Teknologiakiinteistöt continued to grow in 2023, and the company was able to start new projects despite the challenging economic situation.
Teknologiakiinteistöt continued to grow in 2023, and the company's net sales increased by approximately 15 percent, from 37 million euros to 42.4 million euros. Net sales were boosted by, among others, InfraCity, completed for Turku Energia, and CivilCity, which serves as an office building for Kela, Wärtsilä, and Nordea. Both buildings were completed in 2022, but in 2023, they generated rent for the full calendar year for the first time.
Real estate yield requirements continued to rise
The continued rise in general interest rates posed challenges for the entire real estate sector. As a result, property yield requirements rose further, which for Teknologiakiinteistöt led to a decrease in property values by 13 million euros (2022: 22.1 million euros). Due to the increased net sales and smaller property value write-downs compared to the previous year, Teknologiakiinteistöt's operating profit turned positive, reaching 7.6 million euros, compared to -3.2 million euros in 2022.
The company's interest and financing costs decreased in 2023. This was influenced by the fact that in June 2022, the company terminated its interest rate swap agreements with banks and paid the banks the market value of the agreements at that time, 7.1 million euros, as a termination cost. Following the rise in reference interest rates, the interest costs on Teknologiakiinteistöt's senior loans increased to 11 million euros (2022: 4.1 million euros). Consequently, the company's financial result for the fiscal year remained at a loss, totaling -2 million euros (2022: -13.9 million euros).
The tightening of financing availability and terms due to rising interest rates strongly affected the entire industry, but for Teknologiakiinteistöt, the impact remained relatively moderate.
– The past year was characterized in particular by the rise in interest rates and its effects on the company's operations and economic environment. The concrete effects of the interest rate hike were seen in the increase in interest costs on the company's senior loans, in the fair values of properties, and in the general rise in costs across the board. Due to fair value adjustments made previously, the adjustment for the fiscal year was smaller than in previous years, which contributed to the improvement in the result, says CFO of Teknologiakiinteistöt Jan-Peter Hautaniemi.
New projects were launched despite the challenging economic situation
In 2023, Teknologiakiinteistöt invested a total of 31 million euros in various construction projects, tenant space modifications, and property repairs. The company's balance sheet total rose to 504.5 million euros, compared to 501.5 million euros in 2022.
– The most significant project completed in 2023 was the B-part of InfraCity, which customers were able to move into at the beginning of 2024. Despite the challenging financing environment, we were also able to start two new projects: the GeneCity pharmaceutical factory being built for Biovian and AkvaCity being implemented for Turun Vesihuolto, both of which continue the transformation of Itäharju into Turku Science Park.
Occupancy rate remained at a good level
The economic occupancy rate of Teknologiakiinteistöt's leasable spaces remained good in 2023, although it decreased slightly from 97.1 percent at the end of 2022 to 94.5 percent.
– Although Teknologiakiinteistöt's occupancy rate fell, it is still at a quite good level. The office premises market shows that major players are currently reorganizing their spaces to better meet the requirements of hybrid work.
Overall, 2023 was a good year for Teknologiakiinteistöt, with the exception of the decline in property values. The tightening of financing availability and terms due to rising interest rates strongly affected the entire industry, but for Teknologiakiinteistöt, the impact remained relatively moderate.
– The company's operating cash flow and strong ownership base enabled investments and the refinancing of maturing loans even in the changed financing environment. Investments to be completed in the near future will increase the company's net sales without a corresponding increase in costs, which will also have a positive effect on the company's result, Hautaniemi concludes.
More information
Jan-Peter Hautaniemi
CFO, Turun Teknologiakiinteistöt Oy
Tel. 040 631 9177