Citycon Oyj · OMXHEX:CTY1S
Citycon Oyj — Q2 2013 Earnings Presentation
56 slides from Citycon Oyj's earnings presentation, July 2013
Slide 1: Q2 2013 Results
Q2 2013 Results 1 Q2 2013
Slide 2: Disclaimer
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 other
Slide 3: Geographical positioning
Geographical positioning Net rental income (Q1-Q2) Fair values of properties (June 2013) —with Kista Galleria 100 % —with Kista Galleria 100 % EUR million EUR million 12.7 323 13 % 10 % 50.3 1 671 51 % 1 247 52 % Sweden 35.8 38 % 36 % Finland Finland Finland Sweden Sweden Baltic Countries & New Busi
Slide 4: Geographical positioning
Geographical positioning Citycon celebrates its 25th anniversary this year. Citycon became the first retail property specialist in Finland 15 years ago and has now very strong foothold in the whole region: FINLAND • Market leader • Net rental income in Q1-Q2/2013 EUR 50.3 million • Currently 23 shop
Slide 5: Five core assets
Five core assets 1 Sweden—Kista Galleria 5 2 Sweden—Liljeholmstorget Galleria Finland—Iso Omena Company to provide picture Company to provide picture 4 3 Finland—Koskikeskus Estonia—Rocca al Mare Company to provide picture Retail premises Total GLA Parking Fair value Visitors Sales 2012 City (sq.m.)
Slide 6: Five year strategy—defined focus, increased total return
Five year strategy—defined focus, increased total return 1 2 3 Better Stronger Bigger Operational Financial Leverage the Excellence: Excellence: Expertise: – Improve organic – Strong balance – Execute selective growth sheet property – Focus on urban, – Funding acquisitions leading grocery diversific
Slide 7: Business environment
Business environment 7 Q2 2013
Slide 8: Business environment
Business environment CONSUMER CONFIDENCE 40 30 20 10 0 1.1.2008 1.3.2008 1.5.2008 1.7.2008 1.9.2008 1.1.2009 1.3.2009 1.5.2009 1.7.2009 1.9.2009 1.1.2010 1.3.2010 1.5.2010 1.7.2010 1.9.2010 1.1.2011 1.3.2011 1.5.2011 1.7.2011 1.9.2011 1.1.2012 1.3.2012 1.5.2012 1.7.2012 1.9.2012 1.1.2013 1.3.2013 1.
Slide 9: Economic outlook
Economic outlook GDP growth Inflation 10,0 % 6,0 % 8,0 % 5,0 % 4,0 % 6,0 % Change % Change % 3,0 % 4,0 % 2,0 % 2,0 % 1,0 % 0,0 % 0,0 % Sweden Finland Denmark Estonia Lithuania Euro zone Sweden Finland Denmark Estonia Lithuania Euro zone -2,0 % -1,0 % 2011 2012 2013E 2014E 2011 2012 2013E 2014E Unemp
Slide 10: Business environment
Business environment May unemployment rates below Retail sales (Jan-May)1) & CPI (May) the European Union average (10.9%): Retail Sales CPI • Finland 8.4 % 6,0 % 5,0 % • Sweden 7.9 % 5,0 % • Estonia 8.3 % (April 2013) 4,0 % 3,3 % 3,0 % • Lithuania 12.5 % (April 2013) 2,0 % 1,6 % 1,6 % 1,5 % 1,0 % In
Slide 11: Sales and footfall in all Citycon SC's
Sales and footfall In all Citycon SC’s Total sales: +1% Total footfall: +3% L-f-L shopping centre sales L-f-L shopping centre footfall 1 000 2% 60 12% 900 10% 50 10% 800 8% 700 40 1% 6% Million Visitors Sales, EUR million 1% Change, % 600 Change, % 30 4% 500 0% 400 2% 2% 20 0% 0% 0% 300 0% 200 10 -2
Slide 12: Highlights of Q2 2013
Highlights of Q2 2013 12 Q2 2013
Slide 13: Highlights of Q2 2013
Highlights of Q2 2013 Good financial • Like-for-like net rental income growth H1: 4.8 % performance in • EPRA Operating Profit Q2: EUR 37.8 m (H1: EUR 73.2 m, 14.1 %) Q1-Q2 • EPRA Earnings Q2: EUR 20.8 m (H1: EUR 40.4 m, 35.2 %) • Net fair value gains Q2: EUR 3.3 m (H1: EUR 15.1 m) • Administrative
Slide 14: Highlights of Q2 2013
Highlights of Q2 2013 EUR 500 m • Strategic transaction executed to diversify funding sources, improve unsecured seven-year liquidity and extend average debt maturities eurobond • Fixed annual coupon of 3.75 % successfully executed • The bond was rated BBB- by Standard & Poor’s and Baa3 by Moody’s,
Slide 15: Highlights of Q2 2013
Highlights of Q2 2013 Extension project at • Approx. 30,000 sqm extension of leasable area connected to the Iso Omena started future metro station (of which retail area 25,000 sqm) • Total investment EUR 175 m • Phase 1 in 50/50 partnership with NCC Property Development Oy • 35 % pre-leased • Constr
Slide 16: Summary of Q1–Q2 2013 Operational results
Summary of Q1 – Q2 2013 Operational results Q1 – Q2 2013 Like-for-like NRI growth, total 4.8 % L-f-L Shopping centre NRI growth 5.3 % L-f-L Supermarket & shops NRI growth 1.8 % L-f-L Shopping centre sales development 0.0 % L-f-L Shopping centre footfall development 2.0 % Solid rental and footfall gr
Slide 17: Summary of Q1–Q2 2013 Portfolio key numbers
Summary of Q1 – Q2 2013 Portfolio key numbers excluding Kista Galleria Q2 2013 Q2 2012 Q1 2013 Occupancy rate (economic), % 94.8 95.6 95.0 Occupancy cost ratio, % 8.5 9.0 8.6 (L-f-L shopping centres) Average rent, EUR/sq.m. 21.5 20.4 21.3 Fair value gain, EUR in million 3.3 0.1 11.8 Net yield requir
Slide 18: Summary of Q1–Q2 2013 Financial results
Summary of Q1 – Q2 2013 Financial results Q1 – Q2 2013 EUR million Q2 2013 Q2 2012 Q1 – Q2 2013 incl. 100 % Kista FY 2012 Galleria1) Net Rental Income, total 42.7 39.7 83.0 98.7 162.0 NRI Finland 26.1 24.4 50.3 50.3 98.2 NRI Sweden 10.4 9.4 20.1 35.8 39.2 NRI Baltic Countries & New 6.2 5.8 12.7 12.7
Slide 19: Outlook 2013
Outlook 2013 EPRA Operating Profit, EUR million EPRA Earnings, EUR million EUR 143.7 – 170 EUR 81.9 – EUR 153.7 110 EUR 91.9 150 90 130 110 70 90 135,7 117,4 50 105,3 107,7 105,0 63,9 70 53,3 50,9 47,3 43,8 50 30 2008 2009 2010 2011 2012 2013E 2008 2009 2010 2011 2012 2013E EPRA Earnings Outlook Ran
Slide 20: Property portfolio, (Re)development projects & sustainability
Property portfolio, (Re)development projects & sustainability 20 Q2 2013
Slide 21: Property portfolio excluding Kista Galleria
Property portfolio excluding Kista Galleria • 3,689 (3,911) leases with an average length of 3.6 (3.5) years • Total GLA 982,970 m2 (992,570 m2) • Rents linked to CPI (nearly all agreements) Segment diversification Occupancy cost ratio Shopping centre rental income by branches as per Dec 2012 L-f-L
Slide 22: Property portfolio – Key figures
Property portfolio – Key figures Q2/2013 Q2/2012 Q1/2013 2012 Number of leases started 125 247 167 792 during the period Total area of leases started, 35,423 33,254 35,387 141,167 sq.m.1) Average rent of leases started 19.1 19.1 20.7 20.5 (EUR/sq.m.)1) Number of leases ended during 200 200 250 1,064
Slide 23: Property portfolio Average remaining length
Property portfolio Average lease maturity over time • Measured in fair value, like-for-like properties Occupancy (%) 97.1 95.7 96.0 95.0 95.1 95.5 95.7 accounted for 78.3% of the total portfolio and of l-f-l 4 portfolio 66.7% is in Finland and 84.8% of the total 3,1 3,1 3,2 3,4 3,5 Average remaining
Slide 24: Valuation yield development in the portfolio
Valuation yield development in the portfolio Fair value of investment properties EUR 2,711.3 million (2,602.0) • Total fair value gains Q1-Q2 EUR 15.1 million (EUR 6.0 million) • Fair value gain in shopping centres EUR 12.2 million • Fair value gain in supermarkets and shops EUR 2.9 million Net yiel
Slide 25: Extension and (re)development of Iso Omena
Extension and (re)development of Iso Omena The shopping centre's retail area will grow to 75,000 square metres Vantaa Extension will be fully integrated with the new Matinkylä metro station and bus terminal Approx. 35,000 passengers will pass through the metro centre each day Helsinki Espoo City Cen
Slide 26: (Re)developments and extensions
Ongoing (re)development projects Property Area, Citycon’s Cumulative Expected Est. of Pre- sq.m. estimated realised yield on completion leasing before total capex by completion rate, % and after investment, the end of when EUR million period, stabilized, EUR million % 1) Iso Omena 63,300 88.0 9.3 6.
Slide 27: Largest (re)development projects under planning
Largest (re)development projects under planning Citycon's Board of Directors has not yet made a decision on these (re)development project, but they are under planning Property Project Citycon’s Target for Target Additional information area, expected net project year of 1) sq.m. investment initiation
Slide 28: Environmental targets and results
Environmental targets and results Strategic objectives related to environmental responsibility Targets for 2012 Results of 2012 Targets for 2013 Climate Change Reduction of greenhouse gas emission by 20 per cent by year In l-f-l shopping centres: 2-3% 2-3% 2020 from the 2009 level -3.3 % Energy Redu
Slide 29: Financial figures
Financial figures 29 Q2 2013
Slide 30: Snapshot of statement of comprehensive income
Snapshot of statement of comprehensive income EUR million Q2/2013 Q2/2012 Q1-Q2/2013 Q1-Q2/2012 2012 Gross rental income 58.1 55.3 117.3 109.9 225.9 Service charge income 3.5 3.1 7.2 6.3 13.3 Turnover 61.6 58.4 124.5 116.2 239.2 Property operating expenses 18.8 18.0 41.0 37.9 75.8 Other expenses fro
Slide 31: NRI growth by segments and portfolios (excl. Kista Galleria)
NRI growth by segments and portfolios (excl. Kista Galleria) Baltic Countries and EUR million Finland Sweden New business Other Total Turnover Q1-Q2/2011 43,9 17,3 7,6 0,0 68,7 106,0 Acquisitions 0,4 1,0 3,3 - 4,7 7,0 (Re)development projects 2,2 0,3 -0,3 - 2,2 3,2 Divestments -0,3 -0,7 - - -1,0 -1,
Slide 32: Segment information (incl. Kista Galleria)
Segment information (incl. Kista Galleria) EUR million Q2/2013 Q2/2012 Q1-Q2/2013 Q1-Q2/2012 2012 Net rental income Finland 26.1 24.4 50.3 47.3 98.2 Sweden 18.3 9.4 35.8 18.6 39.2 Baltic Countries and New Business 6.2 5.8 12.7 11.4 24.6 Total segments 50.6 39.7 98.7 77.3 162.0 Reconciliation to IFRS
Slide 33: Snapshot of statement of financial position
Snapshot of statement of financial position Statement of financial position, EUR million 30 Jun 2013 30 Jun 2012 31 Dec 2012 Investment properties 2,711.3 2,602.0 2,714.2 Total non-current assets 2,879.2 2,621.0 2,737.6 Total current assets 98.2 88.0 75.5 Total assets 2,983.9 2,720.5 2,818.5 Total s
Slide 34: Cash flow statement
Cash flow statement Q1-Q2 Q1-Q2 • Cash flows from operating activities decreased by A EUR MILLION 2013 2012 EUR 38.7 million due to higher interest expenses Operating activities and other financial charges resulting from the Profit before taxes 30,3 38,5 realised fair value losses on interest rate s
Slide 35: Financing highlights Q2 2013
Financing highlights Q2 2013 Investment grade • In May Citycon obtained investment grade credit ratings with credit ratings from stable outlook from Standard & Poor’s (BBB-) and Moody’s Standard & Poor’s (Baa3) and Moody’s in May • The ratings improve Citycon’s access to international debt capital m
Slide 36: Financing overview – Key figures
Financing overview – Key figures • Equity ratio improved to 42.7 % (Q1 2013: 40.4 %) as the remaining excess cash from the rights issue was used to repay debt in Q2. Will improve further when the convertible bond will be repaid in August with the remainder of the eurobond proceeds • LTV increased to
Slide 37: Financing overview – Key figures
Financing overview – Key figures Maturity profile of loans and derivatives Interest-bearing debt by fixing type EUR 1,555.9 m1) Loans (EUR 1,555.9m) Fixed derivatives (EUR 580.7m) Floating rate debt 10% Undrawn loan facilities (EUR 380m) Fixed rate debt 53% Convertible Bonds (EUR 39.8m) Fixed rate s
Slide 38: Financing overview – Key figures
Financing overview – Key figures Maturity profile of fixed and floating rate loans Average fixed rate of debt and swaps1) and undrawn committed credit limits Fixed (EUR 822.1m) Floating (EUR 153.1m) Undrawn credits (EUR 380.0m) Convertible Bonds (EUR 39.8m) • Main maturities during 2013 are the EUR
Slide 39: Debt portfolio
Debt portfolio Breakdown by debt type Breakdown by currency EUR 1,555.9 million1) EUR 1,555.9 million1) Other 7% LTL 1% SEK Bilateral term loans 19% 14% Syndicated term loans EUR 32% 80% CP 2% Bonds 45% • Sufficient liquidity buffer – Citycon’s unused committed credit facilities at the end of Q2 201
Slide 40: Interest rates and LTV
Interest rates and LTV Quarterly development of interest rates 1) Net debt and LTV-% 2) 1,600 70% 5.50% 1,500 5.00% 60% 1,400 4.50% 1,300 50% 4.00% 1,200 3.50% 1,100 40% 3.00% 1,000 2.50% 30% 2.00% 900 1.50% 800 20% 1.00% 700 0.50% 600 10% Q1-06 Q1-07 Q1-08 Q1-09 Q1-10 Q1-11 Q1-12 Q1-13 0.00% Fair v
Slide 41: Financial expenses
Financial expenses Q2 Q1 Q4 Q3 Change- Change- YTD YTD Change- Net Financial Expenses (EUR million) 2013 2013 2012 2012 % (y-o-y) % (q-o-q) 2013 2012 % (YTD) Financial Expenses: B Interest expenses -16,4 -16,8 -16,0 -16,2 5% -3% -33,2 -31,0 7% Foreign exchange gains(+)/ losses(-) 0,1 0,0 -0,1 0,1 -1
Slide 42: Net financial expenses Q1 2013 vs Q2 2013
Net financial expenses Q1 2013 vs Q2 2013 • Net Interest expenses decreased by EUR 0.5 million from the previous quarter due to the Kista shareholder loan accrued interest over the full Q2, instead of 2.5 months in Q1, and lower net debt levels following the equity issue in March. • Other expenses i
Slide 43: Share performance and volume
1 000 000 2 000 000 3 000 000 4 000 000 5 000 000 6 000 000 7 000 000 0 2.1.2012 43 13.1.2012 26.1.2012 8.2.2012 21.2.2012 5.3.2012 16.3.2012 29.3.2012 13.4.2012 26.4.2012 10.5.2012 24.5.2012 6.6.2012 19.6.2012 3.7.2012 16.7.2012 27.7.2012 9.8.2012 22.8.2012 4.9.2012 Citycon share volume Q2 2013 17.
Slide 44: Ownership
Ownership • Established and listed on the Helsinki Stock Shareholders Exchange since 1988 Domestic International • 30 June 2013 market cap EUR 1 054.7 million 23,9 % • Number of domestic shareholders increased: 76,1 % total 8,613 (5,825) registered shareholders, 23.9% (19.2%) of total • Largest Shar
Slide 45: Back up information
Back up information 45 Q2 2013
Slide 46: History of Citycon
History of Citycon Citycon’s 25 years! International New management Foundation expansion and new strategy 1988 2003 2011 Founded by Sampo Pension Ltd, Citycon business to include • Citycon’s new CEO, Marcel Kokkeel, Imatran Voima Oy, development as well as owning, joined the company Rakennustoimisto
Slide 47: Kista Galleria case study— flagship in Sweden
1 Kista Galleria case study— flagship in Sweden Kista Galleria One of the largest shopping centres in Stockholm1) • GLA: 92,000 sq.m of leasable area, 60,000 sq.m retail • Parking facility with 2,500 parking spaces • Fair value EUR 530 m, net rental yield 5.6% 1), occupancy 96.5% • Visitors (2012):
Slide 48: Iso Omena case study—flagship in Finland
2 Iso Omena case study—flagship in Finland One of the largest shopping centres in Helsinki Metropolitan Area • GLA: 63,000 sq.m of leasable area, 50,900 sq.m retail, • Fair value EUR 373.8 m, net rental yield 5.3% occupancy: 99.8% • Visitors (2012): 8.8 m • Sales (2012): EUR 260.4 m Major extension
Slide 49: Rocca al Mare case study—flagship in Estonia
3 Rocca al Mare case study—flagship in Estonia The largest shopping centre in Tallinn and all of Estonia • GLA: 53,300 sq.m of leasable area, 51,800 sq.m retail, occupancy 100% • Fair value EUR 151.5 m, net rental yield 8.2%, occupancy: 100% • Visitors (2012): 6.4 m • Sales (2012): EUR 136.6 m Poten
Slide 50: Koskikeskus case study – meeting point of Tampere
4 Koskikeskus case study – meeting point of Tampere in the heart of the city Koskikeskus Located in the very heart of Tampere • GLA: 34,300 sq.m of leasable area, 28,800 sq.m retail • Parking facility with 425 parking spaces • Fair value EUR 175.9 m, net rental yield 5.5%, occupancy: 89.8% • Visitor
Slide 51: Liljeholmstorget Galleria case study – acceleration of performance
5 Liljeholmstorget Galleria case study – acceleration of performance Liljeholmstorget Located in the lively and dynamic Liljeholmen • GLA: 40,900 sq.m of leasable area, 27,700 sq.m retail • Parking facility with 900 parking spaces • Fair value EUR 260.2 m, net rental yield 4.2% , occupancy: 97.9% •
Slide 52: Lease expiry profile Q2
Lease expiry profile Q2 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 +2023 Shopping centres % Other retail properties % Average remaining length: 3.6 yrs 52 Q2 2013
Slide 53: Illustrative calculation of ICR covenant using Q2 2013 financials
Illustrative calculation of ICR covenant using Q2 2013 financials1) Q2/2013 EBITDA for covenant EBITDA = EUR 144.7 + EUR 0.9+ calculation: direct operating profit EUR 0.8 + depreciations +/- non-cash and = EUR 146.4 million for rolling 12- exceptional items month period EUR million Q2 Q1 Q4 Q3 Cumul
Slide 54: Illustrative calculation of equity ratio covenant using Q2 2013 financials
Illustrative calculation of equity ratio covenant using Q2 2013 financials1) Equity for covenant calculation: Equity = EUR 1,272.8 + EUR 39.7 – total shareholders’ equity + EUR 47.0 + EUR 23.4 subordinated debt – non- = EUR 1,288.9 million as at 30 June controlling interest +/– fair value of 2013 de
Slide 55: Citycon's major shopping centres
Citycon’s major shopping centres Iso Omena Myyrmanni Trio (incl. Hansa) 1977/87/2008 Lippulaiva Built 2001 1994/2007/2010 45.700 m2 1993 GLA 63.300 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 100
Slide 56: Contact information
Contact information INVESTOR RELATIONS Mr Marcel Kokkeel CEO Tel. +358 207 664 521 Marcel.Kokkeel@citycon.com Mr Eero Sihvonen CFO, Executive Vice President Tel. +358 50 5579 137 Eero.Sihvonen@citycon.com Ms Henrica Ginström IR Manager Tel. +358 50 5544 296 Henrica.Ginstrom@citycon.com Q2 2013 56