Citycon Oyj · OMXHEX:CTY1S

Citycon Oyj — Q1 2014 Earnings Presentation

53 slides from Citycon Oyj's earnings presentation, 2014

  1. Slide 1: Citycon presentation Q1/2014 Results

    2014 Citycon presentation 2014 Q1/2014 Results

  2. Slide 2: Disclaimer

    2014 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

  3. Slide 3: A focused company

    2014 A focused company Portfolio selection criteria: Dominant in Located in urban Grocery- (Re)development potential catchment area, environment in anchored and intensification VISION located in markets growing cities directly and necessity- opportunities through with high barriers connected to publ

  4. Slide 4: Focus on Nordic and Baltic retail real estate

    2014 Focus on Nordic and Baltic retail real estate Key figures 31 March 2014  # of shopping centres 36  # of assets 69  Gross leasable area, sq.m. 953,390  Occupancy rate (economic) 95.5% Sweden  Total assets, EUR billion1) 3.3 Finland  Market cap, EUR billion 1.1 Total assets 1) 21 11% 10 3 F

  5. Slide 5: Leading position in core markets

    2014 Leading position in core markets Thousand sq.m. Nordic and Baltic region Thousand sq.m. Finland 1 500 400 1 315 353 300 1 000 805 694 200 500 129 106 106 101 326 273 100 0 0 Thousand sq.m. Sweden Thousand sq.m. Estonia 400 200 338 300 272 225 219 106 196 200 100 92 100 31 31 24 0 0 5 Includes s

  6. Slide 6: Focus on urban locations driven by strong demographics

    2014 Focus on urban locations driven by strong demographics Core assets:  Urban environments, located where people live and work  Strong population growth and natural footfall  Integrated with public transportation  Benefit from high barriers to entry e.g., land constraints, zoning restrictions

  7. Slide 7: Core portfolio of grocery-anchored shopping centres

    2014 Core portfolio of grocery-anchored shopping centres Shopping centre rental income by branches 31 December 2013 2% 7% 8% Clothes and fashion 27% Groceries Leisure, home supplies 8% Services and offices Cafes and restaurants Health and beauty 10% Department stores Other specialty stores 19% 18% 7

  8. Slide 8: Five core assets

    2014 Five core assets Sweden – Kista Galleria Finland – Iso Omena Sweden – Liljeholmstorget Galleria Finland – Koskikeskus Estonia – Rocca al Mare Total GLA Fair value Net rental Economic Visitors 2013 Sales 2013 (sq.m.) (EUR million)1) yield, % occupancy, %1) (millions) (EUR million) Kista Galleria

  9. Slide 9: Citycon’s portfolio well positioned for changing retail landscape

    2014 Citycon’s portfolio well positioned for changing retail landscape Citycon: Urbanisation  Growing urban population • 87% of total portfolio in main cities  Increased urban GDP per capita • 70% in capital cities Convenience  Demand for proximity, security, • Vast majority of centres cleanlines

  10. Slide 10: Business Environment

    2014 BUSINESS ENVIRONMENT 10

  11. Slide 11: Consumer confidence

    11 -70 -60 -50 -40 -30 -20 -10 0 10 20 30 40 1.1.2009 1.3.2009 1.5.2009 1.7.2009 Source: Eurostat 1.9.2009 1.11.2009 1.1.2010 Finland 1.3.2010 1.5.2010 1.7.2010 1.9.2010 Sweden 1.11.2010 Consumer confidence 1.1.2011 1.3.2011 Estonia 1.5.2011 1.7.2011 1.9.2011 1.11.2011 Lithuania 1.1.2012 1.3.2012 1.

  12. Slide 12: Economic outlook

    2014 Economic outlook Change % GDP growth Change % Inflation 12% 6% 10% 5% 8% 4% 6% 3% 4% 2% 2% 1% 0% 0% -2% Finland Sweden Denmark Estonia Lithuania Euro area Finland Sweden Denmark Estonia Lithuania Euro area 2011 2012 2013 2014E 2015E 2011 2012 2013 2014E 2015E 20% % Unemployment % Public sector

  13. Slide 13: Highlights Q1/2014

    2014 HIGHLIGHTS Q1/2014 13

  14. Slide 14: Highlights Q1/2014

    2014 Highlights Q1/2014 Steady financial performance Continued focus on cost control Challenging retail environment Developments progressing Strengthened management team Nasdaq, New York 14

  15. Slide 15: Steady financial performance

    2014 Steady financial performance EUR million Q1/2014 Q1/2013 Change-% Q4/2013 2013 Net rental income 40.7 40.4 0.8% 41.9 168.9 Administrative expenses 5.1 5.3 -4.6% 5.5 20.6 EPRA Operating profit 36.1 35.4 1.9% 36.5 149.1 Net financial income & expenses -13.7 -16.4 -16.7% -15.1 -90.1 EPRA Earnings

  16. Slide 16: Steady financial performance: Strong LFL NRI development

    2014 Steady financial performance Strong LFL NRI development LFL net rental income growth  Continued strong like-for-like 6% net rental income growth in low inflation environment 4.9 % 5% 4.6 %  Shopping centres: 4.3%  Supermarkets & shops: 1.4% 4% 3.9 % 3.8 % 3%  Growth in all regions  Finland

  17. Slide 17: Steady financial performance: All leasing indicators stable

    2014 Steady financial performance All leasing indicators stable Q1/2014 Q1/2013 Q4/2013 Occupancy rate (economic), % 95.5% 95.0% 95.7% LFL occupancy rate (economic), % 94.9% 94.7% 95.2% Occupancy cost ratio, % 8.7% 8.7% 8.7% (LFL shopping centres) Average rent, EUR/sq.m./mth 21.7 21.3 21.5  Occupan

  18. Slide 18: Continued focus on cost control

    2014 Continued focus on cost control Property operating expenses Administrative expenses EUR million EUR million 90 30 27.7 26.5 78.4 80 75.8 71.6 25 23.3 67.4 70 20.6 60 20 50 15 40 30 10 22.2 20.4 20 5.3 5.1 5 10 0 0 2010 2011 2012 2013 Q1/2014 2010 2011 2012 2013 Q1/2014 18

  19. Slide 19: Challenging retail environment especially in Finland

    2014 Challenging retail environment especially in Finland  Finland 10% Retail sales (Jan-Feb) and CPI (Mar)  Modest GDP forecast 8% 7.6 %  Consumers hold back on 6% 5.1 % spending 4% Retail Sales 2.9 %  Sweden CPI 2% 1.1 %  Stronger economic 0.1 % 0.2 % 0.2 % 0.4 % 0% fundamentals drive retail

  20. Slide 20: Challenging retail environment: LFL sales and footfall slightly down

    2014 Challenging retail environment LFL sales and footfall slightly down LFL shopping centre sales LFL shopping centre footfall EUR million Growth % Million Growth % 500 14% 30 4% 450 12% 12% 2% 2% 25 400 10% 350 0% 8% 20 300 -2% 6% -2% -2% 250 15 4% -4% 200 2% 10 150 -6% 0% 0% 100 -1% 5 -1% -8% 50

  21. Slide 21: Developments progressing

    2014 Developments progressing Citycon’s Actual Expected Area expected investments yield on Pre-leasing Completion before/ investment by completion rate, % target after, sq.m. need, 31.3.2014, when EUR m EUR m stabilised, % 63,300 Iso Omena 88.0 16.3 6.5-7.0 40% Q3/2016 90,000 22,400 Iso Kristiina 54

  22. Slide 22: Development pipeline projects planned ≥ 2015

    2014 Development pipeline 4 projects planned ≥ 2015 Citycon’s Estimated Target for expected project project investment area/additi initiation/ need, onal sq.m. completion EUR m The plans include a facelift to the north part of the shopping centre with new 6,000/ Kista Galleria 6 2014/2015 entrance,

  23. Slide 23: Development pipeline: Kista Galleria is being upgraded

    2014 Development pipeline Kista Galleria is being upgraded Food court and North Entrance (re)development project started in April  Facelift to the north part with new entrance, additional leisure and restaurant offering as well as extension of the current food court.  Total investment approx. EUR

  24. Slide 24: Strengthened management team

    2014 Strengthened management team More focus on successful leasing  Jurn Hoeksema was appointed Chief Operating Officer and a member of the management team as of June 2014.  Jurn Hoeksema has broad international experience in the shopping centre business.  Harri Holmström, current COO, has been a

  25. Slide 25: Summary of Q1/2014 and going forward

    2014 Summary of Q1/2014 and going forward Slower growth expectations for 2014 reflected in the outlook Q1/2014: Solid LFL performance, positively impacted by lower costs Ongoing (re)developments support further earnings and NAV growth as of 2015-2016 25

  26. Slide 26: Financial Figures

    2014 FINANCIAL FIGURES 26

  27. Slide 27: Financial results Q1/2014

    2014 Financial results Q1/2014 EUR million Q1/2014 Q1/2013 2013 incl. Kista Net rental income, total 40.7 40.4 48.1 168.9 NRI, Finland 24.4 24.2 24.4 103.5 NRI, Sweden 9.2 9.7 16.7 39.7 NRI, Baltic Countries & New 7.0 6.4 7.0 25.6 Business EPRA Operating Profit 36.1 35.4 43.1 149.1 EPRA Earnings 22.

  28. Slide 28: NRI development

    2014 NRI development EUR million 42 1.2 41 0.4 40.7 40.4 -0.4 -0.1 40 -0.8 39 38 Q1/2013 Acquisitions (Re)development Divestments LFL properties Other (incl. Q1/2014 projects exchange rates) 28

  29. Slide 29: Income statement

    2014 Income statement EUR million Q1/2014 Q1/2013 Change-% 2013 Turnover 61.3 62.9 -2.5% 248.6 Property operating expenses 20.4 22.2 -8.3% 78.4 Other expenses from leasing operations 0.2 0.3 -17.6% 1.3 Net rental income 40.7 40.4 0.8% 168.9 Administrative expenses 5.1 5.3 -4.6% 20.6 Other operating

  30. Slide 30: Balance sheet

    2014 Balance sheet EUR million 31 Mar 2014 31 Dec 2013 Investment properties 2,744.3 2,733.5 Total non-current assets 2,923.9 2,898.6 Total current assets 42.6 74.5 Total assets 2,972.2 2,975.4 Total shareholder’s equity 1,309.8 1,340.6 Total liabilities 1,662.4 1,634.7 Total liabilities and shareho

  31. Slide 31: Outlook 2014

    2014 Outlook 2014 EPRA Operating profit EPRA Earnings EUR million EUR million 170 147.1– 110 88.7– 149.1 155.1 96.7 150 135.7 86.7 90 130 117.4 110 105.0 70 63.9 90 53.3 50 47.3 70 50 30 2010 2011 2012 2013 2014E 2010 2011 2012 2013 2014E EPRA Operating profit Outlook Range EPRA Earnings Outlook Ran

  32. Slide 32: Financing Overview

    2014 FINANCING OVERVIEW

  33. Slide 33: Key financing figures

    2014 Key financing figures Q1/2014 Q1/2013 Q4/2013 Interest bearing debt, fair value, EUR million 1,491.8 1,585.9 1,471.3 Available liquidity, EUR million 414.2 335.1 435.4 Average loan maturity, years 3.8 3.0 4.1 Average fixing period, years 3.6 3.2 3.9 Hedging ratio, % 82.1 87.4 83.4 Weighted aver

  34. Slide 34: Debt type and currency split

    2014 Debt type and currency split Breakdown by debt type 1) Breakdown by currency 1)  Well diversified debt sources following the EUR 500 million Eurobond issue in Q2/2013 - bonds accounting for 44% of total outstanding debt.  EUR 500 million Eurobond issue has shifted the currency breakdown more

  35. Slide 35: Debt maturities and interest risk hedging

    2014 Debt maturities and interest risk hedging Maturity profile of loans and derivatives Interest bearing debt by fixing type 1)  Average loan maturity in Q1 decreased to 3.8 years as no new long term debt was issued. Clearly longer than one year ago (3.0 years) due to the 7-year EUR 500 million Eu

  36. Slide 36: Financial expenses analysis

    2014 Financial expenses analysis EUR thousand Q1/2014 Q1/2013 Q4/2013 Interest expenses -14,648 A -16,791 -15,268 A Foreign exchange gains (+) /losses (-) -36 -3 -4 Amortisation of capitalised fees -406 -423 -328 B Non-cash option expense from convertible bonds 0 -239 -85 Other expenses -360 -400 -9

  37. Slide 37: Property Portfolio & (Re)developments

    2014 PROPERTY PORTFOLIO & (RE)DEVELOPMENTS 37

  38. Slide 38: Lease portfolio

    2014 Lease portfolio  3,227 (3,764) lease agreements with an average length of 3.4 (3.4) years  Total GLA 953,390 sq.m. (989,870 sq.m.)  Rents linked to CPI (nearly all agreements)  Annualised potential rental value for the portfolio is EUR 247.3 million Occupancy rate (economic) years Average l

  39. Slide 39: Lease expiry profile Q1/2014

    2014 Lease expiry profile Q1/2014 25% 20% 15% Other retail properties % Shopping centres % 10% 5% 0% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 +2024 39

  40. Slide 40: Property portfolio

    2014 Property portfolio Q1/2014 Q1/2013 Change-% Q4/2013 Occupancy rate (economic), % 95.5 95.0 - 95.7 Average rent, EUR/sq.m. 21.7 21.3 1.9% 21.5 # of leases started 144 167 -13.8% 163 Total area of leases started, sq.m. 30,696 35,387 -15.4% 52,697 Average rent of leases started, 18.9 20.7 -9.2% 17

  41. Slide 41: Property portfolio: top tenants and occupancy cost ratio

    2014 Property portfolio Top 5 tenants Occupancy cost ratio 31 Dec 2013 LFL shopping centres, rolling 12 mth Proportion of Average rental income, remaining length Total 8.7 % % of leases, years Kesko 16.1 6.1 Finland 9.8 % S Group 5.7 6.9 ICA Gruppen 4.2 3.5 Sweden 6.8 % Stockmann 2.7 2.3 Baltic Coun

  42. Slide 42: Valuation yield development

    2014 Valuation yield development  Fair value of investment properties EUR 2,744.3 million  Fair value change in Q1/2014 EUR 11.9 million  Citycon’s average net yield requirement 31 March 6.2% (as defined by JLL) Citycon's valuation yield development 8,5 % Finland 7,5 % 7.3 % Sweden Baltic Countri

  43. Slide 43: Extension and (re)development of Iso Omena

    2014 Extension and (re)development of Iso Omena  The shopping centre's retail area will grow to 75,000 sq.m. Vantaa  Extension will be fully integrated with the new Matinkylä metro station and bus terminal  Approx. 35,000 passengers /day Helsinki Espoo City Centre  Citycon and NCC Property Devel

  44. Slide 44: Strategic (re)development and partnership in IsoKristiina

    2014 Strategic (re)development and partnership in IsoKristiina Lappeenranta  IsoKristiina is located in the city centre of Lappeenranta, a university city in Eastern Finland 25 km from the Russian border  Catchment area is approx. 130,000 inhabitants  Great emphasis in the project is placed on le

  45. Slide 45: Shares and Shareholders

    2014 SHARES AND SHAREHOLDERS 45

  46. Slide 46: Share performance and volume

    46 1 000 000 2 000 000 3 000 000 4 000 000 5 000 000 6 000 000 7 000 000 0 31.1.2012 29.2.2012 30.3.2012 30.4.2012 31.5.2012 29.6.2012 31.7.2012 31.8.2012 28.9.2012 31.10.2012 30.11.2012 28.12.2012 Citycon share volume 31.1.2013 28.2.2013 28.3.2013 30.4.2013 Share performance and volume 31.5.2013 28

  47. Slide 47: Ownership, March 2014

    2014 Ownership, 31 March 2014  Established and listed on the Helsinki Shareholders Stock Exchange since 1988  Market cap EUR 1,138.5 million 21.0 %  Number of domestic shareholders stayed stable: total 8,857 (8,509) registered Domestic shareholders, 21.0% (24.8%) of total International  Largest

  48. Slide 48: Back up information

    2014 BACK UP INFORMATION 48

  49. Slide 49: History of Citycon

    2014 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,  Citycon business to include development  Citycon’s new CEO, Marcel Kokkeel, Imatran Voima Oy, as well as own

  50. Slide 50: Illustrative calculation of ICR covenant using Q1/2014 financials

    2014 Illustrative calculation of ICR covenant using Q1/2014 financials Q1/2014 EBITDA for covenant calculation: EBITDA for rolling 12 months period: + Direct operating profit + EUR 149.8 + Depreciations + EUR 0.8 +/- Non-cash and exceptional items + EUR 0.3 = EUR 151.0 million EPRA Earnings (EUR mil

  51. Slide 51: Illustrative calculation of equity ratio covenant using Q1/2014 financials

    2014 Illustrative calculation of equity ratio covenant using Q1/2014 financials Equity for covenant calculation: Equity : + Total shareholders’ equity + EUR 1 309.8 + Subordinated debt + EUR 0.0 - Non-controlling interest - EUR 56.1 +/- Fair value of derivatives included in equity + EUR 23.9 = EUR 1

  52. Slide 52: Contact information

    2014 Contact information Eero Sihvonen, CFO, Exec. VP Tel. +358 50 557 9137 Henrica Ginström, IR Manager Tel. +358 50 554 4296 52

  53. Slide 53: citycon.com

    2014 citycon.com

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