CITYCON OYJ Press Release 25 May 2015 at 3.40 p.m.
Citycon acquires Sektor Gruppen, Norway’s second largest shopping centre owner and manager – consolidating Citycon as the largest listed shopping centre specialist in the Nordics and the third largest listed continental European operator. With the EUR 1.47 billion acquisition, Citycon gains exposure throughout the entire Nordic region, while increasing its gross asset value (GAV) by nearly 50%, from EUR 3.4 billion to EUR 4.9 billion.
The transaction’s major benefits include:
Strengthened Nordic position through enlarged footprint and geographical diversification. Following the transaction, Citycon will own 55 shopping centres in the Nordic countries and Estonia and increase its total annual footfall from 150 million to over 200 million and total gross leasable area (GLA) from 1.0 million sq.m. to 1.4 million sq.m.
Excellent strategic fit with a portfolio of quality urban grocery-anchored shopping centres in locations with strong demographics
Immediate critical mass in Norway – one of the fastest growing and wealthiest economies in Europe
Established Norwegian management platform joining Citycon: ability to focus on value creation from day one
Upside potential through operational and financial synergies
“We’re very excited about this acquisition, which completes our Nordic presence. The transaction is a defining step forward in our goal to be the household name for Nordic and Baltic shopping centres. Sektor represents a perfect strategic fit for us, being recognized as a quality organization with an impressive track record, good assets and experienced management,” says Marcel Kokkeel, CEO of Citycon.
“We are happy to receive an owner with strong retail real estate experience and a long-term vision and investment horizon. Integrating Citycon’s wide experience, financial strength and strong management with ours will provide the optimum conditions for further growth and development, while creating scale advantages and synergies,” says Eirik Thrygg, CEO of Sektor.
“International retailers often analyze the Nordics as one market and now we can offer them a complete Nordic platform. Citycon and Sektor share the same asset strategy of shopping centres located in the heart of communities, in urban crosspoints, and catering to customers’ everyday needs,” continues Marcel Kokkeel.
Size matters in retail because it makes the property portfolio more attractive for tenants and provides economies of scale for procurement, operations and digital innovation. A larger portfolio provides a firm foundation for best-practice sharing, specialty leasing, cross-country tenanting and digital marketing initiatives.
The transaction reflects Citycon’s clear focus on expanding its asset portfolio in urban, fast-growing Nordic cities. Sektor’s portfolio fulfils Citycon’s strict asset selection criteria with regard to urban locations, everyday shopping, strong demographics and proximity to public transportation and services to ensure consistent footfall. Following the completion of the acquisition, Citycon will have leading market positions in Finland, Sweden, Norway and Estonia, as well as an established foothold in Denmark.
“In recent years, we have been focusing on optimizing our revenues, our portfolio and the flexibility of our funding structure and, now we are ready for a strategic step by enlarging our operating platform,” says Kokkeel.
Sektor’s portfolio comprises a total of 34 shopping centres, of which 20 are fully or majority-owned, 4 are minority-owned, 2 rented and 8 managed shopping centres. Most of the centres (approx. 95%) are located in Norway’s three main economic hubs: the Oslo, Bergen and Stavanger regions. The annual number of visitors in Sektor’s shopping centres is more than 60 million. Sektor’s largest tenants include Norway’s biggest grocery chain NorgesGruppen and clothing company Varner Gruppen, whose brands include e.g. Dressmann, Bik Bok and Cubus. The Sektor portfolio has a strong occupancy rate of approximately 97%.
The acquisition price of EUR 1.47 billion reflects a net initial property yield of approximately 5.2% and the transaction is expected to be accretive to earnings per share as of 2016.
“Our two largest shareholders, Gazit-Globe and Canada Pension Plan Investment Board are supportive of the transaction and our target is to maintain a strong financial profile with leverage of 40-45% Loan to Value (LTV), a conservative level in the Nordic perspective” Marcel Kokkeel adds.
Citycon has issued a stock exchange release on the transaction and its financing earlier today.
A press conference will be held in Oslo with the Chairmen and CEOs of both companies on May 26, 2015 at 10:30 CET at the Thief Hotel, Landgangen 1, 0252 Oslo.
To join the press conference webcast:
Geelmuyden Kiese (advisor to Citycon)
Tel. +47 482 00 570
Citycon is a leading owner, manager and developer of urban, grocery-anchored shopping centres in the Nordic and Baltic region, managing assets that total approximately EUR 3.4 billion and with market capitalisation of EUR 1.8 billion. Citycon is the No. 1 shopping centre owner in Finland and Estonia and among the market leaders in Sweden. Citycon has also established a foothold in Denmark.
Citycon’s shopping centres are located in urban crosspoints close to where customers live and work, and with a direct connection to public transport, health care and municipal services. Placed in the heart of communities, Citycon’s shopping centres care for the everyday needs of customers. Citycon owns 35 shopping centres and 25 other retail properties. Of the shopping centres, 21 are located in Finland, 10 in Sweden, 3 in Estonia and 1 in Denmark. In 2014, Citycon’s shopping centres attracted a total of 150 million visitors.
Listed on Nasdaq Helsinki (CTY1S) since 1988, Citycon Oyj maintains investment-grade credit ratings from Standard & Poor’s (BBB) and Moody’s (Baa2). Citycon is a member of EPRA (European Public Real Estate Association). www.citycon.com
About Sektor Gruppen
Sektor Gruppen AS is the second largest company in managing, developing and marketing of shopping centres in Norway. Sektor’s portfolio consists of 20 fully and majority-owned shopping centres, 4 minority-owned centres, 2 rented centres and 8 managed shopping centres. With these 34 shopping centres, Sektor creates excellent shopping experiences for its customers in partnership with tenants. Sektor’s total portfolio under management has a gross leasable area of more than 600,000 sq.m. www.sektor.no