Q2 2021 I Equity Story - Citycon
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1 Q2 2021 I Equity Story
2
TABLE OF CONTENTS
1. COMPANY OVERVIEW CITYCON IS A LEADING NORDIC PLAYER…
OPERATING
2. ENVIRONMENT
…OPERATING IN STABLE BUSINESS ENVIRONMENT…
3. BUSINESS MODEL …WITH A BUSINESS MODEL THAT PROVIDES PROTECTION EVEN DURING CRISIS…
4. MAXIMIZING VALUE … AND SERVES AS A PLATFORM FOR ATTRACTIVE LONG-TERM OPPORTUNITIES...
SUSTAINABILITY
5. STRATEGY
… WITH AMBITIOUS SUSTAINABILITY TARGETS…
6. KEY FINANCIALS … AND HIGHLIGHTING VERY GOOD Q2 RESULT AND STRONG LIQUIDITY.
APPENDIX FINANCIAL AND OPERATIONAL INFORMATION
COMPANY OVERVIEW 3 Q2 2021 I Equity Story
LEADING OWNER, MANAGER AND DEVELOPER OF URBAN
COMMUNITY HUBS IN THE NORDICS
▪ Net rental income in 2020 MEUR 205.4 1)
▪ 37 premises 2)
▪ 150 million visitors p.a. 1)
▪ GLA 1.2 million sq.m. 1)
10 ▪ Portfolio value EUR 4.5BN 2)
centres
▪ 233 employees
17 ▪ Investment grade credit ratings: Baa3, BBB- & BBB-
centres
6 Stable business model and diversified tenant mix
centres 2
centres
2 Pan-Nordic reach with leading positions in Finland,
centres Sweden, Norway and Estonia
Nordic countries less severely affected by COVID-
19 than rest of Europe and better equipped to
support companies through the crises
1) As of 31 December 2020
4 Q2 2021 I Equity Story 2) Including Kista Galleria
CLEAR FOCUS, DIVERSIFIED TENANT BASE , STRONG CAPITAL BASE
– A €4.5bn portfolio of urban community hubs in the heart where people live and work and connect
1 LEADING OPERATOR AND DEVELOPER OF
to public transportation provides natural visitor flow
URBAN COMMUNITY HUBS IN NORDICS
– Centres with retail, municipal services and entertainment under one roof
2 CONSISTENTLY HIGH OCCUPANCY LEVELS – Consistently high retail occupancy levels around 93.8% with a 2.9-year average lease term and with
FROM DIVERSIFIED TENANT BASE BRINGS A top 5 tenants representing only 18% of rental income
STABLE CASH FLOW – Ca 92% of rental income linked to indexation
3 FOCUS ON AFFLUENT AND STABLE NORDIC – Strong pan-nordic asset portfolio brings stability and diversification
COUNTRIES – Operating countries with high credit ratings and residents with high purchasing power
– Demonstrated ability to convert our property portfolio more towards larger and higher quality
4 EARNINGS GROWTH UNDERPINNED BY urban assets and to develop individual assets
DEVELOPMENT PIPELINE OF OWNED ASSETS – Significant residential potential
5 ROBUST BALANCE SHEET, MODERATE LTV – Loan to value 38.9%
AND ASSETS LARGELY UNENCUMBERED – 100 % of debt is unsecured
– Fitch: BBB- (stable outlook)
6 INVESTMENT GRADE RATINGS
– Moody’s: Baa3 (stable outlook)
– S&P: BBB- (stable outlook)
– Citycon is committed to maintaining investment grade credit ratings
5 Q2 2021 I Equity Story
OPERATING ENVIRONMENT 6 Q2 2021 I Equity Story
OVER LONG-TERM OUR OPERATING ENVIRONMENT IS
CHARACTERISED BY STRONG URBANISATION...
POPULATION GROWTH 2015-2035 PERCENTAGE OF POPULATION IN URBAN AREAS
100%
Sweden
93%
95%
Denmark
90% 92%
Norway and
85% Finland
90%
80%
Estonia
TAMPERE
12% 77%
HELSINKI 75%
15%
OSLO
70%
STOCKHOLM
29% 25% TALLINN
10% 65%
GOTHEN-
BURG 1980 2018 2030 2050
22%
Finland Norway Sweden Denmark Estonia
COPEN-
HAGEN
16%
7 Q2 2021 I Equity Story Source: UN World Urbanization Prospects 2018
STRONG MACRO ECONOMICS IN THE NORDICS ARE EXPECTED TO
CONTINUE
GDP/CAPITA FORECAST (2020-F2025) GENERAL GOVERNMENT GROSS DEBT/GDP
FORECAST (2020-F2025)
80 000 120%
60 000
80%
40 000
40%
20 000
0 0%
Denmark Finland Norway Sweden Nordics Eurozone Denmark Finland Norway Sweden Nordics Eurozone
2020 F2021-F2025 2020 2021F-2025F
UNEMPLOYMENT FORECAST (2020-F2025)
INFLATION FORECAST (2020-F2025)
10%
2.5 %
8%
2.0 %
6%
1.5 %
4%
1.0 %
2%
0.5 %
0%
Denmark Finland Norway Sweden Nordics Eurozone 0.0 %
Denmark Finland Norway Sweden Nordics Eurozone
2020 F2021-F2025
2020 F2021-F2025
8 Q2 2021 I Equity Story Source: IMF
COVID-19 HAS AFFECTED LESS TO CONSUMER CONFIDENCE IN
THE NORDICS VS. WESTERN AND SOUTHERN EUROPE
CONSUMER CONFIDENCE INDICATOR — August 2021
7.3 6.9
4.2
-0.6
-3.5 -4.3
-6.8
-8.5
-12.9
Nordic countries
9 Q2 2021 I Equity Story
Source: EU Programme of Business and Consumer Surveys (August-21)
STRONGER NORDIC HOUSEHOLD FINANCIAL SITUATION
SUPPORTS A POTENTIAL REBOUND IN CONSUMER SPENDING
FINANCIAL SITUATION OF HOUSEHOLDS OVER NEXT 12 MONTHS — August 2021
15.1
13.1 12.3
4.8
3.1
2.2 1.5
(2.0)
(3.2)
Nordic countries
10 Q2 2021 I Equity Story
Source: EU Programme of Business and Consumer Surveys (August-21)BUSINESS MODEL 11 Q2 2021 I Equity Story
OUR OPERATIONAL MODEL BASED ON EFFICIENT URBAN HUBS
AND LARGE SHARE OF NECESSITY TENANTS BRINGS STABILITY
GROCERY-ANCHORED CENTRES
• Large proportion of resilient necessity-based tenants
OPERATIONAL EXCELLENCE
• Harmonizing practices
• Centralizing procurement
• Maintain strict control on operating expenses and
capital expenditure.
MIX USE DEVELOPMENT
• Developing urban community hubs with retail, public
services and entertainment under same roof
• Further value to all stakeholders through
densification and increased catchment
12 Q2 2021 I Equity StoryCONNECTION TO PUBLIC TRANSPORTATION
PROVIDES NATURAL FOOTFALL
100%
OF OUR SHOPPING
▪ All of our centres are accessible by bus
CENTRES CONNECTED
TO PUBLIC ▪ 10 centres directly connected to metro lines, 17 to train lines and 6 to tram lines
TRANSPORTATION
54%
OF VISITORS ARRIVE ▪ Almost 4,000 dedicated bicycle parking spaces.
BY PUBLIC ▪ Almost 90% of our shopping centres have dedicated areas for secure bicycle
TRANSPORTATION, parking
FOOT OR BICYCLE
ISO OMENA
IS A GREAT EXAMPLE ▪ Footfall increased +74 % to 20 million annual visitors after metro opening.
OF POWERFUL PUBLIC ▪ Tenant sales +17%, same-store sales +7%.
TRANSPORTATION
13 Q2 2021 I Equity StoryOUR 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% SMALL PORTION OF TURNOVER BASED RENTS
Health care • In 2020 only 5 % of our gross rental income was
4% Municipality from turnover based rents
3% services 92% OF RENTS TIED TO INDEXATION
3%
Offices PUBLIC SECTOR TENANTS ARE GROWING PART OF OUR
19% 1% 3% 3% Pharmacies
BUSINESS
Home and Banks
sporting goods Residentials and hotels • Currently public sector tenants and healthcare represent
10%
4% 5% Cafes and restaurants approx. 10% of our contracted GLA
Speciality stores
Leisure Cosmetics • In 2020 Citycon signed or agreed long term leases with
Other services Wellness municipalities and health care tenants across the Nordics
for a total of 10,900 square meters.
14 Q2 2021 I Equity StoryWE HAVE A SIGNIFICANTLY HIGHER “ESSENTIAL” BUSINESS
EXPOSURE THAN OTHER PAN-EUROPEAN RETAIL PEERS
• gRO CITYCON – TOP TEN TENANTS PROPORTION OF GROCERIES IN TOP 10
TENANCIES - PEER GROUP COMPARISON
Kesko Group Grocery 4.8%
S Group Grocery 4.0% Peer 4
Varner Group Fashion 3.9%
Peer 3
ICA Group Grocery 2.4%
Coop Grocery 2.3% Peer Group
avg
H&M Fashion 1.9%
NorgesGruppen Grocery 1.9% Peer 2
Clas Ohlason Home 1.7%
Peer 1
Lindex Fashion 1.7%
Gresvig Sport goods 1.5% Citycon
Top 10 tenants 26.2%
0.0% 5.0% 10.0% 15.0% 20.0%
Grocery in Top 10 15.3%
15 Q2 2021 I Equity Story
Source: Company´s Annual ReportsPUBLIC SECTOR TENANTS
- A GROWING PART OF OUR BUSINESS
SWEDEN NORWAY FINLAND ESTONIA DENMARK TOTAL
CREDIT RATING AAA AAA AA+ AA- AAA
MUNICIPAL/GOVERNMENTAL TENANTS
Leased GLA ~36,000 ~9,000 ~19,000 ~100 ~3,000 ~67,000
Share of total
11% 2% 6% 0% 6% ~5% 1%
GRI % 1%
ALCOHOL MONOPOLY (ALKO, SYSTEMBOLAGET,
3%
VINMONOPOLET) TENANTS 6%
Leased GLA ~8,000 ~1,000 ~1,000 - - ~16,000 2%
Share of total 11%
3% 1% 1% - - ~1%
GRI %
SHARE OF TOTAL GLA%, MUNICIPAL AND ALCOHOL MONOPOLY TENANTS ~8%
6%
Share of GRI (municipal tenants)
16 Q2 2021 I Equity Story Share of GRI (alcohol monopolies)
As of 31 December 2020LOW OCR SUPPORTS PROFITABILITY OF OUR TENANTS AND
CITYCON’S COMPETITIVENESS ALSO GOING FORWARD
OCCUPANCY COST RATIO VS PEERS
Citycon
Peer 1
Peer 2
Peer 3
Average
Peer 5
Peer 6
0.0 % 5.0 % 10.0 % 15.0 % 20.0 % 25.0 %
Peer group: Hammersson, Klepierre, Mercialys, Unibail-Rodamco-Westfield, Wereldhave
Source: Companies' annual reports (2019-2020)
17 Q2 2021 I Equity StorySTRONG 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
18 Q2 2021 I AudiocastFOOTFALL 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 Tenant Sales
19 Q2 2021 I AudiocastQ2 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 rent collections.
• Q2/2021 was in line with our expectations and narrows our full year guidance.
SUCCESSFUL FINANCING AND UPGRADED RATING OUTLOOK CONFIRM STRATEGY
• 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.
• We also completed a successful issuance of a green bond of 350 MEUR with a high
demand. The issuance reduced our LTV to 38.9%.
• In addition to organic portfolio development, the LTV reduction gives us the opportunity
to accelerate our portfolio transformation by select acquisitions. The active transactions
market further supports our capital recycling activities aiming for an increased share of
residential and office premises in our portfolio.
20 Q2 2021 I AudiocastMAXIMIZING VALUE 21 Q2 2021 I Equity Story
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
GROWTH
▪ Top 2 cities in each ▪ Grocery anchored ▪ Identified residential ▪ Long lasting ▪ Selective
OPPORTUNITIES
country with strong centres, a large share potential in relationship with divestments ensuring
urbanisation of necessity tenants connection to liquidity for strategic AND CLEAR
municipalities
▪ Connection to public ▪ Mixed-use hubs with existing assets ▪ Continues dialogue acquisitions SYNERGIES WITH
transportation growing share of ▪ Developing new with surrounding ▪ Investments in EXISTING BUSINESS
municipalities residential, office, communities organic growth of
municipality services ▪ Sustainability residential,
space embedded in the combined with
operating model potential acquisitions
22 Q2 2021 I Equity StoryPERFECTLY POSITIONED TO
PARTICIPATE IN DENSIFICATION
▪ Direct connections to the most important public transportation hubs place
EXISTING/ OWNED
assets in prime position for zoning and gaining building rights
ASSETS IN PRIME
LOCATIONS ▪ Existing relationships and co-operation with municipalities make Citycon the
preferred partner
LEADING OWNER
▪ Proven track-record of developing award-winning destinations
AND DEVELOPER OF
REAL ESTATE IN THE ▪ Successful development of green assets with innovative recycling,
NORDICS transportation and energy efficiency solutions
FOR CITYCON:
ATTRACTIVE GROWTH ▪ Attractive add-on business on top of prime retail assets with a significant
BUSINESS WITH portfolio diversification impact
CLEAR SYNERGIES ▪ Increase in the number of people in the catchment area creates natural
WITH EXISTING customer flow and balances intra-day fluctuation
BUSINESS
23 Q2 2021 I Equity StoryCITYCON CONTINUES TO FOCUS ON PORTFOLIO
TRANSFORMATION TOWARDS A MIXED-USE PORTFOLIO
CURRENT NEW DEVELOPMENT TARGET
PORTFOLIO OPPORTUNITIES PORTFOLIO
19.5% 13%
GLA GLA 40.0% GLA 40.0%
57.5% 1.1m 0.6m* 1.5m
23.0%
87%
20.0%
RETAIL NECESSITY RESIDENTIAL, OFFICE & OTHER
Note: * Includes 0.2 msq.m. of condos; ** Total opportunities of 0.6 msq.m. - 0.2 m.sq.m. of condos sold once
completed
24 Q2 2021 I Equity StoryVALUE FROM THE BUILDING RIGHTS IS APPROX. 200
MEUR
Value of development projects is mostly created already in the zoning
phase. Decision on whether to invest or cash on building rights is made in
BUILDING RIGHTS VALUE CREATION
a later stage of the process.
200
150
Building rights
of 200 MEUR for
100 the portfolio
equates 1.12
EUR/ share
50
0
2020 2021 2022 2023 2024 2025 2026
Annual Building Rights Cumulative Building Rights
Final construction decision is made in a later stage of the process
triggering also capex spend
25 Q2 2021 I Equity StoryOUR 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 Zoning
execution, i.e., the construction phase Ongoing Zoning
Pre-Zoning
Construction 21,120
Valid Zoning 22,500 €
Ongoing Zoning 158,750
€
Pre-Zoning 106,000
Over 300,000 sqm in total
26 Q2 2021 I Equity StoryCapex
spent to
date EUR
LIPPULAIVA – A PROTOTYPE OF AN
263 million
URBAN HUB
• SUPERIOR TENANT MIX with grocery anchors
• 45% of the GLA reserved for grocery stores
• A variety of private and public services — a kindergarten, public library private
health services and gym.
• PRE-LEASED LEVEL OF 76%* with an average rent of approx. 31 EUR per sq.m.**
• SIGNIFICANT RESIDENTIAL COMPONENT attached to the centre
• 8 high-rise towers attached to the centre
• In total approximately 550 apartments of which approximately 275 rental
apartments are owned by Citycon with anticipated rent of approx. 25 EUR per
sq.m.**
• A CATCHMENT AREA OF 93,000 INHABITANTS
• Purchasing power of inhabitants (€/year)
clearly higher above the HMA average.
• Significant residential zoning in the catchment
area >10% increase expected in the following
ten years.
• Well-connected to the PUBLIC TRANSPORTATION
• Anticipated traffic from metro and bus
terminal: 14.000 commuters per day (y2026).
* Of which 71% are contracts signed and 5% are negotiated/ offers accepted by the tenant
Groceries44% Services andoffices21% Homeandsportinggoods15% Restaurants8%
** Stabilized rents (Y2026) Wellness4% Fashion4% Cosmeticsandpharmacies2% Specialitystores1%
27 Q2 2021 I Equity StoryLILJEHOLMEN SHOWCASES TRANSFORMATION STRATEGY
• Liljeholmen is a well-connected sub-urban area in the heart of
Stockholm and is expected to grow substantially in future.
• Citycon has established assets in the area and currently owns a
mixed-use urban hub comprised of retail (with a large proportion
of necessity tenants) and healthcare services.
• Liljeholmen will include new areas totaling approx. 70,000 sqm to
accommodate the needs of future residents and office workers.
New developed space is distributed between residential, office,
services, culture and public meeting places.
• The project is currently in the zoning phase, and the construction
is planned in phases starting from year 2023.
• These densification plans are being done in close partnership with
the City of Stockholm.
28 Q2 2021 I Equity StoryOPPORTUNITY 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 experienced reverse inquiries portfolio transformation can be accelerated through
for several of our assets. select acquisitions e.g., in residentials.
• The appetite and pricing for high quality assets
continues to be on an attractive level and facilitates The Nordic residential sector is more
selective capital recycling activities in line with our mature than many other parts of Europe
portfolio transformation strategy, which will increase and attracting capital given the region's
robust macro economic and demographic
the share of residential and office premises and outlook. Sweden and Finland provide the
decrease the proportion of non-essential retail in our best opportunities for listed investors in
portfolio. the Nordics.
• A strong balance sheet remains a key priority and the - Green Street Advisors, 07/2021
company will continue its capital recycling actions
going forward.
29 Q2 2021 I Equity StorySUSTAINABILITY 30 Q2 2021 I Equity Story
OUR SUSTAINABILITY STRATEGY
CARBON NEUTRAL ACCESSIBLE CONVENIENT AND SAFE
− Citycon is carbon neutral by 2030 − 100% of assets are connected to − Tenant satisfaction stays consistently
public transportation, encouraging above 90% in areas of safety, security,
green ways to visit our centres hospitality and service-mindedness.
Citycon puts best
sustainability practices into
effect by following a clear
roadmap and monitoring
success
EXCELLENCE IN ACTION
31CITYCON IN THE TOP QUARTER IN EUROPE’S TOP CLIMATE
LEADER COMPANIES ACROSS ALL SECTORS
Citycon among Europe’s top Climate Leader companies
according to Financial Times report
• Financial Times and German research company Statista published
18 May 2021 a list of companies across Europe that have shown the
highest reduction in greenhouse gas emissions in relation to their
revenues in the period 2014–2019.
• The results will also be introduced in a special report to be
published in Financial Times on 27 May.
• More than 4,000 companies with revenue of at least MEUR 40 in
2019 were surveyed.
CITYCON IS PROUD TO
BE RECOGNISED AS ONE OF
EUROPE’S CLIMATE LEADERS 2021
32 Q2 2021 I Equity Story
ConfidentialSTRIVING FOR EXCELLENCE IN ACTION
SUSTAINABILITY KEY FIGURES
Citycon wants to have a positive impact on people,
communities and the environment. “Excellence in
action” is present in what everyone at Citycon does
every day. We want to make best sustainable
practices the norm throughout the company, so that
successes are shared and adopted.
33 Q2 2021 I Equity StoryFINANCIAL OVERVIEW 34 Q2 2021 I Equity Story
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 operating profit, EUR 44.1 million, slightly ahead the Q2/2020 (EUR 44.0
million). EPRA earnings per share EUR 0.183 compared to EUR 0.204 in Q2/2020.
• Q2 portfolio valuations increased for a second consecutive quarter, and for H1 the fair value gains stand at EUR 24.4
million.
• Q2/2021 was in line with our expectations and we narrow our full year guidance.
INCREASES IN FOOTFALL, TENANT SALES AND LEASING ACTIVITY
• Footfall increased from last year and was 8.2% above Q2/2020 – on a like-for-like basis the increase was 11.9%. The
positive trend continues, and June 2021 sales exceeded pre-pandemic levels in June 2019. Tenant sales grew
accordingly, with like-for-like tenant sales +1.8% above H1/2020 levels.
• Rent collection has remained high, at 95% in H1. Q1 rent collection was initially reported as 92% and has since increased
to 96%. Q2 rent collection stands at 94% and is expected to improve in line with the Q1 collection.
• Leasing activity was strong: the number of signed leases grew from 29,000 sq.m. in Q2/2020 to 55,000 in Q2/2021,
complemented with higher average rents for the signed leases.
• The stable performance throughout the pandemic reflects the strength of Citycon’s strategy which is based on having a
large share of necessity tenants and locations in densely populated major markets.
• The stability of Nordics as operating environment and the wide COVID-19 vaccine coverage in our operating countries
are further key factors underlying the stability of the results.
35 Q2 2021 I Equity StoryQ2/2021: 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 completed a successful issuance of a green hybrid bond of 350 MEUR with a high demand, in addition to
the senior bond issued in Q1 with a coupon of 1.625%. The enhanced liquidity gives flexibility to accelerate the portfolio
transformation through select acquisitions. The issuance, together with the divestment of 3 non-core assets, also
reduced our LTV to 38.9%.
CAPITAL RECYCLING AND PORTFOLIO TRANSFORMATION
• The Nordic real estate transaction market continued to pick up and on the heels of the divestment of 3 non-core assets
in Q1, we have experienced reverse inquiries for several of our assets. The appetite and pricing for high quality assets
continues to be on an attractive level and facilitates selective capital recycling activities in line with our portfolio
transformation strategy, which will increase the share of residential and office premises and decrease the proportion of
non-essential retail in our portfolio.
• We have identified 222 MEUR of additional building rights’ potential. Of this 222 MEUR, only approx. 50 MEUR has been
realized in our book values, leaving approx. 170 MEUR as additional growth for the company.
NEW CFO APPOINTED
• Mr. Bret D. McLeod has been appointed Citycon Oyj’s CFO and member of the Corporate Management Committee
following the planned retirement of the current CFO, Mr. Eero Sihvonen at year-end. Mr. McLeod will assume full
responsibility as CFO on January 1, 2022. Mr. Sihvonen will remain as an adviser to the company until June 2022.
36 Q2 2021 I Equity StoryCLICK 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 27.6 32.2 -14.4 % n/a
EPRA EPS (basic) 0.183 0.204 -9.9 % n/a
Adjusted EPRA EPS (basic) (1 0.155 0.181 -14.4 % n/a
EPRA NRV per share 11.66 11.51 1.3 % n/a
1) The adjusted key figure includes hybrid bond coupons and amortized fees.
37 Q2 2021 I Equity StoryCLICK 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 EPRA Earnings (1 55.2 63.0 -12.4 % n/a
EPRA EPS (basic) 0.361 0.399 -9.5 % n/a
Adjusted EPRA EPS (basic) (1 0.310 0.354 -12.4 % n/a
EPRA NRV per share 11.66 11.51 1.3 % n/a
1) The adjusted figure includes hybrid bond (issued November 2019) coupons and amortized fees.
38 Q2 2021 I Equity StoryESTIMATED 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 Other (non- NRI Q1-
rents discounts* based rents leasing and rents changes and COVID related) Q2/2021
other charges
* Rental discounts granted in Q2/2020 have been accrued over the contract period.
39 Q2 2021 I Equity StoryPORTFOLIO 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 -84.6 -141.2
Right-of-use assets classified as investment
-1.5 -1.4 -2.9 -2.8 -5.7
properties (IFRS 16)
Investment properties in the statement of
15.9 -75.6 24.4 -87.4 -146.9
financial position. total
Kista Galleria (50%) -0.4 -0.8 -1.1 -12.0 -32.3
Investment properties and 15.5 -76.4 23.4 -99.4 -179.2
Kista Galleria (50%). total
AVERAGE YIELD REQUIREMENT. % 30 June 2021 30 June 2020
Investment properties and
5.4% 5.5%
Kista Galleria (50%), average
40 Q2 2021 I Equity StorySUCCESSFUL 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 statements prepared in accordance with IFRS.
• The issuance brings flexibility to execute on our transformation strategy and enables the
diversification of our portfolio both organically and through potential acquisitions. The issuance
will also strengthen the balance sheet and demonstrates Citycon’s commitment to improving its
investment grade credit ratings.
• The demand was very strong with an order book reaching around one billion euros and
approximately 150 investors, and therefore, we were able to tighten the pricing and increase the
size of the issue to EUR 350 million during the book building process.
41 Q2 2021 I Equity StoryMOODY’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 reflect sufficient ALL THREE MAJOR
CREDIT AGENCIES,
headroom for Citycon’s credit metrics, the INCLUDING FITCH.
resilience of our necessity-based urban hubs,
the stability of our markets, and a positive view
towards our transformation toward a more
residential and mixed-use portfolio
42 Q2 2021 I Equity StoryMAIN 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 million deferred payment in other receivables related to
43 Q2 2021 I Equity Story asset disposals. n addition, highly liquid cash investments has been taken into account in net debt.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 assumes that there are no major changes in
macroeconomic factors and that there will not be another wave of COVID-19 with
restrictions resulting in significant store closures. These estimates are based on the
existing property portfolio and announced disposals as well as on the prevailing level of
inflation, the EUR–SEK and EUR–NOK exchange rates, and current interest rates.
Previous Outlook
Citycon forecasts the 2021 direct operating profit to be in range EUR 170- 188 million,
EPRA EPS EUR 0.651-0.751 and adjusted EPRA EPS EUR 0.558-0.658.
44 Q2 2021 I Equity StoryAPPENDIX
citycon.com
45 Q2 2021 I Equity StoryBALANCED 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%
46 Q2 2021 I Equity StoryINCOME 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 0.0 -1.6 - -0.8 -2.6 -67.8 % -5.3
Net rental income 50.8 50.2 1.2 % 101.2 102.6 -1.3 % 205.4
Administrative expenses -6.5 -6.3 2.4 % -12.1 -12.8 -5.4 % -25.9
Other operating income and expenses -0.2 0.1 - -0.5 0.4- 0.9
Net fair value gains/losses on investment
15.9 -75.6 - 24.4 -87.4 - -146.9
property
Net gains/losses on sale of investment
0.3 0.0 - -5.1 1.7 - 0.7
property
Operating profit 60.4 -31.6 -291.5 % 107.9 4.5 - 34.1
Net financial income and expenses -13.8 -12.0 14.8 % -27.4 -24.3 12.8 % -51.8
Share of profit/loss of joint ventures -1.7 -0.8 98.5 % -3.5 -10.0 -64.6 % -28.0
Profit before taxes 44.9 -44.4 - 77.0 -29.8 - -45.7
Current taxes -0.6 -0.4 66.1 % -1.4 -1.2 17.9 % -1.8
Deferred Taxes -6.9 7.8 - -12.1 8.1 - 19.6
Profit/loss for the period 37.5 -37.0 - 63.5 -23.0 - -27.9
47BALANCE 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 2 538.4
Total liabilities and shareholders’ equity 5 024.8 4 702.8
48 Q2 2021 I Equity StoryTHANK YOU!
citycon.com
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