CEO’s review

CEO’s review

According to the Lumo Homes plc’s Interim Report 1 January–31 March 2026

Total revenue and net rental income decreased in the first quarter of the year, mainly due to the sale of a portfolio of approximately 2,000 apartments completed in July last year. On a comparable, like-for-like basis, however, both total revenue and net rental income increased, reflecting the continued strength of our core operations. FFO declined as a result of lower total revenue and the cold winter. During the review period, our liquidity remained good and our balance sheet strong.

There were no significant changes in the rental market during the early part of the year. The oversupply situation and the market rebalancing continue, particularly in the capital region. Residential construction has been exceptionally low for four years now, and no material increase is anticipated during this year. Start-ups of state-subsidised housing production were still at a moderate level last year, but are expected to decrease following changes in subsidy schemes. As for non-subsidised housing production, the current market conditions do not yet support the launch of new start-ups.

At the beginning of the year, we published our updated strategy for 2026–2028, in which we clarified the company’s strategic priorities and updated the financial targets and dividend policy. At the same time, we renewed our brand strategy. The Annual General Meeting approved the change of the company’s business name, and in March the name was changed to Lumo Homes plc. We have operated under the Lumo brand towards customers for a long time, and now our corporate brand and legal name have also been unified. Going forward, we will operate under one brand, supporting the execution of our strategy and clarifying our operations. Customer centricity and continuous improvement of the customer experience are at the core of our strategy, which we believe will also be reflected in a pricing premium. Our customer experience developed strongly at the beginning of the year. In March, the customers’ willingness to recommend us, measured by NPS, reached 60, the highest result ever recorded in our measurement history.

After the review period, we completed the acquisition of a housing portfolio of 4,761 apartments from Varma. As we have previously stated, this acquisition marks our return to a growth path. Our objective is to grow profitably and improve FFO per share. The acquired portfolio consists of high-quality assets, largely located in growth centres. Leasing of the new apartments has taken off above expectations immediately after the completion of the transaction.

The acquisition of the housing portfolio was partly financed with EUR 600 million acquisition financing facility, with a maturity of 12 months. Our plan is to refinance the facility with debt from the capital markets, and we are actively monitoring the developments in the financial markets. Since the outbreak of the Middle East crisis, interest rates have risen. However, higher interest rates will primarily affect the company through new loan arrangements, as our hedging ratio is high. Our strong balance sheet and solid liquidity position provide a good foundation to proceed according to the strategy and to monitor the market developments with confidence.

Reima Rytsölä
CEO