Citycon Oyj · OMXHEX:CTY1S
Citycon Oyj — Q2 2010 Earnings Presentation
50 slides from Citycon Oyj's earnings presentation, July 2010
Slide 1: Citycon Presentation Q2 2010
Citycon Presentation Q2 2010
Slide 2: Contents
Contents Strategy Main points and financial overview Business environment Sustainability (Re)development projects Property portfolio Key figures Financing overview Backup information 2 Q2 2010
Slide 3: Strategy
Strategy Citycon • wants to be the leading shopping centre owner, operator and developer in the Nordic and Baltic countries. • invests in shopping centres and retail properties in major growing cities with good demographics. • seeks growth through matching acquisitions and property development. • ad
Slide 4: Financial targets
Financial targets Continued expansion through property development and selective acquisitions Cumulative CAPEX since 2005 in excess of EUR 1.5 billion Main emphasis on organic growth GROWTH Solid distribution policy DIVIDENDS Payout target 50 % of the result for the period after taxes excl. fair
Slide 5: Geographical overview
Geographical overview FINLAND • 68.4% of total net rental income • Net rental income EUR 42.7 million Sweden (€m) Finland (€m) • Market leader with 22% market share 1,465.7 • 22 shopping centres, 42 other retail 601.0 properties, one unbuilt lot 63.7 61.5 42.7 25.9 24.7 13.9 MV Turn- Gross Net MV Tu
Slide 6: Main points
Main points Q2 2010 (vs. Q1 2010) • The fair value change was EUR 22.9 million (EUR 0.8 m) and the market value of property portfolio was EUR 2,229.5 million (EUR 2,193.5 m) • The valuation yield 6.6% (6.6%) by external appraiser • Net rental income was EUR 31.8 million (EUR 30.6m) • Direct result p
Slide 7: Financing Overview
Financing Overview • Total asset stood at EUR 2,308.9 million • Total liquidity of EUR 246.2 million incl. unutilized committed debt facilities (EUR 221.2 m) and cash (EUR 25.0 m) • Equity ratio 33.8%, hedging ratio of the loan portfolio 82% • Average year-to-date interest rate 4.0% (4.2%). • Period
Slide 8: Business Environment
Business Environment 8 Q2 2010
Slide 9: Business Environment
Business Environment GDP PRIVATE CONSUMPTION Source: Nordea 9 Q2 2010
Slide 10: Business Environment: Consumer Confidence
Business Environment CONSUMER CONFIDENCE 40,0 30,0 20,0 10,0 0,0 Finland 1.1.2008 1.4.2008 1.7.2008 1.10.2008 1.1.2009 1.4.2009 1.7.2009 1.10.2009 1.1.2010 1.4.2010 Sweden -10,0 Estonia Lithuania -20,0 euro zone -30,0 -40,0 -50,0 -60,0 Source: Eurostat Consumer confidence indicator is conducted as a
Slide 11: Business Environment
Business Environment Positive signs: RETAIL AND GROCERY SALES AND CPI, MAY 2010 During Jan-May 2010, retail sales increased by 2.5 % in Finland and by 3.3 % in Sweden. (Sources: Statistics Finland, Statistics Sweden) Occupancy rates in shopping centres % continue to be high both in Finland and in Sw
Slide 12: Retailer Sales (not same store)
Retailer Sales (not same store) Kesko • In May 2010, the Kesko Group's sales, excl. VAT, increased by 8.5%, the growth for the Finnish operations was 10.2% • Jan- May 2010, Kesko Group sales increased by 0.4%, in Finland 1.4% (source: Kesko Stock Exchange Release 14 June, 2010) S Group • Jan-March 2
Slide 13: Sustainability
A Sustainability 1 3 Q2 2010 CcITYCON
Slide 14: Strategical Goals for Environmental Impact Areas
Strategical Goals for Environmental Impact Areas Climate change Reduction of greenhouse gas emissions by 20% by year 2020 from the 2009 baseline level (the EU objective is to reduce emissions by 20% by 2020 from the 1990 level). Energy Reduction of energy consumption (electricity and heat) by 9% by
Slide 15: Key Results 2009
Key Results 2009 Emissions • 31,801 tnCO2e equals: • 13.5 million litres petrol or • 0.04 % of Finland’s total emissions (2007) or 0.05 of Sweden’s total emissions (2007) • To offset the emissions, one needs to plant 103,000 trees in the habitat of Northern Europe, this correlates area of 88 soccer
Slide 16: Key Results: Land use and Sustainable project development
Key Results Land use and Sustainable project development • Liljeholmstorget was awarded as the first European shopping centre the Platinum-level LEED® environmental certificate • Rocca al Mare was awarded silver-level LEED®certificate first in the Baltic Countries in January 2010 • The first ever LE
Slide 17: Internal Green Shopping Centre Management Program
Internal Green Shopping Centre Management Program Tool for Shopping Centre Management • Energy • Green • Water thinking in • Waste action Internal • Refrigerants • Recognition benchmark • Transport of • Procurement Development • Training areas • Marketing • Monitoring 17 Q2 2010
Slide 18: (Re)development Projects
(Re)development Projects 18 Q2 2010
Slide 19: Ongoing (Re)development Projects
Ongoing (Re)development Projects PROPERTY LOCATION AREA, sq.m. TOTAL ACTUAL EST. FINAL before and ESTIMATED CUMULATIVE YEAR OF after INVESTMENT CAPEX, by the COMPLETION NEED, MEUR end of period, MEUR Åkersberga Österåker, 20 000 49.0 1) 26.4 2011 Refurbishment and extension of the shopping centre in
Slide 20: Property Portfolio
Property Portfolio 20 Q2 2010
Slide 21: Property Portfolio
Property Portfolio • 4,019 (4,080) leases with an average length of 3.3 (3.0) years • GLA totalled 947 050 sq.m. • Net rental income increased by 1.8% to EUR 62.5 million • Net rental income for like-for-like properties decreased by 1.0% due to higher property operating expenses reflecting seasonal
Slide 22: Like-for-like and other NRI development by Segments
Like-for-like and other NRI development by Segments -Q1-Q2/2009 vs. Q1-Q2/2010 the Baltic EUR million Finland Sweden Countries Other Total 1H/2008 44,9 12,2 3,1 0,0 60,1 Acquisitions 0,4 0,0 -0,1 0,0 0,4 (Re)developments 0,5 0,0 1,7 0,0 2,2 Divestments -0,1 0,0 0,0 0,0 -0,1 Like-for-like 0,6 0,3 -0,
Slide 23: Property Portfolio
Property Portfolio RENTAL CONTRACTS ILLUSTRATION OF A TYPICAL LEASE AGREEMENT • Major tenants largest grocery retailer in Nordics also fashion tenants and local discount department stores are important. • Largest tenant Finnish retailer Kesko with 23.2% of GRI end of 2009 • Five largest totaled 35.6
Slide 24: Property Portfolio
Property Portfolio TOTAL PORTFOLIO Q2/2010 Q2/2009 Q1/2010 2009 Number of leases started 175 219 185 873 during the period Total area of leases started, 36 256 32 511 42 997 141 628 sq.m. 1) Average rent of leases started 17.2 21.9 18.2 23.6 (EUR/sq.m.) 1) Number of leases ended during 185 215 392 7
Slide 25: Valuation Yield Development in the Portfolio
Valuation Yield Development in the Portfolio % 8,5 8 7,5 7 Finland Finland excl. Iso Omena Sweden 6,5 Baltic Countries Total 6 5,5 5 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2006 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 Valuation yield above is based on external valu
Slide 26: Sales and Footfall
Sales and Footfall Shopping Centre Sales Shopping Centre Footfall 900,0 35 % 70,0 50 % 45 % 45 % 800,0 30 % 60,0 40 % 29 % Million Visitors 700,0 25 % 50,0 35 % Change, % 600,0 30 % Change, % 20 % 40,0 25 % 500,0 14 % 15 % 30,0 20 % 400,0 15 % Sales, MEUR 300,0 10 % 20,0 7 %5% 8% 9 %510%% 200,0 10,0
Slide 27: Shopping Centre Rental Income by Branches
Shopping Centre Rental Income by Branches Based on Valid Rent Roll at 31 Dec. 2009 2% 7% 23 % Clothes and Fashion 8% Groceries Leisure, Home Supplies 9% Department Stores Services and Offices Cafes & Restaurants 10 % 22 % Health & Beauty Other Specialty Stores 19 % 27 Q2 2010
Slide 28: Sales Area by Branch for Each Cluster
Sales Area by Branch for Each Cluster Citycon has classified the Finnish shopping centres into three cluster according to their role in a consumer’s life. 28 Q2 2010
Slide 29: Key Figures
Key Figures 29 Q2 2010
Slide 30: Snapshot of Statement of Comprehensive Income
Snapshot of Statement of Comprehensive Income EUR million Q1-Q2/2010 Q1-Q2/2009 2009 Gross rental income 93.2 88.2 177.8 Service charge income 4.9 3.2 8.5 Turnover 98.1 91.5 186.3 Property operating expenses 34.9 29.8 60.2 Other expenses from leasing operations 0.7 0.4 0.7 Net rental income 62.5 61.
Slide 31: Snapshot of Statement of Financial Position
Snapshot of Statement of Financial Position Statement of Financial Position, EUR million 30 June 2010 30 June 2009 31 Dec 2009 Investment property 2,229.5 2,104.5 2,147.4 Total non-current assets 2,243.8 2,114.5 2,161.4 Current assets 65.1 33.0 91.8 Assets total 2,308.9 2,147.5 2,253.2 Total shareho
Slide 32: Consolidated Cash Flow Statement 1H 2010
Consolidated Cash Flow Statement 1H 2010 6-months 6-months • Cash from operations dropped clearly mainly due to exceptional ended ended items both in 2010 and 2009: EUR MILLION 30 June 30 June • Cash flow before working capital declined by approximately Operating activities 1 per cent Profit before
Slide 33: Key Figures – Financing Overview
Key Figures – Financing Overview Interest-bearing debt by fixing type Maturity profile of loans and derivatives EUR 1, 394.7 million 1) 600 Loans (EUR 1,394.7m) 500 Fixed derivatives (EUR 877.3m) 482 Floating rate debt 18% Fixed rate debt 400 19% Convertible Bonds 304 (EUR 72.8m) 300 238 222 196 204
Slide 34: Key Figures – Financing Overview
Key Figures – Financing Overview Maturity profile of fixed and floating rate loans and Period-end interest rate by maturity for fixed rate debt undrawn committed credit limits and swaps 450 4,3 % 408 Fixed (EUR 260.6m) 4,19 % 400 4,2 % Floating (EUR 1,134.1m) 350 4,1 % 4,05 % Undrawn credits (EUR 22
Slide 35: Key Figures - Debt Portfolio
Key Figures - Debt Portfolio Breakdown by debt type Breakdown by currency EUR 1,394.7 million 1) EUR 1,394.7 million 1) Other LTL 1% 26% Syndicated term loans EEK 3% 42% EUR 58% CP SEK 3% 38% Revolving credit facility 21% Bonds 8% • The backbone of the debt financing continues to be the syndicated t
Slide 36: Key Figures – Interest Rates and LTV
Key Figures – Interest Rates and LTV Quarterly development of interest rates 1) Net debt and LTV-% 2) 5,50 % 1 400 1 369,6 70 % 1 327,2 1 312,2 5,00 % 1 300 1 272,3 1 234,8 60 % 1 221,1 1 205,3 4,50 % 1 184,3 1 194,6 1 191,3 1 200 1 147,3 1 149,4 4,00 % 50 % 1 100 3,50 % 1 000 40 % 3,00 % 900 878,2
Slide 37: Share Performance
Share Performance1) 7,00 6,00 5,00 4,00 3,00 2,00 1,00 0,00 FTSE EPRA Nasdaq OMX Helsinki CAP Citycon 37 Q2 2010 1) Starting values of FTSE EPRA index and OMX Helsinki CAP index on 3 January 2006 have been rebased to Citycon share price at EUR 3.03
Slide 38: Ownership
Ownership SHAREHOLDERS • End of June market capitalization totaled EUR 538.6 million 12.0% • 88.0 % of shareholders international • Number of domestic owners increased • 4,145 registered shareholders • Largest Shareholders: • Gazit-Globe 47.9% (source: www.gazit- globe.com) • ING Clarion Real Estate
Slide 39: Backup Information
Backup Information 39 Q2 2010
Slide 40: Completed Projects: Liljeholmstorget
Completed Projects LILJEHOLMSTORGET Construction of a new shopping centre south west of Stockholm city centre. Location is the major traffic hub. Existing building is totally refurbished, new centre is built adjacent to subway station. Pilot project in sustainable construction. LEED® - platinum cert
Slide 41: Completed Projects: Rocca al Mare
Completed Projects ROCCA AL MARE Extension and redevelopment of existing centre west of Tallinn city centre. After the project Rocca al Mare is the largest centres in Estonia and Citycon took over almost a quarter of the Tallinn shopping centre market. Anchor tenant largest Prisma hypermarket in Est
Slide 42: Breakdown of Financial Expenses
Breakdown of Financial Expenses 2q 1q 2q Change-% Change-% YTD YTD Change-% Net Financial Expenses (EUR million) 2010 2010 2009 (y-o-y) (q-o-q) 2010 2009 (YTD) Financial Expenses: Interest expenses -13,2 -12,3 -11,3 17 % 7% -25,6 -22,8 12 % Foreign exchange losses 0,0 0,0 0,0 nm 135 % 0,0 0,0 82 % C
Slide 43: Net Financial Expenses Q1 2010 vs Q2 2010
Net Financial Expenses Q1 2010 vs Q2 2010 16 +0.9 +0.5 -0.2 +0.0 14 14,4 13,1 12 10 8 6 4 2 0 1Q2010 Net interest Fees Derivative Other 2Q2010 valuation 43 Q2 2010
Slide 44: Illustrative Calculation of ICR Covenant Using Q2 2010 Financials
Illustrative Calculation of ICR Covenant Using Q2 2010 Financials* Q2 2010 EBITDA for covenant EBITDA = EUR 107.6 + EUR 0.7 + calculation: direct operating profit EUR 1.5 + depreciations +/- non-cash and = EUR 109.8 million for previous exceptional items 12-month period EUR million Q2 Q1 Q4 Q3 Cumul
Slide 45: Illustrative Calculation of Equity Ratio Covenant Using Q2 2010 Financials
Illustrative Calculation of Equity Ratio Covenant Using Q2 2010 Financials* Equity for covenant calculation: Equity = EUR 779.1 + EUR 66.8 – total shareholders’ equity + EUR 44.1 + EUR 32.6 subordinated debt – minority = EUR 834.4 million as at 30 Jun interest +/– fair value of derivatives 2010 incl
Slide 46: Citycon in brief - Background
Citycon in brief - Background Citycon’s path to becoming the market leader and an international real estate company 1988 2004 2007 Quoted on the Main List of Citycon continues to growth New acquisitions in Finland and Sweden Helsinki Stock Exchange Office Ownership structure becomes Liljeh
Slide 47: First Possible Termination Year of the Leases by Contract Type
First Possible Termination Year of the Leases by Contract Type, 31 Dec 2009 35,0 30,0 25,0 Valid until further notice 20,0 Initially fixed-term contract 15,0 Fixed-term contract 10,0 5,0 0,0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020+ Fixed-term contracts expire at the end of the contrac
Slide 48: Citycon Core Shopping Centres
Citycon Core Shopping Centres Iso Omena Myyrmanni Trio (incl. Hansa) 1977/87/2008 Lippulaiva Built 2001 1994 45.700 m2 1993 GLA 61.300 m2 40.300 m2 89.3 % 23.400 m2 Ownership 100 % 100 % 100 % Finland Koskikeskus Forum Columbus 1988 1953/91 1997/07 26.300 m2 17.500 m2 21.000 m2 88 % Citycon 69 % 100
Slide 49: Contact Information
Contact Information INVESTOR RELATIONS Mr Petri Olkinuora CEO Tel. +358 207 664 401 Petri.Olkinuora@citycon.fi Mr Eero Sihvonen CFO, Executive Vice President Tel. +358 50 5579 137 Eero.Sihvonen@citycon.fi Ms Hanna Jaakkola IRO Tel. +358 40 5666 070 Hanna.Jaakkola@citycon.fi 49 Q2 2010
Slide 50: Disclaimer
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