Citycon Oyj · OMXHEX:CTY1S

Citycon Oyj — Q1 2015 Earnings Presentation

54 slides from Citycon Oyj's earnings presentation, 2015

1. Slide 1: Citycon presentation Q1/2015 Results

   2015 Q1 Citycon presentation 2015 Q1/2015 Results Q1

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

   Leading owner, manager, and developer of 2015 shopping centres in the Nordics and Baltics Q1 Key figures 31 March 2015  # of shopping centres1) 35  # of assets 60 Finland  Gross leasable area, sq.m. 930,940 Sweden  Total assets, EUR billion1) 3.4  Market cap, EUR billion 1.8  S&P BBB; Moody’s

3. Slide 3: Offering the best environment for success

   2015 Offering the best environment for success Q1 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 shoppin

4. Slide 4: Leading position in core markets

   2015 Leading position in core markets Q1 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 4 Include

5. Slide 5: Urban crosspoints driven by strong demographics

   Urban crosspoints driven by strong 2015 demographics Q1 Core assets:  Urban environments, located where people live and work  Strong population growth and natural footfall  Integrated with public transportation  Shared access to education, healthcare, culture, municipal services 5

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

   Core portfolio of grocery-anchored 2015 shopping centres Q1 Rental income by category for shopping centres FY2014 2% 7% 9% 26% Clothes and fashion Groceries Leisure, home supplies 8% Services and offices Cafes and restaurants Health and beauty 11% Department stores Other specialty stores 20% 18% 6

7. Slide 7: Citycon's five core assets

   2015 Citycon’s five core assets Q1 Sweden – Kista Galleria Finland – Iso Omena Sweden – Liljeholmstorget Galleria Finland – Koskikeskus Estonia – Rocca al Mare Total GLA Fair value Net rental Economic Visitors 2014 Sales 2014 (sq.m.) (EUR million)1) yield, %1) occupancy, %1) (millions) (EUR million)

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

   Citycon’s portfolio is well positioned 2015 for the changing retail landscape Q1 Citycon’s response Urbanisation Growing urban population 87% of total portfolio in main cities Increased urban GDP per capita 70% in capital cities Convenience Aging population and increasing 100% of centres located <50

9. Slide 9: Business Environment

   2015 Q1 BUSINESS ENVIRONMENT 9

10. Slide 10: Consumer confidence

    10 0 -30 -10 -20 10 20 30 40 1.1.2010 1.3.2010 1.5.2010 Source: Eurostat 1.7.2010 1.9.2010 1.11.2010 1.1.2011 1.3.2011 1.5.2011 Finland 1.7.2011 1.9.2011 1.11.2011 Sweden 1.1.2012 Consumer confidence 1.3.2012 1.5.2012 1.7.2012 Estonia 1.9.2012 1.11.2012 1.1.2013 1.3.2013 Denmark 1.5.2013 1.7.2013 1.

11. Slide 11: Economic outlook

    2015 Economic outlook Q1 Change % GDP growth Change % Inflation 3% 4% 2% 3% 2% 1% 1% 0% Finland Sweden Denmark Estonia Euro area 0% -1% Finland Sweden Denmark Estonia Euro area -1% -2% 2013 2014 2015E 2016E 2013 2014 2015E 2016E % Unemployment 80% % Public sector debt as % of GDP 15% 60% 10% 40% 5%

12. Slide 12: Q1/2015 Solid start to the year

    2015 Q1 Q1/2015 SOLID START TO THE YEAR 12

13. Slide 13: Highlights Q1/2015

    2015 Highlights Q1/2015 Q1 Financial performance  Steady result supported by lower financing expenses Operating performance  Solid LFL NRI  Reflection of country retail environment Stable overall valuation  Positive development in Sweden (Re)developments progressing  IsoKristiina to open in Oct

14. Slide 14: Solid financial and operating performance

    2015 Solid financial and operating performance Q1 MEUR Q1/2015 Q1/2014 % 2014 Net rental income 39.8 40.1 -0.7 169.4 EPRA Operating profit 34.9 35.5 -1.7 149.8 EPRA Earnings 27.2 21.6 26.0 99.7 EPRA Earnings per share (basic) 0.046 0.049 -6.0 0.191 EPRA NAV 2.92 3.04 -4.0 3.01  Like-for-like gross

15. Slide 15: Continued growth in like-for-like NRI

    2015 Continued growth in like-for-like NRI Q1 Like-for-like NRI growth  Continued like-for-like NRI growth in a close to zero inflation 6% environment 5% 4.9%  Shopping centres: 2.3% 4.6%  Supermarkets & shops: 2.8% 3.8% 4%  Divergence between countries 2.9% 3% 2.4%  Finland: -0.4%  Sweden: 10

16. Slide 16: Sales and footfall in Finland under pressure

    2015 Sales and footfall in Finland under pressure Q1 Sales in LFL shopping centres Footfall in LFL shopping centres 6% 6% 4% 4% 2% 2% 2% 0% 0% 0% 0% -2% -2% -2% -2% -4% -3% -4% -3% -4% -6% -6% Finland Sweden Baltics & Total Finland Sweden Baltics & Total New New Business Business 16

17. Slide 17: Retail environment weak in Finland, but strong in Sweden

    Retail environment weak in Finland, but strong 2015 in Sweden Q1 Finland Retail sales Jan-Feb 2015  GDP forecast for 2015 10% 8.0% 8% modest 6% 4.8%  Consumers still hold back on 4% spending 2% 0.8% Sweden 0% -2%  Strong economic -4% -1.6% fundamentals continues Finland Sweden Estonia Denmark Bal

18. Slide 18: Further enhancement of portfolio: Developments progressing

    Further enhancement of portfolio: 2015 Developments progressing Q1 Citycon’s Actual gross Expected Area (expected) investments yield on Pre-leasing Completion before/ investment by completion rate, % target after, sq.m. need, 31.03.2015, when MEUR MEUR stabilised, % Extension & Iso 63,300 Q3/2016 18

19. Slide 19: Iso Omena - top shopping centre in the Helsinki region

    Iso Omena - top shopping centre in the 2015 Helsinki region Q1  New concept with improved circulation  Total extension approx. 35,000 sq.m. (of which retail 29,000 sq.m.)  Opening Q3/2016 & Q2/2017  Full integration with new metro  35,000 passengers/day 19

20. Slide 20: Iso Omena - top shopping centre in the Helsinki region

    Iso Omena - top shopping centre in the 2015 Helsinki region Q1 Ground floor Extensions 20

21. Slide 21: IsoKristiina – prime shopping and entertainment location

    IsoKristiina – prime shopping and 2015 entertainment location Q1  Opening of phase 1 in May 2015  Grand opening Oct 2015  Theather, healthcare, gym, and cinema integrated  Strong anchor profile e.g. Sokos / Marks & Spencer, Kesko, Claes Ohlson 21

22. Slide 22: Stenungs Torg - phase 1 completed

    2015 Stenungs Torg - phase 1 completed Q1  Phase 1 completed in Oct 2014  New main entrance  H&M & Nordic Wellness new anchor tenants  Phase 2 further extension and upgrade 22

23. Slide 23: Development pipeline

    Development pipeline 2015 2 projects committed and one planned ≥ 2015 Q1 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 C Mölndals retail property. Joint venture agreemen

24. Slide 24: (Re)developments and refurbishments put pressure on 2015 and start contributing in 2016

    2015 (Re)developments and refurbishments put pressure on 2015 and start contributing in 2016 Q1  Grand opening October 2015 IsoKristiina (re)development  Connection to extension incl. partial demolition of parking building Iso Omena (re)development  7% of GLA offline since Feb 2015  Signing of 7

25. Slide 25: Going forward

    2015 Going forward Q1 2015 EPRA EPS guidance remains unchanged at 17.5-19.5 (Re)developments and selected acquisitions support further earnings growth 2016/2017 Maintain strong capital base Target LTV: 40-45% 25

26. Slide 26: Financial Review

    2015 Q1 FINANCIAL REVIEW 26

27. Slide 27: Financial results

    2015 Financial results Q1 MEUR Q1/2015 Q1/2014 % 2014 Net rental income, total 39.8 40.1 -0.7 169.4 NRI, Finland 23.5 24.4 -3.7 103.0 NRI, Sweden 9.6 8.8 8.8 38.9 NRI, Baltics & New Business 6.7 6.9 -2.6 27.5 EPRA Operating profit 34.9 35.5 -1.7 149.8 EPRA Earnings 27.2 21.6 26.0 99.7 EPRA EPS (basi

28. Slide 28: NRI development

    2015 NRI development Q1 EUR million 42 LFL NRI growth 41 2.4% 40.1 0.8 40 0.0 39.8 -0.1 -0.3 39 -0.7 38 37 36 35 Q1/2014 Acquisitions (Re)development Divestments LFL properties Other (incl. Q1/2015 projects exchange rates) 28

29. Slide 29: Stable leasing indicators

    2015 Stable leasing indicators Q1 Q1/2015 Q1/2014 Q4/2014 Occupancy rate (economic), % 95.9 95.5 96.3 LFL occupancy rate (economic), % 95.3 95.3 95.8 Occupancy cost ratio, % 8.8 8.9 8.8 (LFL shopping centres) Average rent, EUR/sq.m./mth 21.8 21.7 21.6  Relatively stable occupancy  Slight quarterly

30. Slide 30: Stable leasing indicators

    2015 Stable leasing indicators Q1 Q1/2015 Q1/2014 Q4/2014 Average rent, EUR/sq.m. 21.8 21.7 21.6 # of leases started 185 144 184 Total area of leases started, sq.m. 44,674 30,696 34,168 Average rent of leases started, EUR/sq.m. 20.6 18.9 22.1 # of leases ended 330 204 222 Total area of leases ended,

31. Slide 31: Income statement

    2015 Income statement Q1 MEUR Q1/2015 Q1/2014 % 2014 Turnover 60.1 61.3 -2.0 245.3 Property operating expenses 20.1 21.0 -4.1 74.4 Other expenses from leasing operations 0.2 0.2 -17.7 1.6 Net rental income 39.8 40.1 -0.7 169.4 Administrative expenses 5.5 5.1 9.1 20.7 Other operating income and expen

32. Slide 32: Positive valuation driven by Sweden

    2015 Positive valuation driven by Sweden Q1 Fair value changes Weighted average MEUR yield requirement, % Q1/2015 31 Mar 2015 31 Dec 2014 Total 1.2 6.1 6.1 Finland -2.7 6.1 6.1 Sweden 3.5 5.7 5.7 Baltics and New Business 0.4 7.2 7.2  Fair value change for Q1/2015 including Kista Galleria (100%) was

33. Slide 33: Strong balance sheet

    2015 Strong balance sheet Q1 MEUR 31 Mar 2015 31 Mar 2014 31 Dec 2014 Investment properties 2,801.7 2,744.3 2,769.1 Total non-current assets 3,013.3 2,919.7 2,965.2 Total current assets 48.2 47.7 64.8 Total assets 3,063.3 2,973.2 3,037.2 Total shareholder’s equity 1,592.6 1,242.2 1,652.5 Total liabi

34. Slide 34: Financing Overview

    2015 Q1 FINANCING OVERVIEW 34

35. Slide 35: Average cost of debt historically low

    2015 Average cost of debt historically low Q1 Loan to Value Weighted average interest rate 70% 5,0% 4,5% 60% 57.5% 4.25% 54.5% 4.07 % 4.12% 4,0% 49.3% 50% 3,5% 40.8% 3.28% 38.6% 3.15% 40% 3,0% 30% 2,5% 20% 2,0% 2011 2012 2013 2014 Q1/2015 2011 2012 2013 2014 Q1/2015  Annual dividend / capital retur

36. Slide 36: Financing key figures

    2015 Financing key figures Q1 Q1/2015 Q1/2014 Q4/2014 Interest bearing debt, fair value, MEUR 1,252.5 1,491.8 1,188.4 Available liquidity, MEUR 388.8 414.2 449.8 Average loan maturity, years 5.6 3.8 5.9 Hedging ratio, % 83.7 82.1 88.0 Weighted average interest rate, %1) 3.15 4.03 3.28 Loan to Value

37. Slide 37: Debt type and currency split

    2015 Debt type and currency split Q1 Breakdown by debt type 1) Breakdown by currency 1)  Share of bond debt increased in Q4/2014 following the EUR 350 million bond issue  Currency breakdown shifted more towards EUR after bond issue. Part has been converted to SEK debt using cross-currency swaps 1)

38. Slide 38: Debt maturities and interest risk hedging

    2015 Debt maturities and interest risk hedging Q1 Maturity profile of debt 1) Debt by fixing type Loans 500 500 Floating to fixed swaps Undrawn loan facilities 400 352 350 300 200 143 149 102 100 59 5 3 0 2015 2016 2017 2018 2019 2020 2024  Average loan maturity increased substantially to 5.6 years

39. Slide 39: Outlook 2015 unchanged

    2015 Outlook 2015 unchanged Q1 EPRA Operating profit EPRA Earnings EUR million EUR million 105.7- 170 110 113.7 141.8- 149.8 99.7 150 149.1 149.8 135.7 90 86.7 130 117.4 110 70 63.9 90 53.3 50 70 50 30 2011 2012 2013 2014 2015E 2011 2012 2013 2014 2015E  EPRA Operating profit EUR (-8) to 0 million

40. Slide 40: Property Portfolio

    2015 Q1 PROPERTY PORTFOLIO 40

41. Slide 41: Lease portfolio

    2015 Lease portfolio Q1  3,013 (3,227) lease agreements with an average length of 3.2 (3.4) years  Total GLA 930,940 sq.m. (953,390 sq.m.)  Rents linked to CPI (nearly all agreements)  Annualised potential rental value for the portfolio is EUR 243.1 million Occupancy rate (economic) Average leas

42. Slide 42: Property portfolio

    2015 Property portfolio Q1 Top 5 tenants Occupancy cost ratio LFL shopping centres, rolling 12 mth Proportion of Average rental income, remaining length FY2014 % of leases, years Total 8.8% Kesko 15.4 5.1 S Group 6.0 5.9 Finland 9.4% ICA Gruppen 4.1 4.3 Sweden 6.8% Stockmann 2.8 1.8 H&M 2.1 4.2 Balt

43. Slide 43: Valuation yield development

    2015 Valuation yield development Q1 Citycon's valuation yield development 8% 7.2% 7% 6.1% 6% 5.7% 5% Q1/2009 Q1/2010 Q1/2011 Q1/2012 Q1/2013 Q1/2014 Q1/2015 Finland Sweden Baltics and New Business Total 43

44. Slide 44: Cityconline – building community and loyalty

    2015 Cityconline – building community and loyalty Q1 506 000 facebook likers + 23% 135 000 newsletter subscribers Mobile apps in all largest centres 22 pick-up points 225 digital screens (+73%) 44

45. Slide 45: Environmental targets and results

    2015 Environmental targets and results Q1 Performance in 2014 Climate change In LFL SC: Yearly reduction of greenhouse gas emission by 2−3%  -2% Energy Yearly reduction of energy consumption (electricity, heating and cooling) In LFL SC:  by 2–3% -6%  Carrying out a renewable energy feasibility st

46. Slide 46: Shares and Shareholders

    2015 Q1 SHARES AND SHAREHOLDERS 46

47. Slide 47: Share performance and volume

    47 1 000 000 2 000 000 3 000 000 4 000 000 5 000 000 6 000 000 7 000 000 0 Shares 31.1.2013 28.2.2013 28.3.2013 30.4.2013 31.5.2013 28.6.2013 31.7.2013 30.8.2013 30.9.2013 31.10.2013 29.11.2013 30.12.2013 Citycon share volume 31.1.2014 28.2.2014 31.3.2014 Share performance and volume 30.4.2014 30.5.

48. Slide 48: Ownership, 31 March 2015

    2015 Ownership, 31 March 2015 Q1  Established and listed on Nasdaq Helsinki in 1988 Nominee-  Market cap EUR 1,794.2 million registered Other 69.7%  Total registered shareholders 7,260 30.3% (8,857), of which nominee-registered 69.7% (79.0%) of total  Largest shareholders:  Gazit-Globe 42.8% 

49. Slide 49: Back up information

    2015 Q1 BACK UP INFORMATION 49

50. Slide 50: Financial expenses breakdown

    2015 Financial expenses breakdown Q1 MEUR Q1/2015 Q1/2014 2014 2013 Interest expenses -9.2 -14.6 -51.0 -64.3 A Foreign exchange gains (+) / losses (-) -0.2 0.1 0.1 0.0 Other expenses B -1.5 -0.8 -33.8 -32.2 Total expenses -11.0 -15.5 -84.7 -96.5 Interest income C 1.8 1.8 7.2 6.5 Net financial expens

51. Slide 51: History of Citycon

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

52. Slide 52: Contact information

    2015 Q1 Contact information Eero Sihvonen, CFO, Exec. VP Tel. +358 50 557 9137 Henrica Ginström, VP IR & Communications Tel. +358 50 554 4296 52

53. Slide 53: Disclaimer

    2015 Disclaimer Q1 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 a

54. Slide 54: citycon.com

    2015 Q1 citycon.com

Citycon — Q1 2015 Earnings Presentation on 6ix