#Finland #Kojamo #Helsinki #Varma #Lumo Kodit

Kojamo's Bold Move in the Housing Market

In a strategic step to expand its foothold in the Finnish residential market, Kojamo plc has recently signed an agreement with Varma Mutual Pension Insurance Company wherein Kojamo's subsidiary, Lumo Kodit Oy, will acquire a prominent housing portfolio. This portfolio encompasses 60 residential properties that collectively offer 4,761 apartments, predominantly situated in Finland’s vibrant metropolitan areas, namely Helsinki, Tampere, and Turku. Approximately 98% of the properties are centrally located in these thriving urban regions.

Transaction Details

The deal is valued at EUR 900 million, with a unique financial structure involving a cash component and shares to be issued by Kojamo upon the transaction's closure. The acquisition is expected to bolster Kojamo's existing revenue stream. The estimated stabilized annual rental income from this new portfolio is about EUR 63.0 million, achievable as the occupancy rate improves from its current level of 83% to match Kojamo's standard. With a focus on reinvigorating this portfolio under the Lumo brand and utilizing its exceptional customer service capabilities, Kojamo anticipates significant growth in both occupancy and the overall value of the properties.

CEO Reima Rytsölä expressed enthusiasm regarding this acquisition, highlighting its alignment with Kojamo's growth strategy: "This transaction presents a unique opportunity for Kojamo to return to growth by acquiring a portfolio of significant size and with a strong alignment with our strategy. The properties are located in prime areas with a strong focus on growth centers, ensuring high quality and excellent condition. We believe this will deliver strong shareholder value through increased funds from operations (FFO) per share."

Financial Framework

To facilitate this acquisition, Kojamo has issued 24,666,667 special rights to Varma under the Finnish Companies Act, ensuring Varma's subscription for new shares upon completion. The subscription price, corresponding to a 23.04% premium over the recent trading average, amounts to EUR 291,288,670.60 in total. The deal's financial aspects also include a senior unsecured acquisition financing facility of EUR 600,000,000 facilitated by prominent banks including Goldman Sachs, Nordea, and Skandinaviska Enskilda Banken. This funding aims to support Kojamo's ongoing structural improvements and expansion initiatives.

Markus Aho, Deputy CEO of Varma, noted the rationale behind this partnership, stating, "We have reviewed our investment portfolio and identified efficient ways to invest in the Finnish residential market, especially in light of the upcoming pension reforms. Our continuing partnership with Kojamo ensures the ongoing management of the portfolio by an adept real estate operator."

Looking Forward

The acquisition transaction remains contingent on standardized conditions typical of real estate deals, including regulatory approval. With an anticipated completion date set for April 1, 2026, the stakeholders are keen on bringing this significant investment to fruition, which is not only expected to enhance Kojamo's operational efficiency but also grow its shareholder value through an improved EPRA Cost Ratio.

As Kojamo continues to prioritize quality and sustainable living solutions in urban settings, it aims to remain at the forefront of the residential real estate market in Finland, delivering on its mission to create better urban housing conditions for its residents. This move asserts Kojamo's commitment to enhancing its property portfolio and responding proactively to market demands, succeeding in its endeavor to set new standards in the housing sector.