I guess we can say that if, even with this selling pressure, deals were closed with only a 5% discount, then the valuation has certainly been spot on. In a free selling environment, we would probably have even exceeded the book value?
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Who or what makes this current environment closed or restricted?
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Strictly speaking, 9% of the Care Fundâs properties have now been sold by number, not 10% as someone claims. The sold properties account for 5.1% of the value of the properties owned by the fund. The relative change in square meters will be known immediately at the beginning of January.
However, it seems quite clear that as a result of the sale, the average unit size, average square meter price, and average lease term of the properties owned by the fund increased.
From the sale, Titanium will receive a 2% sales commission, likely still in 2025. If the received sale price is used to pay redemptions, Titanium will receive approximately a 1% redemption commission for the payment of redemptions in 2026. The feared âsignificantâ decrease in commission revenues in these respects will materialize net in the fiscal year 2027.
Owners of Care Fund units have enjoyed solid cash yields and even a small appreciation during the worst real estate market turbulence of recent decades. The world is not perfect; redemption payments have been delayed. But perhaps it can now be stated that it would have been quite foolish, both for the soon-to-be former fund owners and for the remaining owners in the fund, to sell care properties off at half price during the worst market turmoil?
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The appraiserâs task is to determine the market value of properties. If transaction prices deviate significantly from the values in appraisal reports (whether up or down), then yes, the appraisal reports have been wrong. In addition, the fund has had plenty of time to find a willing buyer for the properties.
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A few compiled comments:
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The market is not restricted by any measure. Titanium has now had 18 months to sell the properties (at the end of June 2024, there was information that redemptions would be paid in January '25). This has certainly been the best possible price currently available on the market.
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Real estate valuation is very far from an exact science. In my opinion, hitting that 5% range corresponds very well to valuation reports. @Lisko1âs comment on this is very apt.
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The transaction fee is a good point. According to our calculations, the company has not fully taken this 2% transaction fee historically, although it is possible that we have an error in our Excel. Because of this, I donât dare to directly input that return into Excel. Redemption fees will certainly be mostly at 1%.
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A good challenge from @gearloose1 regarding the timing of the sale. Of course, this ultimately depends on what price was available last spring. On the other hand, eQ was able to sell hundreds of millions worth of properties to the market at reasonable valuations during the last 18 months.
Then, finally, a bit of scenario analysis. In my comment, I already painted the best-case scenario, which is that this 35 MEUR sale would be enough to clear the table. A bad, but realistic, alternative is that the company announces it will pay the overdue redemptions from 1/25 in January 2026, but does not comment on their scale. In this scenario, the investor does not know how much of the \~50 MEUR buffer will be used for this, and at the same time, redemptions for 7/25 and 1/26 are in the backlog. Of course, the scale will be seen in the February monthly review, but this would unpleasantly leave open the risk that redemptions are +100 MEUR. If the company only pays a portion of the overdue redemptions, it would be desirable for the company to clearly communicate which portion is being paid (cf. eQ).
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Considering demographic development, itâs quite a good move to sell the daycare properties to Norwegians. The residual value risk in the portfolio decreases.
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Due to selling pressure. The buyer is very well aware of the situation Titanium has been in regarding redemptions over the last 18 months. I think itâs very naive to think that this has had no impact on the price at all.
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Itâs probably still too early to strongly predict the start of new sales for Hoiva, but could this news about property sales even trigger new redemptions?
Some investors have likely been quite passive in taking any action, as there has been no information about the timing of redemptions. Even a partial start of redemptions might activate those who had intended to redeem.
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I posted some comments in the Financial Sector thread regarding the postponement of Titaniumâs redemptions. It sounds quite worrying that they are only able to pay half of the H1â24 redemptions now. This means the other half of H1â24, as well as H2â24 and H1â25 in their entirety, are still outstanding. Any potential redemptions for H2â25 wonât be paid out until next summer. Iâll return to this in more detail on Monday when Iâm back from vacation 
Finanssisektori sijoituskohteena - #860 kÀyttÀjÀltÀ Sauli_Vilen
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Before the announcement, there was a risk of 100M+ in backlogged redemptions, but if every half-year period results in 50 million, things arenât looking good. One hundred million wonât be enough.
It would be a surprise if the stock doesnât take a big hit first thing in the morning.
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The announcement was released during trading hours, and the share price dropped by a few percent. The announcement itself was not a surprise to shareholders. It was already known that redemption payments would begin, but only partially. However, by November 2025, the Care fund has performed more than twice as well as in 2024 (i.e., 2.38%), and this trend is likely to curb redemptions as returns on bank deposits begin to decline.
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Not many people noticed that announcement yesterday and it is showing today (currently -5.5%). The fact that only half of the redemptions are being paid for H1 24 is a shocking disappointment for owners; I bet Sauli will also take a very negative stance on this when he gets the chance.
The Care fundâs return has now turned downward (1 month -0.32%) and this may continue to be the trend as assets have to be sold due to the volume of redemptions.
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So, is that -0.32% the impact of the sold assets on the care fundâs value? Many were certainly expecting it to be several percentage points, so thatâs a good performance if true. It also explains why properties have been sold at such a slow pace, as they want to achieve a valuation roughly in line with the fundâs book value.
The problem with sales at Titanium is that the properties are valued using the sales comparison method, while the rest of the market values their real estate based on yield value â price expectations are nowhere near each other.
Titanium should perhaps align its valuations with the broader market, but one could bet that doing so would cause the estimates to drop even further.
I wonder if there are some corporate transactions coming up, as the shareholder list has temporarily disappeared. At the beginning of January, I checked the changes for December, but now the list is gone.
Edit: Thanks @Nordman09, I searched for it on Google, so it seems indexing there is still in progress regarding this.
Didnât Kojamoâs shares really take off back then when they switched to yield-based valuation, as this meant old properties were valued much higher due to their good rental yields?
You can find the shareholder list in its usual place in the website menu. The website has been updated, so your old link (if you have it bookmarked) likely no longer works.
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Back at work now and spent the morning crunching Titaniumâs numbers in Excel. 
One thing I had completely forgotten is that the properties being sold represent realized profit, and this falls under the profit distribution requirement. In other words, if Titanium had acquired a property for 1 euro and now sells it for 2 euros, at least 75% of this 1-euro profit must be paid out as a distribution. The company stated in its release that it sold the properties above their acquisition value, meaning part of this flows directly out as a profit distribution. If we assume, for example, that the properties were sold at 20% above the acquisition price, the minimum distribution amount would be ~3.5 MEUR. I have no idea how accurate or inaccurate that 20% figure is, but itâs a guess for now. I think itâs also clear that the fund does not want to increase leverage (it wouldnât be fair to other owners), and thus the 25 MEUR I calculated earlier is actually more of a maximum the fund could pay out. According to my calculations, the cash flow generated by the fund goes mostly toward paying the cash-flow-based distribution, and the fund doesnât have extra cash available to pull out. Therefore, the increase in the distribution resulting from the sale of this position must also be financed by this sale, meaning the sum will likely drop closer to 20 MEUR. With this math, the H1â24 redemptions would be around 40 MEUR, not 50 MEUR. The figure is admittedly higher than I originally expected, but the risk of exceeding the 50 MEUR level is quite small.
Attached is a rough table on the development of redemptions. The million-dollar question here is how redemptions will develop for those two pending redemption windows. My base case is that H1â24 was the peak and it will trend downwards from there, but this is obviously more of a guess than a fact. 
| Care redemptions | ||||||||
|---|---|---|---|---|---|---|---|---|
| Calendar | H1â22 | H2â22 | H1â23 | H2â23 | H1â24 | H2â24 | H1â25 | H2â25 |
| Redemption window | H2â21 | H1â22 | H2â22 | H1â23 | H2â23 | H1â24 | H2â24 | H1â25 |
| AUM | 461 | 489 | 498 | 504 | 466 | 476 | 477 | 482 |
| Redemptions | -4.3 | -5.2 | -10.4 | -9.1 | -32.6 | -40 | ? | ? |
NOTE! This table only includes net redemptions for the month when the redemptions are paid. This does not account for net subscriptions from other months (1-5 and 7-11).
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Redemptions for the Baltia fund are also being partially deferred, and half will be paid.
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Titaniumâs strong share price performance lately was likely partly due to some restoration of confidence in the companyâs success, but now weâve come down quite a bit following bad news over the last few days. Investors are probably spooked by a higher-than-expected volume of redemptions, and there is certainly cause for concern. Today, there has been peculiar reporting on the situation of Titaniumâs real estate funds, as it was easy to get the impression that the freezing of redemptions happened NOW. This actually happened for the first time already a year ago regarding the care real estate fund.
Letâs see this year how the transition into an asset management company succeeds and consider potential sales in 2027 if the execution of the story is not successful.
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