The growth of Turun Teknologiakiinteistöt continued in 2023, and the company was able to launch new projects despite the challenging economic situation.
The growth of Turun Teknologiakiinteistöt continued in 2023, and the company’s turnover increased by approximately 15 percent, from 37 million euros to 42.4 million euros. The increase in turnover was driven by projects such as 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 2023 was the first year they generated rental income for the entire calendar year.
Property yield requirements continued to rise
The continuous rise in general interest rate levels posed challenges for the entire real estate sector. As a result, property yield requirements continued to increase, which led to a decrease in the value of Turun Teknologiakiinteistöt’s properties by 13 million euros (2022: 22.1 million euros). Due to the increased turnover and smaller property value write-downs compared to the previous year, the operating profit of Turun Teknologiakiinteistöt turned positive, amounting to 7.6 million euros, compared to -3.2 million euros in 2022.
The company’s interest and financing expenses 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. Interest expenses on Turun Teknologiakiinteistöt’s senior loans rose to 11 million euros due to the increase in reference rates (2022: 4.1 million euros). Consequently, the company’s result for the financial year remained in the red, at -2 million euros (2022: -13.9 million euros).
The tightening of financing availability and terms caused by rising interest rates had a strong impact on the entire industry, but in the case of Turun Teknologiakiinteistöt, the impact remained relatively moderate.
– The past year was characterized in particular by rising interest rates and their effects on the company’s operations and economic environment. The concrete effects of the interest rate hikes were visible in the increase of the company’s senior loan interest expenses, in the fair values of the properties, and in the general rise in costs across the board. Due to fair value adjustments made previously, the accounting entry for the financial year was smaller than in previous years, which contributed to the improvement in the result, says Jan-Peter Hautaniemi, CFO of Turun Teknologiakiinteistöt.
New projects were launched despite the challenging economic situation
In 2023, Turun Teknologiakiinteistöt invested a total of 31 million euros in various construction projects, tenant space alterations, 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 launch two new projects: the GeneCity pharmaceutical plant 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 financial occupancy rate of Turun Teknologiakiinteistöt’s leasable premises remained good in 2023, even though the occupancy rate fell slightly from 97.1 percent at the end of 2022 to 94.5 percent.
– Although the occupancy rate of Turun Teknologiakiinteistöt fell, it is still at a quite good level. The office market shows that major players are currently reorganizing their spaces to better meet the demands of hybrid work.
Overall, 2023 was a good year for Turun Teknologiakiinteistöt, with the exception of the decline in property values. The tightening of financing availability and terms caused by rising interest rates had a strong impact on the entire industry, but in the case of Turun Teknologiakiinteistöt, the impact remained relatively moderate.
– The company’s operational cash flow and strong ownership base enabled investments and the refinancing of maturing loans even in the changed financing environment. Investments completed in the near future will increase the company’s turnover without a corresponding increase in expenses, which will also have a positive impact on the company’s results, Hautaniemi concludes.
More information
Jan-Peter Hautaniemi
CFO, Turun Teknologiakiinteistöt Oy
Tel. +358 40 631 9177