Slide 1: Citycon Presentation Q1/2016 Results
CITYCON PRESENTATION Q1/2016 RESULTS
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 31 MAR 2016 – 52 shopping centres1) – Market cap EUR 2 billion – 13 managed/rented assets – Moody’s Baa1 – Gross leasable area – Standard&Poor’s BBB FINLAND 1,231,790 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 >65% 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% 0% of reviewed Dec.
Slide 11: Solid quarterly results supported by good performance in Norway
SOLID QUARTERLY RESULTS SUPPORTED BY GOOD PERFORMANCE IN NORWAY
Slide 12: Highlights Q1/2016
HIGHLIGHTS Q1/2016 SOLID FINANCIAL RESULTS SUPPORTED BY GOOD PERFORMANCE IN NORWAY - EPRA Earnings up 32.1% mainly due to acquisition of Norwegian operations - EPRA EPS EUR 0.04 close to last year’s level with 40% more shares OVERALL STABLE LIKE-FOR-LIKE NET RENTAL INCOME - Adjusted like-for-like ne
Slide 13: Financial highlights
FINANCIAL HIGHLIGHTS MEUR Q1/2016 %1) Net rental income 55.2 38.9 Direct Operating profit 47.9 37.3 EPRA Earnings 36.0 32.1 EPRA EPS (basic) 0.040 -5.4 EPRA NAV per share 2.78 -4.7 Fair value change 26.3 - Loan to Value (LTV), % 45.0 - 1) Change from previous year 13
Slide 14: Norwegian operations – a strategic part of the Citycon portfolio
NORWEGIAN OPERATIONS – A STRATEGIC PART OF THE CITYCON PORTFOLIO Occupancy 98.7%, +0.1 bps Like-for-like NRI1) 3.0% TRONDHEIM Fair value change +24.1 MEUR Net rental yield 4.1% (9 mth, annualised 5.5%) Tenant sales 0% Footfall -5% > Easter this year in Q1 and last year in Q2 BERGEN 20% OSLO NRI 80%
Slide 15: Successful and fast integration process in Norway
SUCCESSFUL AND FAST INTEGRATION PROCESS IN NORWAY INITIAL TARGET STATUS Q1/2016 Increased to ORGANIZATION – Savings in Sektor SG&A of ≥10% ≥ 1 MEUR p.a. > 2 MEUR p.a. – Tenanting, specialty leasing, marketing, digital optimisation LFL NRI growth of OPERATIONS Pro forma LFL NRI +3.0% 100 bps above CP
Slide 16: Stable overall operating performance
STABLE OVERALL OPERATING PERFORMANCE
Slide 17: Overall positive like-for-like NRI growth driven by Norway and Sweden
OVERALL POSITIVE LIKE-FOR-LIKE NRI GROWTH DRIVEN BY NORWAY AND SWEDEN LIKE-FOR-LIKE NET RENTAL INCOME GROWTH –Operating results reflect the general 7.7% performance of the main economies –Iso Omena and Myyrmanni excluded 3.0% from like-for-like due to projects 2.3% 0.6% –Baltics impacted by increase
Slide 18: Stable occupancy with some quarterly variations
STABLE OCCUPANCY WITH SOME QUARTERLY VARIATIONS OCCUPANCY RATE 96.8% 96.3% 96.2% 95.7% 95.7% 2012 2013 2014 2015 Q1/2016 18
Slide 19: Overall positive sales development – Sweden strong, Finland picking up
OVERALL POSITIVE SALES DEVELOPMENT – SWEDEN STRONG, FINLAND PICKING UP SALES, LIKE-FOR-LIKE SHOPPING CENTRES FOOTFALL, LIKE-FOR-LIKE SHOPPING CENTRES 2% 1% 1% 1% 1% 0% -1% -3% Finland Sweden Baltics & Denmark Total Finland Sweden Baltics & Denmark Total Norway 0% Kista Galleria -5% Norway -5% Kista
Slide 20: Development portfolio
DEVELOPMENT PORTFOLIO (i: ES CITYCON
Slide 21: (Re)developments progressing – Iso Omena first phase opening in August 2016
(RE)DEVELOPMENTS PROGRESSING – ISO OMENA FIRST PHASE OPENING IN AUGUST 2016 Expected Cumulative Area before/ Yield on Pre-leasing Completion City investment, investment, after, sq.m. cost1) target MEUR MEUR Part 1: 92% Q3/2016 & Iso Omena Helsinki area 63,300/99,000 182.0 (250.0) 99.2 6.0% Total SC:
Slide 22: Iso Omena – building the best shopping centre in Finland
ISO OMENA – BUILDING THE BEST SHOPPING CENTRE IN FINLAND –First phase opening in August when 28,000 sq.m. will come online and new metro will start operating –Grand opening of the 100,000 sq.m. shopping centre in May 2017 –Good tenant demand, pre- leasing of phase 1 > 90% –Creating a true dining des
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 –Target opening 2020 when new metro starts operating –Strong grocery focus (>35%). Also healthcare and municipal services –New housing to be built in connection –Wealthy catchment population, fastest growing area in Hel
Slide 25: 450 MEUR of investment coming online within 2 years
450 MEUR OF INVESTMENT COMING ONLINE WITHIN 2 YEARS – AVERAGE YIELD ON COST OF APPROX. 6.5% INVESTMENT VOLUMES THAT COME ONLINE MEUR Q2/2018 Mölndal Galleria completion 500 Q2/2017 + Buy-out NCC's 50% Iso Omena part 2 completion Q3/2017 400 Straedet, buy-out from TK Development 300 Q3/2016 Iso Omena
Slide 26: Key target areas 2016 and onwards
KEY TARGET AREAS 2016 AND ONWARDS FURTHER INTEGRATION OF CITYCON NORWAY - Increased target: > 2 MEUR administrative cost savings p.a. SUCCESSFUL COMPLETION OF ONGOING DEVELOPMENTS - EUR 150-200 million p.a. - Uplift in rental income and earnings 2017 onwards IMPROVE QUALITY OF THE PORTFOLIO THROUGH
Slide 27: Stable financial results
STABLE FINANCIAL RESULTS
Slide 28: Financial results
FINANCIAL RESULTS MEUR Q1/2016 Q1/2015 % 2015 Gross rental income 63.3 46.1 37.4 223.9 Net rental income 55.2 39.8 38.9 199.6 Direct Operating profit 47.9 34.9 37.3 175.4 EPRA Earnings 36.0 27.2 32.1 130.8 EPRA EPS (basic) 0.040 0.043 -5.4 0.173 EPRA NAV per share 2.78 2.92 -4.8 2.74 –Modest decreas
Slide 29: Net rental income up 38.9% due to acquisition of Norwegian operations
NET RENTAL INCOME UP +38.9% DUE TO ACQUISITION OF NORWEGIAN OPERATIONS NRI DEVELOPMENT MEUR +18.7 +0.4 55.2 -2.9 -0.7 -0.1 39.8 Q1/2015 Acquisitions (Re)development Divestments LFL properties Other (incl. exchange Q1/2016 projects rates & IFRIC 21) 29
Slide 30: Leasing indicators
LEASING INDICATORS Q1/2016 2015 Average rent EUR/sq.m. 22.1 22.3 Average remaining length of lease portfolio years 3.2 3.3 Leases started pcs 294 895 Average rent of leases started EUR/sq.m. 19.6 23.2 Leases ended pcs 371 1,114 Average rent of leases ended EUR/sq.m. 21.6 20.1 Leasing spread of renew
Slide 31: Positive valuation driven by Norway
POSITIVE VALUATION DRIVEN BY NORWAY FAIR VALUE CHANGES, MEUR Q1/2016 2015 Finland -8.3 -37.1 Norway 24.1 0.2 Sweden 8.8 39.6 Baltics & Denmark 1.7 4.7 Total 26.3 7.3 WEIGHTED AVERAGE YIELD REQUIREMENT, % 31 MAR 2016 31 DEC 2015 Finland 5.9 5.9 Norway 5.2 5.2 Sweden 5.4 5.4 Baltics & Denmark 6.8 6.9
Slide 32: Income statement
INCOME STATEMENT MEUR Q1/2016 Q1/2015 % 2015 Gross rental income 63.3 46.1 37.4 223.9 Service charge income 20.1 14.0 43.0 71.7 Property operating expenses -27.7 -20.1 37.7 -94.6 Other expenses from leasing operations -0.4 -0.2 83.8 -1.4 Net rental income 55.2 39.8 38.9 199.6 Administrative expenses
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 +0.02 +0.04 2.78 2.74 -0.04 Q4/2015 EPRA Earnings Indirect result Translation reserve Dividends paid and Q1/2016 equity return 31 MAR 2016 31 MAR 2015 31 DEC 2015 EPRA NA
Slide 34: Strong balance sheet
STRONG BALANCE SHEET MEUR 31 MAR 2016 31 MAR 2015 31 DEC 2015 Investment properties 4,079.1 2,801.7 4,091.6 Total non-current assets 4,575.4 3,013.3 4,573.6 Investment properties held for sale 71.7 1.8 1.7 Total current assets 66.8 48.2 89.1 Total assets 4,714.0 3,063.3 4,664.4 Total shareholders’ e
Slide 35: Financing overview
FINANCING OVERVIEW
Slide 36: Financing key figures – no major debt transactions in Q1
FINANCING KEY FIGURES – NO MAJOR DEBT TRANSACTIONS IN Q1 KEY RATIOS 31 MAR 2016 31 MAR 2015 31 DEC 2015 Interest bearing debt, fair value MEUR 2,035.1 1,252.5 2,037.1 Available liquidity MEUR 381.2 388.8 377.1 Average loan maturity years 5.3 5.6 5.5 Interest rate hedging ratio % 85.3 83.7 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 15% 8% RCF 10% 2,035.1 Bonds 77% 2,035.1 EUR 55% 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 MATURITY PROFILE OF LOANS, INTEREST RATE SWAPS AND DEBT FACILITIES MEUR 700 632 600 500 400 350 300 300 256 271 239 200 156 149 138 100 60 74 38 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2025+ Loan
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 14.7% Fixed rate Fixed rate swaps debt 70.6% 14.7% 39
Slide 40: Outlook 2016 unchanged
OUTLOOK 2016 UNCHANGED DIRECT OPERATING PROFIT EPRA EARNINGS 220 195.4-209.4 170 139.8-153.8 200 150 180 175.4 130.8 130 160 149.1 149.8 110 99.7 140 135.7 86.7 90 120 69.3 70 100 80 50 60 30 2012 2013 2014 2015 2016E 2012 2013 2014 2015 2016E – Direct Operating profit + 20 to 34 MEUR – EPRA Earning
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% 3.5 3.5 96.3% 96.2% 3.2 3.3 3.2 95.7% 95.7% 2012 2013 2014 2015 Q1/2016 2012 2013 2014 2015 Q1/2016 – 4,121 lease agreements with an average length of 3.2 years – Total GLA 1,231,790 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 9.0% Kesko 8 Finland 9.3% S Group 5 VarnerGruppen 4 Norway 8.9% ICA Gruppen 3 Sweden 7.4% NorgesGruppen 2 Baltics & Denmark 11.6% Top 5, total 22 0% 2% 4% 6% 8% 10% 12%
Slide 44: Valuation yield development
VALUATION YIELD DEVELOPMENT 8% 7% 6% 5% Q1/2011 Q1/2012 Q1/2013 Q1/2014 Q1/2015 Q1/2016 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: Goodwill related to Sektor acquisition
GOODWILL RELATED TO SEKTOR ACQUISITION MEUR 31 MARCH 2016 Purchase price (NAV) 472.8 Sektor IFRS net asset value acquired 344.3 Goodwill 128.5 FX-change from the fixed NOK/EUR-rate 52.2 Decrease in income tax percentage -9.2 Goodwill total 31.12.2015 171.5 FX-change 2.0 Goodwill total 31.3.2016 173.
Slide 47: 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 48: Economic outlook
ECONOMIC OUTLOOK GDP GROWTH INFLATION 4% 3% 3% 2% 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 70% 10% 60% 50% 40% 5% 30% 20% 10% 0% 0% Fi
Slide 49: Ownership, 31 March 2016
OWNERSHIP, 31 MARCH 2016 –Established and listed on Nasdaq SHAREHOLDERS Helsinki in 1988 31 MAR 2016 –Market cap EUR 1,976 million Direct Nominee- registered registered –Total registered shareholders 10,211 30.4% 69.6% –Largest shareholders: –Gazit-Globe 43.4% –CPPIB 15.0% –Ilmarinen 7.13% –Included
Slide 50: 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 51: 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