Here are Frans’s comments on Ovaro selling three buildings for 1.1 million. 
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Here are Frans’s preliminary comments for Ovaro’s Q1, to be published on Thursday.
We expect the operating result to have decreased due to the divestment of low-quality housing stock, and the reported result to have remained at a weak level, even considering the seasonally weak Q1. The result is supported by the capital gain from the sale of buildings in the Jyväskylä Kukkula project. At the core of Ovaro’s strategy is the transformation into a full-fledged real estate developer, which we expect to have progressed in the early part of the year, and the fruits of this change will only be reaped in the coming years. On the results day, we are particularly interested in the progress of the Jyväskylä Kukkula project and other development projects (especially the Hervanta nursing home project) as well as potential property sales.
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Here are Frans’s quick comments on the morning’s results.
Ovaro Kiinteistösijoitus published a weaker-than-expected Q1 report this morning in terms of figures. Revenue and operating profit decreased due to the divestment of low-quality housing stock, but operating expenses and property taxes were also heavier than we anticipated. Q1 is also seasonally weaker because full-year property taxes are recorded in this quarter. The result was supported by the sales gain from the Jyväskylä Kukkula project buildings, but housing sales still resulted in a small loss. The reported profit was clearly below our expectations, but the company reiterated its guidance, which indicates an improving year-end. Development projects have progressed largely according to plan, and the company also started pre-marketing for the Kerava housing project in April. According to our preliminary assessment, the review caused some downward pressure on our forecasts.
Ovaro CEO Marko Huttunen was interviewed by Frans after the Q1 releases.
Topics:
00:00 Introduction
00:14 Q1 result summary
00:51 High level of operating expenses
01:44 Outlook for the rest of the year regarding the protected buildings in Kukkula, Jyväskylä
02:25 Kukkula project phase 3 development project
03:18 Status of the Hervanta project
03:42 Kerava housing project
04:48 Nisula properties
05:20 Financing channels
06:07 Sentiments regarding apartment sales
Frans-Mikael has written comments on Ovaro’s divestment from Apitare.
Ovaro and Investors House sold the Apitare Oy property complex in Jyväskylä for 60 million euros, which is 5 MEUR above its estimated fair value. We believe the price is good, and Ovaro will record a sales gain of approximately 1.6 MEUR from it. Overall, we consider Apitare to have been a very successful investment for Ovaro. The sale reduces the steady cash flow recorded from associated companies, but above all, it frees up capital for Ovaro’s existing development projects, especially the Kukkula development in Jyväskylä. The sale also improves the company’s weakened liquidity situation.
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Ovaro signed a letter of intent in Kukkula, Jyväskylä, for a care housing project of approximately 4,000m2 in the former main hospital property (a protected building). This is a good sign that there is increasing demand for protected buildings. The value of the agreement was not commented on in the release. The counterparties are ART Kiinteistöt (appears to be primarily engaged in rental brokerage) and KSP asunnot (housing rental for special groups). Ovaro will retain approximately a 19% share in the project company to be established.
The letter of intent is conditional on the buyers’ financing being secured. According to the preliminary schedule, construction could start at the turn of the year.
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Frans has provided his pre-comments as Ovaro reports its Q2 results on Thursday.
We expect revenue and net income to have decreased due to the sale of the property portfolio and the shift in focus to real estate development. We anticipate the result to rise to a good level due to the capital gain from the sale of the Apitare property. The company’s transformation into a full-fledged real estate developer, which is central to its strategy, has progressed this year, and on the results day, we are particularly interested in the progress of development projects and potential property sales.
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Here are Frans’s quick comments on Ovaro’s Q2 results.
Ovaro Kiinteistösijoitus published a stronger-than-expected earnings report this morning. Net income fell short of our expectations, but earnings rose significantly better than expected due to sales gains and positive fair value changes. However, some items in the report still require further analysis. The company’s transformation into a full-fledged real estate developer, which is central to its strategy, and its development projects appear to have progressed as expected, even though the situation in the new housing market, in particular, remains very difficult.
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Frans interviewed Ovaro’s CEO Marko Huttunen regarding Q2.
Topics:
00:00 Introduction
00:12 Q2 Highlights
01:03 Apitare Deal
01:34 Positive Fair Value Changes
02:10 Significant Taxes from Apitare Deal
02:52 Financial Position and Future Investment Needs
04:04 Development Projects
And here is the company report on Ovaro, in Frans’s style.
Ovaro’s Q2 report was very strong in terms of results due to a sales gain and a positive fair value change, and also better than our expectations, but the rental business result fell slightly short of expectations. Development projects appear to be progressing, which is central to the company’s investment story. The company’s financial position clearly improved thanks to the Apitare sale, which enables project initiations more smoothly, especially if the targeted increase in balance sheet turnover succeeds. With a low valuation (2025e P/B 0.58x), the potential of the project pipeline and the progress of projects, as well as the slow but ongoing turnaround in new construction, we see the expected return still favoring further purchases. We raise our target price to 3.70 euros (previously 3.30 €) due to an increase in NAV and a decrease in risk level, and reiterate our Add recommendation.
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@henrielo has written about real estate investment companies Ovaro, Toivo, Asuntosalkku, and Investors House.
I realized how different strategies domestic mid-sized publicly listed real estate investment companies employ. Strategies vary from Asuntosalkku’s very cautious current strategy emphasizing own share purchases to Ovaro’s active buy-develop-sell business model.
One can also speak of the strategy’s application phase, as the current implementation method of the strategy depends partly on market conditions.
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Ollikainen, a board member, has continued buying shares. Ollikainen already owns approximately 8.3% of the share capital.
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Here are Frans’s comments on when Ovaro made a new financing agreement with Danske Bank.
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What kind of price is being paid for that new loan?
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Here are Frans’s comments on how Ovaro made a letter of intent for the construction of 100 student apartments in Kukkula, Jyväskylä.
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I will try to get an answer to this in connection with the Q3 report. Historically, Ovaro has reported loan interest rates quite openly.
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Here are Frans’s preliminary comments as Ovaro reports its Q3 results on Thursday.
We expect revenue and net income to have been approximately at Q2 levels, but to have decreased from last year due to the sale of the property portfolio and the shift in focus to real estate development. This is also reflected in the earnings development, and the results are no longer supported by the previously significant associate company Apitare Oy. We estimate the result to be at a loss in Q3. Behind the weak result is also the company’s transformation into a full-fledged real estate developer, which has progressed promisingly this year. On the results day, our focus will, as usual, be on the progress of real estate development projects and potential property sales.
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And here are Frans’s quick comments on the Q3 results this morning.
Ovaro Kiinteistösijoitus published slightly better-than-expected results this morning, which came from a better-than-expected net rental yield. Furthermore, the operating cost level developed positively. The real estate development projects, which are central to the strategy, appear to be progressing largely as planned, even though the housing market situation remains difficult. From an initial glance, the report’s impact on our forecasts was quite neutral.
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Frans interviewed Ovaro’s CEO Marko Huttunen regarding Q3.
Topics:
00:00 Introduction
00:12 Third quarter development
01:14 Positive development of net revenues
02:0
Hardworking night owl Frans has completed the company report on Ovaro after the Q3 releases.
Real estate development company Ovaro’s Q3 was slightly better than expected due to the positive development of net revenues and cost structure, even though development projects had not yet materialized as we anticipated. The market situation remains difficult, but development projects are progressing largely according to plan. The launch of the Kerava owner-occupied housing project next year appears increasingly likely, while the 17 MEUR student housing project agreed upon in Jyväskylä’s Kukkula project strengthens the overall picture of Kukkula. Updates we made to the timing of the project pipeline partly shift revenues to 2027, but our NAV estimate remained practically stable. With a low valuation (P/B 0.56x), strengthened financial position, and the potential of the project pipeline, we still see the risk/reward ratio as positive. We reiterate our target price of 3.70 euros and our Add recommendation.
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