Slide 1: Citycon Presentation Q2/2016
CITYCON PRESENTATION Q2/2016
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 KEY FIGURES 30 JUNE 2016 – 52 shopping centres1) – Market cap EUR 2 billion – 13 managed/rented assets – Moody’s Baa1 – Gross leasable area – Standard&Poor’s BBB FINLAND 1,190,390 s.qm. PORTFOLIO VALUE NORWAY Baltics
Slide 3: Creating urban crosspoints
CREATING URBAN CROSSPOINTS Right assets Responsible shopping Pure retail player focusing centre management on necessity-based shopping Commitment to sustainable management centres in growing urban and development and contributing to the areas communities surrounding our shopping centres WHAT OUR WE
Slide 4: True pan-Nordic leader
TRUE PAN-NORDIC LEADER RETAIL GLA (THOUSAND SQ.M.)1) 360 FINLAND 140 125 120 110 360 350 SWEDEN 200 200 200 1 290 #3 #1 NORWAY #2 400 #2 325 175 110 145 ESTONIA 110 80 60 1) Source: Company reports, Pangea Property Partners analysis, as per April 2016. Includes only majority-owned shopping centres.
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: Core portfolio of grocery-anchored shopping centres
CORE PORTFOLIO OF GROCERY-ANCHORED SHOPPING CENTRES RENTAL INCOME BY CATEGORY 31 DEC 2015 4% 2% 7% 25% Fashion Groceries 10% Leisure and home Rental income supplies Services and offices 224 Health and beauty EUR million 10% Cafés and restaurants 20% Other specialty stores Department stores 21% 6
Slide 7: Citycon's five main core assets
CITYCON’S FIVE MAIN CORE ASSETS Kista Galleria Iso Omena Liljeholmstorget Galleria Koskikeskus Herkules City GLA (sq.m.) Fair value, MEUR Visitors, million Sales, MEUR Kista Galleria Stockholm 95,300 631 19 216 Iso Omena Helsinki area 62,700 443 8 182 Liljeholmstorget Galleria Stockholm 41,000 292 1
Slide 8: Urbanisation & omnichannel drive retail more than shopping
URBANISATION & OMNICHANNEL DRIVE RETAIL RETAIL TRENDS NORDIC CAPITALS FASTEST GROWING IN EUROPE CITYCON’S RESPONSE Oslo 20.3 Stockholm 18.3 Copenhagen 14.7 URBAN MORE ELDERLY Helsinki 13.1 URBAN CROSSPOINTS 90% main cities & SINGLE GROWTH HOUSEHOLDS Amsterdam London 11.2 11.2 where people live and w
Slide 9: 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 10: Sustainable mind-set – forerunner in the Nordics
SUSTAINABLE MIND-SET – FORERUNNER IN THE NORDICS KEY RESULTS 2015 >70% of Citycon’s shopping centres are BREEAM In-Use certified –most retail certificates in the Nordics Energy consumption, kWh/sq.m. -6% (target -2%) 80% 60% Recycling rate 95% 40% (target >90%) 20% Within top 10% of reviewed 0% Dec.
Slide 11: Q2/2016 stable results, cost savings program implemented
Q2/2016 STABLE RESULTS, COSTS SAVINGS PROGRAM IMPLEMENTED
Slide 12: Highlights Q2/2016
HIGHLIGHTS Q2/2016 STABLE FINANCIAL RESULTS DRIVEN BY GOOD PERFORMANCE IN SWEDEN AND NORWAY - EPRA Earnings +28% mainly due to the acquisition of Norwegian operations - EPRA EPS EUR 0.084 close to last year’s level with 40% more shares POSITIVE OVERALL LFL NRI AND IMPROVED OCCUPANCY - Adjusted like-
Slide 13: Financial highlights
FINANCIAL HIGHLIGHTS MEUR Q1-Q2/2016 %1) Net rental income 112.2 36.3 Direct Operating profit 98.4 35.8 EPRA Earnings 74.6 29.9 EPRA EPS (basic) 0.084 -7.0 EPRA NAV per share 2.80 -6.3 Fair value change 31.0 - Loan to Value (LTV), % 45.4 9.5 1) Change from previous year (Q1-Q2/2015) 13
Slide 14: Successful integration in Norway
SUCCESSFUL INTEGRATION IN NORWAY INITIAL TARGET STATUS Q2/2016 Increased to – Savings in Citycon Norway SG&A ORGANIZATION ≥ 1 MEUR p.a. approx. 3.5 MEUR p.a. of ≥10% on group level – Tenanting, specialty leasing, LFL NRI growth of H1/2016 pro forma LFL OPERATIONS marketing, digital optimisation 100
Slide 15: Stable overall operating performance
STABLE OVERALL OPERATING PERFORMANCE
Slide 16: Positive overall like-for-like NRI growth driven by Norway and Sweden
POSITIVE OVERALL LIKE-FOR-LIKE NRI GROWTH DRIVEN BY NORWAY AND SWEDEN LIKE-FOR-LIKE NET RENTAL INCOME GROWTH –Operating results reflect the general performance of the main economies –The standard like-for-like portfolio 4.5% 3.8% includes only 42% Citycon’s portfolio 3.0% –Finland impacted negativel
Slide 17: Occupancy remains at high level > 96%
OCCUPANCY REMAINS AT HIGH LEVEL > 96% OCCUPANCY RATE 96.8% 96.5 % 96.3% 96.2% 95.7% 95.7% 2012 2013 2014 2015 Q1/2016 Q2/2016 17
Slide 18: Overall stable sales and footfall development
OVERALL STABLE SALES AND FOOTFALL DEVELOPMENT LIKE-FOR-LIKE SHOPPING CENTRE SALES LIKE-FOR-LIKE SHOPPING CENTRE FOOTFALL 3% 1% 0% 0% -1% -1% -1% -4% Finland Sweden Baltics & Denmark Total Finland Sweden Baltics & Denmark Total Norway 3% Kista Galleria -7% Norway -2% Kista Galleria -2% 18 The width o
Slide 19: Successful delivery on Citycon's disposal plan
SUCCESSFUL DELIVERY ON CITYCON’S DISPOSAL PLAN – Disposal of Magistral in Tallinn in February – Disposal of 5 supermarket and shop properties in Finland in April 100 MEUR divested at above IFRS fair value in Q1-Q2/2016 – Citycon intends to divest an additional EUR 200-250 million within the coming
Slide 20: Development portfolio
DEVELOPMENT PORTFOLIO (i: ES CITYCON
Slide 21: (Re)developments progressing – Iso Omena first phase opening 95% leased
(RE)DEVELOPMENTS PROGRESSING – ISO OMENA FIRST PHASE OPENING WITH 95% LEASED Expected Cumulative Area before/ Yield on Pre-leasing Completion City investment, investment, after, sq.m. cost1) target MEUR MEUR Part 1: 95% Q3/2016 & Iso Omena Helsinki area 63,300/99,000 182.0 (250.0) 121.5 6.0% Total S
Slide 22: Renewed Iso Omena shows international appeal
RENEWED ISO OMENA SHOWS INTERNATIONAL APPEAL – Successful pre-leasing: 4 shops still to be signed (out of total 66 shops) – 2000m2 Zara signed for phase 2 (only one in Western Helsinki area) – New M.E.E.T food concept - 50 cafés and restaurants in total – Creating an alternative for Helsinki CBD – M
Slide 23: Development pipeline – urban locations in capital cities
DEVELOPMENT PIPELINE – URBAN LOCATIONS IN CAPITAL CITIES Area before/after, Expected investment, Target for project City sq.m. MEUR initiation/completion Tumba Centrum Stockholm 25,500/35,500 55 2016/2017 Lippulaiva Helsinki area 19,200/42,000 160–180 2016/2020 Norwegian properties Mainly Oslo area
Slide 24: Lippulaiva – rebuilding an urban everyday shopping centre
LIPPULAIVA – REBUILDING AN URBAN EVERYDAY SHOPPING CENTRE IN WEALTHY ESPOONLAHTI – Exceptional pre-leasing result ≥ 50% signed in Q2 – Temporary 10,000 m2 centre fully leased – Start of demolition in mid-July 2017 – Daily shopping concept in area with strong population growth (+18% in 10 yrs) – New
Slide 25: 450 MEUR of developments coming online will support earnings growth
450 MEUR OF DEVELOPMENTS COMING ONLINE WILL STRONGLY SUPPORT EARNINGS GROWTH INVESTMENT VOLUMES THAT COME ONLINE MEUR Q2/2018 Mölndal Galleria completion 500 Q2/2017 + Buy-out of NCC's 50% Iso Omena part 2 completion Q3/2017 400 Straedet, buy-out from TK Development 300 Q3/2016 Iso Omena part 1 comp
Slide 26: Key target areas 2016 and onwards
KEY TARGET AREAS 2016 AND ONWARDS SUCCESSFUL COMPLETION OF ONGOING DEVELOPMENTS - 150-200 MEUR p.a. - Uplift in rental income and earnings 2017 onwards IMPROVE QUALITY OF THE PORTFOLIO THROUGH CONTINUED EXECUTION OF DIVESTMENT STRATEGY - Additional divestments of 200-250 MEUR, mainly in Finland OVER
Slide 27: Financial overview
FINANCIAL OVERVIEW
Slide 28: Financial results
FINANCIAL RESULTS Q1-Q2/2016 MEUR Q2/2016 Q2/2015 Q1-Q2/2016 Q1-Q2/2015 INCL. KISTA Gross rental income 62.2 46.6 125.4 92.6 142.8 Net rental income 57.0 42.6 112.2 82.3 127.6 Direct Operating profit 50.5 37.6 98.4 72.5 113.1 EPRA Earnings 38.7 30.2 74.6 57.5 n.a. EPRA EPS (basic) 0.043 0.047 0.084
Slide 29: Net rental income +37% following the acquisition of Norwegian operations
NET RENTAL INCOME +37% FOLLOWING THE ACQUISITION OF NORWEGIAN OPERATIONS NRI DEVELOPMENT MEUR +37.0 +0.5 0.2 112.2 -7.3 -0.5 82.3 Q1-Q2/2015 Acquisitions (Re)development Divestments LFL properties Other (incl. exchange Q1-Q2/2016 projects rates & IFRIC 21) 29
Slide 30: Positive releasing spread in Sweden and Norway, negative in Finland and Estonia
POSITIVE RELEASING SPREAD IN SWEDEN AND NORWAY, NEGATIVE IN FINLAND AND ESTONIA Q1-Q2/2016 Q1-Q2/2015 Average rent EUR/sq.m. 22.4 21.9 Average remaining length of lease portfolio years 3.2 3.2 Leases started pcs 515 392 Average rent of leases started EUR/sq.m. 20.3 21.5 Leases ended pcs 646 492 Aver
Slide 31: Positive valuation driven by Norway and Sweden
POSITIVE VALUATION DRIVEN BY NORWAY AND SWEDEN FAIR VALUE CHANGES, MEUR Q2/2016 Q2/2015 Q1-Q2/2016 Q1-Q2/2015 Finland -6.9 -14.3 -15.2 -17.0 Norway 0.2 - 24.3 - Sweden 12.9 14.6 21.8 18.1 Baltics & Denmark -1.6 1.6 0.2 2.0 Total 4.7 1.8 31.0 3.0 WEIGHTED AVERAGE YIELD REQUIREMENT, % 30 JUN 2016 30 J
Slide 32: Income statement
INCOME STATEMENT MEUR Q2/2016 Q2/2015 Q1-Q2/2016 Q1-Q2/2015 % Gross rental income 62.2 46.6 125.4 92.6 35.4 Service charge income 20.2 13.6 40.2 27.6 45.5 Property operating expenses -25.1 -17.2 -52.9 -37.4 -41.5 Other expenses from leasing operations -0.2 -0.4 -0.6 -0.6 1.6 Net rental income 57.0 4
Slide 33: EPRA NAV improved due to positive results supported by fair value gains
EPRA NAV IMPROVED DUE TO POSITIVE RESULTS SUPPORTED BY FAIR VALUE GAINS CHANGE OF NET ASSET VALUE (EPRA NAV) EUR, per share +0.02 +0.11 +0.00 0.01 2.80 -0.07 2.74 Q4/2015 EPRA Earnings Indirect result Translation reserve Dividends and equity Other Q2/2016 return paid Q2/2016 Q2/2015 2015 EPRA NAV pe
Slide 34: Strong balance sheet
STRONG BALANCE SHEET MEUR 30 JUN 2016 30 JUN 2015 31 DEC 2015 Investment properties 4,110.0 2,819.6 4,091.6 Total non-current assets 4,590.8 3,046.8 4,573.6 Investment properties held for sale 21.3 13.8 1.7 Total current assets 116.3 81.0 89.1 Total assets 4,728.4 3,141.6 4,664.4 Total shareholders’
Slide 35: Financing overview
FINANCING OVERVIEW
Slide 36: Financing key figures – no major debt transactions in Q2
FINANCING KEY FIGURES – NO MAJOR DEBT TRANSACTIONS IN Q2 KEY RATIOS 30 JUN 2016 30 JUN 2015 31 DEC 2015 Interest bearing debt, fair value MEUR 2,055.5 1,286.4 2,037.1 Available liquidity MEUR 384.6 343.6 377.1 Average loan maturity years 5.0 5.3 5.5 Interest rate hedging ratio % 84.6 81.5 84.8 Weigh
Slide 37: Debt type and currency split
DEBT TYPE AND CURRENCY SPLIT DEBT BY TYPE DEBT BY CURRENCY Bank term loan 5% SEK CP 17% 9% RCF 10% 2,055.5 Bonds 77% 2,055.5 EUR 54% MEUR NOK MEUR 30% Part of EUR debt has been converted to SEK and NOK using cross-currency swaps 37
Slide 38: Balanced maturity profile with long average loan maturities
BALANCED MATURITY PROFILE WITH LONG AVERAGE LOAN MATURITIES AND LIMITED NEAR-TERM MATURITIES DEBT MATURITIES MEUR 700 628 600 500 400 350 300 300 258 274 242 200 177 138 151 100 58 75 37 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2025+ Loans Floating to fixed swaps Undrawn loan facilities B
Slide 39: 85% of debt fixed rate, limited exposure to increased interest rates
85% OF DEBT FIXED RATE, LIMITED EXPOSURE TO INCREASED INTEREST RATES DEBT BY FIXING TYPE Floating rate debt 15.4% Fixed rate Fixed rate swaps debt 70.0% 14.6% 39
Slide 40: Outlook 2016 specified
OUTLOOK 2016 SPECIFIED DIRECT OPERATING PROFIT EPRA EARNINGS 220 170 192.4-201.4 141.8-150.8 200 150 180 175.4 130.8 130 160 149.1 149.8 110 99.7 140 135.7 86.7 90 120 69.3 100 70 80 50 60 30 2012 2013 2014 2015 2016E 2012 2013 2014 2015 2016E – Direct Operating profit + 17 to 26 MEUR (previously 16
Slide 41: Property portfolio
PROPERTY PORTFOLIO |g ol pre? { VARLDEN CITYCON
Slide 42: Lease portfolio
LEASE PORTFOLIO OCCUPANCY RATE AVERAGE LEASE MATURITY Years 96.8% 96.5% 3.5 3.5 96.3% 3.2 3.3 3.2 95.7% 95.7% 2012 2013 2014 2015 Q2/2016 2012 2013 2014 2015 Q2/2016 – 4,054 lease agreements with an average length of 3.2 years – Total GLA 1,190,390 sq.m. – Rents linked to CPI (nearly all agreements)
Slide 43: Property portfolio
PROPERTY PORTFOLIO TOP 5 TENANTS OCCUPANCY COST RATIO SHOPPING CENTRES, ROLLING 12 MONTHS PROPORTION OF 2015 RENTAL INCOME, % Total 8.7% Kesko 8 Finland 9.3% S Group 5 Norway 8.3% VarnerGruppen 4 Sweden 7.1% ICA Gruppen 3 NorgesGruppen 2 Baltics & Denmark 10.9% Top 5, total 22 0% 2% 4% 6% 8% 10% 12%
Slide 44: Valuation yield development
VALUATION YIELD DEVELOPMENT VALUATION YIELD DEVELOPMENT 8% 7% 6% 5% Q2/2011 Q2/2012 Q2/2013 Q2/2014 Q2/2015 Q2/2016 Finland Norway Sweden Baltics and Denmark Total 44
Slide 45: Back-up information
a || F | i CS | lg : oom et \ nl Fi _ BACK-UP INFORMATION Fae ea in mel SS CITYCON |
Slide 46: History of Citycon: +25 years of retail experience and portfolio growth
HISTORY OF CITYCON +25 YEARS OF RETAIL EXPERIENCE AND PORTFOLIO GROWTH Foundation International expansion New management and new strategy 1988 2003 2011 Founded by Sampo Pension Ltd, Imatran Citycon business to include development as Citycon’s new CEO, Marcel Kokkeel, joins Voima Oy, Rakennust
Slide 47: Economic outlook
ECONOMIC OUTLOOK INFLATION GDP GROWTH Change % Change % 5% 3% 4% 2% 3% 2% 1% 1% 0% 0% -1% -1% Finland Norway Sweden Denmark Estonia Euro area Finland Norway Sweden Denmark Estonia Euro area 2014 2015 2016E 2017E 2014 2015 2016E 2017E UNEMPLOYMENT PUBLIC SECTOR DEBT AS % OF GDP Change % Change % 12%
Slide 48: Ownership, 30 June 2016
OWNERSHIP, 30 JUNE 2016 –Established and listed on Nasdaq SHAREHOLDERS 30 JUNE 2016 Helsinki in 1988 Direct –Market cap EUR 1,824.5 million registered 30 .4% Nominee- registered –Total registered shareholders 10,343 69.6% –Largest shareholders: –Gazit-Globe 43.5% –CPPIB 15.0% –Ilmarinen 7.13% –Inclu
Slide 49: Disclaimer
DISCLAIMER This document and the information contained herein is strictly confidential and is being provided to you solely for your information. This document may not be retained by you and neither this document nor the information contained herein may be reproduced, further distributed to any other
Slide 50: 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