“The COVID-19 outbreak has rapidly reached the scale of global pandemic and is severely affecting our lives on individual, societal and global level. Citycon, like all other companies, has faced a rapid change in its operating environment.
At the operational level, Q1/2020 was a good quarter for Citycon while the implications of COVID-19 started to show during the latter half of March. At comparable rates both our like-for-like net rental income and our EPRA earnings increased. However, including the negative impact of the exchange rates our net rental income and EPRA earnings somewhat declined. Footfall declined by 3% percent as a result of government restrictions. Occupancy rate slightly decreased but remained still at a high level. Loan to value slightly increased to 45.7% compared to Q4/2019.
During the time of unusual events our strategy to focus on urban, grocery-anchored shopping centres gives us stability. Our tenant mix has a relatively high proportion of groceries, healthcare, pharmacies and social services balancing the challenges of the retail sector. Our conservative financing strategy and strong liquidity give financial strength and support our ability to meet our commitments towards all our stakeholders. As an additional measure, we have suspended all uncommitted capex except for tenant allowances. Having said this, COVID-19 will have an impact on our business in the near-term. As disclosed in March, our operations will be affected by the legitimate and necessary government restrictions in our operating countries and the turmoil in the financial markets. We are working together with our tenants and all other stakeholders to find solutions to overcome the variety of challenges and to mitigate the impact of the crisis.
Simultaneously, we are committed to delivering our long-term strategy, thus the Citycon team is fully engaged with providing the best retail locations in urban community hubs. Our main target is to support the business of our tenants and surrounding communities also after the crisis. Appeal of our community hubs was once again demonstrated in February 2020 by agreeing on a new lease contract with Espoo City library. The library will be located in our new development project, Lippulaiva, that is progressing as planned.
In the Nordics, resolving the challenges are seen as a common project. Governments are proactively engaged with not only securing citizens’ health and safety but also preserving the economic viability of businesses through various means of economic support. These means vary by country but include e.g. direct subsidies for companies to cover their fixed costs and government guarantees for company loans. As governments, organisations and individuals strive to slow down the outbreak and to mitigate the consequences, our responsibility at Citycon is to secure the continuance of our operations and availability of the necessity-based services provided at our premises. Safety of our customers, tenants and personnel remain a top priority during the crisis.
I am extremely proud of the Citycon management team and all employees and how they have managed the business through this crisis. Our infrastructure has allowed our team to work efficiently from remote locations and I am confident that we will come through this crisis stronger and better.”
Source: Citycon's Interim Report Q1/2020