CITYCON OYJ Stock Exchange Release 6 February 2020 at 9:00 hrs
- Solid overall performance in 2019
- Like-for-like net rental income grew in all business units
- Total tenant sales grew by 2.6%; positive like-for-like sales development
- Total footfall increased by 3.8%; positive like-for-like footfall development
- Continued positive leasing spread driven by Sweden&Denmark
- Loan-to-value improved to 42.4 % as a result of the successful issuance of the
EUR 350 million hybrid bond
OCTOBER—DECEMBER 2019
- Net rental income was EUR 53.5 million (Q4/2018: 53.7). Like-for-like
properties increased net rental income by EUR 0.5 million, and the acquisition
of Straedet in Denmark increased net rental income by EUR 0.4 million. Net
rental income developed positively in best assets, Iso Omena in particular. This
was partly offset by divestments in 2018 and Q2/2019, impacting net rental
income by EUR -1.6 million. Weaker currencies had an impact of EUR -1.2 million.
Adoption of IFRS 16 standard increased net rental income in Q4/2019 by EUR 1.7
million in total.
- EPRA Earnings increased to EUR 35.6 million (34.2) particularly due to lower
administrative expenses. EPRA Earnings per share (basic) was EUR 0.200 (0.192),
impact from weaker currencies was EUR -0.005 per share.
- IFRS-based earnings per share decreased to EUR -0.15 (0.03) mainly as a result
of higher fair value losses of investment properties. In addition, net financial
expenses were higher following one-off bond buy-back costs during the quarter.
- The reporting period includes the adoption of IFRS 16 from 1.1.2019 onwards.
Please see Note 2 for more information.
JANUARY—DECEMBER 2019
- Net rental income increased to EUR 217.4 million (Q1-Q4/2018: 214.9).
Completed (re)development projects increased net rental income by EUR 3.8
million, and like-for-like properties increased NRI by EUR 0.9 million.
Divestments decreased net rental income by EUR -6.2 million and weaker SEK and
NOK by EUR -3.0 million. Adoption of IFRS 16 standard increased net rental
income in Q1-Q4/2019 by EUR 7.0 million in total.
- EPRA Earnings increased to EUR 145.6 million (143.5) due to higher net rental
income and lower net financial expenses. EPRA Earnings per share (basic) was EUR
0.818 (0.806), negative impact from weaker currencies was EUR -0.015 per share.
- IFRS-based earnings per share was EUR 0.04 (0.09) as a result of larger fair
value losses of investment properties.
-Net cash from operations per share increased to EUR 0.76 (0.54) resulting from
lower net financial expenses, mainly due to lower one-off bond buy-back costs
for the full period
-The Board of Directors proposes to the Annual General Meeting that the Board be
authorised to decide on the distribution of dividend for the financial year
2019, and assets from the invested unrestricted equity fund. Based on the
proposed authorization the maximum amount of dividend to be distributed shall
not exceed EUR 0.05 per share and the maximum amount of equity repayment
distributed from the invested unrestricted equity fund shall not exceed EUR 0.60
per share. Based on the authorization, the company could distribute a maximum of
EUR 8,899,926.25 as dividends and EUR 106,799,155.00 as equity repayment. The
dividend/equity repayment would be paid to shareholders in four installments.
- The reporting period includes the adoption of IFRS 16 from 1.1.2019 onwards.
Please see Note 2 for more information.
KEY FIGURES
Q4/2019 Q4/2018 % 1) Comparable
change % 3)
Net rental income MEUR 53.5 53.7 -0.4 % 1.8 %
Direct Operating profit MEUR 47.1 44.1 7.0 % 9.6 %
2)
IFRS Earnings per share EUR -0.15 0.03 - -
(basic) 4) 5)
Fair value of MEUR 4160.2 4131.3 0.7 % -
investment properties
Loan to Value (LTV) 2) % 42.4 48.7 -12.9 % -
EPRA based key figures
2)
EPRA Earnings MEUR 35.6 34.2 4.3 % 7.3 %
Adjusted EPRA Earnings MEUR 33.9 34.2 -0.6 % 2.2 %
5)
EPRA Earnings per share EUR 0.200 0.192 4.3 % 7.3 %
(basic) 4)
Adjusted EPRA Earnings EUR 0.191 0.192 -0.6 % 2.2 %
per share (basic) 4) 5)
EPRA NAV per share 4) EUR 12.28 12.95 -5.2 % -
2019 2018 % 1) Comparable
change % 3)
Net rental income MEUR 217.4 214.9 1.2 % 2.6 %
Direct Operating MEUR 193.5 187.6 3.1 % 4.7 %
profit 2)
IFRS Earnings per share EUR 0.04 0.09 -56.6 % -52.8 %
(basic) 4) 5)
Fair value of MEUR 4160.2 4131.3 0.7 % -
investment properties
Loan to Value (LTV) 2) % 42.4 48.7 -12.9 % -
EPRA based key figures
2)
EPRA Earnings MEUR 145.6 143.5 1.5 % 3.4 %
Adjusted EPRA Earnings MEUR 143.9 143.5 0.3 % 2.2 %
5)
EPRA Earnings per share EUR 0.818 0.806 1.5 % 3.4 %
(basic) 4)
Adjusted EPRA Earnings EUR 0.809 0.806 0.3 % 2.2 %
per share (basic) 4) 5)
EPRA NAV per share 4) EUR 12.28 12.95 -5.2 % -
1. Change from previous year. Change-% is calculated from exact figures.
2. 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.
3. Change from previous year (comparable exchange rates). Change-% is
calculated from exact figures.
4. Key ratios have been adjusted in the comparison periods to reflect the new
number of shares after the reversed share split executed in March 2019.
5. The adjusted key figure includes hybrid bond coupons and amortized fees.
CEO F. SCOTT BALL:
“For Citycon, 2019 was a year of portfolio and operational improvement as well
as a year of strategic review in order to define the company’s short and medium
-term focus areas. Our new organization and other improvements have begun to
provide consistency across the portfolio, allow us to grow specific segments of
our business and enable us to take advantage of our Pan-Nordic scale.
Citycon’s operational performance remained solid in 2019. The total net rental
income increased by 1.2 % to EUR 217.4 million while like-for-like net rental
income grew in all our business units. EPRA earnings increased from previous
year and the EPRA earnings per share was EUR 0.818 in 2019. In general, the
occupancy rate remained at a high level driven by good locations of our shopping
centres which are supported by seamless public transportation connection. We
were pleased that total tenant sales increased by 2.6% and total footfall by
3.8% during 2019.
In 2019 we continued to take action to strengthen our balance sheet. The
successful 350 million green hybrid bond issuance in November was an important
milestone in strengthening our credit profile. Following the hybrid bond
issuance our loan-to-value ratio decreased to 42.4% at the end of 2019. We are
now in the range of our target loan-to-value -level of 40-45%. A strong balance
sheet and maintaining the loan-to-value ratio below 45% remains a key priority
for the company also in the future. During the year, we also improved the
average quality of our portfolio by divesting two secondary shopping centres in
Finland for EUR 77 million. The disposal price was in line with the assets’
latest IFRS fair value, which demonstrates that there is investor demand for
good retail assets and is a further confirmation of the stable value of our
assets.
Citycon has large assets in growing urban locations that offer great
densification potential. Our strategy is to become a mixed-use urban real estate
investor and owner. It is clear we have a great number of embedded growth
opportunities within the existing portfolio and we have identified 320,000 sq.m.
residential opportunity within the existing portfolio. Of that number
approximately 60,000 sq.m. is already zoned, 130,000 sq.m. is in the zoning
process and we are beginning to discuss for the remaining 130,000 sq.m. It is
important to note that only small part of this is on our current valuations. The
additional value will be realised as we achieve zoning approvals. An excellent
example of mixed-use development is our project in Lippulaiva. Lippulaiva will
have a significant residential component attached to the shopping centre and we
have building rights for up to eight buildings with 500 apartments in total. The
project is processing as planned and we estimate to open the Lippulaiva shopping
centre in spring 2022.
Overall, we have an urban asset portfolio with very stable business model in
which 85% of our leases are linked to indexation. In addition, our diversified
tenant mix with a relatively low share of fashion tenants and transportation
hubs as anchors, gives us a strong position in the retail market. Looking at our
financial guidance for 2020, we expect our EPRA EPS to be in the range of EUR
0.815-0.915 in 2020. From 2020 onwards, we will also give a guidance on adjusted
EPRA EPS which includes the coupons and amortized fees from the hybrid bond. We
expect our adjusted EPRA EPS to be in range of EUR 0.720-0.820 in 2020.”
OUTLOOK
Citycon’s Board of Directors resolved to update Citycon’s guidance practice
following the issuance of Capital Securities. In order to quantify the impact of
hybrid bond coupons, Citycon will also provide guidance on adjusted EPRA EPS
after hybrid bond coupon payments. As of 2020, Citycon will provide guidance on
direct operating profit, EPRA EPS and adjusted EPRA EPS. The adjusted EPRA
metrics include all coupon expenses from the Capital Securities.
Citycon forecasts the 2020 EPRA Earnings per share (basic) to be EUR 0.815
-0.915. Furthermore, the Direct operating profit is expected to be in the range
of EUR 191-209 million and adjusted EPRA EPS in the range of EUR 0.720-0.820
million.
The acquisition of the remaining interest in the portfolio of three shopping
centres, as disclosed on 5 February 2020, is included in the estimates.
Otherwise, the estimates are based on the existing property portfolio as well as
on the prevailing level of inflation, the EUR–SEK and EUR–NOK exchange rates,
and current interest rates. Premises taken offline for planned or ongoing
(re)development projects reduce net rental income during the year.
EVENTS AFTER THE REPORTING PERIOD
On 5 February 2020 was disclosed that Citycon has agreed to acquire a portfolio
of three shopping centres in Norway. The transaction value amounts approximately
to EUR 145 million.
AUDIOCAST
Citycon's investor, analyst and press conference call and live audiocast will be
arranged on Thursday, 6 February 2020 at 10 am EET. The audiocast can be
participated by calling in and followed live at
https://citycon.videosync.fi/2019-q4-results/register.
Conference call numbers are:
Participants from Europe +44 3333 000 804
Participants from US +1 855 857 0686
PIN: 35377183#
For more investor information, please visit the company’s website at
www.citycon.com.
Espoo, 5 February 2020
Citycon Oyj
Board of Directors
For further information, please contact:
Eero Sihvonen
Executive VP and CFO
Tel. +358 50 557 9137
eero.sihvonen@citycon.com
Citycon Oyj is a leading owner, manager and developer of urban, grocery-anchored
shopping centres in the Nordic region, managing assets that total approximately
EUR 4.4 billion. Citycon is the number one shopping centre owner in Finland and
among the market leaders in Norway, Sweden and Estonia. Citycon has also
established a foothold in Denmark.
Citycon Oyj has investment-grade credit ratings from Moody’s (Baa3) and Standard
& Poor’s (BBB-). Citycon Oyj’s shares are listed on Nasdaq Helsinki Ltd. stock
exchange.
For more information about Citycon Oyj, please visit www.citycon.com.