We can use the data then to actually get free of charge the CO₂ neutral energy. That's been.
It's one of these examples that you start working on something which was initially just focused on energy saving, but then it has these spin-on effects that, hey, actually you can use the data in different ways that you didn't think about in the beginning when you were making the investment case. Good example.
That.
Maybe I could also add that when it comes to achieving these targets, what we have been presenting, it's not only managing the property data. As Janne was presenting, we are building the houses for 100 years, but we operate 24/7 on a minute level. This operation is more like the tenant behavior, potential customer behavior, the market, development related data that has less to do with the property, properties themselves.
Thanks. One final question from me. We have seen these cities where you want to operate in, and we have seen this Finnish rental market data that we had actually quite nice trend of declining number of available rental apartment for some time. It seems that this trend has somewhat stalled during the last year. What kind of headwinds you see in these, your core markets today?
Well, I don't know if it's considered that the headwind has gotten stronger in a, w e do not share that view, but probably the kind of a favorable development has stalled a little bit. I think there's probably couple of reasons behind that. One is that even though the construction or residential startups have been in a relatively low level, especially on a non-subsidized area, but there has been a relatively decent amount of subsidized production in residentials.
That has probably affected somewhat, given the fact that actually the macroeconomic situation in Finland has gotten worse in the last year or 18 months, which has affected that probably more people are eligible for a subsidized apartment as well. Then it's good to bear in mind that actually the legislation is going to change and actually the new starts for subsidized construction will come down already this year and probably in the next year as well. That's why we, a t least in my estimation is that the kind of new startups in residentials are lowest this year than last three years.
Thank you.
Celine. Okay. Simon, go ahead.
Thank you. Simen from DNB Carnegie. A question on the strategy. One thing I don't find in the strategy, and you have done this last year, is share buybacks. Clearly one of the most profitable thing you can buy at the moment would be your own shares. Why are you talking about buying assets in the market? Why is that not included in the strategy? Can you please elaborate a bit on why you haven't mentioned that on stage today?
It was actually there in our dividend policy. We have a opportunity to buy back our shares as well. We haven't decided a new program. But that's definitely a tool for our capital allocation as well that what we can use. I think. There's a little bit of a kind of a perspective or timeline of that whether if you look at on the long run like we tend to do, then the market offers probably relative decent opportunities to acquire assets as well.
On the other hand, if you do the buyback, whether it's a kind of effect on share price or not, we truly understand the yield math behind the buybacks and that's why that was the one reason why we did it last year, the roughly EUR 75 million buyback.
It will still be in the toolbox if I understand you correctly then?
It will, yeah.
Yeah. There's a lot also things happening in the world at the moment, war, especially in the Middle East, impacting energy costs. We're seeing interest rate movements, spiking in recent weeks. You're talking about divestments also. How do you think this one can impact the strategy to divest? One thing also, you have a bridge financing after the Varma transaction. Are you hedging that position at all given the recent movements in interest rates, or how are you handling those risk and that risk factors?
Well, if I take the first kind of take out, of course, we have to look at that if we do the divestments, what would be the kind of most value creative way of using those funds. In a case that interest rate level would be kind of a permanent rise, for example, in this current world, but in a medium term, so to say. Then it would be, of course, one alternative to use those funds for paying back the debt and when discussing about the bridge funding of Varma deal.
We haven't particularly hedged that interest rate, but we have plans to take out relatively soon.
Mm-hmm. To fall back on the first question from earlier, the customer satisfaction, CapEx, for instance, is that will that be at the current level you have, or will you upgrade your portfolio, especially on the new assets? Do you see any changes to that?
Well, it probably will rise a little bit, but not in a meaningful way, in a sense that you always have to be careful when you talk to analysts that we're going to invest something in a customer experience, and then you pencil in the millions. If we talk about the technological investments that Tuomas presented, yes, we have to spend a little bit more than we have done, but I would say that not a meaningful way. I don't know if you have a better non-answering answer than I have.
Perhaps I follow suit, so not giving any real answer, but of course, these investments in digital development items are booked as a part of our SG&A expenses. We penciled in total amount, so including headcount and all these investments. We expect the SG&A expenses going forward to be slightly more than it's today. I'm not going to give any figure for that slightly, but
My job is asking.
If you pencil in, let's say inflation plus something, it's. That perhaps gives at least some color there. Not a big thing, not a big time, but it's some increases there.
Tuomas.
I could shortly also mention when it comes to technology investments, the business improvement list that I was mentioning is a long one. There are really different sizes of development activity. Some are small, some are bigger. We have already seen that some of the development items that we have introduced have actually cut down our cost level. That has actually cut down our technology spending. It's not only like CapEx investments needed. It's also more like advanced way of operating with our technology.
Thank you.
Céline Soo-Huynh from Barclays. Thank you all for your presentation. I did appreciate all the insight. For us that was really helpful. My first question is to you Reima and Ville. Did I pronounce that correctly, Ville?
Yeah.
I know that you are not keen on construction anymore, and that kind of makes sense given the current environment of interest rates. What is the yield on cost that would make you wanna go back into construction again? What needs to change for the economics to work again? Thank you.
Well, good question. I would say that we first of all haven't totally ruled out them because as Ville mentioned in his presentation. We might have some, for example, some plots or some assets that we can utilize the extra land and construction permits there and then it makes more sense. In general levels, we have if I give a rough estimate roughly 20% cap at the moment comparing to acquiring the assets. At the moment it doesn't look very kind of.
That would be above 8% yield on costs. Is that correct?
Sorry.
That would be above 8% yield on cost. Do you think that would be doable?
Uh.
'Cause you used to build on six.
Yeah. Well, I would say that probably 8 is not correct figure. If you think about that at the moment the how would I say overall yield and the cost level of a construction hasn't come down that much as you would anticipate it. It's actually pretty hard to say why is that, but it is what it is. That's why it's roughly 15%-20% more expensive to the start up. I don't know if you want to elaborate a little more.
Yeah. Maybe a different way of looking at it is. I talked about a couple of projects that we're now looking at in terms of the portfolio intensification. What happens there is that we essentially get the land almost for free. That’s roughly in the same ballpark as this 15%-20%. What I would add is kind of the extra strain on the balance sheet then with having that construction project going on. That kind of adds on to it. That’s why we're not just looking at it as a yield on cost measure.
Okay. I think that makes sense. You know, over time you guys implemented a big cost reduction program, and that led to departure or reduction in headcount. I was wondering if that was quite focused on the construction team, and that's the reason why you don't want to do construction again anymore.
No, not really. I think we start with what makes best sense and what's best for the investment strategy. If we thought today that it would be constructing, then that's what we would be doing, and we would. It's true that we have a rather narrow team now, but it's the right size to what we're doing. If we thought that it would be a better deal for the shareholders to ramp up that team and ramp up the development pipeline, then that's what we would do. We don't think that that's the case today.
Right. The keywor.
And.
is consolidation.
Mm.
You wanna consolidate the markets.
Yeah.
Okay.
I think it would be fair to say that for our construction team as such, we haven't gotten rid of that competencies totally. We still have that competencies in place and the team in place. It's just a much lighter team than it used to be.
Okay.
A couple additional note if I may. It's not all about net initial yield, but of course, you need to look how much you are able to increase the rents going forward. That plays a very important role when you do these decisions. One thing is that when you are in oversupply situation in the market, perhaps not the wisest thing to help that is to start to build new product. Then if you just look today, if you are able to acquire a good portfolio, good properties, net initial yield of 5%, and you take the burden of development, and first you invest, and then you start to enjoy the cash flows in later, as we'll explain.
Today's cost of construction, you might get low 4s. You'll get quite new product with 5 if you acquire something. That's today. It may change, but that gives an idea that the construction costs today need to come down between 15%-20% to even match what you achieve just acquiring quite new product from the market.
Well, Erik, I'm glad you mentioned rental increase because my next question was going to be for you on the guidance. You've mentioned a rent increase of 1%-2% for this year with the aim of getting to, I believe, 3%, 2%-3%. For the medium term, if we look at the top line guidance of 5%-7%, how much of that is actual rental growth price increase?
The re-rental growth as such is in this year's guidance.
Yeah
Is, is, uh, two-ish percent.
2-ish%, okay.
Yeah.
for the medium term?
The FFO for medium term is slightly more than that.
Sorry, can you quantify?
little bit more than that.
2. 2.5?
We like wide ranges, so between 2 and 2.5.
I'll take six then. Thank you, Erik.
Hi. Frans Pekkarinen from Inderes. To Tuomas first, maybe this question. How much are developing your AI tools and other development, like in-house compared to buying from the service providers, for example, the AI chatbot?
We are utilizing external service providers a lot, but we also have in-house developers operating our business support systems. There we also do like experimentation. I was actually giving some of the examples that are being done by our internal team. It's a mixture of both.
Yeah. Janne mentioned in your presentation that you can, like from the termination to new tenant, you can do it in one business day. Could you tell, like what is the average time around here, and how much upside do you see in this current measure?
I can't disclose the actual time, but I can tell you that we see that if we are able to tackle 90% of new sales leads within the same business day, it generates a lot of new lease agreements, opportunities, and we are seeing that in our conversion. We also track down very carefully the termination apartment inspection and when we publish it on our online store, and the conversions are going up. I'm very glad that we are concentrating on that process part of our termination to sales to agreement.
Okay. Thank you.
Any more questions? Svante.
Svante Krokfors, Nordea. Two questions. They are related to each other slightly. Could you give an, I know it's difficult, but a rough estimate of how much of your occupancy rate improvement, say, over the last 18-24 months has come from more dynamic pricing of apartments becoming available and customer satisfaction that has gone up and reduced the churn?
I think it's really difficult to quantify that, what has actually been the factor. Of course, we can look at that. The churn figure has come down, and if you calculate that to the occupancy. It has also meaningful effect, but also the pricing dynamism has definitely affected. I don't know if you have a better
Yeah. I'm sure it's a combination of several things. It's dynamic pricing. It's how we manage the operations. It's we have more staff working evening hours and during the weekends, and we have established a team in our service center to support the renting operations. Our repairs are more focused on supporting the renting and all these things that Janne already explained. I'm confident that if we didn't do all these things, we wouldn't be able to improve the occupancy like we did. Of course, the dynamic pricing plays a role there. It's important part of that. But if we did only that, I think the result would have been very poor. We needed all these things.
It's impossible to say that this amount came because of this action and this came because of this action, but I'm confident that it required all these things I mentioned.
Thank you. Relating to that, slide that you mentioned that your premium to market rent is 1.4% depending on how you define it. What was it back in, say, summer 2024 when your occupancy rate was at the lowest, in your opinion?
I think it was at least double.
You intend to take it back there.
Our intent is to go beyond that, so have more. Yeah.
And it.
It was 1.2% if you compare to institutional investors' pricing. If you look the total market, it's it is already perhaps four-ish, so it's much more than compared to only a couple of institutional players.
Thank you.
Now we want to be clearly higher than that.
Thank you.
Any more? Seems that no more questions. I think we could move on to closing remarks. What would you like people to take home from today?
Well, as I said in the very beginning, the kind of our initial target to accomplish today was that you guys would kind of figure out that there's just kind of a strong connection between delivering the best customer experience and value creation. We know that and we have tried to kind of concretize the factors behind that also the operational excellence and the kind of improving customer experience. We do know and recognize and understand that there's.
We are not able to disclose every component, and you are not probably not been able to put every figure into your Excel spreadsheet that how it's going to affect. There are some parts that even we don't know that the magnitude of it. We are kind of confident that this will be the right way, and this company needs to be run like a proper business where the customer creates value and not just kind of taking care of the portfolio.
That's the kind of an important message, and hopefully we have been able to give you an idea of what the concrete measures behind our strategic focus areas are. We are now here to deliver those targets. We have plenty of work to do, but as I said, we are confident we can do it. Thanks a lot for your interest.
So.
Thank you.
Now we're going to end the webcast, but if you have any questions coming up later on, please, contact investor relations team. Thank you, everyone.