Citycon Oyj · OMXHEX:CTY1S
Citycon Oyj — Q3 2019 Earnings Presentation
30 slides from Citycon Oyj's earnings presentation, Oct 24, 2019
Slide 1: Audiocast Presentation Q3/2019
24.10.2019 AUDIOCAST PRESENTATION Q3/2019
Slide 2: Q1-Q3/2019: Another Solid Quarter
Q1-Q3/2019: ANOTHER SOLID QUARTER NET RENTAL INCOME CONTINUED TO GROW -NRI continued to grow in Sweden and Norway. Positive NRI development in best assets, in Iso Omena in particular. -Positive like-for-like NRI development in Finland and Norway. SOLID OPERATIONAL DEVELOPMENT -Leasing spreads contin
Slide 3: Capital Markets Day 2019 Held in September
CAPITAL MARKETS DAY 2019 HELD IN SEPTEMBER – CMD 2019 held in Stockholm – Around 30 investors and analysts participated in the asset tours of Kista Galleria and Liljeholmstorget as well as the actual CMD – Strategic direction and future focus areas discussed by Citycon’s new management team
Slide 4: Capital Markets Day 2019 - Key Messages
CAPITAL MARKETS DAY 2019 - KEY MESSAGES OPERATING ENVIRONMENT ▪ Retail is adapting to cater for changing consumer patterns ▪ Nordic countries provide a stable market environment STABLE BUSINESS MODEL ▪ Diversified tenant and revenue mix, 85% of leases linked to indexation ▪ Growing importance of pub
Slide 5: Kista Repositioning Progressed During Q3/2019
KISTA-REPOSITIONING PROGRESSED DURING Q3/2019 – Vacated Åhlens department store area re-positioning is now complete – Grocery store ICA Kvantum opened in Kista in August 2019. ICA further strengthens the grocery offering of Kista, where Lidl already opened in June 2019. Home store Rusta to open duri
Slide 6: We Have Taken Concrete Steps to Become Carbon Neutral by 2030
WE HAVE TAKEN CONCRETE STEPS TO BECOME CARBON NEUTRAL BY 2030 Aim to become carbon neutral by 2030 ~6,400 solar ▪ Consume less energy and producing more energy ourselves panels in Citycon’s portfolio by Several steps taken towards energy-efficiency the end of ▪ 520 solar panels to be installed in Is
Slide 7: Overall Sales +4% and Footfall +5%
OVERALL SALES +4% AND FOOTFALL +5% LIKE-FOR-LIKE SALES, FOOTFALL AND NRI CONTINUED TO GROW FOOTFALL DEVELOPMENT TENANT SALES DEVELOPMENT LIKE-FOR-LIKE AND TOTAL NET LIKE-FOR-LIKE NRI DEVELOPMENT Q1-Q3/2019 vs. Q1-Q3/2018, % 1) Q1-Q3/2019 vs. Q1-Q3/2018, % 1) RENTAL INCOME DEVELOPMENT CORE VS NON-COR
Slide 8: Occupancy Rate at a Good Level
OCCUPANCY RATE AT A GOOD LEVEL Q3/2019 Q3/2018 2018 96.0% 96.4% 96.1% 95.6% 95.3% Average rent1) EUR/sq.m. 23.1 23.1 23.2 Average remaining length years 3.4 3.4 3.4 of the lease portfolio Q3/2019 Q3/2018 2018 Average rent of leases EUR/sq.m. 26.2 23.4 22.5 started Average rent of leases EUR/sq.m. 26
Slide 9: Financial Overview
FINANCIAL OVERVIEW
Slide 10: Q3/2019 Financials
Q3/2019 FINANCIALS Q3/2019 MEUR Q3/2019 Q3/2018 Change % INCL. KISTA 50% Gross rental income 56.7 57.8 -2.0 % 59.6 Net rental income 54.2 53.6 1.2 % 56.3 Direct operating profit 48.0 47.8 0.3 % 49.9 EPRA Earnings 35.5 36.8 -3.6 % N/A EPRA EPS (basic) 1) 0.199 0.207 -3.6 % N/A EPRA NAV per share 1) 1
Slide 11: Q1-Q3 Financials
Q1-Q3 FINANCIALS Q1-Q3/2019 MEUR Q1-Q3/2019 Q1-Q3/2018 Change % INCL. KISTA 50% Gross rental income 175.1 177.8 -1.5 % 184.4 Net rental income 164.0 161.2 1.7 % 171.0 Direct operating profit 146.4 143.6 1.9 % 152.9 EPRA Earnings 110.0 109.3 0.6 % N/A EPRA EPS (basic) 1) 0.618 0.614 0.6 % N/A EPRA NA
Slide 12: Net Rental Income Continued to Grow
NET RENTAL INCOME CONTINUED TO GROW NRI DEVELOPMENT MEUR 3.9 3.3 164.0 161.2 0.4 -0.2 -4.6 Q1-Q3/2018 Acquisitions (Re)development projects Divestments LFL properties Other (incl. IFRS 16 and Q1-Q3/2019 exchange rate differences CURRENCIES HAD SOME IMPACT ON NRI Foreign currency impact IFRS16 impact
Slide 13: Fair Value Changes
FAIR VALUE CHANGES FAIR VALUE CHANGES, MEUR Q3/2019 Q3/2018 Q1-Q3/2019 Q1-Q3/2018 2018 Finland & Estonia -13.4 -14.6 -32.1 -47.8 -58.8 Norway -0.5 -6.7 -19.2 -20.6 -22.2 Sweden & Denmark -2.6 0.6 -8.9 14.2 8.5 IFRS 16 -1.5 - -4.5 - - Investment properties, total -17.9 -20.7 -64.7 -54.2 -72.5 Kista G
Slide 14: EPRA Net Asset Value Development
EPRA NET ASSET VALUE DEVELOPMENT CHANGE OF NET ASSET VALUE (EPRA NAV) ) 1) EUR, per share 0.62 0.09 12.95 -0.42 12.58 0.01 -0.49 Q4/2018 EPRA Earnings Indirect result Translation reserve Dividends and equity Other Q3/2019 return paid 30 SEP 2019 30 SEP 2018 31 DEC 2018 EPRA NAV per share, EUR 1) 12.
Slide 15: Main Financing Targets
MAIN FINANCING TARGETS – Debt portfolio's hedge ratio 70-90% ✓ 82.5% – Investment-grade credit ratings ✓ BBB-/Baa3 – Financing mainly unsecured ✓ 95.3% – Substantial liquidity buffer ✓ MEUR 555 – Average maturity of loan portfolio > 5 yrs - 4.3 – Loan to Value 40-45% - 49.6% Stable business model ma
Slide 16: Amount of Interest-Bearing Debt Declined
AMOUNT OF INTEREST-BEARING DEBT DECLINED FINANCING KEY FIGURES LTV DEVELOPMENT 30 SEP 2019 30 SEP 2018 31 DEC 2018 Interest bearing debt, fair value MEUR 2,134.8 2,171.1 2 154.6 48.7 49.6 Available liquidity MEUR 555.3 556.7 556.4 Average loan maturity years 4.3 5.2 5.0 Interest rate hedging ratio %
Slide 17: Interest Rates Are at Record-Low Levels
INTEREST RATES ARE AT RECORD-LOW LEVELS SWAP RATE DEVELOPMENT % 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 01/2010 01/11 01/12 01/13 01/14 01/15 01/16 01/17 01/18 01/19 08/19 EUR Swap 5Y NOK Swap 5Y SEK Swap 5Y 17
Slide 18: Spread Between Cap Rates and Interest Rates Has Widened
SPREAD BETWEEN CAP RATES AND INTEREST RATES HAS WIDENED SPREAD BETWEEN INTEREST RATES AND CAP RATES IS WIDE % 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 01/2010 01/11 01/12 01/13 01/14 01/15 01/16 01/17 01/18 01/19 EUR Swap 5Y Retail Sector Economic Cap rate EUR 10 year bond yield
Slide 19: Outlook 2019 Narrowed
OUTLOOK 2019 NARROWED DIRECT OPERATING PROFIT 198.5 200.5 190-195 187.6 175.4 149.8 Direct operating profit MEUR 190-195 (previously 189-200) EPRA Earnings 2014 2015 2016 2017 2018 2019E MEUR 141-146 EPRA EARNINGS (previously 140-151) 151.1 152.3 143.5 141-146 130.8 EPRA EPS (basic) 99.7 EUR 0.79-0.
Slide 20: Strategic Focus Areas
STRATEGIC FOCUS AREAS
Slide 21: Significant Opportunities to Create Further Value Through Densification
WE HAVE SIGNIFICANT OPPORTUNITIES TO CREATE FURTHER VALUE THROUGH DENSIFICATION CURRENT RESIDENTIAL EXPOSURE SWEDEN NORWAY FINLAND ESTONIA DENMARK TOTAL Total GLA ~18,500 ~400 ~1,100 0 0 ~20,000 Number of Units 539 3 28 0 0 570 POTENTIAL RESIDENTIAL EXPOSURE 120,000 sq.m. SWEDEN NORWAY FINLAND ESTON
Slide 22: Our Development Project in Lippulaiva Is Progressing
OUR DEVELOPMENT PROJECT IN LIPPULAIVA IS PROGRESSING ▪ Lippulaiva will become a strong convenience and service-based shopping centre in the growing neighbourhood of Espoonlahti in Status update greater Helsinki Q3/2019: ▪ Lippulaiva will be integrated to the -foundation works new Western Metro and p
Slide 23: Lippulaiva Is a Great Example of a Mixed-Use Development
LIPPULAIVA IS A GREAT EXAMPLE OF A MIXED-USE DEVELOPMENT LIPPULAIVA ▪ Up to 8 residential buildings with around 450 apartments (~31,000 sqm of building rights). ▪ Currently we are reviewing different options on how to develop the residential component ▪ Shopping centre to be opened in spring 2022, r
Slide 24: Strategic Focus Areas Going Forward
STRATEGIC FOCUS AREAS GOING FORWARD STRENGTHEN BALANCE SHEET AND MAINTAIN CREDIT RATINGS - Maintaining our credit ratings is a focus area for the company - Thoughtful dispositions of non-core assets at appropriate pricing levels SHORT-TERM PERFORMANCE IMPROVEMENT - More proactive asset management -
Slide 25: Thank You.
citycon.com CONTACT INFORMATION Eero Sihvonen THANK YOU.CFO, Exec. VP Tel. +358 50 557 9137 Mikko Pohjala IR and Communications Director Tel. +358 40 838 07 09
Slide 26: Appendix
APPENDIX
Slide 27: Income Statement
INCOME STATEMENT MEUR Q1-Q3/2019 Q1-Q3/2018 % 2018 Gross rental income 175.1 177.8 -1.5 % 237.0 Service charge income 56.6 57.8 -2.0 % 79.2 Property operating expenses -66.4 -72.7 -8.6 % -98.9 Other expenses from leasing operations -1.4 -1.7 -21.7 % -2.4 Net rental income 164.0 161.2 1.7 % 214.9 Adm
Slide 28: Balance Sheet
BALANCE SHEET MEUR 30 SEPT 2019 30 SEPT 2018 31 DEC 2018 Investment properties 4,105.9 4,183.4 4,131.3 Total non-current assets 4,464.0 4,555.1 4,488.4 Investment properties held for sale 51.6 94.7 78.1 Total current assets 62.0 48.2 56.2 Total assets 4,577.6 4,698.0 4,622.7 Total shareholders’ equi
Slide 29: 95% of Debt Fixed Rate with Balanced Maturity Profile
95% OF DEBT FIXED RATE WITH BALANCED MATURITY PROFILE DEBT BREAKDOWN BY TYPE Bank loans DEBT MATURITIES CP 5% MEUR 500 6% 500 450 400 2,134.8 350 350 350 EUR million Bonds 300 300 89 % 300 250 227 237 219 200 154 150 126 DEBT BREAKDOWN BY CURRENCY 101 100 SEK 19% 50 31 2 0 EUR 2019 2020 2021 2022 20
Slide 30: IFRS 16 - Impact on Q1-Q3/2019 Financials
IFRS 16 - IMPACT ON Q1-Q3/2019 FINANCIALS ▪ No change in accounting treatment for lease agreements where we act as the lessor. However, in agreements where Citycon acts as the lessee, accounting treatment will be changed. ▪ Adopted as of Q1/2019 CONSOLIDATED INCOME STATEMENT IMPACT MEUR ON Q3/2019 I