Citycon Oyj's Interim Report for 1 January - 30 September 2018

Solid Operating Performance Continued and Administrative expenses Declined Significantly - Seite 3

In January-September 2018 our business developed in line with our expectations. Our operating performance remained solid, but our EPRA earnings declined to EUR 0.123 as a result of disposals and negative currency impact. However, thanks to our strict cost management measures, administrative expenses declined significantly. During the reporting period, net rental income amounted to EUR 161 million and the pro-forma like-for-like net rental income, which includes Iso Omena and Buskerud shopping centres for the April-September period, grew by 0.8%.

During the third quarter, we successfully completed the re-financing of a bond expiring in 2020. In August, we issued a EUR 300 million Eurobond to institutional investors and used most of the proceeds to buy back part of a EUR 500 million bond expiring in 2020. As a result, we de-risked the re-financing of a large bond expiring in 2020, whilst the average cost of debt improved to 2.36% and the average loan maturity now clearly exceeds our target of over 5 years.

In the retail industry a noticeable divergence between the best and other assets is clearly visible. We continue to see this polarization also in our asset portfolio. The performance in our prime shopping centres in major urban areas remained good during January-September 2018, while the development in secondary shopping centres, particularly in Finland, was softer. As a result, the fair value changes of our investment properties were EUR -54.2 million during January-September 2018 driven by Finland and Norway. Due to negative fair value changes and higher debt, our loan-to-value metric increased to 48.2% at the end of September. Lowering the loan-to-value remains a key priority for management. We aim to divest EUR 200-400 million of assets in the coming few years and use the proceeds to strengthen our balance sheet.

With three quarters of the year now behind us and after the announced divestments, we have specified our guidance range. We now expect our EPRA EPS to be in the range of EUR 0.1575-0.1675 for the full year 2018."

OUTLOOK 2018 SPECIFIED

   
                                                          Previously
    EPRA Earnings per share (basic) EUR   0.1575 - 0.1675 0.155 - 0.170
    Direct operating profit 1)      MEUR  -14 to -5       -14 to -1
    EPRA Earnings 1)                MEUR  -12 to -3       -14 to -1

1) Change compared to the previous year

These estimates are based on the existing property portfolio and on the prevailing level of inflation, the EUR-SEK and EUR-NOK exchange rates, and current interest rates. Guidance for 2018 includes around EUR -5 million impact from weaker currencies. Premises taken offline for planned or ongoing (re)development projects reduce net rental income during the year.