Citycon Oyj · OMXHEX:CTY1S
Citycon Oyj — Q3 2010 Earnings Presentation
50 slides from Citycon Oyj's earnings presentation, October 2010
Slide 1: Citycon Presentation Q3 2010
Citycon Presentation Q3 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 Q3 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 • 67.8% of total net rental income • Net rental income EUR 64.7 million Sweden (€m) Finland (€m) • Market leader with 22% market share 1,496.7 • 22 shopping centres, 42 other retail 639.9 94.5 91.2 properties, one unbuilt lot 64.7 38.9 36.9 22.1 MV Turn- Gross Net MV Tu
Slide 6: Main points
Main points Q3 2010 (vs. Q2 2010) • The fair value change was EUR 15.8 million (EUR 22.9 m) and the market value of property portfolio was EUR 2,299.9 million (EUR 2,229.5 m) • The valuation yield 6.5% (6.6%) by external appraiser • Net rental income was EUR 33.0 million (EUR 31.8m) • Direct result
Slide 7: Financing Overview
Financing Overview • Total asset stood at EUR 2,424.8 million • Total liquidity of EUR 263.6 million incl. unutilized committed debt facilities (EUR 177.1 m) and cash (EUR 86.5 m) • Equity ratio 35.9%, hedging ratio of the loan portfolio 80% • Average average year-to-date interest rate was 4.01%. •
Slide 8: Directed Share Offering - Transaction Summary
Directed Share Offering - Transaction Summary • Citycon issued 22 million new shares by way of an accelerated book-building representing approx. 9.9 % of the shares and votes prior to the offering • The offering was over-subscribed leading to a tight discount compared with the closing price (EUR 2.8
Slide 9: Business Environment
Business Environment 9 Q3 2010
Slide 10: Business Environment
Business Environment GDP PRIVATE CONSUMPTION 3,5% 3,0%3,5% 4,2% 4,2% 4,5% 4,0% 2,8%3,1% 3,2% 2,6% 3,0% 3,0% 2,5% 2,5% 4,5% 4,8% 4,0% 5,0% 1,8% 0,9% 2,4% Finland Sweden Estonia Lithuania -0,8% Sweden -0,7% -1,9% Finland Estonia Lithuania -3,5% -5,1% -8,1% -16,8% -18,4% -14,1% -14,8% 2009A 2010E 2011E
Slide 11: 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 1.7.2010 Sweden -10,0 Estonia Lithuania -20,0 euro zone -30,0 -40,0 -50,0 -60,0 Source: Eurostat Consumer confidence indicator is condu
Slide 12: Business Environment: Retail Sales
Business Environment RETAIL SALES During Jan-August 2010, retail sales AND CPI, August 2010 increased by 3.7 % in Finland, 2.6 % in Sweden and -7.0% in Estonia. Retail Sales CPI The property market has picked up 5,5 especially in Sweden. 4,4 2,2 Consumer confidence stronger, 1,2 0,9 unemployment rat
Slide 13: Retailer Sales (not same store)
Retailer Sales (not same store) Kesko • In August 2010, the Kesko Group's sales, excl. VAT, increased by 6.8% • Jan- Aug 2010, Kesko Group sales increased by 2.3%, in Finland 2.7% (source: Kesko Stock Exchange Release 14 September, 2010) S Group • Jan-June 2010, S Group’s retail sales grew by up 9.0
Slide 14: Sustainability
Sustainability Leed® Platinum shopping centre Liljeholmstorget in Stockholm 14 Q3 2010
Slide 15: 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 16: 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 17: 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 18: 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 18 Q3 2010
Slide 19: (Re)development Projects
(Re)development Projects Future image of Myllypuro shopping centre in Helsinki 19 Q3 2010
Slide 20: Ongoing (Re)development Projects
Ongoing (Re)development Projects PROPERTY LOCATION AREA, TOTAL ACTUAL Expected yield EST. sq.m. ESTIMATED CUMULATIV on completion FINAL NEW E CAPEX, by when YEAR OF before and the end of after INVESTMENT, stabilized, % 1) COMPLE period, MEUR TION MEUR Åkersberga Österåker, 20 000 32.9 7.3 2011 Refur
Slide 21: Property Portfolio
Property Portfolio Extension part of Åkersberga Centrum in Österåker 21 Q3 2010
Slide 22: Property Portfolio
Property Portfolio • 3,793 (4,033) leases with an average length of 3.2 (3.0) years • GLA totalled 931,480 sq.m. • Net rental income increased by 1.7% to EUR 95.4 million • Net rental income for like-for-like properties decreased by 0.8% (excl. impact of strengthened Swedish krona) due to higher pro
Slide 23: Like-for-like and other NRI development by Segments
Like-for-like and other NRI development by Segments -1-9/2009 vs. 1-9/2010 the Baltic EUR million Finland Sweden Countries Other Total 1-9'2008 68,2 18,8 4,6 0,0 91,6 Acquisitions - - - 0,0 0,0 (Re)developments 1,2 0,1 2,9 0,0 4,3 Divestments -0,2 0,0 0,0 0,0 -0,2 Like-for-like 0,2 0,5 -0,3 0,0 0,4
Slide 24: Property Portfolio: Rental Contracts
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 25: Property Portfolio: Leasing Activity
Property Portfolio TOTAL PORTFOLIO Q3/2010 Q3/2009 Q2/2010 2009 Number of leases started 184 140 175 873 during the period Total area of leases started, 33 341 23 789 36 256 141 628 sq.m. 1) Average rent of leases started 17.5 20.7 17.2 23.6 (EUR/sq.m.) 1) Number of leases ended during 408 187 185 7
Slide 26: 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 Q3 2006 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 Valuation yield above is based on exter
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 Q3 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 Q3 2010
Slide 29: Key Figures
Key Figures Leed® Silver shopping centre Rocca al Mare Tallinnassa 29 Q3 2010
Slide 30: Snapshot of Statement of Comprehensive Income
Snapshot of Statement of Comprehensive Income EUR million Q1-Q3/2010 Q1-Q3/2009 2009 Gross rental income 138.5 132.6 177.8 Service charge income 7.6 4.8 8.5 Turnover 146.1 137.4 186.3 Property operating expenses 49.5 43.2 60.2 Other expenses from leasing operations 1.1 0.4 0.7 Net rental income 95.4
Slide 31: Snapshot of Statement of Financial Position
Snapshot of Statement of Financial Position Statement of Financial Position, EUR million 30 Sept 2010 30 Sept 2009 31 Sept 2009 Investment property 2,299.9 2,162.7 2,147.4 Total non-current assets 2,313.5 2,173.3 2,161.4 Current assets 111.3 34.1 91.8 Assets total 2,424.8 2,207.4 2,253.2 Total share
Slide 32: Consolidated Cash Flow Statement Q1-Q3/2010
Consolidated Cash Flow Statement Q1-Q3/2010 Jan-Sep Jan-Sep • Cash from operations continue to be behind the previous year EUR MILLION 2010 2009 due to exceptional items both in 2010 and 2009: Operating activities Profit before taxes 80,8 -13,1 • Cash flow before working capital declined by approxim
Slide 33: Key Figures – Financing Overview
Key Figures – Financing Overview Interest-bearing debt by fixing type Maturity profile of loans and derivatives EUR 1, 429.6 million 1) 600 Loans (EUR 1,429.6m) Fixed derivatives (EUR 892.9m) 501 Floating rate debt 500 20% Fixed rate debt 18% 400 Convertible Bonds (EUR 71.3m) 309 300 257 242 229 200
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 500 4,3 % 450 Fixed (EUR 256.4m) 429 4,19 % 4,2 % 400 Floating (EUR 1,173.2m) 4,1 % 4,05 % Undrawn credits (EUR 17
Slide 35: Key Figures - Debt Portfolio
Key Figures - Debt Portfolio Breakdown by debt type Breakdown by currency EUR 1,429.6 million 1) EUR 1,429.6 million 1) Other LTL 1% 29% Syndicated term loans EEK 3% 40% EUR 58% CP SEK 3% 38% Revolving credit facility 20% 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 1369,6 70 % 1343,1 1327,2 1312,2 5,00 % 1 300 1272,3 1234,8 60 % 1221,1 1205,3 4,50 % 1184,3 1194,6 1191,3 1 200 1147,3 1149,4 4,00 % 50 % 1 100 3,50 % 1 000 40 % 3,00 % 900 878,2 863,3
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 Q3 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 • End of June market capitalization totaled EUR 765.5 million • 86.0 % of shareholders international • Number of domestic owners increased • 4,793 registered shareholders • Largest Shareholders: • Gazit-Globe 47.% (source: www.gazit- globe.com) • Citycon is included in GPR 250 Property Sec
Slide 39: Backup Information
Backup Information Future image of shopping centre Forum in Jyväskylä 39 Q3 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. LEED® - platinum certified! Retail GLA, sq.m. 28,400 Office and
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 3q 2q 3q 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 -13,3 -13,2 -11,5 16 % 1% -38,9 -34,3 13 % Foreign exchange losses 0,0 0,0 0,0 nm -23 % 0,1 0,0 93 % C
Slide 43: Net Financial Expenses Q2 2010 vs Q3 2010
Net Financial Expenses Q2 2010 vs Q3 2010 16 +0.1 -0.0 -0.3 -0.3 14 14,4 14,0 12 10 8 6 4 2 0 2Q2010 Net interest Fees Derivative Other 3Q2010 valuation 43 Q3 2010
Slide 44: Illustrative Calculation of ICR Covenant Using Q3 2010 Financials
Illustrative Calculation of ICR Covenant Using Q3 2010 Financials* Q3 2010 EBITDA for covenant EBITDA = EUR 107.0 + EUR 0.7 + calculation: direct operating profit EUR 1.8 + depreciations +/- non-cash and = EUR 109.5 million for rolling 12- exceptional items month period EUR million Q3 Q2 Q1 Q4 Cumul
Slide 45: Illustrative Calculation of Equity Ratio Covenant Using Q3 2010 Financials
Illustrative Calculation of Equity Ratio Covenant Using Q3 2010 Financials* Equity for covenant calculation: Equity = EUR 870.2 + EUR 65.8 – total shareholders’ equity + EUR 48.1 + EUR 30.5 subordinated debt – minority = EUR 918.4 million as at 30 Sept interest +/– fair value of derivatives 2010 inc
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 60 % 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 Q3 2010
Slide 50: Disclaimer
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