Slide 1: Citycon Presentation Q3/2016
CITYCON PRESENTATION Q3/2016
Slide 2: Leading owner, manager and developer of shopping centres in the Nordics and Baltics
LEADING OWNER, MANAGER AND DEVELOPER OF SHOPPING CENTRES IN THE NORDICS AND BALTICS – 52 shopping centres1) – 200 million visitors p.a. – 13 managed/rented assets – Market cap EUR 2 billion – GLA 1.2 million sq.m. – Credit ratings: Baa1 & BBB FINLAND PORTFOLIO VALUE Baltics and Denmark 7% NORWAY SWE
Slide 3: Enriching urban crosspoints
ENRICHING URBAN CROSSPOINTS RIGHT RESPONSIBLE SHOPPING ASSETS CENTRE MANAGEMENT Necessity-based Sustainable space shopping centres in for retailers and growing urban areas communities WHAT OUR WE DO APPROACH STRONG CAPITAL BASE RETAIL EXPERTS OUR Efficient capital RESOURCES Creating attractive alloc
Slide 4: True pan-Nordic leader
TRUE PAN-NORDIC LEADER 360 140 125 120 110 FINLAND KESKO SPONDA ELO WERELDHAVE 360 350 200 200 200 #1 SWEDEN UNIBAIL- OLAV STEEN &STROM ATRIUM RODAMCO THON LJUNGBERG 1 290 #2 #3 #2 400 325 175 110 NORWAY OLAV STEEN & STROM SALTO SCALA THON 145 110 80 60 ESTONIA ASTRI LINSTOW SATNAM Source: Company r
Slide 5: Urban crosspoints driven by strong demographics
URBAN CROSSPOINTS DRIVEN BY STRONG DEMOGRAPHICS CORE ASSETS: –Urban environments, located where people live and work –Strong population growth and natural footfall –Integrated with public transportation –Shared access to education, health care, culture, municipal services 5
Slide 6: Strong grocery-anchoring
STRONG GROCERY-ANCHORING ‒ OVER 100 GROCERY STORES Other specialty stores Department stores 4% 2% Cafés & restaurants 7% Fashion 25% Health & Beauty 10% Rental income Services & offices 224MEUR 10% Groceries 20% Leisure & home supplies 21% 6 As per 31 December 2015
Slide 7: 90% of Citycon's shopping centres are located in capital or main cities
90% OF CITYCON’S SHOPPING CENTRES ARE LOCATED IN CAPITAL OR MAIN CITIES KISTA GALLERIA, ISO OMENA, LILJEHOLMSTORGET KOSKIKESKUS, HERKULES, STOCKHOLM HELSINKI AREA GALLERIA, STOCKHOLM TAMPERE SKIEN GLA, sq.m. 95,300 83,0001) 41,000 33,000 49,700 Visitors, million 19 8 10 6 3 Sales, MEUR 216 182 147 1
Slide 8: Urbanisation & omnichannel drive retail more than shopping
URBANISATION & OMNICHANNEL DRIVE RETAIL RETAIL TRENDS NORDIC CAPITALS FASTEST GROWING IN EUROPE CITYCON’S RESPONSE Oslo 20.3 Stockholm 18.3 Copenhagen 14.7 URBAN MORE ELDERLY Helsinki 13.1 URBAN CROSSPOINTS 90% main cities & SINGLE GROWTH HOUSEHOLDS Amsterdam London 11.2 11.2 where people live and w
Slide 9: Sustainable shopping centre management
SUSTAINABLE SHOPPING CENTRE MANAGEMENT Acting as a sustainable business partner People Environment An excellent place Energy-efficient and to work and to be OUR APPROACH environmentally sound proud of shopping centres SOLID Community & ECONOMY Economy Companionship Creating long-term Urban multifunc
Slide 10: Sustainable mind-set – forerunner in the Nordics
SUSTAINABLE MIND-SET – FORERUNNER IN THE NORDICS KEY RESULTS 2015 >70% of Citycon’s shopping centres are BREEAM In-Use certified –most retail certificates in the Nordics Energy consumption, kWh/sq.m. -6% (target -2%) 80% 60% Recycling rate 95% 40% (target >90%) 20% Within top 10% of reviewed 0% Dec.
Slide 11: Q3/2016: Stronger company after opening of Iso Omena extension and successful bond issue
Q3/2016: STRONGER COMPANY AFTER OPENING OF ISO OMENA EXTENSION AND SUCCESSFUL BOND ISSUE
Slide 12: Highlights Q3/2016
HIGHLIGHTS Q3/2016 GOOD PERFORMANCE IN SWEDEN AND NORWAY COMPENSATES CHALLENGES IN FINLAND - EPRA Earnings +18% mainly due to the acquisition of Norwegian operations - EPRA EPS EUR 0.127 close to last year’s level with 25% more shares POSITIVE OVERALL LIKE-FOR-LIKE NET RENTAL INCOME - Adjusted LFL N
Slide 13: Financial highlights
FINANCIAL HIGHLIGHTS MEUR Q1-Q3/2016 %1) Net rental income 169.0 18.9 Direct Operating profit 148.6 16.9 EPRA Earnings 113.2 17.5 EPRA EPS (basic) 0.127 -6.3 EPRA NAV per share 2.83 4.8 Fair value change 38.4 - Loan to Value (LTV), % 46.2 - 1) Change from previous year (Q1-Q3/2015) 13
Slide 14: Overall stable operating performance – diverging trend by country continues
OVERALL STABLE OPERATING PERFORMANCE – DIVERGING TREND BY COUNTRY CONTINUES
Slide 15: Positive overall like-for-like NRI growth driven by Norway and Sweden
POSITIVE OVERALL LIKE-FOR-LIKE NRI GROWTH DRIVEN BY NORWAY AND SWEDEN LIKE-FOR-LIKE NET RENTAL INCOME GROWTH –Operating results reflect the general performance of the main economies 4.3% –Finland impacted negatively by 3.4% 3.1% (re)developments in the three largest 2.8% 0.6% properties in Helsinki
Slide 16: Overall stable sales and footfall development
OVERALL STABLE SALES AND FOOTFALL DEVELOPMENT SALES, LIKE-FOR-LIKE SHOPPING CENTRES FOOTFALL, LIKE-FOR-LIKE SHOPPING CENTRES 1% 1% 0% 0% 0% -3% 0% -2% Finland Sweden Baltics & Total Finland Sweden Baltics & Total Denmark Denmark Norway 2% Kista Galleria -7% Norway -3% Kista Galleria -2% 16 The width
Slide 17: Occupancy remains at a good level
OCCUPANCY REMAINS AT A GOOD LEVEL - 50 BPS DECLINE MAINLY DUE TO FINLAND OCCUPANCY RATE 96.8% 96.5% 96.3% 96.0% 95.7% 2013 2014 2015 Q2/2016 Q3/2016 17
Slide 18: Development portfolio
DEVELOPMENT PORTFOLIO
Slide 19: Ongoing (re)developments progressing – Iso Omena first phase opened with 95% leased
ONGOING (RE)DEVELOPMENTS PROGRESSING – ISO OMENA FIRST PHASE OPENED SUCCESSFULLY WITH 95% LEASED ONGOING PROJECTS Expected Cumulative Area before/ Yield on cost1), Pre-leasing, Completion City investment, investment, after, sq.m. % % target MEUR MEUR Phase 1: 95% Q3/2016 & 1 Iso Omena Helsinki area
Slide 20: Successful opening of Iso Omena extension
SUCCESSFUL OPENING OF ISO OMENA EXTENSION - 30% FOOTFALL INCREASE SINCE OPENING – Strong international brands, e.g. Superdry, O’Learys, The Athlete’s Foot, Peak Performance, H&M, Zara – 6,000 sq.m. of first-class healthcare services and library – Grand opening of Iso Omena in Q2/2017 – Metro opening
Slide 21: State-of-the-art Iso Omena shows international appeal
“STATE-OF-THE ART” ISO OMENA SHOWS INTERNATIONAL APPEAL
Slide 22: Iso Omena – launch of new Citycon F&B concept M.E.E.T
ISO OMENA - LAUNCH OF NEW CITYCON F&B CONCEPT M.E.E.T – Creating a true dining destination in Iso Omena – Over 50 cafés and restaurants in total, representing 25% of all retail units – New restaurants previously featured only in Helsinki CBD – Directly connected to new, seven-screen Finnkino cinema
Slide 23: Development pipeline
DEVELOPMENT PIPELINE _— CITYCON
Slide 24: Development pipeline – urban locations in capital cities
DEVELOPMENT PIPELINE – URBAN LOCATIONS IN CAPITAL CITIES Area before/ Expected Target – Development investments of City after, investment, initiation/ 150-200 MEUR p.a. sourced sq.m. MEUR completion through recycling COMMITTED PROJECTS of capital. Average YoC 6.5% Lippulaiva Helsinki area 19,200/42,
Slide 25: Porsgrunn Downtown: shopping centre extension
PORSGRUNN DOWNTOWN: SHOPPING CENTRE EXTENSION IN THE HEART OF THE CITY BY THE RIVERSIDE – Strong existing shopping centre of 24,000 sq.m. retail – (Re)development and extension of 9,000 sq.m. retail. Additional residential – Development investment of 75 MEUR with a YoC in line with the Citycon targe
Slide 26: Helsinki Lippulaiva: from monofunctional centre to mixed-use urban crosspoint
HELSINKI LIPPULAIVA: FROM A MONOFUNCTIONAL CENTRE TO A MIXED-USE URBAN CROSSPOINT BEFORE AFTER
Slide 27: Stockholm Liljeholmstorget: extending on top of the metro station
STOCKHOLM LILJEHOLMSTORGET: CONTINUATION OF AN URBAN SUCCESS STORY BY EXTENDING ON TOP OF THE METRO STATION BEFORE AFTER
Slide 28: Oslo Trekanten: transforming neighbourhood centre into Norway flagship
OSLO TREKANTEN: TRANSFORMING NEIGHBOURHOOD CENTRE INTO A CITYCON FLAGSHIP IN NORWAY BEFORE AFTER
Slide 29: Key target areas 2016 and onwards
KEY TARGET AREAS 2016 AND ONWARDS SUCCESSFUL COMPLETION OF ONGOING DEVELOPMENTS - Uplift in rental income and earnings 2017 onwards - Development investments of 150-200 MEUR p.a. within the existing portfolio with an average YoC of 6.5% - Fuel the pipeline RECYCLE CAPITAL THROUGH CONTINUED EXECUTION
Slide 30: Financial overview
FINANCIAL OVERVIEW
Slide 31: Financial results
FINANCIAL RESULTS Q1-Q3/2016 MEUR Q3/2016 Q3/2015 Q1-Q3/2016 Q1-Q3/2015 INCL. KISTA Gross rental income 61.9 65.9 187.3 158.6 213.2 Net rental income 56.8 59.7 169.0 142.1 192.0 Direct Operating profit 50.2 54.7 148.6 127.2 170.6 EPRA Earnings 38.6 38.9 113.2 96.4 n.a. EPRA EPS (basic) 0.043 0.046 0
Slide 32: Net rental income +19% following the acquisition of Norwegian operations
NET RENTAL INCOME +19% FOLLOWING THE ACQUISITION OF NORWEGIAN OPERATIONS NRI DEVELOPMENT MEUR 38.6 1.4 169.0 -11.2 -1.2 -0.7 142.1 Q1-Q3/2015 Acquisitions (Re)development Divestments LFL properties Other (incl. exchange Q1-Q3/2016 projects rate differences) 32
Slide 33: Increased average rent, occupancy at a good level
INCREASED AVERAGE RENT, OCCUPANCY AT A GOOD LEVEL Q3/2016 Q2/2016 Occupancy rate (economic) % 96.0 96.5 Average rent EUR/sq.m. 22.7 22.4 Average remaining length of lease portfolio years 3.4 3.2 Q1-Q3/2016 Q1-Q3/2015 Average rent of leases started EUR/sq.m. 22.7 22.8 Average rent of leases ended EUR
Slide 34: Positive valuation driven by Sweden and Norway
POSITIVE VALUATION DRIVEN BY SWEDEN AND NORWAY FAIR VALUE CHANGES, MEUR Q3/2016 Q1-Q3/2016 Q1-Q3/2015 Finland 0.3 -14.9 -25.4 Norway 0.5 24.8 - Sweden 7.4 29.2 27.0 Baltics & Denmark -0.9 -0.7 5.5 Total 7.4 38.4 7.1 WEIGHTED AVERAGE YIELD REQUIREMENT, % 30 SEP 2016 30 JUN 2016 30 SEPT 2015 Finland 5
Slide 35: Income statement
INCOME STATEMENT MEUR Q3/2016 Q3/2015 Q1-Q3/2016 Q1-Q3/2015 % Gross rental income 61.9 65.9 187.3 158.6 18.2 Service charge income 19.2 20.0 59.4 47.7 24.7 Property operating expenses -23.8 -25.7 -76.7 -63.1 21.5 Other expenses from leasing operations -0.6 -0.5 -1.1 -1.1 4.8 Net rental income 56.8 5
Slide 36: EPRA NAV stable
EPRA NAV STABLE CHANGE OF NET ASSET VALUE (EPRA NAV) EUR, per share 0.04 0.13 0.01 0.02 2.83 -0.11 2.74 Q4/2015 EPRA Earnings Indirect result Translation reserve Dividends and equity Other Q3/2016 return paid 30 SEPT 2016 30 JUN 2016 31 DEC 2015 30 SEPT 2015 EPRA NAV per share, EUR 2.83 2.80 2.74 2.
Slide 37: Financing overview
FINANCING OVERVIEW
Slide 38: Steadily improved ICR
STEADILY IMPROVED ICR LOAN TO VALUE (LTV) INTEREST COVER RATIO Years 3.8x 3.9x 54.5% 49.3% 3.1x 45.7% 46.2% 2.4x 2.1x 38.6% 2012 2013 2014 2015 Q3/2016 2012 2013 2014 2015 Q3/2016 – Slightly higher LTV following buyout of Iso Omena construction JV partner in Q3/2016 and NOK/SEK currency movements 38
Slide 39: Decreased average interest rate and extended loan maturity
DECREASED AVERAGE INTEREST RATE AND EXTENDED LOAN MATURITY AVERAGE INTEREST RATE AVERAGE LOAN MATURITY Years 5.9 5.8 5.5 4.25% 4.12% 4.1 3.28% 3.04% 2.90% 3.2 2012 2013 2014 2015 Q1-Q3/2016 2012 2013 2014 2015 Q3/2016 – Lower cost of debt following bond issue in August 2016 39
Slide 40: Financing key figures
FINANCING KEY FIGURES 30 SEP 2016 30 SEP 2015 31 DEC 2015 Interest bearing debt, fair value MEUR 2,156.4 2,022.6 2,037.1 Available liquidity MEUR 583.3 379.0 377.1 Average loan maturity years 5.8 5.5 5.5 Interest rate hedging ratio % 94.8 88.2 84.8 Weighted average interest rate1) % 2.90 3.39 3.04 L
Slide 41: 95% of debt fixed rate, vast majority bonds
95% OF DEBT FIXED RATE, VAST MAJORITY BONDS DEBT BREAKDOWN BY TYPE DEBT BREAKDOWN BY CURRENCY Bank term loan Other 5% 0% CP SEK 5% 19 % EUR 57 % Bonds NOK 90 % 24 % Part of EUR debt has been converted to SEK and NOK using cross-currency swaps 41
Slide 42: Balanced maturity profile with limited near-term maturities
BALANCED MATURITY PROFILE WITH LIMITED NEAR-TERM MATURITIES DEBT MATURITIES 700 600 500 500 388 400 350 350 300 300 250 200 156 138 139 111 113 111 100 33 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Loans Floating to fixed swaps Undrawn loan facilities Bonds 42
Slide 43: 350 MEUR unsecured 10-year Eurobond successfully executed
350 MEUR UNSECURED 10-YEAR EUROBOND SUCCESSFULLY EXECUTED LATEST BOND ISSUED AT 1.25% COUPON DEMONSTRATED ACCESS TO BOND MARKETS Amount EUR 350,000,000 Issued amount, Interest, Maturity, Issue date million p.a. years Status Senior unsecured Eurobond EUR 350 1.25% 10 8/9/2016 Baa1 Stable (Moody’s) &
Slide 44: Outlook 2016 specified
OUTLOOK 2016 SPECIFIED DIRECT OPERATING PROFIT EPRA EARNINGS 220 170 191.4-198.4 143.8-150.8 200 150 180 175.4 130.8 130 160 149.1 149.8 110 99.7 140 135.7 86.7 90 120 69.3 70 100 80 50 60 30 2012 2013 2014 2015 2016E 2012 2013 2014 2015 2016E – Direct Operating profit + 16 to 23 MEUR (previously 17
Slide 45: Property portfolio
PROPERTY PORTFOLIO |g ol pre? { VARLDEN CITYCON
Slide 46: Lease portfolio
LEASE PORTFOLIO OCCUPANCY RATE AVERAGE LEASE MATURITY Years 96.8% 3.5 3.5 3.4 96.3% 3.2 3.3 95.7% 95.7% 96.0% 2012 2013 2014 2015 Q3/2016 2012 2013 2014 2015 Q3/2016 – 4,147 lease agreements with an average length of 3.4 years – Total GLA 1,219,190 sq.m. – Rents linked to CPI (nearly all agreements)
Slide 47: Property portfolio
PROPERTY PORTFOLIO TOP 5 TENANTS OCCUPANCY COST RATIO SHOPPING CENTRES, ROLLING 12 MONTHS PROPORTION OF 2015 RENTAL INCOME, % Total 8.6% Kesko 8 Finland 9.0% S Group 5 Norway 8.5% VarnerGruppen 4 Sweden 6.9% ICA Gruppen 3 NorgesGruppen 2 Baltics & Denmark 10.6% Top 5, total 22 0% 2% 4% 6% 8% 10% 12%
Slide 48: Valuation yield development
VALUATION YIELD DEVELOPMENT VALUATION YIELD DEVELOPMENT 8% 7% 6% 5% Q3/2011 Q3/2012 Q3/2013 Q3/2014 Q3/2015 Q3/2016 Finland Norway Sweden Baltics and Denmark Total 48
Slide 49: Back-up information
a || F | i CS | lg : oom et \ nl Fi _ BACK-UP INFORMATION Fae ea in mel SS CITYCON |
Slide 50: Ownership, 30 September 2016
OWNERSHIP, 30 SEPTEMBER 2016 –Established and listed on Nasdaq SHAREHOLDERS 30 SEPTEMBER 2016 Helsinki in 1988 Direct Nominee- –Market cap EUR 2,020.3 million registered registered 30.7% 69.3% –Total registered shareholders 10,932 –Largest shareholders: –Gazit-Globe 43.49% –CPPIB 15.00% –Ilmarinen 7
Slide 51: History of Citycon
HISTORY OF CITYCON +25 YEARS OF RETAIL EXPERIENCE AND NORDIC EXPANSION From Finnish office assets To international retail premises To a true Pan-Nordic leader 1988 2003 2011 Founded by Sampo Pension Ltd, Strategy to include also (re)development New management and redefined strategy Imatran Voi
Slide 52: Attractive tenant mix of Nordic and international brands
ATTRACTIVE TENANT MIX OF NORDIC AND INTERNATIONAL BRANDS GROCERIES & CAFÉS & LEISURE & HOME & HEALTH, BEAUTY FASHION DAILY NEEDS RESTAURANTS SPORT DESIGN & SERVICES 52
Slide 53: Economic outlook
ECONOMIC OUTLOOK GDP GROWTH Change % INFLATION Change % 5% 3% 4% 2% 3% 2% 1% 1% 0% 0% -1% -1% Finland Norway Sweden Denmark Estonia Euro area Finland Norway Sweden Denmark Estonia Euro area 2014 2015 2016E 2017E 2014 2015 2016E 2017E UNEMPLOYMENT PUBLIC SECTOR DEBT AS % OF GDP Change % Change % 70%
Slide 54: 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 55: Thank you
citycon.com CONTACT INFORMATION Eero Sihvonen THANK YOU. CFO, Exec. VP Tel. +358 50 557 9137 Henrica Ginström VP, IR & Communications Tel. +358 50 554 4296