CITYCON OYJ Interim Report 5 May 2022 at 20:30 hrs
HELSINKI, May 5, 2022 /PRNewswire/ —
FINANCIAL PERFORMANCE
Like–for-like rental income increased by +3.5% compared to the previous year.
Total net rental income was affected by divestments and was EUR 49.1 million (Q1/2021: 50.4).
Retail occupancy 95.1%; 90 bps improvement over Q4/2021 (94.2%).
Average rent per sq.m. increased by EUR 0.8 to EUR 23.4 per sq.m.
Like–for-like footfall increased +17.6%; 1920 bps improvement over Q4/2021 (-1.6%).
Like–for-like tenant sales increased +11.8%; +7.4% higher than in Q1/2019 (pre-pandemic level).
Operating properties recorded a fifth consecutive quarter of uplift as fair value change of investment properties in Q1/2022 was EUR 14.2 million.
EPRA NRV/share +5.7% vs Q1/2021
DEVELOPMENT ACTIVITIES
Grand opening of phase I of Lippulaiva on 31 March 2022.
Excellent reception from the tenants and customers.
Pre–leasing rate over 90% and over 110 thousand visitors during the opening weekend.
Stabilized NRI for full Lippulaiva project estimated at 21 MEUR.
Anticipated partial 2022 NRI contribution between 7–9 MEUR.
Metro fully constructed and opening at year-end.
6 of 8 residential towers under construction and opening between 2022–2024 (Citycon will own 6).
Continue to execute on 600,000 sqm development opportunities in multiple locations.
Liljeholmen, Oasen and Trekanten are next focus projects on Citycon.
CAPITAL RECYCLING
Strategic sale ~145.4 MEUR of two non-core centres in Norway (disclosed on 7 February) with combined yield of 5.2% and at or above IFRS book value.
In total, Citycon has sold 6 non-core centres during last 14 months at or above NAV.
Further bolsters portfolio valuations and demonstrates strength of private market.
Transaction closed on 28 February 2022.
Signed forward commitment to acquire newly developed residential asset in Stockholm, Sweden for ~69.5 MEUR (disclosed on 7 February).
200 well-appointed rental and freehold apartments in growing Barkarbystaden.
Close proximity to existing necessity-based assets in Kista and Jakobsberg.
Residential construction underway in all Citycon´s main operating countries.
BALANCE SHEET
Portion of the proceeds from the Norwegian divestments were utilized to repurchase approx. EUR 25 million of 2024 bond.
Further stabilizes Citycon´s well laddered maturity profile and reduces a refinancing risk.
Attractive to earnings and earnings per share by reducing interest expense.
LTV improvement to 40.4%.
KEY FIGURES
1) Change from previous year (comparable exchange rates). 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) The adjusted key figure includes hybrid bond coupons and amortized fees.
4) Highly liquid cash investments has been taken into account in net debt.
5) Calculation updated from this and comparison periods. Divided by number of shares at balance sheet date instead of average amount of shares during the reporting period.
STANDING PORTFOLIO KEY FIGURES 1)
1) New presentation method. Standing portfolio key figures include only income and expenses from investment properties that were on group balance sheet on 31 March 2022. The portfolio is the same in the reporting period and in the comparison period, hence the numbers are comparable.
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) The adjusted key figure includes hybrid bond coupons and amortized fees.
CEO F. SCOTT BALL:
After a strong conclusion to 2021, Citycon continued to demonstrate the strength of our strategy and portfolio during the first quarter of 2022. Like-for-like net rental income increased 3.5% over the prior year. The average rent per square meter increased 0.8 EUR to 23.4 EUR/s.qm., while retail occupancy moved up to 95.1%. We continue to see very strong growth in both footfall and tenant sales, which increased dramatically compared to the previous year. Notably, tenant sales are already above pre-pandemic (2019) levels highlighting the speed of the recovery of Citycon´s grocery- and municipal-anchored centres.
The strong operational figures reflect the stability of our necessity-based centres which serve as a last mile logistics hub for delivery of grocery, municipal, and other services directly to the consumer. With customers prioritizing convenience and accessibility, more and more tenants are leveraging their omnichannel strategies and utilizing their physical stores as the critical last-mile distribution. Our excellent urban locations in the strongest and fast-growing cities in the Nordics, and the fact that all our urban hubs have a direct connection to public transportation, offer attractive opportunities for tenants and irreplaceable convenience for customers. Tenant demand for our centres has accelerated as evidenced by our strong leasing activity with over 48,000 sq.m. of signed leases during the first quarter, resulting in increased retail occupancy of 90 bps to 95.1%, coupled with rent growth.
Our strategy of creating mixed-use urban hubs with a focus on grocery and municipal services is paying operational dividends and driving traffic to our centers, highlighted by significant like-for-like growth in both footfall (17%) and tenant sales (12%) in the first quarter. Notably, like-for-like tenant sales are already above pre-pandemic (2019) levels, on the strength of spending in groceries, pharmacies, municipal and healthcare services. Like-for-like net rental income increased by 3.5% compared to Q1/2021 and our average rent level increased by EUR 0.8 per sq.m. to EUR 23.4 compared to year-end 2021. These operational improvements continue to positively impact asset values as our operating properties recorded a fifth consecutive quarter of uplift as total fair value change of investment properties in Q1/2022 was EUR 24.6 million and net fair value change was EUR 14.2 million. EPRA NRV per share has increased by +5.7% compared Q1/2021.
As disclosed in February 2022, we divested two additional non-core assets in Norway during the first quarter with pricing above NAV. This means we have now sold 6 non-core assets over the last 14 months at pricing that validates our increasing valuations. We entered into a forward funding agreement to purchase a brand-new residential asset comprising of 200 apartments in Stockholm near our Kista and Jacobsberg centres. During, and subsequent to, the quarter we continued to demonstrate our strategic capital allocation to strengthen the balance sheet, as part of the divestment proceeds were used to repurchase approx. EUR 25 million of our bonds maturing in October 2024. The repurchase is accretive to earnings, strengthens our maturity profile and reduces refinancing risk as we have no near-term maturities until 2024.
(CONTINUA)