Citycon Oyj · OMXHEX:CTY1S
Citycon Oyj — Q2 2021 Earnings Presentation
38 slides from Citycon Oyj's earnings presentation, 2021
Slide 1: Audiocast Presentation Q2/2021
AUDIOCAST PRESENTATION Q2/2021 Construction of residential high-rises at Lippulaiva development project 1
Slide 2: Q2/2021: Continued quarter over quarter NRI and valuation growth
Q2/2021: CONTINUED QUARTER OVER QUARTER NRI AND VALUATION GROWTH CITYCON’S FINANCIAL PERFORMANCE: CONTINUED QUARTER OVER QUARTER GROWTH • Net Rental Income (NRI) of EUR 50.8 million +1.2% compared to Q2/2020 (NRI EUR 50.2 million), and +0.7% compared to Q1/2021 (EUR 50.4 million). The direct operati
Slide 3: Q2/2021: Bond issuance and capital recycling speed up portfolio transformation
Q2/2021: BOND ISSUANCE AND CAPITAL RECYCLING SPEED UP PORTFOLIO TRANSFORMATION FINANCING ACTIVITY CLICK TO EDIT TITLE • During Q2 we received upgraded credit rating outlooks from both Standard & Poor’s and Moody’s. The ratings now stand at BBB- and Baa3 with a stable outlook. • In Q2 Citycon complet
Slide 4: Second consecutive quarter of fair value growth
SECOND CONSECUTIVE QUARTER OF FAIR VALUE GROWTH FAIR VALUE GAINS OF INVESTMENT PROPERTIES, MEUR* 2x 16 [Pan-European] Commercial real estate 8 values expected to increase 0-5% over the next 6-12 months - Green Street Advisors, 04/2021 The Nordic property market is hotter than -51 ever, as a growing
Slide 5: Consumer confidence in the Nordics has improved during Q2/2021
CONSUMER CONFIDENCE IN THE NORDICS HAS IMPROVED DURING Q2/2021 AND REBOUNDED TO PRE-PANDEMIC LEVELS CONSUMER CONFIDENCE INDEX (CCI), INDEX=JANUARY 2020 DIFFERENCE, 03/21-06/21 110 105 Sweden +1.7 p.p. Finland +1.8 p.p. OECD avg. +1.7 p.p. 100 Denmark +0.3 p.p. Estonia +2.6 p.p. 95 90 2020 2020 2020
Slide 6: Our necessity-based urban hubs have provided stability during pandemic
OUR NECESSITY-BASED URBAN HUBS HAVE PROVIDED STABILITY DURING PANDEMIC GROSS RENTAL INCOME BY TENANT CATEGORY, 2020 OVER 35 % OF GROSS RENTAL INCOME FROM NECESSITY TENANTS Fashion and • Focus on the daily needs of customers Groceries accessories • 4 out of the top 5 tenants are grocery stores 19% 23
Slide 7: Footfall and tenant sales are recovering from pandemic impact
FOOTFALL AND TENANT SALES ARE RECOVERING FROM PANDEMIC IMPACT FOOTFALL DEVELOPMENT LFL TENANT SALES DEVELOPMENT Q2/2021 VS. Q2/2020 H1/2021 VS. H1/2020 +11.9% June 2021 tenant sales exceeded +5.4% comparable pre- pandemic (06/2019) levels +8.2% +1.8% Total Footfall LFL Footfall LFL Grocery sales LFL
Slide 8: Strong leasing activity shows further signs of recovery
STRONG LEASING ACTIVITY SHOWS FURTHER SIGNS OF RECOVERY LEASES SIGNED RETAIL OCCUPANCY RATE DEVELOPMENT SQM, thousands 94.1% 94.1% 94.1% +21% +88% 64 53 55 94.0% 93.8% 93.8% 29 Q1 Q2 Q2/ Q1/ Q2/ 2020 2021 2021 2020 2021 Retail occupancy rate Retail occupance rate w/o Kista 8 Q2 2021 I Audiocast
Slide 9: Continued NRI and valuation growth
CONTINUED NRI AND VALUATION GROWTH NET RENTAL INCOME, MEUR DIRECT OPERATING PROFIT, MEUR FAIR VALUE CHANGES, MEUR* +1% +1% +66.6 49.9 50.4 50.8 44.9 44.1 15.5 43.1 7.9 Q4/2020 Q1/2021 Q2/2021 Q4/2020 Q1/2021 Q2/2021 -51.1 Q4/2020 Q1/2021 Q2/2021 9 Q2 2021 I Audiocast *Investment properties and Kista
Slide 10: Financial overview
FINANCIAL OVERVIEW 10 Q2 2021 I Audiocast
Slide 11: Q2/2021 Financials
CLICK TO EDIT TITLE Q2/2021 FINANCIALS CLICK TO EDIT TITLE Q2/2021 incl. MEUR Q2/2021 Q2/2020 Change Kista 50% Gross rental income 54.1 53.6 0.9 % 56.3 Net rental income 50.8 50.2 1.2 % 52.5 Direct operating profit 44.1 44.0 0.4 % 45.7 EPRA Earnings 32.7 36.3 -9.9 % n/a Adjusted EPRA Earnings (1 27.
Slide 12: Q1-Q2/2021 Financials
CLICK TO EDIT TITLE Q1-Q2/2021 FINANCIALS CLICK TO EDIT TITLE Q1-Q2/2021 MEUR Q1-Q2/2021 Q1-Q2/2020 Change incl. Kista 50% Gross rental income 111.3 111.5 -0.2 % 116.1 Net rental income 101.2 102.6 -1.3 % 104.4 Direct operating profit 89.0 90.2 -1.3 % 92.1 EPRA Earnings 64.3 71.0 -9.5 % n/a Adjusted
Slide 13: Exchange rates impacted the results
EXCHANGE RATES IMPACTED THE RESULTS NOK AND SEK EXCHANGE RATE DEVELOPMENT FOREIGN CURRENCY IMPACT ON Q1-Q2/2021 0.107 • NRI: 3.0 MEUR 0.102 • EPRA EPS: 0.014 EUR 0.097 0.092 0.087 Closing rates Q2/2021 Q2/2020 SEK 10.11 10.49 0.082 NOK 10.17 9.51 0.077 0.072 Average rates Q1-Q2/2021 Q1-Q2/2020 SEK 1
Slide 14: Net rental income increased in Q2 – YTD NRI reaching 2020 levels
NET RENTAL INCOME INCREASED IN Q2 –YTD NRI REACHING 2020 LEVELS NET RENTAL INCOME BRIDGE Q1-Q2/2021 102.6 0.6 -1.7 3.6 101.2 IN Q2/2021 NET -0.4 RENTAL INCOME -3.6 INCREASED BY 1.2% COMPARED TO PREVIOUS YEAR Q1-Q2/2020 Acquisitions (Re)development Divestments Like-for-like Other (incl. Q1-Q2/2021 pr
Slide 15: Estimated direct COVID-19 impact on net rental income
ESTIMATED DIRECT COVID-19 IMPACT ON NET RENTAL INCOME NET RENTAL INCOME BRIDGE 102.6 -0.6 ESTIMATED DIRECT -0.7 2.9 101.2 COVID-19 IMPACT ON NET -0.9 -0.3 -1.1 -0.3 RENTAL INCOME -0.4 AMOUNTS APPROX. -4.3 MEUR Q1-Q2/2020 Capital/Gross Rental Turnover Specialty Parking fees Credit losses Service Othe
Slide 16: Portfolio valuations increased for a second consecutive quarter
PORTFOLIO VALUATIONS INCREASED FOR A SECOND CONSECUTIVE QUARTER FAIR VALUE CHANGES. MEUR Q2/2021 Q2/2020 Q1-Q2/2021 Q1-Q2/2020 2020 Finland & Estonia 3.4 -32.9 6.6 -45.5 -86.8 Norway 9.8 -17.4 8.5 -6.2 -1.3 Sweden & Denmark 4.2 -23.9 12.3 -32.9 -53.1 Investment properties. total 17.4 -74.2 27.4 -84.
Slide 17: EPRA Net Reinstatement Value (NRV) increased
EPRA NET REINSTATEMENT VALUE (NRV) INCREASED 0.36 0.15 -0.09 0.00 -0.01 0.02 0.00 11.66 11.48 0.00 -0.25 Q4/2020 EPRA Earnings Indirect result Translation Dividends Hybrid bond Net losses/gains Change in Change in Other Q2/2021 reserve paid and interests and on cash flow goodwill as a deferred taxes
Slide 18: Successful 350 MEUR hybrid issuance brings flexibility
SUCCESSFUL 350 MEUR HYBRID ISSUANCE BRINGS FLEXIBILITY TO EXECUTE ON OUR TRANSFORMATION STRATEGY EUR 350 million Green Hybrid • Issued on 4 June 2021 • Fixed rate coupon of 3.625% • The Hybrid is subordinated to Citycon’s debt obligations and treated as equity in Citycon’s consolidated financial sta
Slide 19: Moody's and Standard & Poor's upgraded Citycon's outlooks to stable
MOODY’S AND STANDARD & POOR’S UPGRADED CITYCON’S OUTLOOKS TO STABLE • In June, both Moody’s and Standard & Poor's NOW CITYCON HAS AN affirmed Citycon’s investment grade credit INVESTMENT GRADE ratings with upgraded outlooks to stable. CREDIT RATING WITH A STABLE OUTLOOK FROM • The outlook upgrades r
Slide 20: Main financing metrics
MAIN FINANCING METRICS ▪ Fixed interest rate ratio 96.9% ▪ Investment-grade credit ratings BBB-/Baa3/BBB- ▪ Financing mainly unsecured 100% ▪ Substantial liquidity buffer MEUR 835.7 ▪ Loan to Value 38.9%* ▪ Average maturity of loan portfolio 4.3 *The Q1/2021 LTV calculation is adjusted for a EUR 29
Slide 21: Financing key figures
FINANCING KEY FIGURES LTV DEVELOPMENT FINANCING KEY FIGURES 30 JUN 2021 30 JUN 2020 48.7% 2,097.0 2,176,2 46.2% 46.8% 46.9% 46.5% Interest bearing debt, fair value MEUR 45.7% 42.4% 38.9% Available liquidity MEUR 835.7 582,9 Average loan maturity years 4.3 3,9 Fixed interest rate ratio % 96.9 81.5 We
Slide 22: Good liquidity position provides flexibility
GOOD LIQUIDITY POSITION PROVIDES FLEXIBILITY AVAILABLE LIQUIDITY, MEUR 30 JUNE 2021 31 MARCH 2021 31 DEC 2020 30 SEP 2020 30 JUNE 2020 Syndicated revolving credit facilities unutilized 500.0 500.0 405.7 527.0 402.5 Money Markets Funds 284.9 0.0 0.0 0.0 0.0 Cash pool overdraft limits unutilized 24.9
Slide 23: Outlook for 2021
OUTLOOK FOR 2021 Citycon forecasts the 2021 direct operating profit to be in range EUR 173–184 million, EPRA EPS EUR 0.676–0.726 and adjusted EPRA EPS EUR 0.558–0.608. Adjusted EPRA Earnings per share outlook includes also the coupons of the recently issued EUR 350 million hybrid. The outlook assume
Slide 24: Looking forward
LOOKING FORWARD 24 Q2 2021 I Audiocast
Slide 25: Citycon's strategy is based on a stable core business with attractive growth opportunities
CITYCON’S STRATEGY IS BASED ON A STABLE CORE BUSINESS WITH ATTRACTIVE GROWTH OPPORTUNITIES HOW WE CREATE VALUE ASSETS IN NORDIC NECESSITY BASED DENSIFICATION STRONG SOCIAL RECYCLING OF = STABLE CORE PRIME LOCATIONS TENANT MIX POTENTIAL AND COMMUNITY CAPITAL BUSINESS WITH RELATIONSHIPS ATTRACTIVE GRO
Slide 26: ~220 MEUR of building rights value in our portfolio
WE HAVE ~220 MEUR OF BUILDING RIGHTS VALUE IN OUR PORTFOLIO – MOST OF IT IS OFF-BALANCE SHEET UPSIDE ESTIMATED BUILDING RIGHTS VALUE, MEUR* ~220 ~50 ~170 Total building rights value Captured in book value Additional upside 26 Q2 2021 I Audiocast *Approximate values
Slide 27: Breakdown of building rights by country
BREAKDOWN OF BUILDING RIGHTS BY COUNTRY TOTAL BUILDING RIGHTS AREA* # OF RESIDENTIALS* TOTAL BUILDING RIGHTS VALUE* COUNTRY SQM (THOUSANDS) UNITS MEUR Sweden ~225 ~2,100 ~100 Finland ~125 ~1,200 ~55 Norway ~150 ~1,300 ~50 Estonia ~135 ~700 ~20 Total ~630 ~5,400 ~220 27 Q4 2020 I Audiocast *Approxima
Slide 28: Building rights include over 300,000 sqm of residential development pipeline
OUR TOTAL BUILDING RIGHTS PORTFOLIO INCLUDES OVER 300,000 SQM OF RESIDENTIAL DEVELOPMENT PIPELINE • Citycon has created a significant residential development pipeline of 22 projects Construction • The whole scale of development projects is covered, ranging from early pre-zoning phase to € Valid Zoni
Slide 29: Organic developments progressing as planned – Lippulaiva NRI uplift
ORGANIC DEVELOPMENTS PROGRESSING AS PLANNED – LIPPULAIVA NRI UPLIFT OF ~19 MEUR EXPECTED LIPPULAIVA, FINLAND HERKULES, NORWAY LILJEHOLMEN, SWEDEN • Urban hub consisting of mass • Construction of the first two • Large scale redevelopment project transport, retail, residentials, residential blocks in
Slide 30: Opportunity to accelerate portfolio transformation with acquisitions
OPPORTUNITY TO ACCELERATE PORTFOLIO TRANSFORMATION WITH ACQUISITIONS BACKED BY STRONG TRANSACTION MARKET NORDIC SELL-SIDE REAL ESTATE MARKET NORDIC BUYSIDE REAL ESTATE MARKET • The Nordic real estate transaction market continued • Owing to our improved liquidity position, our to pick up and we have
Slide 31: Q2 Summary
Q2 SUMMARY SOLID RESULTS WITH FURTHER QUARTER OVER QUARTER GROWTH • Fair value increased for a second consecutive quarter, and for H1 the total increase stands at EUR 24.4 million. • Footfall, tenant sales and leasing activity are rebounding to pre-pandemic levels, which can be seen in our NRI and r
Slide 32: Q&A
32 Q2.2021 | Audiocast CICITYCON
Slide 33: Contact details
EERO SIHVONEN LAURA JAUHIAINEN CFO. Exec. VP VP. Strategy and Investor Relations +358 50 557 9137 +358 40 823 9497 eero.sihvonen@citycon.com laura.jauhiainen@citycon.com CITYCON.COM 33
Slide 34: Appendix
APPENDIX citycon.com 34 Q2 2021 I Audiocast
Slide 35: Balanced maturity profile
BALANCED MATURITY PROFILE DEBT BREAKDOWN BY TYPE DEBT MATURITY PROFILE Bonds 97% Bank loans 0% CP 3% DEBT BREAKDOWN BY CURRENCY EUR 67% NOK 17% SEK 16% 35 Q2 2021 I Audiocast
Slide 36: Income statement
INCOME STATEMENT MEUR Q2/2021 Q2/2020 % Q1-Q2/2021 Q1-Q2/2020 % 2020 Gross rental income 54.1 53.6 0.9 % 111.3 111.5 -0.2 % 224.3 Service charge income 17.1 16.9 1.6 % 35.5 35.0 1.3 % 71.2 Property operating expenses -20.5 -18.8 9.5 % -44.8 -41.3 8.2 % -84.9 Other expenses from leasing operations 0.
Slide 37: Balance sheet
BALANCE SHEET MEUR 30 JUNE 2021 30 JUNE 2020 Investment properties 4 292.7 4 170.4 Total non-current assets 4 622.4 4 482.3 Investment properties held for sale 0.0 0.0 Total current assets 402.5 220.5 Total assets 5 024.8 4 702.8 Total shareholders’ equity 2 536.5 2 164.4 Total liabilities 2 488.3 2
Slide 38: Thank you!
THANK YOU! citycon.com 38 Q2 2021 I Audiocast