The absolute highlight of the quarter was the grand opening of phase one of Lippulaiva, our new mixed-use centre that represents the future of convenient urban living. Lippulaiva is the prototype of Citycon’s strategy: a full-service, mixed-use, urban hub with several large grocery anchors, a wide range of private and municipal services, direct connection to the metro, surrounded by eight residential towers. The metro construction is complete, and it will begin to operate by the year-end. Six of the eight residential towers are under construction with first ones opening up later this year. Lippulaiva is the ultimate in convenience, experience and atmosphere for consumers and it will have an immediate impact on the community and consumers that surround it. Notably, grocery stores account for approximately 45% of the centre and all necessity goods representing over 70% of Lippulaiva’s 44,000 sq.m. of gross leasable area. Lippulaiva is expected to welcome approximately 8 million annual visitors. Lippulaiva is also the prototype of Citycon´s sustainability initiatives in action. The centre is a pioneer in sustainable energy solutions and is carbon neutral in terms of energy consumption from day one. The primary source of energy is the largest ever geothermal heating and cooling system built on a commercial building in Europe combined with integrated solar panels and a smart electricity management solution.
Finally, Lippulaiva is also an important milestone in realising the potential in Citycon’s robust development pipeline and marks the first time that Citycon has carried out its own rental housing production. The residential component of the project consists of 560 apartments, which will come online between late 2022 and 2024, further diversifying Citycon´s portfolio and revenue streams while enhancing the underlying performance of the retail centre.
As our results show, Citycon is well positioned for the anticipated inflationary environment. Our business model is inflation protected with 92% of our leases indexed to inflation and the types of goods and services that our centres sell are less dependent on discretionary income than traditional retail. Although, Citycon’s operations are not directly impacted by the war in Ukraine, there is the spill over effect of increasing energy costs. Citycon has a significant amount of onsite energy production, and the vast majority of our electricity costs are hedged, which provides further stability both for Citycon and its tenants going forward. Citycon´s relatively low occupancy cost ratio also offers the company ample headroom for rent growth particularly as sales continue to increase. This continues to translate into strong leasing activity and stable cash flow. This stable cash flow, combined with the significant value creation potential for our development pipeline and an investment grade balance sheet, provides an attractive risk-adjusted return proposition for all stakeholders.
As a result of the strong quarter and the confidence we have in the business, we are tightening our guidance and raising the mid-point on all three metrics for which we provide guidance.
OUTLOOK (specified)
Citycon forecasts the 2022 direct operating profit to be in range EUR 168–180 million, EPRA EPS EUR 0.66–0.72 and adjusted EPRA EPS EUR 0.49–0.58.
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 and no major disruptions from the war in Ukraine. These 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.
AUDIOCAST
Citycon’s investor, analyst and press conference call and live audiocasting will held on Friday, 6 May 2022 at 10 am EEST. The audiocast can be participated by calling in and followed live on the following website: https://citycon.videosync.fi/2022-q1
Conference call numbers are:
Participants from Europe +44 333 300 08 04
Participants from the US +1 631 913 14 22
PIN: 77197406#
The audiocast will be recorded and it will be available afterwards on Citycon’s website.
Helsinki, 5 May 2022
Citycon Oyj
Board of Directors
For further information, please contact:
Bret McLeod
Chief Financial Officer
Tel. +46 73 326 8455
bret.mcleod@citycon.com
Sakari Järvelä
VP, Corporate Finance and Investor Relations
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 4.5 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 ratings from Moody’s (Baa3) and Standard & Poor’s (BBB-). Citycon Oyj’s shares are listed on Nasdaq Helsinki.
www.citycon.com
This information was brought to you by Cision http://news.cision.com
https://news.cision.com/citycon-oyj/r/citycon-q1-2022–continued-improvement-in-operating–credit-and-valuation-metrics–raising-midpoint-,c3561503
The following files are available for download: