Citycon Oyj · OMXHEX:CTY1S

Citycon Oyj — FY2015 Earnings Presentation

63 slides from Citycon Oyj's earnings presentation, 2016

  1. Slide 1: Full Year Results Q1-Q4 2015

    Q1-Q4 2015 Full Year Results Q1-Q4 Citycon presentation 2015

  2. Slide 2: Leading owner, manager, and developer of shopping centres in the Nordics and Baltics

    Leading owner, manager, and developer of Q1-Q4 shopping centres in the Nordics and Baltics 2015 Key figures 31 December 2015  # of shopping centres1) 53  # of managed assets 14  Gross leasable area, sq.m. 1,240,440  Total assets, EUR billion1) 4.7 Norway  Market cap, EUR billion 2  Moody’s Baa

  3. Slide 3: Offering the best environment for success

    Q1-Q4 Offering the best environment for success 2015 1 2 3 Clear focus Exceptional platform Strong capital base MISSION Pure retail player focused Leveraging the Sufficient and VISION on shopping centres in expertise at each stage attractively priced We offer the best the most attractive of the shop

  4. Slide 4: True pan-Nordic leader

    Q1-Q4 True pan-Nordic leader 2015 Retail GLA (thousand sq.m.)1) 340 Finland 140 125 120 105 280 Sweden 230 225 225 200 #3 #1 1 275 Norway #2 400 #1 305 200 95 110 95 Estonia 65 60 20 4 1) Source: Company reports, SEB analysis, as per May 2015. Includes only majority-owned shopping centres. Includes

  5. Slide 5: Urban crosspoints driven by strong demographics

    Urban crosspoints driven by strong Q1-Q4 demographics 2015 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

  6. Slide 6: Core portfolio of grocery-anchored shopping centres

    Core portfolio of grocery-anchored Q1-Q4 shopping centres 2015 Rental income by category 2015 4% 2% 7% 25% Fashion 10% Groceries Leisure and home supplies Services and offices 10% Health and beauty Cafes and restaurants Other specialty stores 20% Department stores 21% 6

  7. Slide 7: Citycon's five core assets

    Q1-Q4 Citycon’s five core assets 2015 Sweden – Kista Galleria Finland – Iso Omena Sweden – Liljeholmstorget Galleria Finland – Koskikeskus Norway – Herkules GLA, Fair value, Net rental Economic Visitors, Sales, sq.m. EUR million yield, % occupancy, % millions EUR million Kista Galleria, Stockholm 95

  8. Slide 8: Citycon's portfolio is well positioned for the changing retail landscape

    Citycon’s portfolio is well positioned Q1-Q4 for the changing retail landscape 2015 Citycon’s response Urbanisation Growing urban population 90% of total portfolio in main cities Increased urban GDP per capita 65% in capital cities Convenience Aging population and increasing 100% of centres located

  9. Slide 9: 2015: Another year of action

    Q1-Q4 2015 2015: ANOTHER YEAR OF ACTION CITYCON BECOMES A TRULY PAN NORDIC PLAYER AND THE LARGEST LISTED SHOPPING CENTRE SPECIALIST IN THE REGION 9

  10. Slide 10: Highlights 2015

    Q1-Q4 Highlights 2015 2015 Larger Sektorscale Sektor and improved integration integration faster faster  Successful acquisition and integration of Sektor Integration has moved faster than planned country than balance than expected expected through   Fair value (by JLL) of Norwegian portfolio in l

  11. Slide 11: 2015: Solid operating performance

    Q1-Q4 2015 2015: SOLID OPERATING PERFORMANCE 11

  12. Slide 12: Overall solid NRI growth and strong occupancy

    Q1-Q4 Overall solid NRI growth and strong occupancy 2015 Like-for-like NRI growth Occupancy rate 8% 100% 98.6% 99.4% 6.4% 96.3% 96.8% 96.2% 6% 96% 94.8% 4% 92% 2% 1.1% 88% 0% -0.3% 84% -2% -2.2% -4% 80% Finland Sweden Baltics & Total 2014 2015 Finland Norway Sweden Baltics & Denmark Denmark  Operat

  13. Slide 13: Positive sales development in Sweden and Norway, Finland still weak

    Positive sales development in Sweden and Q1-Q4 Norway, Finland still weak 2015 Sales in shopping centres Footfall in shopping centres like-for-like like-for-like 6% 5% 4% 3% 2% 2% 1% 0% 0% -1% -2% -1% -1% -1% -3% -2% -2% -4% -6% -5% -5% Finland Sweden Baltics & Total Finland Sweden Baltics & Total D

  14. Slide 14: Kista Galleria – strong performance continues

    Q1-Q4 Kista Galleria – strong performance continues 2015  High occupancy of 99% NRI development  Fair value change since acquisition + EUR 79 million +12%  >19 million visitors in 2015  Positive leasing spread, above the Swedish portfolio average  Extended H&M signed, flagship concept (4,000 sq

  15. Slide 15: Sustainable mind-set - Forerunner in the Nordics

    Sustainable mind-set Q1-Q4 - Forerunner in the Nordics 2015  50% of Citycon’s shopping centres are BREEAM Key results 2015 In Use certified Energy consumption, kWh/sq.m. most retail certificates in the Nordics -6%  80 (target -2%) Recycling rate 60 95% (target >90%) 40 Within top 10% of reviewed c

  16. Slide 16: Sektor integration moving fast

    Q1-Q4 2015 SEKTOR INTEGRATION MOVING FAST 16

  17. Slide 17: Sektor integration faster than planned

    Q1-Q4 Sektor integration faster than planned 2015 INITIAL TARGET STATUS  Savings in Sektor SG&A of Increased to ORGANIZATION ≥ EUR 1 million p.a. ≥10% ~ EUR 2 million p.a.  Tenant, specialty leasing, LFL NRI growth of OPERATIONS marketing, digital optimisation On track 100 bps above CPI  Improved

  18. Slide 18: Nordic fundamentals remain strong

    Q1-Q4 2015 NORDIC FUNDAMENTALS REMAIN STRONG 18

  19. Slide 19: Nordic fundamentals remain strong, however, countries are on different courses (1/2)

    Nordic fundamentals remain strong, however, Q1-Q4 countries are on different courses (1/2) 2015  Strong country ratings Retail sales growth in 2015 10%  Norway, Sweden and Denmark: AAA 8.0% 8%  Finland: AA+/AAA 5.7% 6% 4% 3.1%  Oslo, Stockholm, Copenhagen and Helsinki 2% 1.3% among the fastest g

  20. Slide 20: Nordic fundamentals remain strong, however, countries are on different courses (2/2)

    Nordic fundamentals remain strong, however, Q1-Q4 countries are on different courses (2/2) 2015 Norway Norwegian unemployment  Effects of decline in oil industry mostly Trend last 12 months concentrated on the Norwegian west coast Lower unemployment Unchanged  Continued growth through private spen

  21. Slide 21: Improved portfolio quality through capital recycling

    Q1-Q4 2015 IMPROVED PORTFOLIO QUALITY THROUGH CAPITAL RECYCLING 21

  22. Slide 22: Successful execution of disposal programme

    Q1-Q4 Successful execution of disposal programme 2015 MEUR 600 Target: 500 additional EUR 300 million Total divestments of EUR 260 + 60 million within 1-2 years 400 300  Pori forward sale 200  17 properties  EUR 150 million 100  26 properties  EUR 110 million 0 2011-2014 2015 2016-2017 22

  23. Slide 23: Good progress of development portfolio

    Q1-Q4 Good progress of development portfolio 2015 Actual gross Expected yield Expected Area before/ investments by on completion Pre-leasing Completion investment, after, sq.m. 31.12.2015, when stabilised, rate, % target MEUR 1) MEUR % 63,300 182.0 Part 1: 83% Q3/2016 Iso Omena 82.2 6.0 99,000 (250.

  24. Slide 24: Iso Omena - Best shopping centre in Finland

    Q1-Q4 Iso Omena - Best shopping centre in Finland 2015  Part 1 to open after summer at the same time as the new metro  Good tenant demand, pre-leasing of part 1 increased to 75%, additionally 8% main terms agreed  Creating a true dining destination, 50 restaurants and cafes  New tenants include

  25. Slide 25: Mölndal Galleria – Top class community shopping centre

    Mölndal Galleria – Top class community Q1-Q4 shopping centre in the heart of growing area 2015  Strong tenant demand  Expected annual visitors of 5-6 million  Several major chains signed e.g. H&M, Systembolaget, Lindex, KappAhl and a large ICA grocery 25 store

  26. Slide 26: Straedet – daily shopping centre in Copenhagen area

    Straedet – daily shopping centre in wealthy and Q1-Q4 growing Copenhagen area 2015  Completion and acquisition Q3/2017  Fixed 6.25% yield  Pre-leasing of 70-80% 26

  27. Slide 27: Development pipeline one project committed and one planned

    Development pipeline Q1-Q4 one project committed and one planned ≥ 2015 2015 Estimated Expected Target for project gross project area/additio investment, initiation/ nal sq.m. MEUR completion C Tumba Extension project combined with a new bus terminal. 11,000 55 2016/2017 Centrum Zoning has been appr

  28. Slide 28: Impact of (re)developments and committed acquisitions as of 2017

    Impact of (re)developments and committed Q1-Q4 acquisitions as of 2017 2015 Investment volumes that come online EUR million Q2/2018 Mölndal Galleria 500 Q2/2017 completion Iso Omena part 2 + Buy-out NCC’s 50% 450 completion 400 Q3/2017 Straedet, buy-out 350 from TK Development 300 250 Q3/2016 Iso Om

  29. Slide 29: 2016 onwards: From transformation to consolidation

    Q1-Q4 2015 2016 ONWARDS: FROM TRANSFORMATION TO CONSOLIDATION 29

  30. Slide 30: 2011-2015 transformation journey

    2011-2015 transformation journey: Q1-Q4 Increased scale and diversification of cash flow 2015 2011 2015 Baltics & Baltics Denmark 11% 8% Geographical Finland spread 1) Sweden Sweden 35% 28% 29% Finland 61% Norway 28% Portfolio size 1) 2.5 4.7 EUR billion LTV 58% 45.7% Weighted average interest rate

  31. Slide 31: Key target areas 2016 onwards

    Q1-Q4 Key target areas 2016 onwards 2015 Further integration of Citycon Norway  ~EUR 2 million administrative cost savings p.a. Overall long-term like-for-like NRI growth target of 100 bps above inflation Successful completion of ongoing developments  EUR 150-200 million p.a.  ≥150 bps above yiel

  32. Slide 32: Outlook 2016 onwards

    Q1-Q4 Outlook 2016 onwards 2015 EPRA EPS 2016:  Result negatively impacted by:  Full year impact of EUR 150 million non-core disposals in 2015 EUR 15.5-17.5 cents  Substantial nr of sq.m. taken offline e.g. Iso Omena, Myyrmanni 2017/2018: uplift in  Major (re)developments and committed acquisiti

  33. Slide 33: Financial results

    Q1-Q4 2015 FINANCIAL RESULTS - STABLE RESULTS - NORWEGIAN VALUES CONFIRMED - SUCCESSFUL REFINANCING 33

  34. Slide 34: Financial results

    Q1-Q4 Financial results 2015 2015 incl. MEUR 2015 2014 % Kista 100% Gross rental income 223.9 189.4 18.2 258.3 Net rental income 199.5 169.4 17.9 229.7 Direct Operating profit 1) 175.4 149.8 17.1 203.8 EPRA Earnings 130.8 99.7 31.2 n.a. EPRA EPS (basic) 0.173 0.178 -2.8 n.a. EPRA NAV per share 2.74

  35. Slide 35: NRI development

    Q1-Q4 NRI development 2015 EUR million 210 36.8 -0.8 -5.8 1.2 -1.0 199.6 200 190 180 170 169.4 160 150 2014 Acquisitions (Re)development Divestments LFL properties Other (incl. 2015 projects exchange rates & IFRIC 21) 35

  36. Slide 36: NRI by country

    Q1-Q4 NRI by country 2015 MEUR Q4/2015 Q4/2014 % 2015 2014 % Net rental income 57.5 41.5 38.6 199.6 169.4 17.9 NRI, Finland 23.1 25.9 -10.8 96.9 103.0 -5.9 NRI, Norway 18.7 n.a. n.a. 36.8 n.a. n.a. NRI, Sweden 9.4 9.2 2.4 39.7 38.9 2.2 NRI, Baltics & Denmark 6.4 6.4 -0.3 26.2 27.5 -4.8 36

  37. Slide 37: Occupancy improved following Sektor acquisition

    Occupancy improved following Q1-Q4 Sektor acquisition 2015 31 Dec 2015 31 Dec 2014 Occupancy rate (economic), % 96.8 96.3 LFL occupancy rate (economic), % 95.7 96.1 Occupancy cost ratio, % 9.1 9.2 (LFL shopping centres) Average rent, EUR/sq.m./mth 22.3 21.6  Increase in average rent due to divestme

  38. Slide 38: Stable leasing indicators

    Q1-Q4 Stable leasing indicators 2015 Q4/2015 Q4/2014 2015 2014 Average rent, EUR/sq.m. 22.3 21.6 22.3 21.6 # of leases started 304 184 895 595 Total area of leases started, sq.m. 52,063 34,168 173,301 122,568 Average rent of leases started, 23.9 22.1 23.2 19.9 EUR/sq.m. # of leases ended 295 222 1 1

  39. Slide 39: Income statement

    Q1-Q4 Income statement 2015 MEUR Q4/2015 Q4/2014 2015 2014 % Gross rental income 1) 65.3 46.4 223.9 189.4 18.2 Service charge income 24.0 14.4 71.7 55.9 28.2 Property operating expenses -31.5 -18.9 -94.6 -74.4 27.1 Other expenses from leasing operations -0.3 -0.4 -1.4 -1.6 -9.9 Net rental income 57.

  40. Slide 40: Positive valuation driven by Sweden

    Q1-Q4 Positive valuation driven by Sweden 2015 Fair value changes Weighted average MEUR yield requirement, % Fair value Q4/2015 2015 31 Dec 2015 31 Dec 2014 31 Dec 2015 Total 0.2 7.3 5.7 6.1 4,091.6 Finland -11.7 -37.1 5.9 6.1 1,659.4 Norway 0.2 0.2 5.2 - 1,330.8 Sweden1) 12.6 39.6 5.4 5.7 739.0 Bal

  41. Slide 41: Goodwill related to Sektor acquisition

    Q1-Q4 Goodwill related to Sektor acquisition 2015 MEUR 31 Dec 2015 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 171.5  Goodwill was tested for the first time at y

  42. Slide 42: Strong balance sheet

    Q1-Q4 Strong balance sheet 2015 MEUR 31 Dec 2015 31 Dec 2014 Investment properties 4,091.6 2,769.1 Total non-current assets 4,573.6 2,965.2 Investment properties held for sale 1.7 7.2 Total current assets 89.1 64.8 Total assets 4,664.4 3,037.2 Total shareholders’ equity 2,245.5 1,652.5 Total liabili

  43. Slide 43: Financing overview

    Q1-Q4 2015 FINANCING OVERVIEW 43

  44. Slide 44: An active year on the debt financing front

    Q1-Q4 An active year on the debt financing front 2015 Sektor refinancing  Refinancing was a combination of bonds, divestments and a new completed in December bank loan Reduced average interest  Average interest rate decreased to 3.04% mainly due to favorable terms on the new bank loan and unwindin

  45. Slide 45: Increased debt level following Sektor acquisition

    Increased debt level following Sektor Q1-Q4 acquisition 2015 Loan to Value Weighted average interest rate 80% 6% 70% 5% 60% 57.5% 4.25% 4.07% 4.12% 54.5% 4% 50% 49.3% 45.7% 3.28% 3.04% 40% 38.6% 3% 30% 2% 20% 1% 10% 0% 0% 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 45

  46. Slide 46: Sektor refinancing completed

    Q1-Q4 Sektor refinancing completed 2015  Three bonds in September:  NOK 1,400 million bond 10 yr, fixed 3.90%  NOK 1,250 million bond 5.5 yr, floating 3m Nibor +155 bps  Eurobond of EUR 300 million 7 yr, fixed 2.375%, has been swapped into NOK  Divestment proceeds of approx EUR 76 million used

  47. Slide 47: Financing key figures

    Q1-Q4 Financing key figures 2015 Q4/2015 Q4/2014 Q3/2015 Interest bearing debt, fair value, MEUR 2,037.1 1,188.4 2,022.6 Available liquidity, MEUR million 377.1 449.8 379.0 Average loan maturity, years 5.5 5.9 5.5 Interest hedging ratio, % 84.8 88.0 88.2 Weighted average interest rate, % 1) 3.04 3.2

  48. Slide 48: Debt type and currency split

    Q1-Q4 Debt type and currency split 2015 Breakdown by debt type 1) Breakdown by currency 1) CP 8% RCF10% Bank term loan 5% NOK 29% EUR 58% SEK 13% Bonds 77%  Currency breakdown shifted following the Sektor acquisition, and now reflects the country asset splits.  Part of EUR debt has been converted

  49. Slide 49: Debt maturities and interest risk hedging

    Q1-Q4 Debt maturities and interest risk hedging 2015 Maturity profile of debt 1) Debt by fixing type 700 Floating rate Loans 631 debt 600 Floating to fixed swaps 15% Undrawn loan facilities 500 Fixed rate 400 350 swaps 300 14% 300 257 266234 Fixed rate 200 168 debt 138 146 70% 100 60 75 38 0 2016 20

  50. Slide 50: Outlook 2016

    Q1-Q4 Outlook 2016 2015 Direct Operating profit EPRA Earnings EUR million EUR million 195.4- 220 209.4 170 139.8- 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 70 69.3 100 80 50 60 30 2012 2013 2014 2015 2016E 2012 2013 2014 2015 2016E  Direct Operating profit EUR

  51. Slide 51: Property portfolio

    Q1-Q4 2015 PROPERTY PORTFOLIO 51

  52. Slide 52: Lease portfolio

    Q1-Q4 Lease portfolio 2015  4,214 lease agreements with an average length of 3.3 years  Total GLA 1,240.440 sq.m.  Rents linked to CPI (nearly all agreements)  Annualised potential rental value for the portfolio is EUR 335.2 million Occupancy rate Average lease maturity years 99% 4 3.4 3.5 3.5 9

  53. Slide 53: Property portfolio

    Q1-Q4 Property portfolio 2015 Top 5 tenants Occupancy cost ratio Shopping centres, rolling 12 mth Proportion of 2015 rental income, % Kesko 8 Total 9.0% S Group 5 Finland 9.3% VarnerGruppen 4 Norway 8.8% ICA Gruppen 3 NorgesGruppen 2 Sweden 7.6% Top 5, total 22 11.3% Baltics & Denmark 0% 5% 10% 15%

  54. Slide 54: Valuation yield development

    Q1-Q4 Valuation yield development 2015 Citycon's valuation yield development 8% 7% 6.9% 6% 5.9% 5.7% 5.4% 5.2% 5% Q4/2010 Q4/2011 Q4/2012 Q4/2013 Q4/2014 Q4/2015 Finland Norway Sweden Baltics and Denmark Total 54

  55. Slide 55: Backup information

    Q1-Q4 2015 BACKUP INFORMATION

  56. Slide 56: History of Citycon

    Q1-Q4 History of Citycon +25 years of retail experience and portfolio growth 2015 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

  57. Slide 57: Cityconline – building community and loyalty

    Q1-Q4 Cityconline – building community and loyalty 2015 Customer Sms, e-mail Database & coupons APP CITYCON CUSTOMER CLUB Customer Targeted Customer Content Insight Lifecycle Communication LOYALTY CUSTOMER CLUB MEMBERS TO GROW: 250.000 in 2015 TARGET 1.000.000 in 2018 57

  58. Slide 58: Economic outlook

    Q1-Q4 Economic outlook 2015 Change % GDP growth Change % Inflation 4% 3% 3% 2% 2% 1% 1% 0% 0% Finland Norway Sweden Denmark Estonia Euro area Finland Norway Sweden Denmark Estonia Euro area -1% -1% -2% 2014 2015E 2016E 2017E 2014 2015E 2016E 2017E 12% % Unemployment % Public sector debt as % of GDP

  59. Slide 59: Yield compression in Sweden leads to historical gap with Finland

    Yield compression in Sweden leads to Q1-Q4 historical gap with Finland 2015 Stockholm vs. Helsinki shopping centre primevs. Stockholm yield Helsinki shopping centre prime yield 6,50 6,00 Prime yield, % 5,50 5,00 4,50 50 bps spread 4,00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Helsinki Stock

  60. Slide 60: Ownership, 31 December 2015

    Q1-Q4 Ownership, 31 December 2015 2015  Established and listed on Nasdaq Helsinki in 1988 Other 30.1%  Market cap EUR 2,136 million Nominee-  Total registered shareholders 9,537 of registered which nominee-registered 69.9% 69.9%  Largest shareholders:  Gazit-Globe 43.4%  CPPIB 15.0%  Ilmarine

  61. Slide 61: Contact information

    Q1-Q4 2015 Contact information Eero Sihvonen, CFO, Exec. VP Tel. +358 50 557 9137 Henrica Ginström, VP IR & Communications Tel. +358 50 554 4296 61

  62. Slide 62: Disclaimer

    Q1-Q4 Disclaimer 2015 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 t

  63. Slide 63: citycon.com

    Q1-Q4 2015 citycon.com

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