Citycon Oyj · OMXHEX:CTY1S

Citycon Oyj — Q3 2014 Earnings Presentation

55 slides from Citycon Oyj's earnings presentation, October 2014

  1. Slide 1: Citycon presentation Q3/2014 Results

    2014 Citycon presentation 2014 Q3/2014 Results

  2. Slide 2: Disclaimer

    2014 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

  3. Slide 3: Leading owner, manager, and developer of shopping centres in the Nordics and Baltics

    2014 Leading owner, manager, and developer of shopping centres in the Nordics and Baltics Key figures 30 September 2014  # of shopping centres1) 36  # of assets 67 Finland  Gross leasable area, sq.m. 949,230 Sweden  Total assets, EUR billion1) 3.3  Market cap, EUR billion 1.6  S&P BBB; Moody’s

  4. Slide 4: A focused company

    2014 A focused company Portfolio selection criteria: Dominant in Located in urban Grocery- (Re)development potential catchment area, environment in anchored and intensification VISION located in markets growing cities directly and necessity- opportunities through with high barriers connected to publ

  5. Slide 5: Leading position in core markets

    2014 Leading position in core markets Thousand sq.m. Nordic and Baltic region Thousand sq.m. Finland 1 500 400 1 315 353 300 1 000 805 694 200 500 129 106 106 101 326 273 100 0 0 Thousand sq.m. Sweden Thousand sq.m. Estonia 400 200 338 300 272 225 219 106 196 200 100 92 100 31 31 24 0 0 5 Includes s

  6. Slide 6: Focus on urban locations driven by strong demographics

    2014 Focus on urban locations driven by strong demographics Core assets:  Urban environments, located where people live and work  Strong population growth and natural footfall  Integrated with public transportation  Benefit from high barriers to entry, e.g., land constraints, zoning restrictions

  7. Slide 7: Core portfolio of grocery-anchored shopping centres

    2014 Core portfolio of grocery-anchored shopping centres Shopping centre rental income by branches 31 December 2013 2% 7% 8% Clothes and fashion 27% Groceries Leisure, home supplies 8% Services and offices Cafes and restaurants Health and beauty 10% Department stores Other specialty stores 19% 18% 7

  8. Slide 8: Citycon's five core assets

    2014 Citycon’s five core assets Sweden – Kista Galleria Finland – Iso Omena Sweden – Liljeholmstorget Galleria Finland – Koskikeskus Estonia – Rocca al Mare Total GLA Fair value Net rental Economic Visitors 2013 Sales 2013 (sq.m.) (EUR million)1) yield, %1) occupancy, %1) (millions) (EUR million) Ki

  9. Slide 9: Citycon's portfolio is well positioned for changing retail landscape

    2014 Citycon’s portfolio is well positioned for changing retail landscape Citycon: Urbanisation  Growing urban population • 87% of total portfolio in main cities  Increased urban GDP per capita • 70% in capital cities Convenience  Demand for proximity, security, • Vast majority of centres cleanli

  10. Slide 10: Business Environment

    2014 BUSINESS ENVIRONMENT 10

  11. Slide 11: Consumer confidence

    11 0 -40 -30 -20 -10 -50 10 20 30 40 1.1.2010 1.3.2010 1.5.2010 Source: Eurostat 1.7.2010 1.9.2010 1.11.2010 Finland 1.1.2011 1.3.2011 1.5.2011 Sweden 1.7.2011 1.9.2011 1.11.2011 Consumer confidence 1.1.2012 Estonia 1.3.2012 1.5.2012 1.7.2012 Lithuania 1.9.2012 1.11.2012 1.1.2013 Denmark 1.3.2013 1.

  12. Slide 12: Economic outlook

    2014 Economic outlook Change % 10% GDP growth Change % Inflation 6% 8% 5% 4% 6% 3% 4% 2% 2% 1% 0% 0% -1% Finland Sweden Denmark Estonia Lithuania Euro area Finland Sweden Denmark Estonia Lithuania Euro area -2% 2011 2012 2013 2014E 2015E 2011 2012 2013 2014E 2015E % Unemployment % Public sector debt

  13. Slide 13: Highlights Q3/2014

    2014 HIGHLIGHTS Q3/2014 13

  14. Slide 14: Highlights Q3/2014

    2014 Highlights Q3/2014 Solid financial performance Robust operating numbers in a challenging retail environment Completion of EUR 400 million share issuances Investment-grade credit ratings upgraded Successful Eurobond issue of EUR 350 million Announcement of acquisition and (re)development of Möln

  15. Slide 15: Solid financial performance

    2014 Solid financial performance Q1-Q3/ Q1-Q3/ EUR million Q3/2014 Q3/2013 Change-% 2014 2013 Turnover 61.4 62.1 184.5 186.6 -1.1 Net rental income 44.0 43.9 128.0 126.9 0.9 Administrative expenses 4.2 4.7 14.4 15.1 -4.9 EPRA Operating profit 40.2 39.5 114.9 112.6 2.0 Net financial income & expenses

  16. Slide 16: Robust operating numbers: continued growth in like-for-like NRI

    2014 Robust operating numbers Continued growth in like-for-like NRI Like-for-like net rental income growth  Continued strong like-for-like 6% net rental income growth in low inflation environment 4.9% 5% 4.6%  Shopping centres: 3.0%  Supermarkets & shops: 2.4% 4% 3.8% 3% 3.0%  Growth in all regi

  17. Slide 17: Robust operating numbers: leasing indicators stable

    2014 Robust operating numbers Leasing indicators stable Q3/2014 Q3/2013 Q2/2014 Q4/2013 Occupancy rate (economic), % 95.7 95.8 95.7 95.7 LFL occupancy rate (economic), % 95.1 95.4 95.2 95.2 Occupancy cost ratio, % 8.7 8.7 8.7 8.7 (LFL shopping centres) Average rent, EUR/sq.m./mth 21.7 21.5 21.7 21.5

  18. Slide 18: Robust operating numbers: reduced opex and admin expenses

    2014 Robust operating numbers Reduced opex and admin expenses Property operating expenses Administrative expenses EUR million EUR million 90 30 27.7 78.4 26.5 80 75.8 71.6 25 23.3 70 67.4 20.6 58.8 60 55.4 20 50 15.1 15 14.4 40 30 10 20 5 10 0 0 2010 2011 2012 2013 Q1-Q3/2014 2010 2011 2012 2013 Q1-

  19. Slide 19: Robust operating numbers: LFL sales and footfall stable

    2014 Robust operating numbers LFL sales and footfall stable LFL shopping centre sales LFL shopping centre footfall EUR million Growth % Million Growth % 1 600 12% 90 4% 4% 11% 80 1 400 10% 3% 70 1 200 8% 60 2% 2% 1 000 6% 50 800 4% 1% 40 600 2% 30 0% 0% 1% 400 0% 20 0% -1% -1% 200 -2% -2% 10 0 -2% 0

  20. Slide 20: Retail environment promising in Sweden, challenging in Finland

    2014 Retail environment promising in Sweden, challenging in Finland  Finland 8% Retail sales (Jan-Aug) and CPI (Aug)  GDP forecast close to zero 6.5% 6% 5.3%  Consumers hold back on spending Retail 4% 3.1% Sales  Sweden CPI 2% 1.1%  Stronger economic 0.5% -0.7% -0.2% -0.7% 0.2% -0.2% fundamenta

  21. Slide 21: Strongly enhanced financial profile

    2014 Strongly enhanced financial profile  Completion of EUR 400 million LTV development share issuances 70%  Decreased LTV  Stronger ownership base with 60% 58.2% 57.5% CPPIB as 15% shareholder 54.5% 49.3% 50%  Investment-grade credit ratings upgraded  S&P BBB (from BBB-) 40% 36.7%  Moody’s Ba

  22. Slide 22: Acquisition and (re)development of Mölndals Galleria in Gothenburg

    2014 Acquisition and (re)development of Mölndals Galleria in Gothenburg  Modern urban city gallery focusing on daily necessities  (Re)development in 50% JV with NCC PD, Citycon to purchase NCC’s share after completion  Citycon’s total investment approx. EUR 120 million  Existing old retail prope

  23. Slide 23: Developments progressing

    2014 Developments progressing Citycon’s Actual Expected Area (expected) investments yield on Pre-leasing Completion before/ investment by completion rate, % target after, sq.m. need, 30.9.2014, when EUR m EUR m stabilised, % Extension & Iso 63,300 88.0 27.8 6.5-7.0 40% Q3/2016 (re)develop Omena 90,0

  24. Slide 24: Development pipeline: projects planned 2015 and later

    2014 Development pipeline 3 projects planned ≥ 2015 Citycon’s Estimated Target for expected project project investment area/additi initiation/ need, onal sq.m. completion EUR m Building of a new shopping centre replacing the old Mölndals retail property. Joint venture agreement for the 25,000 120 20

  25. Slide 25: Citycon's strategy reconfirmed

    2014 Citycon’s strategy reconfirmed  Citycon continues to focus on owning, developing and managing urban, grocery-anchored shopping centres in the Nordics and Baltics  Approx. EUR 300 million to be divested (incl. supermarkets and shops as well as smaller, non-urban shopping centres) over the next

  26. Slide 26: Summary of Q3/2014 and going forward

    2014 Summary of Q3/2014 and going forward Solid LFL performance despite weak Finnish environment Stronger capital base (Re)developments and selected acquisitions support further earnings growth 26

  27. Slide 27: October: Citycon to acquire GIC's 40% stake in Iso Omena

    2014 16 October: Citycon to acquire GIC’s 40% stake in Iso Omena  GIC has been a co-investor in Iso  Fair value Q4/2013: EUR 388.1 million Omena since 2008  Successful operational performance 2008-2013:  Net rental income +30%  Full ownership of the property provides  Sales and footfall +17% f

  28. Slide 28: Financial Figures

    2014 FINANCIAL FIGURES 28

  29. Slide 29: Financial results

    2014 Financial results Q1-Q3/ Q1-Q3/ Q1-Q3/ EUR million Q3/2014 Q3/2013 2014 incl. 2014 2013 Kista Net rental income, total 44.0 43.9 128.0 126.9 150.3 NRI, Finland 26.7 26.8 77.1 77.2 77.1 NRI, Sweden 10.2 10.6 29.8 30.7 52.1 NRI, Baltic Countries & New 7.1 6.4 21.1 19.0 21.1 Business EPRA Operatin

  30. Slide 30: NRI development

    2014 NRI development EUR million 130 3.0 -1.6 129 1.7 -1.8 128.0 128 126.9 -0.2 127 126 125 124 123 122 121 120 Q1-Q3/2013 Acquisitions (Re)development Divestments LFL properties Other (incl. Q1-Q3/2014 projects exchange rates) 30

  31. Slide 31: Income statement

    2014 Income statement Q1-Q3/ Q1-Q3/ Change- EUR million Q3/2014 Q3/2013 2014 2013 % Turnover 61.4 62.1 184.5 186.6 -1.1 Property operating expenses 16.8 17.8 55.4 58.8 -5.8 Other expenses from leasing operations 0.5 0.4 1.1 0.9 25.1 Net rental income 44.0 43.9 128.0 126.9 0.9 Administrative expenses

  32. Slide 32: Balance sheet

    2014 Balance sheet EUR million 30 Sep 2014 30 Sep 2013 31 Dec 2013 Investment properties 2,759.0 2,739.4 2,733.5 Total non-current assets 2,944.7 2,910.1 2,896.2 Total current assets 141.8 51.8 74.5 Total assets 3,094.1 2,968.0 2,973.0 Total shareholder’s equity 1,692.2 1,236.3 1,278.8 Total liabili

  33. Slide 33: Successful directed share issue and rights issue in June-July

    2014 Successful directed share issue and rights issue in June-July  Directed share issue of approx. EUR 206.4 million to CPPIB Successful execution (9 June) and a fully subscribed rights issue of approx. EUR 196.5 million to all shareholders (8 July)  Major shareholder participation  Approx. EUR

  34. Slide 34: EUR 350 million unsecured 10-year Eurobond successfully executed

    2014 EUR 350 million unsecured 10-year Eurobond succesfully executed Transaction terms Final allocation Issuer Citycon Treasury B.V. Guarantor Citycon Oyj 5.6% 0.4% Status Senior, Unsecured, RegS Bearer Notes 8.3% Rating Baa2 (stable) / BBB (stable) Maturity 1 October 2024 Asset management Size EUR

  35. Slide 35: Outlook 2014

    2014 Outlook 2014 EPRA Operating profit EPRA Earnings EUR million EUR million 94.7- 170 147.1- 110 100.7 153.1 149.1 150 135.7 86.7 90 130 117.4 110 105.0 70 63.9 90 53.3 50 47.3 70 50 30 2010 2011 2012 2013 2014E 2010 2011 2012 2013 2014E EPRA Operating profit Outlook Range EPRA Earnings Outlook Ra

  36. Slide 36: Financing Overview

    2014 FINANCING OVERVIEW

  37. Slide 37: Financing overview – Key figures

    2014 Financing overview – Key figures 30 Sep 2014 30 Sep 2013 30 Jun 2014 Interest bearing debt, fair value, EUR Million 1,200.9 1,499.5 1,308.6 Available liquidity, EUR million 514.2 405.0 419.9 Average loan maturity, years 3.8 4.3 3.8 Average fixing period, years 3.7 4.2 3.7 Hedging ratio, % 87.4

  38. Slide 38: Debt type and currency split

    2014 Debt type and currency split Breakdown by debt type 1) Breakdown by currency 1)  The share of bonds will increase further to over 80% when the EUR 350 million Eurobond is settled in October and bank loans is prepaid with the proceeds. Currency breakdown also to shift more towards EUR 38 1) Cal

  39. Slide 39: Debt maturities and interest risk hedging

    2014 Debt maturities and interest risk hedging Maturity profile of loans and derivatives Interest-bearing debt by fixing type 500 500 Floating rate Loans Fixed to floating swaps debt 400 Undrawn loan facilities 13% 300 269 Fixed rate 189 swaps 200 160 147 170 21% Fixed rate debt 90 97 67% 100 7780 6

  40. Slide 40: Financial expenses analysis

    2014 Financial expenses analysis Q1-Q3/ Q1-Q3/ EUR thousand Q3/2014 Q2/2014 Q3/2013 2014 2013 Interest expenses A -11,556 -14,685 -15,919 -40,889 -49,079 Foreign exchange gains (+) / losses (-) -2 -50 -32 -89 50 Amortisation of capitalised fees -363 -906 -412 -1,675 -1,591 Non-cash option expense fr

  41. Slide 41: Property Portfolio & (Re)developments

    2014 PROPERTY PORTFOLIO & (RE)DEVELOPMENTS 41

  42. Slide 42: Lease portfolio

    2014 Lease portfolio  3,196 (3,636) lease agreements with an average length of 3.3 (3.6) years  Total GLA 949,230 sq.m. (975,790 sq.m.)  Rents linked to CPI (nearly all agreements)  Annualised potential rental value for the portfolio is EUR 246.2 million Occupancy rate (economic) Average lease m

  43. Slide 43: Lease expiry profile Q3/2014

    2014 Lease expiry profile Q3/2014 30% 25% 20% 15% Other retail properties % Shopping centres % 10% 5% 0% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 +2024 43

  44. Slide 44: Property portfolio

    2014 Property portfolio Q1-Q3/ Q1-Q3/ Q3/2014 Q3/2013 2014 2013 Occupancy rate (economic), % 95.7 95.8 95.7 95.8 Average rent, EUR/sq.m. 21.7 21.5 21.7 21.5 # of leases started 139 156 411 448 Total area of leases started, sq.m. 27,999 26,507 88,400 97,317 Average rent of leases started, 18.1 18.4 1

  45. Slide 45: Property portfolio

    2014 Property portfolio Top 5 tenants Occupancy cost ratio 31 Dec 2013 LFL shopping centres, rolling 12 mth Proportion of Average rental income, remaining length % of leases, years Total 8.7% Kesko 16.1 6.1 S Group 5.7 6.9 Finland 9.6% ICA Gruppen 4.2 3.5 Sweden 6.9% Stockmann 2.7 2.3 Tokmanni 2.0 3

  46. Slide 46: Valuation yield development

    2014 Valuation yield development  Fair value of investment properties: EUR 2,759.0 million  Fair value change in Q1-Q3/2014: EUR 13.5 million  Citycon’s weighted average net yield requirement 30 Sept: 6.2% (as defined by JLL) Citycon's valuation yield development 8,5 % Finland 7,5 % 7.3% Sweden B

  47. Slide 47: Extension and (re)development of Iso Omena

    2014 Extension and (re)development of Iso Omena  The shopping centre's retail area will grow to 75,000 sq.m. Vantaa  Extension will be fully integrated with the new Matinkylä metro station and bus terminal  Approx. 35,000 passengers /day Helsinki Espoo City Centre  Citycon and NCC Property Devel

  48. Slide 48: Strategic (re)development and partnership in IsoKristiina

    2014 Strategic (re)development and partnership in IsoKristiina Lappeenranta  IsoKristiina is located in the city centre of Lappeenranta, a university city in Eastern Finland 25 km from the Russian border  Catchment area is approx. 130,000 inhabitants  Great emphasis in the project is placed on le

  49. Slide 49: Shares and Shareholders

    2014 SHARES AND SHAREHOLDERS 49

  50. Slide 50: Share performance and volume

    50 1 000 000 2 000 000 3 000 000 5 000 000 6 000 000 7 000 000 4 000 000 0 Shares 31.1.2012 29.2.2012 30.3.2012 30.4.2012 31.5.2012 29.6.2012 31.7.2012 31.8.2012 28.9.2012 31.10.2012 30.11.2012 28.12.2012 31.1.2013 28.2.2013 28.3.2013 Citycon share volume 30.4.2013 31.5.2013 28.6.2013 31.7.2013 Shar

  51. Slide 51: Ownership, September 2014

    2014 Ownership, 30 September 2014  Established and listed on the Helsinki Shareholders Stock Exchange in 1988  Market cap EUR 1,572.3 million Other 31.3%  Total registered shareholders 7,694 Nominee- (8,789), of which nominee-registered registered 68.7% (77.4%) of total 68.7%  Largest shareholde

  52. Slide 52: Back up information

    2014 BACK UP INFORMATION 52

  53. Slide 53: History of Citycon

    2014 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,  Citycon business to include development  Citycon’s new CEO, Marcel Kokkeel, Imatran Voima Oy, as well as own

  54. Slide 54: Contact information

    2014 Contact information Eero Sihvonen, CFO, Exec. VP Tel. +358 50 557 9137 Henrica Ginström, IR Manager Tel. +358 50 554 4296 54

  55. Slide 55: citycon.com

    2014 citycon.com

Citycon — Q3 2014 Earnings Presentation on 6ix