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.”

Source: Citycon's Financial Statemtents Release Q4/2019