Citycon Oyj’s Interim Report for 1 January – 31 March 2018: Good operational development

Citycon Oyj   Interim Report   19 April 2018 at 09:00 hrs

-Good development in operational figures: occupancy rate improved slightly and leasing spread in renewals and re-lettings developed positively and was +1.9% during the first quarter. Also in Finland operational figures developed well.
-Excellent operating performance in shopping centre Iso Omena: footfall and tenant sales developed strongly.
-Divestments conducted in 2017 (total amount EUR 325 million) impacted net rental income and EPRA Earnings as expected.
-Well on track to 2018 guidance: outlook remains unchanged.

JANUARY—MARCH 2018

- Net rental income was EUR 53.3 million (Q1/2017: 56.6). Divestments decreased net rental income by EUR 4.1 million and weaker currencies by EUR 1.8 million.
- EPRA Earnings was EUR 36.1 million (38.3) as a result of lower net rental income following disposals while lower administrative expenses as well as net financial expenses partly offset this reduction. EPRA Earnings per share (basic) was EUR 0.041 (0.043), negative impact from weaker currencies was EUR 0.0017.
- IFRS-based earnings per share was EUR 0.02 (0.03) as a result of lower net rental income, net fair value losses on investment properties and lower share of results in joint ventures.

KEY FIGURES

Q1/2018 Q1/2017 %1)  2017
Net rental income MEUR 53.3 56.6 -5.8% 228.5
Direct operating profit 2) MEUR 47.4 50.3 -5.8% 200.5
Earnings per share (basic) EUR 0.02 0.03 -29.9% 0.10
Fair value of investment properties MEUR 4,141.2 4,447.3 -6.9% 4,183.4
Loan to Value (LTV) 2) % 46.8 47.1 -0.7% 46.7
EPRA based key figures 2)
EPRA Earnings MEUR 36.1 38.3 -5.9% 152.3
EPRA Earnings per share (basic) EUR 0.041 0.043 -5.9% 0.171
EPRA NAV per share EUR 2.71 2.83 -4.3% 2.71

1) Change from previous year. Change-% is calculated from exact figures and with historical exchange rates.
2) Citycon presents alternative performance measures according to the European Securities and Markets Authority (ESMA) new guidelines.
More information is presented in Basis of Preparation and Accounting Policies in the notes to the accounts.

CEO MARCEL KOKKEEL:

”We started the year with good operational results. Citycon's total net rental income, excluding Kista Galleria, was EUR 53 million in Q1 2018, and the like-for-like net rental income grew by 0.8%. The performance of our Swedish and Danish operations continued to be strong, and also the performance of our Finnish portfolio improved driven by the positive economic environment as well as better property portfolio fundamentals. Our EPRA EPS in Q1/2018 was EUR 0.041 and declined only slightly from 2017 despite the disposal of 13 non-core assets for EUR 325 million last year. The EPRA EPS was supported by cost reduction initiatives resulting in clearly lower administrative expenses. We also saw a positive leasing spread in renewals and re-lettings during the first quarter of 2018.

January-March 2018 was the first full quarter in Iso Omena with the new Western metro fully operational. Footfall more than doubled and tenant sales grew by more than 40% with same-store sales also up by 13% during the first quarter. Kista Galleria was taken out of the like-for-like portfolio as we will execute a substantial programme to re-position our shopping centre as a more necessity-based community centre.

During the quarter, we continued to execute on our strategy to improve portfolio quality and increasingly focus on multi-functional shopping centres in growing urban areas. We divested one smaller shopping centre in Stockholm during the quarter and announced the planned disposal of an asset in Finland after quarter-end in early April. The total proceeds of these divestments, amounting to approximately EUR 50 million, will be used to strengthen our balance sheet and to fund our development pipeline, which is not yet generating cash. Looking ahead, we will continue our capital recycling actions and aim to divest 5-10% of our property portfolio in terms of fair value in the next few years.“


OUTLOOK 2018 UNCHANGED

EPRA Earnings per share (basic) EUR 0.155 – 0.175
Direct operating profit 1) MEUR  -15 – +1
EPRA Earnings 1) MEUR -14 – +4

1) Change compared to the previous year

These estimates are based on the existing property portfolio and excluding the planned divestment of retail property in Kuopio, Finland 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

Citycon signed an agreement on 6 April 2018 to divest a retail property in Kuopio, Finland for approximately EUR 22 million. The transaction is expected to be closed during Q2/2018.

AUDIOCAST

Citycon's investor, analyst and press conference call and live audiocast will be arranged on Thursday 19 April 2018 at 10 am EEST. The audiocast can be participated by calling in and followed live at:
https://citycon.videosync.fi/2018-q1-interim-report

Conference call numbers are:
Participants from Europe +44 203 194 0552
Participants from the US +1 855 716 1597

For more investor information, please visit the company’s website at
www.citycon.com.

Espoo, 18 April 2018
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

Mikko Pohjala
Head of Investor Relations
Tel. +358 40 838 0709
mikko.pohjala@citycon.com

Citycon is a leading owner, manager and developer of urban, grocery-anchored shopping centres in the Nordic region, managing assets that total approximately EUR 4.5 billion. Citycon is No. 1 shopping centre owner in Finland and among the market leaders in Norway, Sweden and Estonia. Citycon has also established a foothold in Denmark.

Citycon has investment-grade credit ratings from Moody's (Baa1) and Standard & Poor's (BBB). Citycon Oyj’s share is listed in Nasdaq Helsinki.

www.citycon.com 

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