Teknologiakiinteistöt’s business remained profitable in 2022 despite the challenging economic situation. Last year, Teknologiakiinteistöt continued its strong expansion.
Last year, Teknologiakiinteistöt continued its strong expansion. The company’s revenue grew by 15 percent, from 32.3 million euros to 37.0 million euros. Revenue was boosted by new buildings commissioned during 2022, namely InfraCity A, which was completed as premises for Turku Energia, and CivilCity, which serves as an office building for Kela, Wärtsilä and Nordea. The company’s service business also increased its revenue.
Changed interest rate environment was reflected in operating profit
The high inflation caused by Russia’s war of aggression and the rise in financing costs were reflected in Teknologiakiinteistöt’s operating profit, which turned negative at -3.2 million euros (2021: 27.3 million euros).
“The rise in interest rates has challenged the entire real estate sector. During the era of negative interest rates, the yield requirements for properties ranged between 3–6 percent depending on their location, but as interest rates rose, the yields of corporate bonds, which have a risk profile comparable to deposits, rose to four percent, which also led to an increase in yield requirements for properties,” says Jan-Peter Hautaniemi, who became CFO of Teknologiakiinteistöt in March.
At Teknologiakiinteistöt, property values decreased by 22.1 million euros. Excluding the property revaluation, the operating profit would have been 18.9 million euros (2021: 15.8 million euros).
“Although the values of the properties owned by Teknologiakiinteistöt decreased last year, their value development remains positive in the long term. In just over a decade, Teknologiakiinteistöt has succeeded in significantly increasing the value of its assets by investing in properties and their surroundings,” Hautaniemi continues.
One-off costs weighed on the result
The company’s result, in turn, was weighed down not only by property revaluations but also by interest rate swaps terminated during the year, for which Teknologiakiinteistöt paid the banks a termination cost of 7.1 million euros, representing the market value of the contracts at the time. As a result, the group’s financial income and expenses rose to -12.9 million euros (2021: -8.4 million euros), and the result turned to a loss of -13.9 million euros (2021: 14.2 million euros).
“Despite the negative result and the one-off cost of terminating interest rate hedges, the company’s cash flow remained strong. The company’s loan-to-value ratio, i.e., the ratio of total debt to the market value of the properties, also remained at a moderate level, allowing for additional borrowing in the future.”
Overall, however, it was a good year, because most importantly, the company’s growth was achieved profitably.
“With revenue growing by 15 percent, the company’s EBITDA grew by 19 percent when measured by absolute values adjusted for property revaluations, which is an excellent result.”
Balance sheet exceeded half a billion
During 2022, Teknologiakiinteistöt made investments totaling 41.5 million euros. The investments consisted of construction projects and changes and repairs to customer premises. The largest projects were the parking facility ParkCity, which opened in January 2023, InfraCity, which started the transformation of the Itäharju industrial area into a Science Park, and IndustryCity, which was created from an old element factory.
The company’s balance sheet total was 501.5 million euros (2021: 476.7 million euros).
Premises full, customers satisfied
The company’s financial occupancy rate remained high in 2022 (97.1%) and there were no major terminations. The most significant of the new lease agreements was a 23-year lease signed with Turun Vesihuolto regarding office spaces and depot areas in Itäharju. Teknologiakiinteistöt signed a 10-year lease with the engineering and consulting company Rejlers for approximately 1,300 square meters of office space in the new InfraCity B office building.
According to the customer satisfaction survey conducted at the end of the year, overall customer satisfaction increased from 3.99 to 4.03 on a scale of 1–5. As many as 93 percent of customers were willing to recommend Teknologiakiinteistöt as a landlord.
“Overall, it was a good year. Customers were more satisfied with Teknologiakiinteistöt than ever before, the occupancy rate remained high, and the balance sheet total grew to over half a billion,” Hautaniemi concludes.