Citycon Oyj - Interim report (Q1 and Q3)

Citycon Oyj's Interim Report Q1/2024: Strong like-for-like NRI growth

Citycon Oyj   Interim Report   15 May 2024 at 19:20 hrs

Strong operational performance

  · Total net rental income increased by 6.7% compared to the previous year.
    · In comparable FX rates, total net rental income increased by 8.2%.

  · Like-for-like net rental income increased by 6.5% compared to the previous
year.
  · The weakening NOK and SEK FX-rates impacted on our results; the impact on
total net rental income was EUR -0.7 million.
  · Average rent per sq.m. increased by 4.1% with comparable FX to EUR 25.1 per
sq.m (vs. Q1/2023).
  · Retail occupancy 94.9% vs 94.6% in Q1/2023 (including Kista).
  · Like-for-like footfall unchanged (-0.1%).
  · Like-for-like tenant sales increased 3.0%.
  · Fair value change of investment properties in Q1/2024 EUR 46.2 million,
including Kista.

The strengthening of the balance sheet as a priority

  · In Q1, Citycon continued to improve its balance sheet by EUR 48.2 million
share issue which was 4-times oversubscribed.
  · Citycon placed a 5-year EUR 300 million green bond with an orderbook
approximately seven times over-subscribed.
  · Citycon executed approx. EUR 213 million tender of its bond maturing in
October 2024.
  · Following the successful execution of these financing transactions,
Citycon's debt maturity profile was significantly improved and refinancing risk
was further reduced.

KEY FIGURES


Citycon              Q1/20  Q1/2023      %        FX        FX       Q1
Group key               24                  Adjusted  Adjusted  -Q4/202
figures 1)                                   Q1/2023      % 2)        3
Net rental   MEUR     51.0     47.8    6.7      47.2     8.2 %    195.7
income                                   %
Like-for     %       6.5 %    9.4 %      -         -         -    6.5 %
-like net
rental
income
development
Direct       MEUR     39.7     38.3    3.7      37.7     5.4 %    164.8
operating                                %
profit 3)
IFRS         EUR      0.33     0.32    3.6      0.31     4.9 %    -0.70
Earnings                                 %
per
share
(basic) 4)
Fair value   MEUR   4082.4   3996.7    2.1         -         -   3858.2
of                                       %
investment
properties
Loan to      %        48.3     42.9   12.6         -         -     46.3
Value (LTV)                              %
3)

EPRA based
key
figures 3)
EPRA         MEUR     24.5     25.3   -3.0      24.8    -1.1 %    109.6
Earnings                                 %
Adjusted     MEUR     22.1     17.9   23.9      17.4    27.4 %     80.6
EPRA                                     %
Earnings 5)
EPRA         EUR     0.138    0.150   -8.0     0.147    -6.1 %    0.651
Earnings                                 %
per
share
(basic)
Adjusted     EUR     0.125    0.106   17.6     0.103    21.0 %    0.479
EPRA                                     %
Earnings
per share
(basic) 5)
EPRA NRV     EUR      8.96    10.78  -16.9         -         -     9.30
per share                                %
6)

1) Standing portfolio key figures have not been presented for Q1/2024 because
there have been no divestments impacting the figures during the reporting period
or the comparison period.
2) Change from previous year (comparable exchange rates). Change-% is calculated
from exact figures.
3) Citycon presents alternative performance measures according to the European
Securities and Markets Authority (ESMA) guidelines. More information is
presented in Basis of Preparation and Accounting Policies in the notes to the
accounts.
4) The key figure includes hybrid bond coupons, amortized fees and gains and
expenses on hybrid bond repayments.
5)  Starting from the beginning of 2024, Citycon excludes reorganisation and one
-time costs (Q1/2024: EUR 4.3 million) from Adjusted EPRA Earnings. Due to this,
Q1/2024 Adjusted EPRA Earnings is not fully comparable with Q1/2023. The
adjusted key figure includes hybrid bond coupons and amortized fees.
6) The effect of currency rates to EPRA NRV/share was EUR -0.20.

CEO HENRICA GINSTRÖM:
First, I want to say that I am both excited and grateful for this opportunity to
serve as the next CEO of Citycon. During my 13 years in the company, I have had
the privilege to be part of Citycon's journey to become the leading owner and
developer of urban hubs in the Nordics and Baltics. We continue to stay
committed to our long-stated necessity-based strategy, focusing on high-quality
assets in strong, growing urban markets in the major Nordic cities, and most
importantly, creating value for all our stakeholders. At the same time, it is
important to acknowledge the changes in our operating environment over the last
two years, in particular the high interest rates, which have had a major impact
on the real estate sector and also Citycon.
Operational performance in January-March 2024 was strong with like-for-like net
rental income increasing by 6.5 % supported by rent indexation and strong
performance of our core assets. Like-for-like tenant sales increased 3.0 % as
sales development continued strong especially in our main tenant categories.
Retail occupancy rate, including Kista Galleria, increased 30 bps compared to
same period previous year. There was a decline in the occupancy rate compared to
year-end due to the Kista consolidation and normal seasonal variation.
Our EPRA earnings remained stable and was EUR 24.5 million, including some one
-time costs and restructuring costs related to organizational changes. Excluding
these one-off costs, EPRA earnings grew and amounted to EUR 28.8 million.
In connection with the financial statements 2023 we outlined actions to be taken
in 2024 regarding asset disposals and cost savings measures with the main goal
of strengthening our balance sheet and cash flow. I would like to highlight our
commitment to the investment-grade credit rating, which enables us to access the
financing market with competitive terms. We demonstrated this commitment during
the first quarter as we executed an approximately EUR 50 million share issuance.
This action was necessary to defend our investment grade credit rating, and the
best solution for the company and all its shareholders. The share issue also
facilitated a very successful EUR 300 million new green bond issuance in
February, which significantly improved our debt maturity profile and reduced our
refinancing risk.
We have set a divestment target of EUR 950 million over next the 24 months and
are confident that we will execute that by the end of 2025. In May, we signed a
deal to sell Kongssenteret in Norway with pricing close to our book value. With
that transaction, we showcase the attractiveness of our necessity-based centers
but also highlight the fact that the transaction market is picking up.
During the first quarter of 2024 we have executed several cost-saving measures.
Through organizational changes and consolidation of group functions to our Iso
Omena head office we have been able to reduce our headcount costs substantially
and are committed to delivering on our overhead run-rate target of less than 10%
of NRI by the end of this year.
Years 2024 and 2025 will be years of execution and delivery. I am looking
forward to building the company's future together with a strong team. Our
business fundamentals are strong, and together with a focus on the balance
sheet, Citycon is and will be well-positioned going forward. We acknowledge that
now is the time to execute on our promises, and that is the key priority for me
as a new CEO and for the whole management team.
OUTLOOK (unchanged)

Direct operating profit                   MEUR  185-203
EPRA Earnings per share (basic)           EUR   0.62-0.74
Adjusted EPRA Earnings per share (basic)  EUR   0.46-0.58

The outlook assumes that there are no major changes in macroeconomic factors and
no major disruptions from the war in Ukraine. These estimates are based on the
existing property portfolio, including Kista 100%, as well as year-end 2023
estimates of inflation, EUR-SEK and EUR-NOK exchange rates, and interest rates.

WEBCAST


Citycon's investor, analyst and press conference call and live webcasting will
be held on Thursday, 16 May 2024 at 10 am EEST. The webcast can be participated
by calling in and following live at this website:
https://citycon.videosync.fi/q1-2024

Questions for the management can be presented by phone. To ask questions, join
the teleconference by registering on the following link:
https://palvelu.flik.fi/teleconference/?id=50048750

After the registration you will be provided with phone numbers and a conference
ID to access the conference. To ask a question, press *5 on your telephone
keypad to enter the queue.

The webcast will be recorded and it will be available afterwards on Citycon's
website.
CITYCON OYJ
For further information, please contact:
Sakari Järvelä
CFO
Tel. +358 50 387 8180
sakari.jarvela@citycon.com
Citycon is a leading owner, manager and developer of mixed-use real estate
featuring modern, necessity-based retail with residential, office and municipal
service spaces that enhance the communities in which they operate. Citycon is
committed to sustainable property management in the Nordic region with assets
that total approximately EUR 4.1 billion. Our centres are located in urban hubs
in the heart of vibrant communities with direct connections to public transport
and anchored by grocery, healthcare and other services that cater to the
everyday needs of customers.
Citycon has investment-grade credit rating from Standard & Poor's (BBB-).
Citycon Oyj's shares are listed on Nasdaq Helsinki.
www.citycon.com

Attachments:

05152648.pdf