Slide 1: Citycon Presentation Q1/2017
20.4.2017 CITYCON PRESENTATION Q1/2017
Slide 2: Leading owner, manager and developer of shopping centres in the Nordics and Baltics
LEADING OWNER, MANAGER AND DEVELOPER OF SHOPPING CENTRES IN THE NORDICS AND BALTICS – 51 shopping centres1) – 200 million visitors p.a. – 13 managed/rented assets – Market cap EUR 2 billion – GLA 1.2 million sq.m. – Credit ratings: Baa1 & BBB FINLAND PORTFOLIO VALUE Estonia and Denmark NORWAY SWEDEN
Slide 3: Enriching urban crosspoints
ENRICHING URBAN CROSSPOINTS RIGHT RESPONSIBLE SHOPPING ASSETS CENTRE MANAGEMENT Necessity-based Sustainable space shopping centres in for retailers and growing urban areas communities WHAT OUR WE DO APPROACH STRONG CAPITAL BASE RETAIL EXPERTS OUR Efficient capital RESOURCES Creating attractive alloc
Slide 4: True pan-Nordic leader
TRUE PAN-NORDIC LEADER 340 140 125 95 90 FINLAND SPONDA ELO KEVA IDEAPARK 300 260 210 155 150 #1 SWEDEN ATRIUM UNIBAIL- OLAV THON STEEN &STROM LJUNGBERG RODAMCO 970 #2 #3 #2 340 205 140 95 NORWAY OLAV STEEN & STROM SALTO SCALA THON 145 100 80 ESTONIA ASTRI LINSTOW Source: Company reports, Pangea Pro
Slide 5: Urban crosspoints driven by strong demographics
URBAN CROSSPOINTS DRIVEN BY STRONG DEMOGRAPHICS CORE ASSETS: –Urban environments, located where people live and work –Strong population growth and natural footfall –Integrated with public transportation –Shared access to education, health care, culture, municipal services 5
Slide 6: Strong grocery-anchoring – over 100 grocery stores
STRONG GROCERY-ANCHORING ‒ OVER 100 GROCERY STORES 1) 2% 1% 9% 24% 9% Home and leisure Fashion Rental income Groceries Services and offices 13% 269 Health and beauty Cafés and restaurants MEUR Specialty stores Department stores 24% 18% As per 31 December 2016 6 1) Including Kista Galleria (50%)
Slide 7: 90% of Citycon's shopping centres are located in capital or main cities
90% OF CITYCON’S SHOPPING CENTRES ARE LOCATED IN CAPITAL OR MAIN CITIES ISO OMENA, KISTA GALLERIA, LILJEHOLMSTORGET KOSKIKESKUS, HERKULES, HELSINKI AREA 1) STOCKHOLM 2) GALLERIA, STOCKHOLM TAMPERE SKIEN GLA, sq.m. 101,000 92,500 40,500 33,100 49,300 Visitors, million 9 19 10 6 3 Sales, MEUR 195 204
Slide 8: Sustainable shopping centre management
SUSTAINABLE SHOPPING CENTRE MANAGEMENT Acting as a sustainable business partner People Environment An excellent place Energy-efficient and to work and to be OUR APPROACH environmentally sound proud of shopping centres SOLID Community & ECONOMY Economy Companionship Creating long-term Urban multifunc
Slide 9: Forerunner in sustainability
FORERUNNER IN SUSTAINABILITY KEY INITIATIVES 2016 Largest shopping centre portfolio with BREEAM In-Use certification – Energy consumption, kWh/sq.m. -6%since 2014 (target -10% by 2020) in the Nordic countries – Within top 5% of globally reviewed companies 100% – Citycon’s Buskerud unique in using >8
Slide 10: Q1/2017: Good start to the year
Q1/2017: GOOD START TO THE YEAR
Slide 11: Highlights Q1/2017
HIGHLIGHTS Q1/2017 6.6% INCREASE IN EPRA EPS TO EUR 0.043 - Good performance in Sweden and Norway compensates for weaker Finland - Overall net rental income growth and lower administrative expenses - Completed (re)development projects support earnings growth POSITIVE LIKE-FOR-LIKE NET RENTAL INCOME
Slide 12: Financial highlights
FINANCIAL HIGHLIGHTS MEUR Q1/2017 %1) Net rental income 56.6 2.5 Direct operating profit 50.3 5.0 EPRA Earnings 38.3 6.6 EPRA EPS (basic) 0.043 6.6 EPRA NAV per share 2.83 1.7 Fair value change 7.3 -72.1 Loan to Value (LTV), % 47.1 - 1) Change from previous year (Q1/2016) 12
Slide 13: Good performance in all countries except non-cores in Finland
GOOD PERFORMANCE IN ALL COUNTRIES EXCEPT NON-CORES IN FINLAND
Slide 14: Positive overall like-for-like NRI growth, non-cores in Finland still struggling
POSITIVE OVERALL LIKE-FOR-LIKE NRI GROWTH, NON-CORES IN FINLAND STILL STRUGGLING LIKE-FOR-LIKE NET RENTAL INCOME GROWTH –Strong shopping centres in 7.0% 5.3% Helsinki area (Iso Omena, Myyrmanni, Lippulaiva) all under 3.6% (re)development in Q1/2017 1.2% 1.0% 1.1% –The like-for-like portfolio in Finl
Slide 15: Overall sales and footfall remained unchanged
OVERALL SALES AND FOOTFALL REMAINED UNCHANGED, MILD DECREASE OF LFL SALES AND FOOTFALL LIKE-FOR-LIKE SALES LIKE-FOR-LIKE FOOTFALL Q1/2017 vs. Q1/2016, % 1) Q1/2017 vs. Q1/2016, % 1) 0% 0% 0% -1% 0% -1% -2% -6% -4% -4% Finland Norway Sweden Estonia & Total Finland Norway Sweden Estonia & Total Denmar
Slide 16: Occupancy remains at an overall good level
OCCUPANCY REMAINS AT AN OVERALL GOOD LEVEL OCCUPANCY RATE 1) 96.5% 96.9% 96.3% 96.0% 96.0% 2013 2014 2015 2016 Q1/2017 16 1) Including Kista Galleria 50%
Slide 17: Development portfolio
DEVELOPMENT PORTFOLIO
Slide 18: Urban developments progressing – Iso Omena phase 2 to open 98% leased
URBAN DEVELOPMENTS PROGRESSING – ISO OMENA PHASE 2 TO OPEN 98% LEASED ONGOING PROJECTS Expected Cumulative Area before/ Yield on cost1), Pre-leasing, Completion City investment, investment, after, sq.m. % % target MEUR MEUR Phase 2: 1 Iso Omena Helsinki area 63,300/101,000 270.0 258.6 6.0 Total SC:
Slide 19: Iso Omena has become the leading shopping and leisure destination in the Helsinki area
ISO OMENA HAS BECOME THE LEADING SHOPPING AND LEISURE DESTINATION IN THE HELSINKI AREA – Second phase opening 20.4. Addition of quality F&B and leisure – Zara opening early April – Strong tenant demand, 98% leased – The 6,000 sq.m. service square of Espoo has attracted >1 million visitors since open
Slide 20: Case Pori – maximizing value before divestment
CASE PORI – MAXIMIZING VALUE BEFORE DIVESTMENT – Former supermarket & shop property of 19,000 sq.m. with declining value trend – Citycon won the competition for the new University of Applied Sciences campus project in 2014 – 20-year lease agreement with the municipality. 100% pre- leased at initiati
Slide 21: Development pipeline
DEVELOPMENT PIPELINE
Slide 22: Development pipeline – urban locations in capital cities
DEVELOPMENT PIPELINE – URBAN LOCATIONS IN CAPITAL CITIES Area before/ Expected Target – Development investments of City after, investment, initiation/ MEUR 150-200 p.a. sourced sq.m. MEUR completion through recycling COMMITTED of capital Down Town Porsgrunn 38,000/46,000 75 2017/2019 PLANNED (UNCOMM
Slide 23: Key target areas 2017 and onwards
KEY TARGET AREAS 2017 AND ONWARDS FURTHER CAPITAL RECYCLING OPPORTUNITIES - Divestments of MEUR 200-250, mainly in Finland, within the coming 1.5 years - Further potential in Norway: divestments of up to MEUR 200-250 over the next three years - MEUR 150-200 p.a. in developments within the existing p
Slide 24: Financial overview
| ee FINANCIAL OVERVIEW b i) CITYCON
Slide 25: Financial results Q1/2017
FINANCIAL RESULTS Q1/2017 MEUR Q1/2017 Q1/2016 % INCL. KISTA 50% Gross rental income 66.1 63.3 4.4 70.4 Net rental income 56.6 55.2 2.5 60.5 Direct operating profit 50.3 47.9 5.0 54.0 EPRA Earnings 38.3 36.0 6.6 n.a. EPRA EPS (basic) 0.043 0.040 6.6 n.a. EPRA NAV per share 2.83 2.78 1.7 n.a. – EPRA
Slide 26: (Re)development projects coming online supported net rental income growth
(RE)DEVELOPMENT PROJECTS COMING ONLINE SUPPORTED NET RENTAL INCOME GROWTH NRI DEVELOPMENT MEUR 1.1 0.9 56.6 0.9 0.5 55.2 -2.0 Q1/2016 Acquisitions (Re)development Divestments LFL properties Other (incl. exchange Q1/2017 projects rate differences) 26
Slide 27: Increased average rent, occupancy at a good level
INCREASED AVERAGE RENT, OCCUPANCY AT A GOOD LEVEL Q1/2017 2016 Occupancy rate (economic) % 96.0 96.3 Average rent EUR/sq.m. 24.0 23.2 Average remaining length of lease portfolio years 3.3 3.3 Q1/2017 2016 Average rent of leases started EUR/sq.m. 25.1 22.4 Average rent of leases ended EUR/sq.m. 22.4
Slide 28: Positive valuation driven by Norway
POSITIVE VALUATION DRIVEN BY NORWAY FAIR VALUE CHANGES, MEUR Q1/2017 Q1/2016 2016 Finland -9.6 -8.3 -33.2 Norway 14.4 24.1 19.8 Sweden 3.5 8.8 39.7 Estonia & Denmark -1.0 1.7 -0.4 Investment properties, total 7.3 26.3 25.9 Kista Galleria (50%) 0.0 1.2 5.5 Investment properties and Kista Galleria (50
Slide 29: Income statement
INCOME STATEMENT MEUR Q1/2017 Q1/2016 % 2016 Gross rental income 66.1 63.3 4.4 251.4 Service charge income 20.4 20.1 1.9 80.3 Property operating expenses -29.6 -27.7 6.8 -105.5 Other expenses from leasing operations -0.3 -0.4 -16.9 -1.4 Net rental income 56.6 55.2 2.5 224.9 Administrative expenses -
Slide 30: Stable EPRA NAV
STABLE EPRA NAV CHANGE OF NET ASSET VALUE (EPRA NAV) EUR, per share 0.043 -0.01 0.01 2.82 -0.01 2.83 -0.03 Q4/2016 EPRA Earnings Indirect result Translation reserve Dividends and equity Other Q1/2017 return paid 31 MAR 2017 31 MAR 2016 31 DEC 2016 EPRA NAV per share, EUR 2.83 2.78 2.82 EPRA NNNAV pe
Slide 31: Balance sheet
BALANCE SHEET MEUR 31 MAR 2017 31 MAR 2016 31 DEC 2016 Investment properties 4,447.3 4,079.1 4,337.6 Total non-current assets 4,870.1 4,575.4 4,762.8 Investment properties held for sale 37.2 71.7 81.9 Total current assets 58.6 66.8 56.2 Total assets 4,965.9 4,714.0 4,900.9 Total shareholders’ equity
Slide 32: Financing overview
ee Cee FINANCING OVERVIEW TS CITYCON
Slide 33: Financing key figures
FINANCING KEY FIGURES 31 MAR 2017 31 MAR 2016 31 DEC 2016 Interest bearing debt, fair value MEUR 2,243.9 2,035.1 2,191.5 Available liquidity MEUR 557.1 381.2 560.4 Average loan maturity years 5.2 5.3 5.6 Interest rate hedging ratio % 90.8 85.3 93.1 Weighted average interest rate1) % 2.78 3.05 2.86 L
Slide 34: 91% of debt fixed rate, vast majority bonds
91% OF DEBT FIXED RATE, VAST MAJORITY BONDS DEBT BREAKDOWN BY TYPE DEBT BREAKDOWN BY CURRENCY Bank term Other CP loan 5% 0% SEK 9% 22% EUR 56% 2,243.9 Bonds 2,243.9 EUR million 86% EUR million Part of EUR debt has been converted to SEK NOK and NOK using cross- 23% currency swaps 34
Slide 35: Balanced maturity profile with long average loan maturity
BALANCED MATURITY PROFILE WITH LONG AVERAGE LOAN MATURITY DEBT MATURITIES 500 500 450 388 400 350 350 350 300 300 245 250 199 200 153 150 138 136 113 109 100 50 33 8 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Loans Floating to fixed swaps Undrawn loan facilities Bonds Commercial Paper
Slide 36: Outlook 2017 unchanged
OUTLOOK 2017 UNCHANGED DIRECT OPERATING PROFIT EPRA EARNINGS 220 191.5-210.5 170 138.1-156.1 198.5 151.1 200 150 175.4 130.8 180 130 160 149.1 149.8 110 99.7 140 86.7 90 120 70 100 80 50 60 30 2013 2014 2015 2016 2017E 2013 2014 2015 2016 2017E – Direct operating profit MEUR -7 to 12 – EPRA Earnings
Slide 37: Property portfolio
PROPERTY PORTFOLIO PVYYyy rperr ~ CITYCON
Slide 38: Occupancy by country
OCCUPANCY BY COUNTRY OCCUPANCY RATE BY COUNTRY 1) 99.2% 99.5% 98.7% 98.7% 98.7% 98.3% 97.6% 97.1% 96.3% 96.3% 96.3% 96.0% 93.9% 92.8% 92.4% Finland Norway Sweden Estonia & Denmark Total Q1/2016 Q4/2016 Q1/2017 1) Including Kista Galleria (50%) 38
Slide 39: Lease portfolio
LEASE PORTFOLIO AVERAGE LEASE MATURITY 1) – 4,806 lease agreements with an average length of 3.3 years Years – Total GLA 1,242,040 sq.m. 3.5 – Rents linked to CPI (nearly all agreements) 3.3 3.3 3.2 3.2 – Annualised potential rental value for the portfolio is EUR 363.4 million 1) – Actual rental con
Slide 40: Property portfolio: top tenants and occupancy cost ratio
PROPERTY PORTFOLIO TOP 5 TENANTS OCCUPANCY COST RATIO 1) SHOPPING CENTRES, ROLLING 12 MONTHS PROPORTION OF 2016 RENTAL INCOME, % Total 8.9% Kesko 6.6 Finland 9.2% S Group 4.5 Norway 8.7% Varner-Group 4.4 NorgesGruppen Group 2.2 Sweden 8.2% Stockmann Group 2.0 Estonia & Denmark 10.2% Top 5, total 19.
Slide 41: Valuation yield development
VALUATION YIELD DEVELOPMENT VALUATION YIELD DEVELOPMENT 1) 8% 7% 6% 5% Q1/2012 Q1/2013 Q1/2014 Q1/2015 Q1/2016 Q1/2017 Finland Norway Sweden Estonia and Denmark Total 1) Excludes Kista Galleria 41
Slide 42: Back-up information
BACK-UP INFORMATION
Slide 43: Ownership, March 2017
OWNERSHIP, 31 MARCH 2017 SHAREHOLDERS 31 MARCH 2017 –Established and listed on Nasdaq Direct Helsinki in 1988 registered Nominee- 16.3% –Market cap EUR 1,975 million registered 83.7% –Total registered shareholders 13,531 –Largest shareholders: –Gazit-Globe 44% –CPPIB 15% –Ilmarinen 7% –Included in e
Slide 44: History of Citycon – 25+ years of retail experience and Nordic expansion
HISTORY OF CITYCON +25 YEARS OF RETAIL EXPERIENCE AND NORDIC EXPANSION From Finnish office assets To international retail premises To a true Pan-Nordic leader 1988 2003 2011 Founded by Sampo Pension Ltd, Strategy to include also (re)development New management and redefined strategy Imatran Voi
Slide 45: Attractive tenant mix of Nordic and international brands
ATTRACTIVE TENANT MIX OF NORDIC AND INTERNATIONAL BRANDS GROCERIES & CAFÉS & LEISURE & HOME & HEALTH, BEAUTY FASHION DAILY NEEDS RESTAURANTS SPORT DESIGN & SERVICES 45
Slide 46: Demonstrated access to bond markets
DEMONSTRATED ACCESS TO BOND MARKETS OUTSTANDING BONDS Issued amount, Interest, Maturity, Bond Issue date Maturity million p.a. years Eurobond EUR 350 1.25% 10 9/2016 9/2026 Eurobond EUR 300 2.375% 7 19/2015 9/2022 NOK bond NOK 1,400 3.9% 10 9/2015 9/2025 3-mth Nibor + NOK bond NOK 1,250 5.5 9/2015 3
Slide 47: Economic outlook
ECONOMIC OUTLOOK GDP GROWTH INFLATION Change % Change % 5% 4% 4% 3% 3% 2% 2% 1% 1% 0% 0% Finland Norway Sweden Denmark Estonia Euro area Finland Norway Sweden Denmark Estonia Euro area 2015 2016 2017E 2018E 2015 2016 2017E 2018E UNEMPLOYMENT PUBLIC SECTOR DEBT AS % OF GDP Change % Change % 12% 70% 1
Slide 48: Disclaimer
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Slide 49: Thank you
citycon.com CONTACT INFORMATION Eero Sihvonen THANK YOU. CFO, Exec. VP Tel. +358 50 557 9137 Henrica Ginström VP, IR & Communications Tel. +358 50 554 4296