Citycon Oyj · OMXHEX:CTY1S
Citycon Oyj — Q3 2020 Earnings Presentation
35 slides from Citycon Oyj's earnings presentation, 2020
Slide 1: Audiocast Presentation Q3/2020
AUDIOCAST PRESENTATION Q3/2020
Slide 2: Q3/2020: Strong performance in COVID-19 environment
Q3/2020: STRONG PERFORMANCE IN COVID-19 ENVIRONMENT CITYCON’S FINANCIAL PERFORMANCE DEMONSTRATES THE STRENGTH AND STABILITY OF THE PORTFOLIO ‒ NRI decline remained modest. January-September total net rental income (NRI) adjusted for FX rate impact was -2.2% and like-for-like NRI -4.7%. ‒ Rent collec
Slide 3: Like-for-like net rental income & rent collections
LIKE-FOR-LIKE NET RENTAL INCOME & RENT COLLECTIONS NET RENTAL INCOME DEVELOPMENT RENT COLLECTION STATUS 2020 Q1-Q3/2020 vs. Q1-Q3/2019. % 98% 93% 95% 94% 92% -2.2% -4.7% -5.2% COVID-19 impact to the total NRI is estimated to be approx. – 4.1 %* Q1/2020 Q2/2020 Q3/2020 H1/2020 Q1-Q3/2020 Total NRI De
Slide 4: Consumers have adapted to COVID environment: tenant sales strong
CONSUMERS HAVE ADAPTED TO COVID ENVIRONMENT: TENANT SALES STRONG FOLLOWING HIGHER AVERAGE PURCHASE TENANT SALES DEVELOPMENT Q1-Q3/2020 vs. Q1-Q3/2019 Increase in average consumer purchase reflects changing consumer behaviour – Footfall has declined following the government restrictions. April was cl
Slide 5: Leasing activity has been strong throughout 2020
LEASING ACTIVITY HAS BEEN STRONG THROUGHOUT 2020 Leasing activity has been strong despite Covid-19 environment LEASES COMMENCED (sq.m.) ‒ As of Q3 175,000 sq.m. of new leases have commenced in 2020, while the 175,085 corresponding figure for 2019 was 113,000. ‒ Leasing activity has picked up again a
Slide 6: Focus on grocery-anchored, multifunctional shopping centres gives stability
OUR FOCUS ON GROCERY-ANCHORED, MULTIFUNCTIONAL SHOPPING CENTRES GIVES STABILITY TO OUR BUSINESS OVER 35 % OF GROSS RENTAL INCOME IS FROM GROSS INCOME BY CATEGORY ”NECESSITY TENANTS” (Q3/2020) ▪ Focus on the daily needs of customers Groceries 19% ▪ 4 out of the top 5 tenants are grocery stores Health
Slide 7: Citycon maintains strong OCR in Q3
CITYCON MAINTAINS STRONG OCR IN Q3 Necessity driven tenants maintained a healthy OCR ratio throughout the quarter OCCUPANCY COST RATIO DEVELOMENT 9.4% 9.4% 9.4% 9.5% 9.3% 9.0% Q2/2019 Q3/2019 Q4/2019 Q1/2020 Q2/2020 Q3/2020 7
Slide 8: Occupancy rate
OCCUPANCY RATE Q1-Q3/2020 Q1-Q3/2019 2019 OCCUPANCY RATE DEVELOPMENT Average rent EUR/sq.m. 22.3 23.1 23.3 96.0% 96.4% 95.5% with comparable rates EUR/sq.m. 22.9 94.5% 93.5% 93.5% 93.8% 94.1% Average remaining length years 3.0 3.4 3.2 of the lease portfolio Q1-Q3/2020 Q1-Q3/2019 2019 Average rent of
Slide 9: Summary of COVID-19 effects on Citycon
SUMMARY OF COVID-19 EFFECTS ON CITYCON COVID -19 has affected the operating environment. Yet, results remain solid and operations have stabilized in Q3. Another picture (Valtteri) ‒ 100% of centres have remained open. At the end of September, all our tenants are open for business. ‒ Footfall has sta
Slide 10: Diversification through densification
DIVERSIFICATION THROUGH DENSIFICATION CITYCON HAS REMAINED FOCUSED ON ITS LONG-TERM GOAL OF DIVERSIFICATION THROUGH DENSIFICATION ‒ The majority of Citycon’s assets are located in connection to the most important transportation hubs of top cities of the Nordics with strong urbanization. This generat
Slide 11: Financial overview
FINANCIAL OVERVIEW 11
Slide 12: Q3/2020 financials
Q3/2020 FINANCIALS MEUR Q3/2020 Q3/2019 Change % Q3/2020 INCL. KISTA 50% Gross rental income 57.1 56.7 0.7 % 59.6 Net rental income 52.9 54.2 -2.4 % 54.4 Direct operating profit 47.1 48.0 -1.8 % 48.4 EPRA Earnings 33.5 35.5 -5.7 % N/A Adjusted EPRA Earnings (1 29.4 35.5 -17.2 % N/A EPRA EPS (basic)
Slide 13: Q1-Q3/2020 financials
Q1-Q3/2020 FINANCIALS Q1-Q3/2020 MEUR Q1-Q3/2020 Q1-Q3/2019 Change % INCL. KISTA 50% Gross rental income 168.6 175.1 -3.7 % 176.9 Net rental income 155.5 164.0 -5.2 % 161.2 Direct operating profit 137.3 146.4 -6.2 % 142.5 EPRA Earnings 104.5 110.0 -4.9 % N/A Adjusted EPRA Earnings (1 92.4 110.0 -16.
Slide 14: Weaker NOK and SEK exchange rates affected the results
WEAKER NOK AND SEK EXCHANGE RATES AFFECTED THE RESULTS 0.104 0.100 0.096 SEK 0.092 NOK 0.088 0.084 0.080 0.076 0.072 1.1.2020 1.2.2020 1.3.2020 1.4.2020 1.5.2020 1.6.2020 1.7.2020 1.8.2020 1.9.2020 1.10.2020 1.11.2020 14
Slide 15: Net rental income impacted by weaker currencies and discounts
NET RENTAL INCOME WAS IMPACTED BY WEAKER CURRENCIES AND SHORT-TERM DISCOUNTS GIVEN IN Q2 NRI DEVELOPMENT MEUR 6.7 164.0 -1.3 -2.4 155.5 -5.9 -5.5 Q1-Q3/2019 Acquisitions (Re)development Divestments LFL properties Other (incl. Q1-Q3/2020 projects IFRS 16 and CURRENCIES HAD AN IMPACT ON NRI exchange r
Slide 16: Estimated direct COVID-19 impact on net rental income
ESTIMATED DIRECT COVID-19 IMPACT ON NET RENTAL INCOME COVID-19 IMPACT ON NRI MEUR -6.8 MEUR 164.0 -2.0 -1.1 -0.3 -0.9 155.5 -0.8 -1.7 -1.7 NRI Q1- Capital/Gross Rental Turnover Specialty Parking fees Credit losses Other (non- NRI Q1- Q3/2019 rents discounts* based rents leasinging and rents COVID re
Slide 17: Fair value changes
FAIR VALUE CHANGES FAIR VALUE CHANGES. MEUR Q3/2020 Q3/2019 Q1-Q3/2020 Q1-Q3/2019 2019 Finland & Estonia -12.1 -13.4 -57.5 -32.1 -55.5 Norway -2.8 -0.5 -9.0 -19.2 -29.2 Sweden & Denmark -6.8 -2.6 -39.7 -8.9 -31.4 Investment properties. total -21.6 -16.4 -106.2 -60.2 -116.0 Right-of-use assets classi
Slide 18: EPRA net asset value impacted by weak NOK and SEK
EPRA NET ASSET VALUE WAS IMPACTED BY WEAK NOK AND SEK 0.59 12.28 -0.70 11.14 -0.54 -0.41 -0.02 -0.01 -0.04 2019 EPRA Earnings Indirect result Translation Dividends Hybrid bond Net losses/gains Other Q3/2020 reserve and equity interests and on cash flow return paid expenses hedges 30 SEP 2020 30 SEP
Slide 19: Main financing metrics
MAIN FINANCING METRICS ▪ Debt portfolio's hedge ratio 81.2% ▪ Investment-grade credit ratings BBB-/BBB-/Baa3 ▪ Financing mainly unsecured 91.2% ▪ Substantial liquidity buffer MEUR 587 ▪ Loan to Value 46.8% ▪ Average maturity of loan portfolio 3.9 19
Slide 20: Financing key figures
FINANCING KEY FIGURES LTV DEVELOPMENT (%) FINANCING KEY FIGURES 30 SEP 2020 30 SEP 2019 31 DEC 2019 48.7%% 45.7%% 46.2%% 46.8% Interest bearing debt. fair value MEUR 2.068.4 2.156.3 1.874.4 42.4%% Available liquidity MEUR 588.6 555.3 562.1 Average loan maturity years 3.9 4.3 4.6 Interest rate hedgin
Slide 21: Good liquidity position
GOOD LIQUIDITY POSITION AVAILABLE LIQUIDITY MEUR 30 SEP 2020 30 JUN 2020 31 MAR 2020 31 DEC 2019 Syndicated revolving credit facilities unutilized 527.0 402.5 376.1 530.4 Cash pool overdraft limits unutilized 24.2 24.3 23.4 24.9 Nonrestricted cash and cash equivalents 37.4 156.1 117.3 7.1 Available
Slide 22: Outlook 2020 specified
OUTLOOK 2020 SPECIFIED Citycon forecasts the 2020 direct operating profit to be in range EUR 178-185 million. EPRA EPS EUR 0.740-0.780 and adjusted EPRA EPS EUR 0.650-0.690. Previous Outlook Citycon forecasts the 2020 direct operating profit to be in range EUR 171-189 million. EPRA EPS EUR 0.710-0.8
Slide 23: Looking forward 2020
LOOKING FORWARD 2020 23
Slide 24: Strong urbanization creates natural demand for densification
STRONG URBANIZATION CREATES NATURAL DEMAND FOR DENSIFICATION IN THE LOCATIONS WHERE CITYCON OPERATES CITIES WHERE CITYCON OPERATES HAVE: POPULATION ▪ Strong country level economics GROWTH* 2015–2035 ▪ Strong local demographics with high purchasing power & strong citizen inflow ▪ Environmentally and
Slide 25: Citycon is in a natural position to participate in densification
CITYCON IS IN A NATURAL POSITION TO PARTICIPATE IN DENSIFICATION ▪ Direct connections to the most important public transportation hubs EXISTING/ OWNED place assets in prime position for zoning and gaining building rights ASSETS IN PRIME LOCATIONS ▪ Existing relationships and co-operation with munici
Slide 26: Portfolio transformation towards mixed-use assets
PORTFOLIO TRANSFORMATION TOWARDS MIXED-USE ASSETS – FUTURE SHARE OF RETAIL ENVISAGED AT 65% (VS. CURRENT 82%) • Portfolio recycling remains a strategic priority for Citycon. CURRENT NEW DEVELOPMENT POTENTIAL This entails shifting portfolio more heavily towards mixed- PORTFOLIO OPPORTUNITIES PORTFOLI
Slide 27: Portfolio includes 22 potential development sites
THE PORTFOLIO INCLUDES 22 POTENTIAL DEVELOPMENT SITES WITH A TOTAL GLA OF 0.6 MSQ.M. DEVELOPENT POTENTIAL - COMPOSITION (TOTAL GLA & BUILDING RIGHTS) COMMERCIAL 325 ksq.m. (230 ksq.m of building rights) FINLAND TOTAL 610ksq.m. 6 Sites NORWAY GLA*: 132 (510 ksq.m. of building rights) RENTAL 7 sites 1
Slide 28: Value creation early in the process: building rights 200 MEUR
VALUE CREATION EARLY IN THE PROCESS – IDENTIFIED VALUE FROM BUILDING RIGHTS ESTIMATED AT 200 MEUR Value of development projects is created already in the zoning phase. Decision on whether to invest or cash on building rights is made in a later stage of the process. Building right value creation 200
Slide 29: Stability in an unstable world
STABILITY IN AN UNSTABLE WORLD… STRONG PERFORMANCE IN COVID-19 ENVIROMENT PLACES CITYCON IN A SOLID POSITION TO MOVE FORWARD ▪ Strong Q3 demonstrated the resilience of Citycon’s strategy and stability of the portfolio: – NRI decline modest, total NRI -2.2% and like-for- like NRI -4.7% (adjusted for
Slide 30: ...while creating diversification through densification
…WHILE CREATING DIVERSIFICATION THROUGH DENSIFICATION CITYCON HAS CONTINUED TO FOCUS ON ITS LONG- TERM GOALS ▪ Capital recycling and portfolio diversification continues to be a top priority. ▪ Capitalizing on densification potential in connection to existing assets to increases the value of portfoli
Slide 31: Thank you
citycon.com CONTACT INFORMATION Eero Sihvonen THANK YOU. CFO. Exec. VP Tel. +358 50 557 9137 Laura Jauhiainen Head of Investor Relations Tel. +358 40 823 9497
Slide 32: Appendix
APPENDIX
Slide 33: Income statement
INCOME STATEMENT MEUR Q1-Q3/2020 Q1-Q3/2019 % 2019 Gross rental income 168.6 175.1 -3.7 % 232.1 Service charge income 51.2 56.6 -9.5 % 77.1 Property operating expenses -61.1 -66.4 -8.0 % -89.3 Other expenses from leasing operations -3.2 -1.4 - -2.5 Net rental income 155.5 164.0 -5.2 % 217.4 Administ
Slide 34: Balance sheet
BALANCE SHEET MEUR 30 SEP 2020 30 SEP 2019 31 DEC 2019 Investment properties 4,155.1 4,105.9 4,160.2 Total non-current assets 4,458.8 4,464.0 4,508.1 Investment properties held for sale - 51.6 - Total current assets 98.4 62.0 74.2 Total assets 4,557.3 4,577.6 4,582.3 Total shareholders’ equity 2,129
Slide 35: Balanced maturity profile
BALANCED MATURITY PROFILE DEBT BREAKDOWN BY TYPE DEBT MATURITIES Bank loans CP 9% 8% 2,047.8 EUR million Bonds 83 % DEBT BREAKDOWN BY CURRENCY SEK 23% EUR 49% 2,047.8 EUR million Part of EUR debt has been converted to SEK and NOK using cross- NOK currency swaps 35 27%