Citycon Oyj · OMXHEX:CTY1S
Citycon Oyj — Q3 2011 Earnings Presentation
46 slides from Citycon Oyj's earnings presentation, 2011
Slide 1: Citycon Presentation Q3/2011 Results
Citycon Presentation Q3/2011 Results
Slide 2: Contents
Contents Strategy Business Environment, Shopping Centre Sales and Footfall Q3 Main Points Sustainability and Property Portfolio Key Figures and Financing Overview Backup Information 2 Q3 2011
Slide 3: Strategy and Business Environment
Strategy and Business Environment 3 Q3 2011
Slide 4: Mission: Leaders of Nordic and Baltic Shopping Centres
Mission We want to be the leaders of Nordic and Baltic Shopping Centres Operational Financial Leverage the Excellence: Excellence: Expertise: Improve organic Strong balance Economies of growth sheet and higher scale returns Improving Divestments & Selective Profitability Recycle capital M&A Better S
Slide 5: Five Year Strategy: Balanced Portfolio
Five Year Strategy: Balanced Portfolio • The Nordic region is expected to More continue to show solid economic geographical growth spread • As spending power increases, the region will be of increasing interest to international retail brands Diversify risk and • By offering a comprehensive cash flow
Slide 6: Rental Growth
Five Year Strategy: Balanced Portfolio Selection of Quality Assets (Re)develop to Keep Keep Rental Growth • Accelerate (re)developments to EUR125 – 150 million p.a. Sell Keep or JV/Other Structures • Divestment • Recycle capital of EUR 300- by establishing 400 million JV’s on core assets Market Shar
Slide 7: Current Focus on Business Improvements
Current Focus on Business Improvements • Cut consumption of • Forward all goods and services recoverable costs • General cost • Improve conscious mentality properties’ income potential Cut • Proactive management of Recover leases Invest Negotiate • Invest in improvement of • Negotiate with propertie
Slide 8: Business Environment
Business Environment CONSUMER CONFIDENCE Source: Eurostat Consumer confidence indicator is conducted as an interview survey. It includes respondent’s view on financial situation, 8 general economic situation, unemployment expectations over the next 12 months, and savings over the next 12 months. Q3
Slide 9: Business Environment
Business Environment GDP PRIVATE CONSUMPTION 7,5% 5,6% 6,0% 4,8% 4,8% 4,2% 3,6% 3,4% 3,6% 3,7% 6,0% 2,7% 2,5% 5,1% 5,0% 5,0% 4,2% 4,3% 1,6% 3,4% 2,7% 2,8% 2,0% 2,5% 1,3% 2,1% 0,8% 1,7% 1,0% 0,0% Finland Sweden Estonia Lithuania Finland Sweden Estonia Lithuania -1,9% -4,5% 2010A 2011E 2012E 2013E 201
Slide 10: Business Environment
Business Environment In Jan-Aug 2011, retail sales RETAIL SALES increased by 5.8% in Finland, 1.2% in AND CPI, August 2011 Sweden and by 3.0% in Estonia. Retail Sales CPI In the real estate market, general sentiment is cautious and waiting. The 6,0 5,5 number of completed transactions has 4,0 3,8 be
Slide 11: Citycon Shopping Centre Sales and Footfall, Q1-Q3/2011 – Q1-Q3/2010
Citycon Shopping Centre Sales and Footfall, Q1-Q3/2011 – Q1-Q3/2010 11 Q3 2011
Slide 12: Q3 Main Points
Q3 Main Points 03201 CITYCON
Slide 13: Current Geographical Overview
Current Geographical Overview FINLAND • Market leader with 22.7% market share • Net rental income EUR 67.3 million Sweden (€m) Finland (€m) • 62.9% of total net rental income • 23 shopping centres, 38 other retail 681.9 1,557.3 98.9 properties, one unbuilt lot 44.7 26.8 67.3 Net Net MV Turn- MV Turn
Slide 14: Main Points - Q1 – Q3 2011
Main Points - Q1 – Q3 2011 (vs. Q1 – Q3 2010) • Turnover grew by 10.3% to EUR 161.0 m mostly thanks to acquisitions and redevelopment projects completed last year. • Net rental income increased 12.1% to EUR 107.0 m. With comparable exchange rates NRI increased by 10.5%. • Like-for-like net rental gr
Slide 15: Main Events - Q1 – Q3 2011
Main Events - Q1 – Q3 2011 • The company strengthened its balance sheet and improved liquidity: • by raising approximately EUR 99 million in new equity through a directed share offering arranged in July by issuing 33 million new shares. • by signing a 7-year unsecured term loan facility for a minimu
Slide 16: Financing Overview
Financing Overview • Specified outlook for 2011: • Turnover is expected to grow by EUR 18-23 million • Direct operating profit to is expected to grow operating profit EUR 10-15 million • Direct result is expected to grow by EUR 4-8 million • Total liquidity of EUR 292.8 million incl. unutilized comm
Slide 17: Sustainability and Property Portfolio
Sustainability and Property Portfolio 17 Q3 2011
Slide 18: Strategical Objectives Related to Environmental Responsibility
Strategical Objectives Related to Environmental At the moment, Green Shopping Responsibility Centre Management audits on-going in all the shopping centres 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
Slide 19: Ongoing (Re)development Projects
Ongoing (Re)development Projects PROPERTY AREA, TOTAL ACTUAL Expected yield EST. FINAL sq.m. ESTIMATED CUMULATIVE on completion YEAR OF NEW CAPEX, by the when COMPLE- before and end of period, after INVESTMENT, stabilized,% 1) TION MEUR MEUR Koskikeskus 27 700 37.9 6.6 6.6 Nov Redevelopment of the c
Slide 20: Latest Acquisitions Kristiine and Högdalen Centrum
Latest Acquisitions Kristiine and Högdalen Centrum Kristiine Högdalen Centrum Kristiine is located west of Tallinn city is a well-know shopping centre located in southern centre and it is Tallinn’s second-largest Stockholm, some five kilometres from the city shopping centre after Citycon’s Rocca al
Slide 21: Property Portfolio
Property Portfolio • 3,994 (3,793) leases with an average remaining length of 3.4 (3.2) years • GLA totalled 999,270 m2 • Net rental income increased 12.1% to EUR 107.0 m. With comparable exchange rates NRI increased by 10.5%. • Net rental income for like-for-like properties increased by 2.7% (excl.
Slide 22: Net Rental Income Growth by Segments and Portfolios
Net Rental Income Growth by Segments and Portfolios Baltic EUR million Finland Sweden Countries Other Total TURNOVER 9M/2009 69,4 17,2 7,3 0,0 93,8 137,4 Acquisitions - - - - 0,0 0,0 (Re)development projects -4,0 3,2 1,6 - 0,8 5,5 Divestments -0,2 -0,3 - - -0,5 -0,9 Like-for-like properties -0,5 0,2
Slide 23: 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 19.9% of GRI end of 2010 • Five largest totaled 33
Slide 24: Property Portfolio
Property Portfolio TOTAL PORTFOLIO Q3/2011 Q3/2010 Q1-Q3/2011 Q1-Q3/2010 2010 Number of leases started during the 188 184 554 544 789 period Total area of leases 64,777 33,341 127,636 112,594 160,215 started, sq.m. 1) Average rent of leases 21.9 17.5 19.7 17.7 17.9 started (EUR/sq.m.) 1) Number of l
Slide 25: Valuation Yield Development in the Portfolio
Valuation Yield Development in the Portfolio % Valuation yield above is based on external valuator’s portfolio valuation. 25 Q3 2011
Slide 26: Key Figures and Financing Overview
Key Figures and Financing Overview 26 Q3 2011
Slide 27: Snapshot of Statement of Comprehensive Income
Snapshot of Statement of Comprehensive Income EUR million Q3/2011 Q3/2010 Q1-Q3/2011 Q1-Q3/2010 2010 Gross rental income 52.5 45.3 153.0 138.5 185.9 Utility and service charge income 2.5 2.6 8.1 7.6 10.0 Turnover 55.0 48.0 161.0 146.1 195.9 Property operating expenses 16.2 14.6 53.2 49.5 67.4 Other
Slide 28: Snapshot of Statement of Financial Position
Snapshot of Statement of Financial Position Statement of Financial Position, EUR million 30 Sept 2011 30 Sept 2010 31 Dec 2010 Investment property 2,512.6 2,299.9 2,367.7 Total non-current assets 2,529.1 2,313.5 2,378.1 Current assets 50.2 111.3 56.9 Assets total 2,579.3 2,424.8 2,436.5 Total shareh
Slide 29: Cash Flow Statement for 9-month period ended 30 Sept 2011
Cash Flow Statement for 9-month period ended 30 Sept 11 • Cash from operations exceeded the prev-YR clearly due to: EUR MILLION 9M 2011 9M 2010 Operating activities • Cash flow before working capital increased by 11 % Cash flow before change in working capital 89,7 80,6 Change in working capital 1,0
Slide 30: Key Figures – Financing Overview
Key Figures – Financing Overview Interest-bearing debt by fixing type Maturity profile of loans and derivatives 600 EUR 1,466.6 million 1) 500 Loans (EUR 1,466.6m) 481 439 Fixed derivatives (EUR 960.0) Floating rate debt 385 17% 400 Fixed rate debt 18% 307 Convertible Bonds 300 (EUR 71.3m) 199 200 1
Slide 31: Key Figures – Financing Overview
Key Figures – Financing Overview Maturity profile of fixed and floating rate loans and Average fixed rate of debt and swaps1) undrawn committed credit limits 400 Fixed (EUR 258.4m) 6,0 % Fixed debt Swaps 367 5,60 % 5,50 % Floating (EUR 1,208.3m) 350 Undrawn credits (EUR 271.4m) 5,0 % 4,80 % 4,50 % 3
Slide 32: Key Figures - Debt Portfolio
Key Figures - Debt Portfolio Breakdown by debt type Breakdown by currency EUR 1,466.6 million 1) EUR 1,466.6 million 1) LTL 1% Other 32% Syndicated term loans 52% EUR 58% SEK 41% CP 2% Revolving credit facility 6% Bonds 8% • The backbone of the debt financing continues to be the syndicated term and
Slide 33: 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 % 1 600 1540,1 70 % 5,00 % 1 500 1445,2 1386,01389,5 60 % 1 400 1369,6 4,50 % 1343,1 1312,21327,2 1 300 1272,3 4,00 % 1205,31221,11194,61191,3 1234,8 50 % 1184,3 1 200 1147,31149,4 3,50 % 1 100
Slide 34: Share Performance
Share Performance1) 34 Q3 2011 1) Starting values of FTSE EPRA index and OMX Helsinki CAP index on 2 January 2009 have been rebased to Citycon share price at EUR 1.90
Slide 35: Ownership
Ownership • End of Q3 market capitalization totaled EUR 765.5 million • 86,1% of shareholders international • 3,997 registered shareholders • Largest Shareholders: • Ilmarinen 8.99% • Gazit-Globe 47.3% (source: www.gazit-globe.com) • Citycon is included in GPR 250 Property Securities Index. The inde
Slide 36: Backup Information
Backup Information Myyrmanni 36 Q3 2011
Slide 37: Completed Projects
Completed Projects FORUM, Jyväskylä, Finland The interior premises (12,000 m2) and the commercial concept of Forum, in the heart of Jyväskylä, was totally redeveloped. As a city centre shopping centre, Forum is focused on fashion and cafés and restaurants. Forum is visited by more than 120,000 custo
Slide 38: Completed Projects
Completed Projects LILJEHOLMSTORGET, Stockholm, Sweden 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! Total GLA 41,000
Slide 39: First Possible Termination Year of the Leases by Contract Type
First Possible Termination Year of the Leases by Contract Type, 31 Dec 2010 35 30 25 20 15 10 5 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021+ Fixed-term contracts expire at the end of the contract period, after which will be negotiated on a potential new lease agreement. Contracts va
Slide 40: Analysis of Financial Expenses
Analysis of Financial Expenses 3q 2q 3q Change-% Change-% YTD YTD Change-% Net Financial Expenses (EUR million) 2011 2011 2010 (y-o-y) (q-o-q) 2011 2010 (YTD) Financial Expenses: Interest expenses -15,2 -14,8 -13,3 14 % 3% -43,0 -38,9 11 % Foreign exchange gains(+)/ losses(-) 0,0 0,0 0,0 -129 % 51 %
Slide 41: Net Financial Expenses Q2 2011 vs Q3 2011
Net Financial Expenses Q2 2011 vs Q3 2011 EUR million 18 +0.4 -0.3 -0.0 -0.3 16 16,3 16,0 14 12 10 8 6 4 2 0 2Q2011 Net interest Fees Derivative Other 3Q2011 valuation 41 Q3 2011
Slide 42: Illustrative Calculation of ICR Covenant Using Q3 2011 Financials
Illustrative Calculation of ICR Covenant Using Q3 2011 Financials* Q3 2011 EBITDA for covenant EBITDA = EUR 112.8 + EUR 1.0 + calculation: direct operating profit EUR 4.0 + depreciations +/- non-cash and = EUR 117.7 million for rolling 12- exceptional items month period EUR million Q3 Q2 Q1 Q4 Cumul
Slide 43: Illustrative Calculation of Equity Ratio Covenant Using Q3 2011 Financials
Illustrative Calculation of Equity Ratio Covenant Using Q3 2011 Financials* Equity for covenant calculation: Equity = EUR 969.6 + EUR 67.6 – total shareholders’ equity + EUR 56.1 + EUR 32.7 subordinated debt – non- = EUR 1,013.9 million as at 30 Sept controlling interest +/– fair value of 2011 deriv
Slide 44: Citycon in Brief - Background
Citycon in Brief - Background Citycon’s path to becoming the market leader and an international real estate company 1988 Quoted on the Main List of Helsinki 2005 2008 Stock Exchange Office portfolio Citycon enters foreign markets The company sells 40% of Iso Omena to GIC. by acquiring its firs
Slide 45: Citycon Core Shopping Centres
Citycon Core Shopping Centres Iso Omena Myyrmanni Trio (incl. Hansa) 1977/87/2008 Lippulaiva Built 2001 1994/2007/2010 45.700 m2 1993 GLA 60.500 m2 45.700 m2 89.3 % 18.500 m2 Ownership 60 % 100 % 100 % Finland Koskikeskus Forum Columbus 1988 1953/91/2010 1997/07 27.700 m2 22,000 m2 21.000 m2 88 % Ci
Slide 46: Contact Information
Contact Information INVESTOR RELATIONS Mr Marcel Kokkeel CEO Tel. +358 207 664 521 Marcel.Kokkeel@citycon.fi Mr Eero Sihvonen CFO, Executive Vice President Tel. +358 50 5579 137 Eero.Sihvonen@citycon.fi Ms Hanna Jaakkola Vice President, IR and Communications Tel. +358 40 5666 070 Hanna.Jaakkola@city