Kojamo Oyj

OMXH:KOJAMO

Earnings Call Transcript 2021-Q2

[Maija Hongas]

Good morning, ladies and gentlemen, and welcome to Kojamo's Half-Year Reports News Conference. My name is Maija Hongas, and I'm Manager of Investor Relations here at Kojamo.Today's presenters are familiar Faces, Jani Nieminen, our CEO; and Erik Hjelt Kiat, 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. The stage is yours, Jani.

[Jani Nieminen, Chief Executive Officer]

Thank you, and good morning, everybody. As we start, I will provide some color on our H1 figures. It's easy to start by saying that the first 6 months has been in line with our expectations. COVID-19 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 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, a couple of years and this year, we have seen a lot of foreign interest towards portfolio deals and a lot of deals have been now completed, providing information to valuators 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 is 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 detail. 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 high, 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. Then that may have an impact if -- to be continued towards the volumes.In the market, we see that all the estimates, all 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 micro locations concerning housing prices.In June, we received a new information concerning forecast and scenarios concerning population growth after pandemic. And according to all the 3 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-person household, changes in values concerning owning things. There are these long-term trends in place for demand of new rental homes in the bigger 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 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, Turku and Tampere, actually more households live in rental apartments than in owner-occupied apartments.As I said, COVID-19 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, urbanization will continue and may even pick up speed.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 costs, of course, may end up providing a little less production for rental apartments, and on the other hand, increase in the number of build-to-sell projects. And my opinion is that most probably, this construction cost increase will settle down at some point. If it would keep on going, that would have an impact to overall volumes providing build-to-sell projects as well. But as all the estimates are providing the same data, urbanization will continue, the housing production volume are focusing towards the biggest cities and towards Helsinki region.Providing some color on our H1 figures. We've been able to create growth throughout the pandemic. Total revenue still growing 1.8%. Of course, it's a combination of 2 things: one is the completion of new apartments; and the other party is our capability to create like-for-like growth.Erik will go deeper in the like-for-like figures. It's important to notice that we are still able to increase our rents. The like-for-like rental growth combined with water charges has been 2.1% and we expect 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 FFO against the comparison year, 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-19 has created a situation where we have been increasing the intensity of cleaning. So these 2 aspects have increased the amount of maintenance cost, 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 EUR 7.5 billion is now providing the data that we are growing. There is a strong growth combined with a positive change in fair values as it reflects yield compression.Gross investments EUR 176.5 million, 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, EUR 4 66 million provided a result of profit before taxes close to EUR 550 million.So in a big picture, no surprises in the figures. We are still proceeding as planned. Still the strategy is to grow our capabilities, combine 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 broadly, buying portfolios if we find something matching our parameters.During H1, we've been completing 441 apartments and starting 610 apartments. At the moment, the pipeline is really strong. We have more than or roughly 2,800 apartments under construction. All the projects located here in Helsinki region meeting our criteria. So high-quality micro locations, along with public transportation and services. All the projects having fixed prices, so we don't carry the risk of increasing construction costs. All the projects providing the net initial yield of 4% roughly or above 4%. And actually, as we 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 has been timing issues concerning the zoning or municipality decision making. So these projects may always end up to be completed a month or 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 Abrahaminkatu and Agricolankatu, 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. One, I guess -- one of the smallest projects Sofianlehdonkatu, it seems that the zoning will be completed next year. That property is actually connected -- the property besides owned by the City of Helsinki and there are discussions on how to proceed with the zoning.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 My Lumo services, and actually, the Net Promoter Score concerning digital services has been really high. The last figures have been 67. On the other hand, we have been creating couple of new service and providing now a bigger capacity concerning broadband services.Then what's been happening in the market, we're seeing a point concerning urbanization. On the other hand, if we look deeper, we see that customers between 25 and 34 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 because of people renting the apartment, so in order to start studying, they're moving back to the parents and not been able to decide what to do. Some of the single-parent households are looking for more affordable solution moving towards the parts of capital region where apartments are cheaper, on the other hand, trying to find their solutions outside Helsinki region.Now we would ask Erik to join and provide more detailed data. Please, Erik.

[Erik Hjelt, CFO & Deputy CEO]

Thank you, Jani, and good morning, everybody, from my side as well. So Page 13, total revenue, the growth there was EUR 3.5 million and like-for-like rental growth contributed EUR 0.4 million and then completed apartments around EUR 3 million, and we completed 3,096 apartments during Q2 this year.Net rental income down by EUR 0.4 million. Total revenue growth was EUR 3.5 million, as mentioned. So maintenance cost growth was EUR 3.8 million and repairs was flat. So the maintenance cost increase was coming from -- actually from 2 sources; one was related to the weather. So heating and taking snow from one place to another increased the costs EUR 2.7 million, especially during Q1. And then the second part is related to COVID-19. So people are spending more time in their apartments, so that increases the cleaning costs and water costs around -- in total around EUR 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, EUR 290 million during Q2 and EUR 421 million in H1. And the yields -- yield compression compared to Q1 was 22 basis points and compared to Q4 2020 was 32 basis points. And the restrictions, actually, there was no restrictions during Q2, but the H1 figure is EUR 12.5 million.Development gains, so we completed 6 projects during Q2. This year development gain above EUR 30 million, and as Jani mentioned, the development gain there was above this 20% on average what we have anticipated.Modernization investments, of course a negative figure, they are EUR 4.9 million during H1. FFO, so down by EUR 2.5 million, net rental income negative EUR 0.4 million, as mentioned. SG&A expenses, a positive figure, EUR 0.9 million and there are some savings related to COVID-19.Finance expense is up EUR 2.3 million, mainly because of the bigger interest-bearing liabilities by EUR 160 million from a corresponding period and more than EUR 300 million from the [ Q2 ] 2020. And cash taxes growth was EUR 0.4 million.Our financial occupancy rate, that was clearly impacted because of third wave of COVID-19, so that is main driver behind that decline in financial occupancy rate. And the like-for-like rental growth was moderate during H1, as anticipated. And as Jani mentioned, the vaccination has proceeded here in Finland well, so almost 70% of the population has got their first shot and the authorities have increased the estimates for the sufficient vaccination level. Previously estimated 70% is enough, now the estimates are the levels would be somewhere between 80% and 90%.As estimated, the students are the first movers, so many universities in Finland has informed that they are going to increase the portion of in-person studies, and that has a clear impact for demand.When it comes to service sector, so there is a message from service companies that there is a shortage of workforce there, so we think that actually tells 2 stories. One is that there are more -- there is growing demand towards services, so people are willing to spend more money for services. And those people who lost their jobs and moved outside Helsinki region, used to work on service sector, has not really returned in big scale yet, so this remains to be seen when this really happen. Most likely, the restrictions will be removed, and -- on back of sufficient vaccination level, and this of course help, but it is 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 and August. Tenant turnover slightly elevated. We have noted that especially people under the age of 25, and one-parent families are rotating, so that pretty much explains the elevated tenant turnover. Rent receivables are flat, so only 1.3% of total revenue.Page 16, our like-for-like rental income, so on the positive side, rent increases and increases in water charges, we have been increasing the rents pretty much in a normal manner, contributing 2.1% for like-for-like rental growth. And the occupancy rate has impact or negative impact for like-for-like rental growth of negative 1.7%. 0.2% other impacts is a portion of several small items lower -- slightly lower commercial, it is -- 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 sauna fees and car parking fees are increasing. So in total, like-for-like rental income growth, positive 0.2%.Page 17, gross investments. Biggest -- by far the biggest portion is our development investments, almost EUR 169 million, modernization investments EUR 4.9 million and capitalized borrowing cost EUR 2.8 million. Modernization investment and repairs flat and then the modernization investment is done by EUR 5.7 million, mainly due to the timing of some projects. So in the corresponding periods, we had a couple of larger projects, and during H1 this year, we haven't started bigger modernization. In total, of course, we keep our properties in good condition as earlier.Page 18, fair value of investment properties. So main drivers, of course, our investments and intensive fair value of investment properties as mentioned. Number apartments by valuation classes, so this 1,000 [Technical Difficulty] acquisition costs includes 2,123 apartments, where we still have restriction regarding the valuation, and those restrictions will gradually end by 2024 and contribute [ valuation increase ] between EUR 140 million and EUR 160 million, in total.Page 19, so on the left-hand side column, apartments under construction 2,793 apartments, a little more than EUR 400 million already invested and a little more than EUR 250 million to be invested in order to complete these ongoing developments.In the mid column, binding lease agreements, binding agreements at construction companies apartments is 829 and the investment cost there will be EUR 171 million. And the Metropolia case providing us roughly 1,000 apartments and other, so really land bank approval and bought some existing building, providing roughly 1,400 apartments.We estimate that investments in development project this year is going to be between EUR 370 million to EUR 420 million, and it's good to note that all these projects are located in Helsinki region.Page 20, our equity ratio and loan to value figures, strong and well in line with our strategic targets to have equity ratio above 40% and our loan to value below 50%.Page 21, EPRA NRV growth 18.1%, so EUR 1.86 per share.Page 22, we have strong financial key figures. Average interest rate -- fixed interest period and average loan maturity slightly increased 4.7 and 4.6 years and average interest down to 1.8%. 62% of total loan portfolio of [ EUR 3 billion ] already from bond market. Hedging ratio at the end of H1 was 92% and we are quite cash rich, so EUR 435 million cash and cash equivalents and financial assets. Credit loans EUR 300 million committed and used.In May, we issued our inaugural green bond [ against ] maturity, EUR 350 million, carrying a coupon of 0.875 and the proceedings from that green bond will be used to finance and/or refinance, so-called net-zero energy buildings.Page 23, our strategic KPIs, couple of notes there. So the FFO against total revenue 35.6%, it's good to note that because of the IFRIC 21, the whole year's property taxes are included or booked in Q1 and then the portion of Q3 and Q4 is EUR 5.5 million. 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 be the reason behind this decline and we think that the reason is simply COVID-19. So people are spending more time in their apartments, and they are sick and tired of COVID-19 and that is reflected in this recommendation part. And we noted that this actually goes in for all industries international. So whether it is hotel, airline, or car rental or whatever industry, net promoter scores seems to have came down during the COVID-19. It is funny actually that this has been the case in even for those industries that -- for services people are not able to use because of the COVID-19, and there the recommendation figures came down, but that's how it is. So we think that is important to keep up our work and after the COVID-19 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 fourth wave of COVID-19 and especially Delta variant. And as mentioned, so the authorities has increased the estimate what is the sufficient vaccination level, previous estimate that 70% is enough. Now the estimate is that the sufficient vaccination level is somewhere between 80% and 90%, and of course, to remove all remaining restriction regarding to COVID-19 requires that the vaccination level will be sufficient.And we still estimate that on back of this sufficient vaccination level, the migration will gradually be there again, and the first sign of that is already visible for the amount of new lease agreements made in during July and first half of August. So the student has already started to make lease agreements and some increases in other part of the market as well. So these changes of the specification is related to slightly postponed of recovery from COVID-19.And we specified our FFO guidance as well, so now we estimate that the FFO will be between EUR 150 million and EUR 158 million. 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 in that early stage that plays a role there, of course. 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 the SG&A expenses is going to be 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.

[Jani Nieminen, Chief Executive Officer]

Thank you, Erik. Couple of words to wrap this up before the Q&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 also we see the impact of COVID-19 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 urbanization will continue as expected.So of course, some uncertainties, because of Delta variant and the fourth wave of COVID-19. But on the other hand, as I said, it seems that 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 and the first part of August, so actually no big surprises concerning H1, and we see our future as positive. Thank you.

[Maija Hongas]

Thank you, Jani and Erik. And now we have time for the questions. And first, we will be taking the questions from the conference call line. So moderator, please. We are ready.

[Operator]

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

[Anssi Kiviniemi, Analyst]

I have a couple of them, so I will take them one by one, if that's okay. First, starting with the guidance. I mean, it was slightly up. 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 the sufficient vaccination levels have been raised? Or are you seeing that your students are moving mainly 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.

[Erik Hjelt, CFO & Deputy CEO]

Anssi, the specification is totally related to the COVID-19 situation. So as mentioned, the authority has increased the amount what they feel that is sufficient vaccination level. Previously they said that 70% is enough. Now because of the fourth 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-19.So this is the reason behind the specification. And as mentioned, we already seeing that students are moving, so we estimated earlier that they are going to be the first movers and that's something we have seen already. So as Jani mentioned, the amount of new lease agreements during July and the first half of August has been quite high and we've seen the first sign of intra-country migration as well. And on the positive side, saw that -- of course it's not positive that service sector is complaining that there are shortage 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 force.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-19 and sufficient vaccination level as well. So this is the background for specification.

[Anssi Kiviniemi, Analyst]

Then on fair values. So there was a yield compression, especially with 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?

[Jani Nieminen, Chief Executive Officer]

Anssi, Erik can provide more detailed color. Of course, we have seen transactions made here in the Finnish market and all the transactions have been made with quite aggressive yields. They have been including properties in Helsinki region and in 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 valuators. And until now, they have been feeling that there has been not enough data, because those ongoing processes hadn't been completed by now. Several portfolio deals have been completed during the summer and a sufficient data. So the yield compression came in mainly here in capital region and in couple bigger cities like Turku and Tampere.

[Anssi Kiviniemi, Analyst]

Then on development gains, you highlighted that they have been above 20% that you basically use as some kind of a threshold or ambition level. Could you give us a little bit more detail. Is it 21% or 29%, so kind of what's the right figure here?

[Jani Nieminen, Chief Executive Officer]

It is closer. The later figures also -- it's also above 25%. In addition to that, Anssi, as we provided the information, we still have the same information to provide you that all our ongoing projects and binding agreements are providing project with a net initial yield of rough 4% or above 4%. And now the valuation yield has seen a yield compression.

[Anssi Kiviniemi, Analyst]

And then the last theme is transactions. Any interest in portfolios out there? What is the current situation? And kind of the other part of the story, it's divestment. So I mean, we have seen a lot of changes in the environment, especially come in tighter regulation and ambitions from European Union, Fit for 55 on energy efficiency and CO2 emissions et cetera. Has these changed your view how you look at the portfolio or how would -- you would like to divest some of that, let's say, non-core assets, what's the word on that?

[Jani Nieminen, Chief Executive Officer]

I think you included a couple of subjects there. First of all, to provide 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 will come to the market and some opportunities will come to the market and we are following the market closely. If we find something appealing enough, we are ready and able 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, and if we think about that, we've been providing the information that we are able to carry out our sustainability targets without any extra investments. 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.

[Operator]

Our next question comes from the line of Svante Krokfors of Nordea.

[Svante Krokfors, Analyst]

Yes, couple of questions from me. Getting back to the yield compression, capital region declined 25 basis points from 376 to 351, and those reference deal could you open a bit more, is it new apartments, combination of new and old apartments? And how do you -- or how is the kind of adjustment made to your bit older stock?

[Jani Nieminen, Chief Executive Officer]

Most of the portfolios have been located around Helsinki housing region and a couple of other big cities as well, mainly project have been including properties built during -- after 2010 or after 2000, so but most often including couple of properties built prior to that. So of course, we have been having this discussion with our valuation experts and valuation is meeting our criteria and 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.

[Svante Krokfors, Analyst]

And on new apartments, are the yields still starting at 3% or have you seen deals done at high 2s?

[Jani Nieminen, Chief Executive Officer]

The biggest transactions made this year have been either 3% or 3%, and are really low figure.

[Svante Krokfors, Analyst]

Then the increasing construction costs, have they in anyway affect 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 rent.

[Jani Nieminen, Chief Executive Officer]

Yes. Thank you for that question. It's an important one. Of course, first the important thing to note 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 cost, in those negotiations this increase has been stepping in. On the other hand, it happened 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, but we may end up finding new projects like we did a couple of years ago. So we're not negotiating one project at the time, but asking on the other hand, for example, what are you able to provide us with EUR 100 million or something like that? So I do believe that we are able to find new approaches and find projects for us. On the other hand, if this increase would continue, it may create a situation where construction companies actually end up having challenges and that may end up opening possibilities and potential for us. So of course, we are following the market closely, but we are quite confident that we are able to proceed with our strategy.

[Svante Krokfors, Analyst]

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?

[Erik Hjelt, CFO & Deputy CEO]

During the first half of this year, we completed 6 projects, and if you look at those project, so it's a combination of these 2 things. So yield compression, of course, plays a role, but it looks that those were quite, what I say, nice project, so it's a combination of these 2 things what we've seen during the H1 this year.

[Svante Krokfors, Analyst]

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 talked about. But I think it was EUR 140 million and EUR 160 million left, but is it still...

[Erik Hjelt, CFO & Deputy CEO]

Correct. So, EUR 140 million to EUR 160 million, and that we haven't calculated any new values based on yield compression there.

[Svante Krokfors, Analyst]

Okay. So that's -- 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 could have an impact on the NP Score?

[Jani Nieminen, Chief Executive Officer]

Of course, theoretically, it could happen, but as Erik provided information, it's actually an unusual situation. So all the most important KPIs providing customer satisfaction data, they have been improving. And so actually customers have been providing us data that they are satisfied, but at the same time, the NPS score has been coming down and as we've been digging this issue, we found an international study providing information that has been actually happening throughout the world in different industries during COVID-19, that NPS scores have been coming down quite significantly. And so in our eyes, it's more like people being spending more time in the apartments having worries about the current situation. And so the stress levels have been higher and as people are spending more time at home, they notice things and noises from neighbors which they wouldn't hear normally if they were working outside of the home and this uncertainty probably has created the decrease of the Net Promoter score.

[Operator]

Our next question comes from the line of Andres Toome of Green Street Advisors.

[Andres Toome, Research Analyst]

I was just wondering where do you expect occupancy trending by end of this year just based on the leasing activity you are seeing in July and August already? And how does the leasing volumes in July and August of this year compared to the same period in 2019?

[Erik Hjelt, CFO & Deputy CEO]

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 and August, and those figures were higher than what we saw in 2019. So that they are quite positive figures. We haven't really guided the occupancy rate for the whole year. And of course, it basically grow how this COVID-19 goes from here. And hopefully this positive trend will continue. So that is going to play a role there.It's good to note that these new -- these agreements of course contributes for occupancy rate with slight delay. So those lease agreements made in July usually comes into the force August, so that comes to the delay that the 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 these agreements and what is going to have in a long run. And as discussed earlier, we think that after this COVID-19 I think goes away and we get rid of all this restrictions what we still have, the migration will gradually pick speed and we have already seen the first sign of that and the things are going to normalize. All estimates are that urbanization will go on at least with the same speed as before the COVID-19 and there are estimates that could be even strong after this COVID-19. So we think that these are the key factors when we look at the era after the COVID-19, and hopefully on back of the sufficient vaccination level, whether it's 80% or 90%. So we are closing those figures actually quite fast.

[Andres Toome, Research Analyst]

And are you able to give any indication what are the re-leasing spreads on the contracts that you're signing now versus the old rent levels?

[Erik Hjelt, CFO & Deputy CEO]

On average we have been able to make the new lease agreements on the same rent level as the expired one or slightly above that.

[Operator]

[Operator Instructions] And the next question comes from the line of Matias Rautionmaa of Danske Bank.

[Matias Rautionmaa, Analyst]

Matias Rautionmaa from Danske Bank. I still have 2 questions left from my side. So first one relates to the strategy. How do you have choose to handle these short-term negative trend in leasing market. And you don't report occupancy rate for Q2. But if I calculated 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 that performance is so much differ or have -- you chose a different strategy?

[Jani Nieminen, Chief Executive Officer]

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 look, if you do look at their figures, in my opinion, there is 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-19 has provided only a point of discontinuity concerning urbanization. So a temporary decrease concerning occupancy is only temporary and that will recover when and as the urbanization will continue.

[Matias Rautionmaa, Analyst]

Okay. That was helpful. And the second question relates to the yield requirements. So you said that there had been these pending deals that are now -- these reference deals, they have been now made and agreed. Does this valuation yield now reflect to the deals made in July, for example, [ digital 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 deals in the market? Is there more yield compression coming? How do you see?

[Jani Nieminen, Chief Executive Officer]

Well, I think, of course first of all we do believe that the valuation is 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 now seen a yield compression here in Finland, it seems that still our yields here in Finland are really attractive compare to yield levels in other European countries like in Stockholm or in Berlin. So that probably still provides a lot of international appetite towards the Finnish market.

[Operator]

Thank you. And there are no further questions from the phones at this time.

[Maija Hongas]

Thank you very much. Next, we have 2 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?

[Jani Nieminen, Chief Executive Officer]

I think there has been an increasing number of individuals owning couple of apartment, 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 apartment 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 and 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 rental levels have been increasing in Helsinki region, 0.9%. So there are no decreases.And concerning the valuation of apartments owned by individual, we don't have a color there. They don't provide that kind of data. So I guess an individual owning the apartment, remembers 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.

[Erik Hjelt, CFO & Deputy CEO]

And so talking with the brokers, they estimate that the prices of apartments, so basically individuals buying and selling apartments has increased in the last 12 months as well. So the trend is pointing towards the same direction on yield-based valuation.

[Jani Nieminen, Chief Executive Officer]

There was an indication that housing price increases could be even 4% to 5% here in Helsinki region.

[Maija Hongas]

And the next question is that, as schools are starting for the next semester, how has the rental market being so far in Q3? And to what level are students renting in the market?

[Jani Nieminen, Chief Executive Officer]

So as mentioned, so in July and the first half of August, we have made more new lease agreements than we made in July and August last year, and that's also more than in July and 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 its important to note that students typically take from the market all the apartments as well. So that will have an impact for the supply in the market as well. So positive for the market in general and then we have got students as new clients as well.

[Maija Hongas]

Thank you. It appears that we don't have any more questions. So it's time to thank you all for participating this event and our Q3 report will be published on the 4th of November. So we hope that we will hear and see you then. Thank you very much.