Earnings Call: Q2 2021

Aug 19, 2021

Good morning, ladies and gentlemen, and welcome to Koyama's Half Year Reports News Conference. My name is Maja Hongas, and I'm Manager of Investor Relations here at Koyama. Today's presenters are familiar faces: Jani Nemenen, our CEO and Erik Held, CFO. After the presentation, we will have some time for questions. And first, we will be taking the questions from the conference call line. After that, we will answer questions from the chat. But without further ado, let's get started. Thank you, and good morning, everybody. As we start, in order to provide some color on our H1 figures, it's easy to start by saying that the 1st 6 months Has been in line with our expectations. COVID-nineteen has had an impact to urbanization and Rental Apartments Market. That means that our financial occupancy is temporarily lower, And our like for like growth has been moderate. On the other hand, we see that long the Biggest trends for long term demand for rental apartments are still valid. Urbanization will continue as well the number of small households. At the same time, during last year and couple of years and this year, we have seen a lot of foreign interest Information to value adders, and we have seen yield compression in the market reflecting our fair values as well. During the summer, as expected, we saw positive signs, Meaning a high number of new tenant agreements in July. And as estimated, It seems that students are moving towards the university cities. And on the other hand, we have seen that There's a lack of employees in service businesses, especially here in Helsinki region, and that Will mean that urbanization will continue. Moving forward to the topics, More detailed, if we look at the operational environment, the estimates are that The easing of pandemic is expected to have a positive impact to Finnish economic growth. The vaccination coverage is already quite good here in Finland and proceeding well. Yesterday, the levels were that 69.3% had already received the first vaccination and 43.5% The second vaccination. The number of residential start ups has been a bit higher than expected. It seems to be Hi. But not meeting the highest volume from prior years. What we saw during the summer has been A rapid and quite significant increase concerning construction costs, especially timber and Steel. And then that may have an impact to be continued towards the volumes. In a market, we see that all the estimates are that rents are still increasing as well the housing prices. A lot of homes have been bought. And of course, we see, as these estimates on the table on the right hand side, A lot of differences between areas and microlocations concerning housing prices. In June, we received New information concerning forecast and scenarios, concerning population growth after pandemic and According to all the three scenarios provided by MDI, urbanization is expected to continue, especially here in Helsinki region. So big cities will be growing during the next couple of decades. That combined with the fact that we still have an increasing number of small households, Meaning 1% and 2% households, changes in values concerning owning things, there are This long term trends in place for demand of new rental homes in the biggest cities. And as I said, we have seen transactions concerning portfolio deals this year, providing data And impacting values as a result of yield compression Relation. Provided in our figures as well. It seems that the same trend still continues. So in all the big cities, The number of households living in rental apartments is increasing. And as prior In cities like Helsinki, Turgo and Tampere, actually, more households live in rental apartments than in owner occupied apartments. As I said, COVID-nineteen has had an impact, and it seems that It has created a point of discontinuity to urbanization, especially here in Helsinki region. But on the other hand, as I said, all the scenarios provide the same information. As pandemic is easing off, Relations. Housing production seems to be Remaining in fairly high level, not reaching the highest volumes, what we see is the number of build to sell projects Increasing and the increasing of construction cost, of course, may end up providing a little less Production for rental apartments and, on the other hand, increasing the number of build to sell projects. And my opinion is that most probably this construction cost increase We'll settle down at some point. If it would keep on going, that would have an impact to overall volume providing build to sell projects as well. But as all the estimates are Providing the same data, urbanization will continue. The housing production volumes are focusing towards the biggest cities and towards Helsinki region. Taking providing some color on our H1 figures. We've been able to create growth throughout the pandemic. Total revenue is still growing 1.8%. Of course, it's a combination of 2 things. 1 is the completion of new apartments, and The other part is our capability to create like for like growth. Erk will go deeper in the like for like figures. That's important to notice that we are still able to increase our rents. The like rental growth combined with water charges, has been 2.1%. And we expected mid- to long term that we are still Creating like for like growth between 2.1% to 2.5% a year. On the other hand, comparing our net rental income And if I focus on the comparison here, to pick up some topics there, Of course, we have to keep in mind still that last winter was cold, and we had a lot of snow. COVID-nineteen has Create a situation where we have been increasing the intensity of cleaning. So these two aspects have increased the amount of Relations. And on the other hand, as we are growing and investing, the loan portfolio has been increasing as well. The fair value of investment properties at the moment, €7,500,000,000 now, Providing data that we are growing, there is a strong growth combined with a positive change in fair values as a reflection of yield comp pressure. Gross investments, €176,500,000 are mainly new development projects. Profit excluding changes in fair value increased 4.5%. And of course, combined this result With a positive impact concerning fair value of investment properties, €466,000,000 provided A result of profit before tax is close to €550,000,000 So in a big picture, No surprises in the figures. We are still proceeding as planned. Still, the strategy is to grow. Our capability is combined different approaches. We have the strong capability to create new development projects either based on our own land or by buying projects from construction companies. The second part of the growth is still that we are able to convert buildings into apartments. And then the remaining aspect is that we are following the market Buying Portfolios if We Find Something Matching Our 441 apartments and starting 610 apartments. At the moment, the pipeline is really strong. We have More than roughly 2,800 apartments under construction, all the projects located here in Helsinki region, Meeting our criteria, so high quality micro low cases, along with public Transportation and Services, all the projects having fixed prices. So we don't carry the risk Of increasing construction cost, all the projects providing the net initial yield of 4% Roughly or above 4%. And actually, as we've been providing information, we are budgeting in a development gain of roughly 20%. As it now has been, we've been reaching numbers above 20%. Some slight changes concerning our estimates of completions Of projects, actually meaning that some of the binding commitments with construction companies, there's been Timing issues concerning zoning or municipality decision making. So this project may always End up to be completed a month or a couple of months prior or delayed a couple of months. But we do have a really solid and strong pipeline towards the future. A couple of words concerning Metropolia Properties, which we have and what we see as a huge Potential for us providing 1,000 apartments in the city center Helsinki. Now the zoning has been completed Concerning a couple of locations like Abraham, Encanto and Angri Calencanto, and our estimate is that we are able to start those projects later this year or in the beginning of next year. Then a couple of the remaining projects, Mainly, the zoning should be completed by the end of this year. 1 I guess, one of the smallest projects, So Piel Hedonkato, it seems that the zoning will be completed next year. That property is actually connected to the property besides owned by the City of Helsinki, and there are discussions on A couple of words concerning what's been happening in the market service wise and in the customer base. We are still proceeding with our capabilities, providing services and digital services. We are really happy that more than 70% of our customers are using Myeloma services. And actually, the net Promoter Score concerning digital services has been really high. The raw figures have been 67. On the other hand, we've been creating a couple of new service and providing now a bigger capacity concerning broadband services. Then what's been happening in the market, we have seen a point of discontinuity concerning urbanization. On the other hand, if we look deeper, we see that customers between 2534 years have been moving More often than usually, and then the number of customers below 25, actually, We've been making a bit more tenant agreements here in Helsinki region. But on the other hand, the tenant turnover Has been abnormal high there. Probably peak cause of people renting the apartments in order to start Studying then moving back to the parent and not being able to decide what to do. Some of the single parent households Relation. Are looking for more affordable solution moving towards the parts of capital region where Apartments are cheaper, on the other hand, trying to find solutions outside Helsinki region. Now we would Ask Erik to join and provide more detailed data. Please, Erik. Thank you, Jani, and good morning, everybody, from my side as well. So Page 13, Total revenue, the growth there was €3,500,000 and like for like rental growth contributed 0 point €4,000,000 and then completed apartments around €3,000,000 And then we completed 3,096 apartments during the Q2 this year. Net rental income down by €400,000 Total revenue growth was €3,500,000 as mentioned. So maintenance costs growth was euros 3,800,000 and repairs was flat. So and in the maintenance cost increase was Coming from actually from TourSources, one was related to the weather. So heating and taking snow from one place to another Increased the cost by €2,700,000 especially during Q1. And then the second part It's related to COVID-nineteen. So people spending more time in their apartments, so that increases their cleaning costs and water Cost around in total, around €800,000 Page 14 profit before taxes. Of course, the bigger figure there is the profit on fair value on investment properties. So now the yield compression is really visible in our figures, €290,000,000 during Q2 and then euros 421,000,000 in H1. And the yields yield compression compared to Q1 was 22 basis points. And compared to Q4 2020, it was 32 basis points. Any restrictions? Actually, there was no any restrictions during Q2, but the H1 figure is €12,500,000 Development gain. So we completed 6 projects during Q2 this year, Development gain above €30,000,000 And as Jenny mentioned, the development gain there was above this 20% on average is what we have anticipated. And monetization investments, of course, a negative figure, There, €4,900,000 during H1. FFO, so down by €2,500,000 Net internal income negative €400,000,000 as mentioned. SG and A expense is a positive figure €900,000 And there are some savings related to COVID-nineteen. Finance expense is up €2,300,000 mainly because of the bigger interest bearing liabilities by €160,000,000 from Corresponding period and more than €300,000,000 from the Q8 2020. And cash taxes growth was €400,000 Our financial occupancy rate, that was clearly Impacted because of the 3rd wave of COVID-nineteen, so that is main driver behind that decline in financial occupancy rate. And the like for like rental growth was moderate during Q1 as anticipated. And as Jani mentioned, the vaccination Has proceeded here in Finland well. So almost 70% has of the population has got their first shot. And the authorities Have increased the estimates for this, the sufficient vaccination level. Previously, estimated 70% is enough. Now the estimates are that the level should be somewhere between 80% 90%. As estimated, the students are the 1st movers. So many universities here in Finland has Informed that they are going to increase the portion of in person studies, and that has a clear impact for demand. What comes to the service sector, so there's a message from service companies that there's a shortage of workforce there. So we think that, that actually tells 2 stories. One is that there are more there's growing demand towards Relations. So people are willing to spend more money for services. And those people who lost their jobs and moved outside Helsinki So this remains to be seen when this really happened. Most likely, the restrictions will be removed and on back of the transaction level. And this, of course, helped, but it has slightly postponed. It's good to note that in July And the first half of August, we have made more new lease agreements than we made last year during July August. The tenant turnover, slightly elevated. We have noted that especially People under age of 25 and 1 parent families are rotating. So that Pretty much explains the elevated tenant turnover. Rent receivables flat, So only 1.3 percent of total revenue. Page 16, our like for like rental Income. So on the positive side, rent increases and increases in water charges, we've been increasing the rents pretty much in a normal manner, Contributing 2.1 percent for like for like rental growth. And the occupancy rate has a impact for or negative impact for like Relation. Rental growth, so negative 1.7%. 0.2% other impacts, so there it's a portion of several Small items, slightly lower commercialization. We have some commercial space. So in those spaces, Sauna fees and car parking fees. Now saunas are open and people are traveling more. So that means that We've seen that sound of fees and car parking fees are increasing. So in total, like for like rental income growth, positive 0 point 2%. Page 17, gross investments. Biggest by far, the biggest portion is our development investments, Almost €169,000,000 monetization investments, euros 4,900,000 and capitalized borrowing cost, euros 2 point €8,000,000 Monetization Investment and Repairs. So repairs, flat and monetization investments down by €5,700,000 mainly due to the timing of some projects. So in the corresponding period, we had A couple of larger projects. And during H1 this year, we haven't started new bigger Relations. In total, of course, we keep our properties in good conditions as earlier. Page 18, fair value of investment properties. So main drivers, of course, our investments and a fair value of investment properties, We still have restrictions regarding the valuation, and those restrictions will gradually end by 2024 And I contribute EUR140,000,000 EUR160,000,000 Page 19. So on left hand side column, Apartments under construction, 2,793 apartments, a little more than €400,000,000 already invested and a little more than €250,000,000 to be invested in order to complete these ongoing developments. In the mid column, binding lease agreements, binding agreements with construction companies, apartments, 829, And the investment cost there will be €171,000,000 And then Metropolia case providing us roughly 1,000 apartments and others, so really Land Bank, Poor Land and Lots and Existing Building, providing roughly 1400 Apartments. We estimate that investments in development project this year is going to be between EUR 370,000,000 EUR 420,000,000 And it's good to note that all these projects are located in Helsinki region. Page 20, our equity ratio loan to value figures strong and well in line with our strategic targets Relation. Page 21, Page 22, we have strong financial key figures, Fixed interest rate period and average loan maturity slightly increased 4.7 years and 4.6 years And average interest is down to 1.8. 62 percent of our total loan portfolio of 3 point €3,000,000,000 already from point market. Hedging ratio at the end of H1 was 92%. And we are quite cash rich. So also €435,000,000 of cash and cash equivalents and financial Assets. Credit line is €300,000,000 committed unused. In May, we issued our inaugural green bond AGS maturity, €350,000,000 carrying a coupon of €0.875,000,000 And the proceedings from that green bond will be used for to finance and or refinance so called next to 0 energy buildings. Page 23, our strategy KPIs, couple notes there. So the FFO against total revenue, EUR 35,600,000,000. It's good to note that Because of the IFRIC 21, the whole year's property taxes are included or booked in Q1. And the portion of Q3 and Q4 It's €5,500,000 And if you calculate those into this equation, so the FFO against total revenue would be 38.4. Net Promoter Score 22, It's quite interesting situation actually because all our customer satisfaction KPIs has improved. But the Recommendation part of the question has came down. And we have looked this figure and what might The reason behind this decline and we think that the reason is simply COVID-nineteen. So people are spending more time in the apartments, and they are sick and tired for COVID-nineteen, and that is reflected in this recommendation part. And we noted that this actually goes in for all industrials internationally. So whether it's hotel, airline or car rental or whatever industry, net promoter scores seems to have came down during the COVID-nineteen. It is funny actually that this has been the case even for those industries that for services, People are not able to use because of the COVID-nineteen, and there the recommendation figures came down. But that's how it is. So we think that it's important To keep up our work and after the COVID-nineteen, this figure will be improving. Page 25, our outlook slightly specified. So now we estimate that the top line growth will be between 2% and 4%. And this specification of top line reflects the uncertainties related to 4th phase of COVID-nineteen and especially delta variant. And as mentioned, so the authorities has Increased the estimate what is the sufficient vaccination level. Previously, they estimate that 70% is enough. Now they estimate this That the sufficient vaccination level is somewhere between €80,000,000,000 and of course, to remove all remaining restriction regarding the COVID-nineteen requires that Vaccination level will be sufficient. And we still estimate that on back of this sufficient vaccination level, the migration will gradually I'll be there again. And the first sign of that is already visible for the amount of new lease agreements made in during July first half of August. So the student has already started to make Release Agreement and some increases in other parts of the market as well. So this change is so the specification is related due to slightly postponed of recovery from COVID-nineteen. And we specified our FFO guidance as well. So now we estimate that the FFO will be between €150,000,000 €158,000,000 And the biggest impact for H2, FFO will be from the weather. So whether it's going to be cold or not cold, whether we are going to get snow at early stage, that plays a role there. Of course, The repair project and the timing plays a role there for FFO during H2 this year. And of course, total revenue growth plays a role there as well. We anticipated no additional financing to be made in the second half of this year given the strong cash position of the company. And we estimate that SG and A expenses are at go is going to be at the same level as last year. Page 26, no changes in dividend policy, so 60% FFO to be paid dividend provided that equity ratio above 40% and that is the case. And at this stage, I will hand it back to Jani. A couple of words to wrap this up before the Q and A. I think one of the big messages is that we are still proceeding in line with our strategy, well in line actually. We do have a really strong project portfolio providing future growth. And as we see the impact of COVID-nineteen towards urbanization as temporary, We've been all the time able to increase the rent levels, and we do still believe that we are able to increase our rent levels. And occupancy will recover as the urbanization will continue as expected. So Of course, some uncertainties because of delta variant and the 4th wave of COVID-nineteen. But on the other hand, as I said, it The vaccination levels are proceeding well, and now we already have A good level of vaccination. We have seen positive signs like a high number of new tenant agreements in July in the first part of August. So actually, no big surprises concerning H1, and we see Thank you, Jani and Erik. And now we have time for the Thank Relations. And our first question comes From the line of Anssi Kizinyemi of SEB. Please go ahead. Your line is open. Hi, guys, and thanks for taking my questions. I have a couple of them, so I will take them 1 by 1, if that's okay. First, Starting with the guidance. I mean, it was slightly cut. Could you elaborate a bit on the reasons behind it? Is it mostly due to the fact that Finland is still in partial lockdown mode and sufficient vaccination levels have been raised. Or are you seeing that Your students are moving in to the big cities slower than you expected? Or are there any effects from postponed projects or Anything like this. So any color would be helpful. Thanks. Hi, Anssi. The specification is equally related to the COVID-nineteen situation. So as mentioned, the authority has increased The amount what they feel that is sufficient vaccination level, previously, they say that 70% is enough Now because of the 4th wave and especially related to delta variant, they estimate that 80% to 90% is sufficient. And then of course, on the back of the sufficient vaccination level, the remaining light restrictions will be removed. And so that means that the opening of the economy, if you like, has slightly been Postponed because of this COVID-nineteen. So this is the reason behind the specification. And as mentioned, we already seen that students are moving. So we estimated earlier that they are going to be the 1st movers, and that's something we've seen already. So as Jenny mentioned, the amount of new lease agreements during July and first half of August has been quite high. And we have seen the first sign of intercountry migration as well. And then the positive signs are that, of course, it's not positive that service sector is complaining that they are sort of working force, But it's a positive in a sense that there seems to be growing demand for services. And of course, that needs working for us. So hopefully, that will create people moving Back to Helsinki region once they are sure that they have jobs. And that's related to COVID-nineteen and subsequent vaccination level as well. So this is the background for specification. Okay. Thanks for that. Then on fair values, there was a yield compression, especially in the capital region. Was there a certain kind of portfolio the yields were taken down? Or is it widespread? And also yield compression happened also outside Helsinki region. So any particular cities there? Thanks. Jani here. Hi, Janssen. Erik can provide more detailed color. Of course, we have seen transactions made here in Finnish markets, And all the transactions have been made with quite aggressive yields. They've been including properties in Helsinki region and other big cities as well. So As we've been providing information prior, we have seen what's been happening in the market, so have been the brokers and evaluators. And until now, there have been feeling that there has been not enough data because those ongoing processes hadn't been completed. But Now several portfolio deals have been completed during the summer and sufficient data. So The yield compression came in mainly here in Capital Region and in a couple of biggest cities like Turku and Tampere. Okay. Then on development gains, you highlighted that they have been above 20 And you basically use as some kind of a threshold or ambition level. Could you give us a little bit more details? Is it 21% or 29% or kind of what's the right figure here? Yes. It's closer to the Later figures also. It's also about 25. Okay. Thanks for that. In addition to that, As we provided the information, we still have the same information to provide you that All our ongoing projects and binding agreements are providing projects with a net initial yield of Rough 4% or above 4%. And now the valuation yield has seen a yield compression. Okay. Thanks for the clarification. Then the last Relations. Any interest in portfolios out there? What is the current situation? And kind of the other part of the Sorry, it's divestment. So I mean we have seen a lot of changes in the environment, especially coming Relations. Regulation and ambitions from European Union, FIT455 on energy efficiency and CO2 emissions, Has these changed your view how you look at the portfolio? Or How you would like to divest some of the, let's say, noncore assets? What's the word on that? He included a couple of subjects there. First of all, to provide a A piece of comment concerning acquisitions. It seems that there were several ongoing processes Which were completed during the summer. And as it seems that at least here in Finland, Everybody's intention is to create the world to be completed before the summer holidays. And after the summer holidays, New things start happening. So mainly, no new big processes were started just before the Holiday season and of course, we now estimate that some of the processes Welcome to the market and some opportunities. Welcome to the market, and we are following the market closely. If we find something appealing enough, we are already unable to move fast. Then on the other hand, what Comes to the question of disposals and energy efficiency, we've been providing information on our new Sustainability program, if we think about that, we've been providing the information that we are able to carry out our Sustainability targets without any extra investment. So the energy efficiency part Has always been a part of investment decision making in our company. So we are well in line with our sustainability program and strategy. Okay. Thank you for that. That's all for me. Thanks. Thank you. Our next question comes from the line of Santi Kaphos of Nordea. Please go ahead. Your line is open. Thank you. Good morning, Svante from Nordea. Hope you can hear me. Yes. Good. Yes. Couple of questions from me. Getting back to the yield compression, capital region declined 25 basis And those reference deal, could you open a bit More, is it new apartments, combination of new and old apartments? And how do you How is the kind of adjustment made to your bit older stock? Most of the portfolios have been located around Helsinki, Helsinki region and in a couple Other big cities as well, mainly projects have been Including properties built during after 2010 or After 2000, so but most often, including a couple of properties built prior to that. So of course, we have been having this discussion with our valuation experts, and the valuation It's meeting our criteria in our portfolio. As there was yield compression, there were slight Adjustments on the other hand towards the older housing stock, so meaning properties older than 15 years. So they have now a bit of burden because of the age of the building. So it should be reflecting correctly our portfolio. Okay. Thank you. And on new apartments, are the yields still starting at 3% or have you seen Relations. The biggest transactions made this You have been either 3 or 3 and a really low figure. Okay. Then The increasing construction costs, have they in any way affected or will they affect your 4% yield on cost assumption going forward because I guess the rents do not you cannot pass that increase on to the rents. Yes. Thank you for that question. It's an important one. Of course, first, important thing To notice is that all the ongoing projects, all the binding agreements have been done with a fixed price. So there we have a good visibility of the pricing. Then what comes, possible new projects. Probably there is an increase in construction costs in those negotiations Likewise, a couple of years ago and even during that period of time, we were able to find projects meeting our criteria. So it may end up in a situation where we have to work a bit harder, Go through a bit more projects in order to find suitable projects for us. We may end up finding new approaches like we did a a couple of years ago. So not negotiating one project at a time, but asking on the other hand, for example, what are you able to provide us with €100,000,000 or something like that. So I do believe that we are able to find Relations. New approaches and fine projects for us. On the other hand, if this increase would Continue. It may create a situation where construction companies actually end up having Relations. And that may end up opening possibilities and potential for us. So of course, we are following in the market closely, but we are quite confident that we are able to proceed with our strategy. Okay. Thanks. And the development gains that you earlier talked about, 20% now closer to 30% than 20%, Is it purely yield compression? Or is there any other factors playing in on that? During the first half of this year, we completed 6 projects. And if you look at those projects, so it's a combination of these 2 things. So Jurgen Kapacen, of course, plays a role, but it looked at those were quite, how would I say, nice projects. So it's a combination of these Two things what we've seen during the H1 this year. Thanks. And Erik, perhaps a question to you with Will the lower yields affect the apartments under restrictions? Could you remind about that? There was a bit bad line when you But I think it was €140,000,000 €160,000,000 total left, but if it's the yield comp. Correct. So €140,000,000 to €160,000,000 And that's we haven't Calculated any new values based on yield compression there. Okay. So that's based on old assumptions? Okay. And then perhaps a question regarding the Net Promoter Score Declining. Do you have any feeling about I mean, You increased your rents by sending a letter or e mail Stating that the rent goes up by this much. Do you think that, that could have an impact on the NPS score? Of course, theoretically, it could happen. But as Erik provided information, It's actually an unusual situation. So all the most important KPIs, KPIs providing customer satisfaction data, they've been improving. So actually, customers have been providing us data that they are satisfied. But at the same time, the NPS score Relations. As we've been digging this issue, we found an international study providing information that, That has been actually happening throughout the world in different industries during COVID-nineteen, that NPS scores have been coming down quite significantly. And so it in our eyes, it seems more Like people being spending more time in the apartments, having worries about the current situation, So the stress levels have been higher. And as people are spending more At home, they notice things that noises from neighbors, which they wouldn't Here, normally, if they were working outside of the home and this uncertainty probably has created the decrease of the Thank you. Thank you. Our next question comes from the line of Andreas Toomey of Green Street Advisors. Please go ahead. Your line is This year, it's just based on the leasing activity you're seeing in July August already. And how does the leasing volumes in July August of this year compared to the same period in 2019. So the Amount of new lease agreements made during July and first half of August this year was higher compared to last year's July August. And those figures were higher than what we saw in 2019. So they are quite positive figures. We haven't really guided the occupancy rate for the whole year. And of course, it So that is going to play a role there. It's good to note that this new lease agreement, of course, contributes for Occupancy rate with slight delay. So those lease agreements made in July usually comes into the 4th August. So that comes To a bit of delay that impact. So we don't think that The relevant point is actually to try to calculate where the occupancy rate will land at the end of this year. The key point is that we are able to make new lease agreements and what is going to happen in the long run. And as discussed earlier, we think that after this COVID-nineteen thing goes away and we get rid of all these Light restriction, but we still have the migration will gradually pick a speed, and we've already seen the first sign of that And the things are going to normalize. All estimates are that the urbanization will Go on at least with the same speed as before the COVID-nineteen, and there are estimates that, that could be Even stronger after this COVID-nineteen. So we think that these are the key factors when we look at The era after the COVID-nineteen. And hopefully, on back of the satisfaction of action level, whether it's 80% or 90%, so we are closing that those figures Actually quite fast. And are you able to give any indication where the releasing Spreads on the contracts that you're signing now versus the old rent levels? On average, we've been able to make The new lease agreements on the same rent level as the expired one are slightly above that. Thanks very much. That's all from my end. Thank you. We have one further question in the Relations. And the next question comes from the line of Matthias Relations. Mati Fradimah from Danske Bank. I still have two questions Left from my side. So first one relates to the strategy. How do you have choose to handle this short term Negative trend in leasing market. And you don't report occupancy rate for Q2. But if I calculate it correctly from the H1 figure, it says that your occupancy was down by over 1 percentage point In Q2, which is a weaker performance compared to your main competitor, Sato. Could you explain why the Thank you for the question. Of course, on the other hand, I guess it's probably better to focus on providing information and discussions concerning our figures and not been focusing on other companies, But on a higher level, to provide some information, if you do look at their figures, In my opinion, there's a slightly different approach and confidence concerning strategy. We've been able to increase the rents. We've been able to increase the total revenues. We do believe that we are well in line with our strategy. We are able to provide added value for our customers concerning the pricing, And we do believe that COVID-nineteen has provided only A point of discontinuity concerning urbanization. So a temporary Decrease concerning occupancy is only temporary, and that will recover Okay. That was helpful. And the second question relates to the yield requirements. So you said that there have been these pending deals that have now these reference deals, and they have been now Made and agreed. Does this valuation yield now reflect To the deals made in July, for example, this Talleri deal, does it reflect that? And follow-up here, The yield level is quite low already in Helsinki area. Do you see what is your feeling when you look at the potential new Well, I think, of course, first of all, we do believe that the valuation It's always done properly and providing correct information. And our outside expert Has all the data available, so they do have a good understanding what's going on In Finland and what kind of transactions have been made in our markets. So the valuation Should and is reflecting correctly the values of our properties. And these deals done Have been including properties in Helsinki, in Helsinki surroundings as well In other big cities like Turku and Tampere regions, it remains to be seen what will happen concerning future Portfolio deals, we do see a lot of appetite towards the Finnish market. And I guess, In a way, it's good to keep in mind that even though we've now seen a yield compression here in Finland, It seems that still our yields here in Finland are really attractive compared to yield levels in other European countries like in Stockholm or Berlin. So that probably Still provides a lot of international appetite towards the Finnish market. Okay. Thank you very much. That was all from my side. Thank you. And there are no further questions from the phones at this time. Thank you very much. Next, we have two questions from the chat. The first one goes, How are the yield valuation of the portfolio now comparing to prices in the private rental market in Helsinki? I think there's been an increasing number of individuals owning a couple of apartments, renting them out. And In a way, that plays an important role providing supply in the market, and they Operate a bit differently. They most often handle the apartments by themselves, and they Seem to be using leverage as well. And owning 1 or 2 apartments using leverage, it plays an important role For the investor to keep the apartment rented at all times, Most probably, it seems that they've been adjusting the price level instead of keeping the apartment vacant. But on the other hand, The latest statistics provide the information that actually the rent levels have been increasing in housing region 0.9 percent. So there are no decreases. And concerning the valuation of apartments owned by individuals, we don't have A color there. They don't provide that kind of data. So I guess an individual owning the apartment Remember the price they paid for the apartment, and then it remains to be seen what's the value if or when they will sell it. And so talking with the brokers, they estimate that the prices of apartments, so basically Individuals buying and selling of partners has increased in the last 12 months as well. So the trend is Pointing towards same direction as on yield based valuation. Actually, there was an indication that Housing price increases could be even 45% here in housing region. And the next question is that as schools are starting for the next semester, How has the rental market been so far in Q3? And to what level are students renting in the market? So as mentioned, so in July and first half of August, we have made More new lease agreements can be made in July August last year, and that's also more than in July August 2019. So there has been a positive trend. And students seems to be active on the market right now. So that's visible in our figures. And it's important to note that students typically take from the market Our partners as well. So that will have an impact for the supply in the market as Also positive impact for the market in general. And we have got students as new clients as well. Thank you. It appears that we don't have any more questions. So it's time to thank you all for participating in this event. And our Q3 report will be published on the 4th November. So we hope that we will hear and see you then. Thank you very much.