Ovaro Kiinteistösijoitus Oyj
Stock Exchange Release 18 December 2018 at 08:45 hrs
The management agreement between Ovaro Kiinteistösijoitus Oyj and management company Orava Funds plc expires today on 18 December 2018. That also eliminates the management fee, and the administrative costs of Ovaro Kiinteistösijoitus will decrease.
As the management agreement expires, Ovaro starts deploying Jones Lang LaSalle Finland Oy (JLL) for determining the fair value of its real estate assets. Earlier, Orava Funds plc determined the fair value of Ovaro’s real estate assets using its own mathematical model in compliance with the management agreement, and this value was used in interim reports and financial statements.
The assessment of the fair value of real estate assets by JLL will be used for the first time in connection with the financial statements for 2018. Ovaro has earlier announced that this change may cause a non-recurring impact on financial results in 2018.
“JLL is a professional and esteemed company carrying out real estate valuations and operating globally. I believe that the change will improve the transparency of valuations,” says CEO Kari Sainio.
Ovaro Kiinteistösijoitus has earlier announced that it will start reporting its real estate stock of 1,586 apartments in two parts: as “Core business” and “Other business”. The sites suitable for renting and development constitute the core business. Other business consists of sites suitable for owner-occupancy which the company seeks to divest during the 2019–2021 strategy period.
As communicated in connection with the interim report for Q3/2018, JLL’s estimate of the fair value of the real estate assets of Ovaro Kiinteistösijoitus on 30 September 2018 was 2.6 per cent lower than the earlier value based on an estimate by Orava Funds plc. The difference is within the limits of valuation accuracy.
The estimates by management company Orava Funds used by the company earlier and the estimates by JLL were as follows on 30 September 2018:
Management company method JLL
Core business €112.3 million €112.0 million
Other business €79.7 million €75.0 million
Total €192.0 million €187.0 million
Kari Sainio, CEO, tel. +358 400 209 147
Distribution: Nasdaq, www.ovaro.fi, major media