Kojamo Oyj

OMXH:KOJAMO

Earnings Call Transcript 2021-Q1

[Maija Hongas, Manager of Investor Relations]

Good afternoon, ladies and gentlemen, and welcome to Kojamo's first quarter's results news conference. My name is Maija Hongas, and I'm Manager of Investor Relations here at Kojamo. Today's presenters will be Jani Nieminen, our CEO; and Erik Hjelt, the CFO. After the presentation, we will have some time for questions. And first, we'll be taking the questions from the conference call line. And after that, from the chat. Please enjoy, and let's get started. The stage is yours, Jani.

[Jani Nieminen, Chief Executive Officer]

Good afternoon, everybody. Nice to be here. Sun is shining here in Helsinki. We're providing some color on our Q1 figures. To start with, it's safe to say that actually, the year has started along with our expectations. And there has been an impact because of COVID-19 to the operating environment. Temporary both, for example, like-for-like growth and the occupancy have been impacted. But as we have been estimating, sufficient vaccination level seems to be reached by the summer and a lot of good estimates already that after the sufficient vaccination level will be reached, things are getting back to normal. Urbanization will proceed. And for example, students will move back to university cities. So drivers for long-term demand for rental apartments are still valid. We do have a really strong pipeline for our future growth. And actually, today, our fair value of investment properties is, for the first time, more than EUR 7 billion. So we are well in line with our strategy, and we have a good starting point to proceed our operations this year and heading towards H2 when we think that after sufficient vaccination level, things are getting back to normal. So we are keeping our outlook 2021 the same. Getting a bit deeper with the general operating environment, there is a lot of estimates that the economic environment will be improving after sufficient vaccination level, means that GDP growth is improving, businesses are improving, people are starting to travel. We have seen a slight increase -- and there will be, according to estimate, a slight increase with prices of old dwellings and as well with rental -- apartment rents. Latest estimates show that there's an increase of start-ups concerning block of flats, but it seems that mainly they are because of build-to-sell projects, which were postponed and canceled last year. They are picking up speed again for homebuyers. Here in Finland, it's easy to say that the vaccination coverage is proceeding nicely. We had a figure on chart, 30.9%. But as by yesterday, it was already 35.4% and still a bit higher today. In the market, we do see that there's still a lot of foreign interest towards our residential market, quite aggressive buyers trying to get residential rental apartment portfolios. That has had an impact already towards our valuation and valuation yields as well. But I think that provides the color that COVID-19 only has a temporary impact to the operating environment. Long-term drivers for demand are still valid. The development of household sizes, an increasing number of 1 and 2-person households will continue, and as well, the urbanization as soon as people are able to move and travel students moving back to university studies doing their studies in a normal manner in place. That will provide a lot of long-term demand. We have seen during the last decade that there's been a change in people's values towards ownership, increasing number of households living in rental apartments in all the big cities. Today, already more households living in rental apartments than in owner occupied homes in 3 big cities: Helsinki, Turku and Tampere. And if we provide some color on what's been happening in the market during the last decade already. Because of the urbanization, there's an average need to provide 35,000 apartments a year. Last decade in Finland, in a big picture, we've been able to provide enough homes on average, but sadly, most often in the wrong places. If we look at the chart on left-hand lower corner. Actually here in capital region, in Helsinki region, the population growth has been strong and not enough new apartments has been provided here. Only during now over the last 2 years, enough apartments have been provided to the market. And on the other hand, last year, because of COVID-19, urbanization didn't continue in a normal manner. That created a situation temporarily that there's less of demand towards bigger supply. But Finland, especially capital region, needs that more than 40% of all the new apartments should be completed to Helsinki region. One thing we can see here as well is that the highest volumes in residential start-ups were 2017 and '18. And now we've been coming down a bit all the time, so that means that the number of completed apartments in the total market are going a bit down all the time. To provide some color on our key figures. Even throughout COVID-19 and a bit challenging period of operating environment, we've been able to grow our total revenue. We've been -- two aspects there. Of course, we've been able to complete new apartments and then increase rent. On the net rental income side, last winter, was cold and provided a lot of snow compared to previous year and compared to so-called normal winter. And that created more maintenance expenses. Compared to last corresponding period, it was EUR 2.3 million, than for example, extra heating was EUR 1.6 million compared to last year -- or corresponding period. FFO level was impacted, of course, by a bit lower net rental income, as I provided color. Then on the other hand, the loan portfolio was as well bigger this year. Fair value of investment properties, EUR 7.1 billion today. We've been investing a lot in the market. On the other hand, of course, there was a positive impact and change in fair values. Mostly our investment -- gross investments, EUR 68 million, are new development projects. New development project investments as well were EUR 58.8 million. Profit, excluding changes in value, EUR 33.6 million, 13.2% better than last year. And then, of course, profit before taxes, EUR 177 million was really strong, and that included a net gain in fair value of EUR 143.5 million. For Kojamo, it's all the time important that we are able to grow using multiple sources. So we are providing new homes based on our own land. We are buying projects from construction companies. We are able to convert buildings into apartments, and then we are buying portfolios if we find suitable according to our parameters. At the end of Q1, we had more than 2,600 apartments under construction. All the projects are located in Helsinki region, along with excellent micro location, along public transportation and services. All the projects are providing the net initial yield of around 4% or above 4%. All the projects have a fixed price with a construction company. So even though if we would see an increase with the construction cost in the market, we wouldn't be impacted with our projects. Metropolia case, the zoning is proceeding, the first project. Zoning has been completed at the end of last year. For example, the new and old Chemistry around Hietalahdentori and then Arkadiankatu. The rest of the projects zoning is proceeding this year and hopefully will be finished later this year. Metropolia case will provide another 1,000 units in city center of Helsinki. And if we look at the estimated timing of completions this year, mainly, our project will be completed during H2, so latter part of the year. And actually, the renting concerning new projects has been proceeding in a normal manner. For 2021, we are reaching an even higher number, completing more than 1,700 apartments. So a really strong pipeline there. For us, it's always been important that we are creating good experience, excellent experience for our customers. We are providing a lot of services for customers entering Lumo world. We are providing services, customers living in Lumo apartments. Lumo webstore already provided more than 23,000 rental agreements. We have created a couple of new services, for example, how to tender electricity contracts and move installation services for existing tenants. An important service has been My Lumo. More than -- about roughly 3 out of 4 of our customers using My Lumo services, actually what it means 1,300 daily users with My Lumo service. Then to provide some color on Lumo customers. Here a couple of chart, a bit different angles. So mainly 1- and 2-person households, more than 75% actually, 1- and 2-person households. That's good to connect with the megatrends, increasing number of 1- and 2-person households in Finland. That's visible here in Kojamo as well. Then on the other hand, the age groups. What we have seen last year is that a lot of customers under 25 years are renting the apartments, but as well terminating the tenant agreement in the same apartment. A bit more than 1 year ago, we had only at 8.5% customers below 25 years. So actually, the amount of younger clients have been increasing but during this COVID-19 period, many of those customers have been a bit worried moving in, moving out, moving to their parents, moving back to the university cities, moving away from the university cities. And that's created a rotation which is not normal. Another thing that's been happening, of course, during this a bit more challenging period of time is that families with a single parent seeking for a more affordable home in the market and then in some scale, as well those people working in service industries being without a permanent job at the moment. Those kind of phenomenas we have seen in the market. Sustainability plays an important role for Kojamo all the time. We published a sustainability report in March. As well we published our green finance framework, linking our sustainability targets with investments and how we're financing them. Of course, we were proud to receive recognition as the most equal listed company in Finland. And for us, it's important that we are committed to complying with the UN sustainable development goals as well aiming carbon neutral energy in our properties by 2030. Now I would pass over to Erik. Thank you.

[Erik Hjelt, CFO & Deputy CEO]

Thank you, Jani, and good afternoon, everybody, from my side as well. So on Page 13, our total revenue grew EUR 1.5 million. And then there's 2 drivers behind that. One is our like-for-like growth was 0.2%, and I will come back to this like-for-like figure later. And the other driver there was completed apartments during Q1 this year, 45 apartments were completed. But of course, for the top line plays a role -- apartments completed during Q2, 3 and 4 last year, more than 400 apartments. Net rental income, down by EUR 0.5 million. Total revenue, up EUR 1.5 million, as mentioned. And maintenance costs were up by EUR 2.3 million compared to last year's Q1. And there was, of course, the biggest driver, cold wind and the higher snow fall. So the heating was up by EUR 1.6 million. Taking snow from one place to another was quite costly, so up by EUR 0.3 million. And then cleaning was elevated EUR 0.4 million. And this higher cleaning cost was related to COVID-19. So people will spend more time at the home, so that required more cleaning. Page 14. Profit before taxes, excluding change in fair value. Investment properties, up by EUR 3.9 million. So net rental income, negative 0.5, as mentioned, SG&A expenses, EUR 0.9 million, so we get some savings, thanks to our own activities. And of course, this COVID-19 plays a role as well there because we were not able to travel and people worked remotely. Finance expenses, down by EUR 3.6 million. And the biggest drivers there was a gain in value of investments, a positive figure, EUR 2.2 million, unrealized change in fair value of derivatives, positive figure, EUR 3 million and interest expenses figure, EUR 1.3 million because of the bigger loan portfolio that we have in our balance sheet. And on profit on fair value of investment properties, EUR 143.5 million and biggest contributor there was the yield compression. So that the yields -- valuation yields came down by 10 basis points, contributing EUR 130.8 million for the value change and the restrictions contributed EUR 12 million and development gained a little more than EUR 2 million. Of course, a negative figure in that valuation line is modernization investments, EUR 1.8 million. FFO, down EUR 1.8 million. So net rental income, negative figure EUR 0.5 million. SG&A expense is a positive figure, EUR 0.9 million. Financial expenses, negative figure there, EUR 1.7 million, driven by the bigger loan portfolio, what we had, as mentioned earlier, and then some additional cash taxes because of our disposal during Q1, EUR 0.3 million. Page 15, financial occupancy rate. So of course, the market situation plays a role here. As Jani mentioned, we've been able to make new lease agreements in a normal manner. And the tenant turnover is elevated. And here, the second wave of COVID-19, of course, plays a role because, again, students were not able to move to the place where they study and travelers were not able to come to the country or travel inside the company. As Jani mentioned, we expect those impacts to be temporary. So like-for-like rental growth, most likely in H1, is going to be moderate, but after the sufficient vaccination level, what we expect to be there during the summer, the second half of this year, the occupancy rate should be improving as the like-for-like rental growth. Page 16. So the impact of rents and water charges was a positive figure 2% here. So we've been able to increase the rents pretty much in a normal manner. And it's good to note that more than 40% of the annual rental increases are coming through during the first quarter of a year. So we are proceeding there pretty much as planned. And the impact of occupancy rate is EUR 1.4 million negative. Then we have 0.4% negative impact for other items. And this is actually a group of several smaller items. So we have, in some of our residential buildings, there are some commercial premises. There the occupancy rate, of course, impacted by this COVID-19 and some other leased premises as well. And some rent-free periods given in those commercial premises. Sauna fees were down slightly and as well as car parking fees. So all these plate was included in these other impacts. But in total, like-for-like growth was moderate as anticipated. Investments proceeding according to strategy, EUR 68 million. Most of that, our development investments, EUR 1.8 million, of course, included as modernization investment in that figure. Then modernization, investments and repairs put together, up by EUR 0.1 million; repairs, down by EUR 0.2 million; modernization investment, up by EUR 0.3 million. And the big picture going forward hasn't really changed, so we expect modernization and investments and repairs put together to be between EUR 60 million and EUR 70 million going forward. Now Page 18. Value of investment properties, EUR 7.1 billion, up by EUR 209 million from the year-end. Investments, EUR 68 million and then change in fair value of investment properties, EUR 143 million. On the right-hand side, we still have 2,123 apartments where we have restrictions regarding the valuation. And these restrictions will gradually end by 2024. And there's going to be an uplift in total in value around EUR 140 million and EUR 160 million, and the impact here is back weighted. Page 19, we have euro-wise view for our development pipeline. On the left-hand side column, apartments, little more than 2,600 in total, already EUR 460 million invested and EUR 221 million to be completed these ongoing developments. These binding agreements providing us a little less than 1,000 apartments, EUR 222 million and it's good to know that these are fixed price turnkey projects, all these. So whatever happens the investment cost doesn't have any impact for these figures. Metropolia case, as Jani mentioned, 2 first rezoning in place already and remaining expected to be in place during this year. And this other right-hand side column covers pure land, providing us 1,200 apartments. And then plots and existing building -- we demolished existing building and building new one there, providing 700 apartments. So net increase there, 400 apartments because there's 300 apartments in that -- in those buildings. We estimate that investments in developments this year is going to be between EUR 370 million and EUR 420 million. Equity ratio and loan to value, we have set the target for equity ratio to be above 40% and loan to value to be below 50%. We have quite sizable buffer against these levels. And this balance sheet figures, of course, supports our growth going forward. EPRA NRV improved ending EUR 17.55 at the end of Q1. Page 22, we have very strong financial key figures. More than half of the portfolio already from the bond market, EUR 3 billion in total interest-bearing liabilities. We have an average fixed interest rate period, 4.5 year, very slow maturity, [ 4.5 year ]. And our hedging ratio is 90%. So we are very well hedged against any potential change in market interest environment. Average interest rate, 1.8%. That's including the cost of derivatives. That's actually a rounding. So the third decimal change there, so nothing changed in the loan portfolio as such. And in this year, 2022 and 2023, we don't have any major maturing loans in our portfolio. Page 23, strategic target towards 2023. Annual growth of total revenue, I will come back to it later. So annual investments, well in line with our target. And as I said, we estimate that investment this year is going to be between EUR 370 million and EUR 420 million. FFO against total revenue, 28.4%. It's good to know that according to IFRIC 21, we booked all property taxes in our Q1 figures. The total amount of property taxes is EUR 11.4 million. So if that were allocated, the portion of property taxes for the quarters, Q2, Q3 and Q4 was around EUR 8.5 million. And if we then add this to the actual FFO for Q1, the FFO against total revenue would have been 37.2%, so well in line with our strategic target. Net Promoter Score, 21, some decrease there. Actually, we measure this Net Promoter Score from 4 different points: new customers, leaving customers and our customer service center. And this is ongoing thing and nothing actually changed there. What caused this change in the Net Promoter Score was this survey, what we do quarterly, and we ask our existing tenants the specific questions, and there was a drop in this recommendation question. But all questions related to customer satisfaction was pretty much unchanged. So how we interpreted this is actually that people are simply tired of COVID-19. So they have to spend more time at the home and they wait to be able to move towards a normal life, if you like. Our outlook for 2021. This is unchanged. So we estimate that the top line growth is going to be between 3% and 5%. And there are, of course, a couple of assumptions behind this outlook. First of all, we estimate that the number of apartments to be completed this year is going to be according to the schedule, Jani already mentioned. And the old development projects are proceeding without any delays and all projects that are on a marketing phase are selling in a normal manner. So we think that, that is proceeding as planned. And the rent increase is, of course, something that we are going to do in a normal manner, and more than 40% this year's rental increases already made.And then we estimated earlier, we estimate that the like-for-like rental growth for the first half of this year is going to be muted and on back of a sufficient vaccination level second half of this year will be -- have a very positive impact. And based on all estimates from authorities, the estimates are that the sufficient vaccination level is going to be reached during this summer. And then what happens after that, so students will move those places where they really want to study. So and that they want to move those places, international students will move to Finland. Business travelers will be there again. Tourism, hopefully, is going to pick up as well. And gradually, the urbanization is going to be there as well. These students, they most likely is going to be the first movers. They want to go to those places where they actually study as soon as possible. And it's going to have a big impact for the total market. So some of those apartments that are currently vacant will be taken by those students. And of course, there is going to be impact for the whole portfolio as well because we have some portion of students. So that might happen actually quite fast. Our outlook for FFO, EUR 150 million to EUR 163 million. And if you look then the midpoint of that range, there are several assumptions behind that. So we estimate that total revenue is going to be according to those lines I just described. That the normal weather from here on is going to be no disposal this year. So no additional cash taxes, additional financing according to those development projects as they go. And of course, we estimate that we can achieve some cost savings, especially regarding repairs and SG&A expenses. So these are assumptions behind the midpoint of that FFO for range. Page 26, dividend policy. Nothing changed there. So the 60% of the FFO will be paid as dividend. Given the -- providing that the equity ratio is above this 40% level, and we have, as mentioned, quite sizeable buffer against those levels. And thus, it's back to Jani.

[Jani Nieminen, Chief Executive Officer]

Thank you, Erik. And to summarize, of course, for Kojamo, it's important that we are a long-term player. Our operations are meant to provide business for several decades. So we do follow the megatrends, and we have expected and do expect that the impact of COVID-19 pandemic will be temporary. And the big drivers for -- big drives creating demand long-term, urbanization and the development of household sizes will continue as they have been developing before COVID-19. So that creates our operational environment in long term. We are in a good position. We've been operating quite systematically. We have been able to grow our turnover and the fair value of our investment properties. We have a really strong pipeline, providing new homes in Helsinki region. And as it seems our expectation concerning the vaccination level be reached by -- sufficient level will be reached by the summer. This is proceeding, as we have been hoping and expecting, and I think we are in a good position to go forward. Thank you. And now please, Maija.

[Maija Hongas, Manager of Investor Relations]

Thank you, Jani, and thank you, Erik. Now it's time for the questions. So we will be taking those first from the conference call line. So please, operator, we are ready.

[Operator]

[Operator Instructions] Our first question comes from Anssi Kiviniemi from SEB.

[Anssi Kiviniemi, Analyst]

I have a couple of them. First of all, starting with the fair value gains. Yield compression, that was the main source of most of the case. So could you talk a little bit around that, what kind of properties, which cities did you see the yield compression? Or was it just across the board?

[Erik Hjelt, CFO & Deputy CEO]

So Anssi, well, it was pretty much across the board, but it was slightly weighted for other places than Helsinki center, so Turku and Tampere, there we saw the decrease of yield requirements and then areas around city center area here in Helsinki.

[Anssi Kiviniemi, Analyst]

Okay. Then on the guidance and revenue growth of 3% to 5%, in a way, what has been baked in, in terms of like-for-like growth and new apartments that will come to the market in the next few quarters? So what's the volume growth? And what's the like-for-like growth contribution to the guidance?

[Erik Hjelt, CFO & Deputy CEO]

So what comes to like-for-like, so we estimate that the first half of this year, the like-for-like top line growth is going to be moderate. And on back of the sufficient vaccination level, is going to be higher on the second half of this year. And then when what comes to the completion of new apartments. So we have penciled in pretty much the schedule what's in the presentation Page 10. And then as discussed, so all this development process, they have -- proceeding according to the plans and the selling side, so marketing side is as well going in a normal matter. By saying normal matter, I mean, mean how they went before the COVID-19. So even the small supply in the market, it looks like that there's still a lot of demand towards these new apartments.

[Anssi Kiviniemi, Analyst]

Okay. That was the third question that I have. So let's skip that, and let's move to the fourth. Just making sure, the harsh winter conditions, cold weather, combined, it was roughly EUR 2 million in cost terms -- extra cost in Q1, right?

[Erik Hjelt, CFO & Deputy CEO]

Correct. EUR 2.3 million.

[Operator]

Our next question comes from Svante Krokfors from Nordea.

[Svante Krokfors, Analyst]

Yes, Svante from Nordea. I hope you can hear me.

[Jani Nieminen, Chief Executive Officer]

Yes.

[Svante Krokfors, Analyst]

I have a couple of questions. The first one actually is -- I should have asked this already a quarter ago, but I ask it now still, in your property valuation assumptions, you lowered the occupancy rate assumption for Helsinki region from 98% to 97.5%. I think it was in Q4 last year. Could you elaborate on that?

[Jani Nieminen, Chief Executive Officer]

Yes, Jani. We had a discussion with the valuation authority, Jones Lang Lasalle, and it seemed that there was right timing to make a slight change in the occupancy level there.

[Svante Krokfors, Analyst]

Is it related to high amount of completions in the Helsinki area of new rental apartments?

[Jani Nieminen, Chief Executive Officer]

I think it was a normal kind of business running through the numbers and the estimates for longer-term demand and supply.

[Svante Krokfors, Analyst]

Okay. And then a question to Erik. Can you -- I missed the -- when you split up the like-for-like rental growth. So the rental increases were 2%, impact of occupancy rate was minus 1.4%. And what was the other impact? What did that constitute of mainly?

[Erik Hjelt, CFO & Deputy CEO]

That's a combination of several minor things. So there are sauna fees, parking space fees. There is -- we have some commercial premises and some other premises, so occupancy in those. So it is a combination of several smaller items.

[Svante Krokfors, Analyst]

Okay. And then perhaps a more broader questions. Have you seen any change in the demand for what kind of apartments -- I mean we have heard stories about people wanting to perhaps seek for a bit bigger apartments if they start to work more from home. I know that your target, this is mainly 1- and 2-person families. But have you seen any trend of this increased demand outside of the metropolitan areas?

[Jani Nieminen, Chief Executive Officer]

Actually, we are tracking all the new tenant agreements all the time on a daily basis and nothing big going on there. One could argue that a slight change of people renting 2-bedroom apartments, those typically household of 2 persons, but it's only 180 apartments more than last year. So nothing big there.

[Svante Krokfors, Analyst]

Okay. And then lastly, on transactions and your valuation. Was there any single deal that impacted your valuation in a material way. There was at least that one YIT and Ålandsbanken sold quite a big chunk. And then I guess there is another deal pending, but are there any major transactions that have impacted your valuation yield?

[Jani Nieminen, Chief Executive Officer]

Of course, at the end of the day, that's something that's decided by the valuation agent and what they provided information last year was that they felt that there was not sufficient data from the market or not enough deals. And they've been collecting, of course, data throughout last 12 months and piece by piece, that picture has been completing. And as we've been providing information that we have seen quite aggressive yields. We have seen portfolios, both with the 3 and mid-figure. Now we see that international players are willing to pay 3 and a low figure. And that has had an impact towards valuation yields as well.

[Erik Hjelt, CFO & Deputy CEO]

If I may add, so it's not only 1 or 2 transactions. So it's a whole bunch of transactions our brokers are following what's happening in the market. And there's already evidence from several transactions completed. And there are some additional discussions ongoing, but they are not taking into [ discount ]. So it's a bigger picture what those brokers and these valuators were looking.

[Operator]

Our next question from Celine Huynh from Barclays.

[Celine Huynh, Research Analyst]

My question is more for Erik. Can you explain again why your Net Promoter Score has declined so materially?

[Erik Hjelt, CFO & Deputy CEO]

So we are -- do you know the Net Promoter Score as such, so it's calculated. We simply ask the customers how likely is it that you recommend the company or its services for your friend or your peer in scale 1 to 10, and then we take out numbers 8 and 9, and we take -- calculate the portion of higher numbers and a portion of lower numbers. So it can be any -- the figure can be anything minus 100 to 100. And we've been able to move towards our target 40%. And now there is a drop in this Q1 in Net Promoter Score, and we calculate this figure from 4 different points. So we asked these questions from new customers, from leaving customers and from those who use our customer service center. This is an ongoing thing. And nothing changed there. Actually, the result has been quite stable. And what's changed during the Q4 was that we -- once every quarter, we ask from existing tenants, the same question. And then this Q1 survey, there was a drop in this part of this Net Promoter Score.But as I said, only this question, how likely is that your recommendation, there was a change, but all questions related to customer satisfaction was pretty much on the same level or many of those actually improved during the Q1. So how we see this outcome is pretty much that it's COVID-19 related. So people are simply tired to be at home and tired of this COVID-19, and that's why they are they are unsatisfied in a way. And then they are waiting the vaccination level to be sufficient and the restriction to be removed. So it's -- this is how actually it works.

[Operator]

[Operator Instructions] Our next question comes from Erik Granström from Carnegie.

[Erik Granström, Financial Analyst]

I only have 2 questions left after following to the Q&A. Could you explain a little bit about the development of the vacancy rate in Q1 versus Q4? Because it obviously increased and increased almost 1.5 percentage points. What exactly is this due to? Is it because of completion of apartments? Or is it because of cancellation of contracts that happened earlier in 2020? Or did something actually happen in Q1 versus Q4?

[Jani Nieminen, Chief Executive Officer]

Thank you for the question. If I provide some broader color on issue and then if need, Erik can provide more detailed color. So actually, what we provided from 2020 was the full year occupancy level. And then now Q1 figure will then develop after we move forward this year. What's been happening during the winter was that the second wave of COVID-19 kicked in, and that has had an impact to the market. And we're seeing that. Even though we've been actually renting the apartment quite in a normal manner, we have seen more people moving out, so terminating tenant agreements. Some of those agreements have been done by students. And even though they already had moved back to their parents, they had kept the apartment, but as the second wave kicked in, they terminated their tenant agreement. And then on the other hand, as I said, we have seen in small scale that, for example, single-parent households have been moving out in order to find a bit cheaper, a bit more affordable solution. But as Erik provided color, the renting of new development project has been proceeding in a normal manner. No problems there.

[Erik Granström, Financial Analyst]

Okay. And then my final question is, what have you seen so far in Q2? I mean we are 1.5 months about into the quarter. And you mentioned that you expect like-for-like to be, as you put it, moderate in the first half of the year. It was basically 0 in Q1. What have you seen so far? Do you actually see like-for-like trending up? Or is this something that you're still waiting for?

[Erik Hjelt, CFO & Deputy CEO]

So we estimate that the like-for-like rental growth for the first half of this year is going to be moderate and on back of the sufficient vaccination, what we expected to be there during the summer, the like-for-like top line growth is going to be accelerated in the second half of this year.

[Erik Granström, Financial Analyst]

But so far, Q2 has developed exactly at Q1?

[Erik Hjelt, CFO & Deputy CEO]

As mentioned, we estimate that the first half of this year, the like-for-like rental growth is going to be moderate.

[Operator]

Thank you. There appears to be no more further questions. So I'll hand over back to the speakers.

[Maija Hongas, Manager of Investor Relations]

Thank you very much. And it seems we don't have any questions from the chat. So I thank you very much for participating in our event today. And we will be publishing our Q2 report on 19th of August. So hopefully, we will meet then again. Thank you very much and have a nice day.