Citycon Oyj · OMXHEX:CTY1S

Citycon Oyj — Investor Presentation (September 2015)

48 slides from Citycon Oyj's investor presentation, Sep 22, 2015

  1. Slide 1: Nordic strategy – Asset tour in Oslo

    Nordic strategy Asset tour in Oslo, 22 September 2015 CEO Marcel Kokkeel

  2. Slide 2: Welcome to Citycon

    WELCOME TO CITYCON THE LARGEST LISTED SHOPPING CENTRE SPECIALIST IN THE NORDICS 2

  3. Slide 3: Leading owner, manager and developer of urban shopping centres

    Leading owner, manager and developer of urban, grocery-anchored shopping centres in the Nordics and Baltics Key figures  # of shopping centres 55 +14  GLA, sq.m. million 1.3  Footfall p.a. million 210  Total assets, EUR billion 4.9 Norway  Market cap, EUR billion 2  S&P BBB; Moody’s Baa2 20+ 2

  4. Slide 4: Citycon's transition 2011-2015

    Citycon’s transition 2011‒2015 2011 2015 Better Citycon Baltics&New  More balanced Nordic portfolio, Baltics Finland Business 7% Finland reduced Finnish exposure 11% 61% 35%  Strong operating result – LFL NRI growth of 2.5-5% p.a.  Cost efficiency – admin expenses as % Sweden of GRI down from 13.

  5. Slide 5: Sektor – a leader in Norwegian retail real estate

    Sektor – a leader in Norwegian retail real estate  Norway’s 2nd largest shopping centre company  100% shopping centres  Focused on the three main urban economic centres:  Oslo, Bergen and Stavanger regions  Proven management track record  17 fully and 3 majority owned shopping centres Occupanc

  6. Slide 6: Norway – a strong basis for solid cash flow projection

    Norway – a strong basis for solid cash flow projection for 2015-2017  Solid GDP growth  1.4-2.2% p.a.  Strong CPI growth  2.0-2.5% p.a.  Strongest population growth in Europe  1.0-1.2% p.a.  Low unemployment rate  4.0-4.5%  Strong household consumption growth  2.6-3.0% p.a.  Fiscal policy

  7. Slide 7: An attractive acquisition moving Citycon to another league

    An attractive acquisition moving Citycon to another league Increased scale  Creation of a EUR 5 bn shopping centre company Size  Immediate critical mass in Norway  Increased liquidity and added capital market visibility Consolidation as Nordic leader Largest listed shopping centre specialist in t

  8. Slide 8: Largest listed property company in the Nordics

    Largest listed property company in the Nordics Gross asset value (EUR bn)1) 6 4.9 5 4.2 4.1 4.1 1.5 4 3.6 3.4 3.3 3.3 3.2 3.1 3.1 3.4 3 2 1 0 Citycon + Castellum Olav Thon Balder Fabege Citycon Klövern Entra Wallenstam Sponda Atrium Sektor Ljungberg 1) Source: Company reports 8

  9. Slide 9: True Pan-Nordic leader

    True Pan-Nordic leader 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 9 1) Source: Company reports, SEB analysis. Includes only majority-owned shopping centres. Includes some assumptions on retail p

  10. Slide 10: Immediate steps after announcement of acquisition

    Immediate steps after announcement of acquisition EUR 600 million rights issue in July EUR 600 million refinancing of Sektor debt in August-September JLL property valuations expected to be in line with initial assumptions Temporary integration manager in place New Citycon Norway organisation structu

  11. Slide 11: Structure based on efficient 'One Citycon' model

    Structure based on efficient ’One Citycon’ model CEO CFO General Counsel CIO COO Marketing Leasing team HR Leasing Commercial Commercial Commercial Development Director Director Director Director & transactions Finance Communications SC SC SC IT Management Management Management Legal 11

  12. Slide 12: Customer Journey

    WE LOOK AS ONE BRAND AND SPEAK WITH ONE VOICE

  13. Slide 13: Value creation through synergies

    Value creation through synergies  Tenant optimisation OPERATION  Rental income slightly below ERV  Marketing and digital innovation  Shared focus and investments LFL NRI growth of  Speciality leasing 100 bps above CPI  1.0% of GRI vs 2.1% in Citycon  Improved purchasing power  Review of supp

  14. Slide 14: Cross-border tenanting

    Cross-border tenanting NORDIC PRESENCE 14

  15. Slide 15: What's next?

    What’s next?  Sektor impact on EPS: neutral DIGEST, INTEGRATE AND PERFORM in 2016, accretive as of 2017  Additional EUR 100-150 CONTINUE DISPOSAL PROGRAM million in 1.5 years  LTV target of 40-45%  (Re)development capex of EUR 150-200 million p.a. SUCCESSFUL COMPLETION AND ACCELERATION OF DEVELO

  16. Slide 16: Long-term Citycon portfolio rebalance

    Long-term Citycon portfolio rebalance +- Indication of relative portfolio share in the future Divestment pipeline mainly in Finland Focus on larger - cities + ++ 0 16 +

  17. Slide 17: Financing update

    FINANCING UPDATE CFO, EXEC. VP EERO SIHVONEN 17

  18. Slide 18: Prudent financing policy and strong balance sheet

    Prudent financing policy and strong balance sheet Loan to Value Financial policy targets 70% 60% 57.5% 54.5% Loan to Value of 40-45% (41.5% as of Q2/15) 49.3% 50% 41.5% 38.6% Long average maturity of loan portfolio: 40% in average >5 years 30% 20% High ratio of fixed interest rate: 70-90% 2011 2012

  19. Slide 19: Financing at closing of Sektor acquisition

    Financing at closing of Sektor acquisition  Rights issue of EUR 604 million completed in July  113% oversubscription  Major shareholder participation  Bridge financing facilities with one year maturity  Total facilities of EUR 400 million, EUR 222 million utilized  Existing Sektor bank loans 

  20. Slide 20: Sektor refinancing in final stages

    Sektor refinancing in final stages  August: Divestments of approx EUR 79 million  Early September: NOK bond of total NOK 2,650 million dual tranche issue  NOK 1.400 million 10 year, fixed 3.90%  NOK 1,250 million 5.5 yr at floating 3m Nibor + 155 bps Citycon bridge facilities prepaid  Mid-Sept

  21. Slide 21: Pro forma debt financing overview

    Pro forma debt financing overview -Following recent bond issues and debt prepayments Maturity breakdown 1) 500 500 Loans 400 Undrawn loan facilities 350 315 300 300 200 185 151 132 140 138 135 100 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025  Debt maturing in 2015 is mainly commercial p

  22. Slide 22: Pro forma debt financing overview

    Pro forma debt financing overview -Following recent bond issues and debt prepayments Breakdown by currency 1) Breakdown by debt type 1) CP 6% SEK 13% Bank loans 16% EUR NOK 57% 30% Bonds 78%  Part of EUR debt has been converted to SEK and NOK debt using cross-currency swaps  Bond financing with lo

  23. Slide 23: Executed two NOK unsecured bonds for NOK 2.65 billion

    Succesfully executed two NOK unsecured bonds for NOK 2.65 billion Transaction terms fixed bond Final allocation fixed bond Asset Other Finland Issuer Citycon Treasury B.V. Manage 8% 1% Insuran Guarantor Citycon Oyj r 9% ce Norway 92% Status Senior, Unsecured, RegS Bearer Notes 60% Maturity 1 Septemb

  24. Slide 24: Executed EUR 300 million unsecured 7-year Eurobond

    Successfully executed EUR 300 million unsecured 7-year Eurobond Transaction terms Final allocation Issuer Citycon Treasury B.V. Other 2% Guarantor Citycon Oyj Insurance 7% Bond ratings Baa2 (Stable) Moody’s / BBB (Stable) S&P Banks & Private Status Senior, Unsecured, RegS Bearer Notes Wealth 11% Ass

  25. Slide 25: Investment grade credit ratings from leading rating agencies

    Investment grade credit ratings from leading rating agencies Baa2 (stable outlook) BBB (stable outlook)  Baa2 rating with stable outlook affirmed  BBB rating with stable outlook affirmed on 25 August 2015 on 23 July 2015 “The stable outlook reflects our expectation “Stable outlook on Finland-based

  26. Slide 26: Preliminary combined financial information

    Preliminary combined financial information MEUR Citycon 2014 Sektor 2014 Adjustments Combined Turnover 245.3 127.0 - 372.3 Net rental income 169.4 74.0 -1.3 242.0 Operating profit 1) 165.0 103.5 -8.9 259.5 Net financial income and expenses -77.5 -49.0 - -126.5 Profit for the period 1) 89.7 40.2 -8.6

  27. Slide 27: Outlook 2015 updated to reflect Sektor acquisition and rights issue

    Outlook 2015 updated to reflect Sektor acquisition and rights issue EPRA Operating profit EPRA Earnings EUR million EUR million 166.8- 150 190 116.7- 181.8 131.7 130 170 149.1 149.8 110 150 99.7 135.7 130 90 86.7 117.4 110 70 63.9 53.3 90 50 70 30 2011 2012 2013 2014 2015E 2011 2012 2013 2014 2015E

  28. Slide 28: Sektor acquisition

    SEKTOR ACQUISITION CIO NILS STYF 28

  29. Slide 29: Transaction highlights

    Transaction highlights  NOK 12,320 million debt-free purchase price (EUR 1,467 million) Net initial property yield of 5.2% Key acquisition terms   Potential to increase by +20bps by year-end 2015 due to developments coming online  Rights issue of EUR 600 million  Approx. EUR 220 million initial

  30. Slide 30: A perfect fit – portfolio in line with core investment criteria

    A perfect fit ‒ Portfolio in line with core investment criteria PAN-NORDIC  100% focused on Norway for Citycon to become a true Pan-Nordic player  Focused on capital city regions and cities with URBAN ENVIRONMENTS population growth  Linked to public transportation  Grocery-anchored shopping cent

  31. Slide 31: Sektor – high quality assets with a resilient tenant base

    Sektor – High quality assets with a resilient tenant base Revenue split Top 10 tenants by rent Fashion 7.0% Cafés and Services Other restaurants 2% 1% 5% Groceries 6.5% Groceries 29% Sports apparel 4.1% Home Home 2.8% 19% Fashion 2.5% Fashion 2.3% Groceries 2.0% Sports 1.5% Speciality 1) 22% Fashion

  32. Slide 32: Property Overview: Storbyen, Sarpsborg

    Property Overview Storbyen, Sarpsborg Comments  Shopping centre in Sarpsborg currently under partial (re)development  Location on the main town square and pedestrian street, integrated with the bus station  Ongoing refurbishment and extension will create a new main RICA SAGA HOTEL PARKING FACILIT

  33. Slide 33: Property Overview: Oasen, Bergen

    Property Overview Oasen, Bergen Comments  A recently (re)developed (2015), grocery- anchored community shopping centre in Bergen  Urban location in fast growing residential area next to a public transportation hub  Healthcare and library integrated in the centre  Several extension opportunities

  34. Slide 34: Property Overview: Herkules, Skien

    Property Overview Herkules, Skien Comments  A recently renovated, grocery- anchored regional retail & service Klosterfoss centre in Skien building  Location on the fringe of the city Melumveien building centre with regional catchment  Modern and simple concept  New residential developments aroun

  35. Slide 35: Property Overview: Magasinet, Drammen

    Property Overview Magasinet, Drammen Comments Drammen Main «Lychegården» Externally owned (15 % of turnover Square  Shopping centre located within an historical and area) block in the centre of Drammen  Located on the main square with the pedestrian street along the main side  “Urban life style”

  36. Slide 36: Property Overview: Kolbotn Torg, Oppegård

    Property Overview Kolbotn Torg, Oppegård Comments Kolbotn Cultural Centre  Grocery-anchored community centre in a Residential housing on top wealthy suburb of shopping centre  Located next to the cultural centre, the city hall and cinema complex  Potential in improving tenant mix, leasing and spe

  37. Slide 37: Property Overview: Stovner Senter, Oslo

    Property Overview Stovner Senter, Oslo Comments  Partially owned (20%) owned community shopping centre with integrated metro station  Strong urban location in a very dense residential district  Connected to healthcare, library and schools  Extensive ongoing redevelopment project Stovner Metro St

  38. Slide 38: Property Overview: Trekanten, Asker

    Property Overview Trekanten, Asker Comments  Grocery anchored community shopping centre in an urban location  Located in a wealthy area integrated with city hall, library and health care with visitor feed from all levels Asker Cultural Centre  Demand for further retail and services enabling a pos

  39. Slide 39: Development pipeline

    DEVELOPMENT PIPELINE DEVELOPMENT DIRECTOR CATO D. LAURITZEN 39

  40. Slide 40: Good potential for value-add investments

    Good potential for value-add investments 2016 2017 2018 2019 2020 40

  41. Slide 41: Project portfolio key facts

    Project portfolio key facts EUR 200 million EUR 350 million Further 190.000 sq.m. Active Potential 220.000 sq.m. 15 EUR 30-40 million per year 16 € Scope M2 Retail Approved New area Under planning Office/service Refurbisment Under evaluation Residential 41

  42. Slide 42: Urban project locations

    Urban project locations  Location Trondheim In city center  Sub urban Bergen Oslo Project activity Regions Stavanger Drammen 42

  43. Slide 43: Storbyen, Sarpsborg

    STORBYEN // Sarpsborg Re-defining the town square… Retail // Restaurants Total project scope 9,000 sq.m. - Refurbishment 7,500 sq.m. - Conversion 1,500 sq.m. Planned completion Q4/2015 43

  44. Slide 44: Stovner Senter, Oslo

    STOVNER SENTER // Oslo New style for everyday shopping… Retail // Restaurants Total project scope 25,000 sq.m. - Refurbishment 20,000 sq.m. - New build 5,000 sq.m. Planned completion Q4/2016 44

  45. Slide 45: Buskerud, Drammen

    BUSKERUD // Drammen First step in realizing a masterplan… Retail Total project scope 20,000 sq.m. - Refurbishment 17,000 sq.m. - New build 3,000 sq.m. Planned completion Q4/2016 45

  46. Slide 46: Down Town, Porsgrunn

    DOWN TOWN // Porsgrunn Re-vitalizing a part of town… Shopping, office and residential Total project scope 45,500 sq.m. - Refurbishment 10,000 sq.m. - New build 35,500 sq.m. Planned completion Q2/2019 46

  47. Slide 47: Conclusions

    Conclusions  Strong pipeline of smaller/mid-sized (re)development and extension projects driving long-term income and value growth  Multifunctional developments, with emphasis on retail  Extensions at urban locations ensure zoning potential despite Norwegian moratorium on new shopping centers  G

  48. Slide 48: citycon.com

    Cl CITYCON citycon.com

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