Citycon Oyj — Earnings Release 2020

Feb 18, 2021

Citycon Oyj’s Financial Statements Release for 1 January – 31 December 2020: Strong performance in COVID-19 environment

Citycon Oyj’s Financial Statements Release for 1 January – 31 December 2020: Strong performance in COVID-19 environment

Citycon Oyj   Stock exchange release 18 February 2021 at 09:00 hrs

• Rent collection was 96 % for the full year
• Total tenant sales were 2.5 % above 2019 level and LFL sales remained close to
  previous year’s level
• Leasing activity increased by 12 % from 2019 with 199,000 sqm of leases signed
  in 2020
• Financial performance remained solid in COVID-19 environment; NRI declined by
  –3.0 % when adjusted for exchange rates and at -5.5 % on historical exchange
  rates
• Administrative expense declined by -3.2 % compared to 2019
• Valuation decline was –3.5 % in 2020
• Citycon successfully issued 200 MEUR tap bond and 800 MNOK bond and renewed
  and extended its current 500 MEUR revolving credit facilities

OCTOBER—DECEMBER 2020

• Net rental income was EUR 49.9 million (Q4/2019: 53.5). Net rental income was
  affected by COVID-19 pandemic and its impact on credit losses and one-time
  discounts granted to tenants, as well as lower specialty leasing and parking
  income. Discounts are accrued over the remaining rental period, no new discounts
  granted during last quarter. The acquisition of SPII in Norway, closed in the
  beginning of 2020, increased net rental income by EUR 2.0 million. This was
  partly offset by impact of weaker currencies that reduced net rental income by
  EUR 0.7 million.
• EPRA Earnings decreased to EUR 32.0 million (35.6) as result of a reduction in
  net rental income, currency changes and lower share of profit of joint ventures
  and associated companies. EPRA Earnings per share (basic) was EUR 0.180 (0.200),
  impact from weaker currencies being EUR 0.0022 per share.
• Adjusted EPRA earnings decreased to EUR 28.0 million (33.9) due to lower net
  rental income and hybrid bond coupons for the bond issued in late 2019.
• IFRS-based earnings per share was EUR -0.07 (-0.15) mainly as a result of
  lower fair value losses than comparison period.

JANUARY—DECEMBER 2020

• Net rental income was EUR 205.4 million (Q1-Q4/2019: 217.4). Acquisitions
  increased net rental income by EUR 8.7 million, while previous year’s
  divestments and weaker currencies decreased it by EUR 2.4 million and by EUR 5.7
  million respectively. Like-for-like net rental income decreased by EUR 10.0
  million mainly due to discounts granted to tenants, increased credit losses and
  volume driven income items, such as parking fees and specialty leasing, that
  were affected by Covid-19 pandemic. The estimated total impact of COVID-19 was
  13.5 million euros.
• EPRA Earnings decreased to EUR 136.6 million (145.6) as result of lower net
  rental income, currency changes and lower share of profit of joint ventures and
  associated companies. EPRA Earnings per share (basic) was EUR 0.767 (0.818),
  impact from weaker currencies being EUR 0.026 per share.
• Adjusted EPRA earnings decreased to EUR 120.3 million (143.9) due to lower net
  rental income and hybrid bond coupons for the bond issued in late 2019.
• IFRS earnings per share was EUR -0.25 (0.04) as a result of higher fair value
  losses, lower net rental income and hybrid bond coupons.
  -Net cash from operations per share decreased to EUR 0.71 (0.76) resulting from
  lower earnings.
  -The Board of Directors proposes to the Annual General Meeting that the Board be
  authorised to decide on the profit sharing for the financial year 2020. Based on
  the proposed authorization the maximum amount of profit sharing, to be paid as
  dividends and/or equity repayment, would be EUR 0.50 per share.

KEY FIGURES

                         Q4/2020   Q4/2019        %   Comparable
                                                     change % 1)

Net rental income MEUR 49.9 53.5 -6.7 % -5.3 %
Direct Operating MEUR 43.1 47.1 -8.5 % -7.0 %
profit 2)
IFRS Earnings per EUR -0.07 -0.15 45.5 % 47.9 %
share (basic) 3)
Fair value of MEUR 4,152.2 4,160.2 -0.2 % -
investment properties
Loan to Value (LTV) % 46.9 42.4 10.6 % -
2)
EPRA based key
figures 2)
EPRA Earnings MEUR 32.0 35.6 -10.1 % -9.2 %
Adjusted EPRA MEUR 28.0 33.9 -17.6 % -20.8 %
Earnings 3)
EPRA Earnings per EUR 0.180 0.200 -10.1 % -9.2 %
share (basic)
Adjusted EPRA EUR 0.157 0.191 -17.6 % -20.8 %
Earnings per share
(basic) 3)
EPRA NRV per share EUR 11.48 12.45 -7.8 % -

                            2020      2019        %   Comparable
                                                     change % 1)

Net rental income MEUR 205.4 217.4 -5.5 % -3.0 %
Direct Operating MEUR 180.4 193.5 -6.8 % -4.0 %
profit 2)
IFRS Earnings per EUR -0.25 0.04 - -
share (basic) 3)
Fair value of MEUR 4,152.2 4,160.2 -0.2 % -
investment properties
Loan to Value (LTV) % 46.9 42.4 10.6 % -
2)
EPRA based key
figures 2)
EPRA Earnings MEUR 136.6 145.6 -6.2 % -3.1 %
Adjusted EPRA MEUR 120.3 143.9 -16.4 % -14.6 %
Earnings 3)
EPRA Earnings per EUR 0.767 0.818 -6.2 % -3.1 %
share (basic)
Adjusted EPRA EUR 0.676 0.809 -16.4 % -14.6 %
Earnings per share
(basic) 3)
EPRA NRV per share EUR 11.48 12.45 -7.8 % -

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.

CEO F. SCOTT BALL:

2020 will be remembered historically for the widespread challenges caused by the
breakout of COVID-19, Citycon has thus far managed to navigate through this
crisis and its performance was one of the best in our sector. The operational
and financial results were very strong given the circumstances, and our strategy
has proven successful when measured against the ultimate stress test caused by
the pandemic and its consequences. The large share of necessity-based tenants as
well as operating in the Nordic countries, that have outperformed in responding
to the crisis, were the factors underlying our strong performance.

Our strategy was positively reflected in the key operational metrics. The rent
collection rate for 2020 was 96%. Tenant sales in our centres slightly exceeded
last year which is a direct result from our tenant mix and a large share of
necessity categories such as groceries, pharmacies and municipal and healthcare
services. We did see consumer behaviour adjust to the government recommendations
with footfall declining by 12%. However, the average purchase per visit
increased by 16% resulting in a slight gain in tenant sales over 2019, as people
visited our centres with a clear intention to make purchases. This highlights
the strength of our strategy as well as the attractiveness of our centres to our
tenants as a place to run profitable businesses. The strength of our assets also
resulted in high leasing activity. We signed 199,000 sq.m. of leases compared to
177,000 sq.m. in 2019. As a result of several important municipal service deals,
the share of municipality leases increased to 8% in line with our strategy.

Strong operational performance of our tenants and centres translated into solid
financial performance for Citycon. Our like-for-like NRI (adjusted for
currencies) declined by -3%.  and our NRI declined from 217.4 million to 205.4
million as a result of weakening of NOK and impact of COVID-19. EPRA EPS was
0.77, which was in the upper half of previous guidance. COVID-19 affected our
result, with an estimated total impact of 13.5 million euros, primarily through
income driven revenue items, such as parking fees and specialty leasing, and
minor discounts given in Q2. Retail occupancy for 2020 was 94.3% and LTV 46.9%.

During 2020 we made significant progress in improving our financing position and
continued to focus on strengthening the balance sheet. In Q2 we decided to
temporarily increase our liquidity due to the uncertainty in the financial
market caused by COVID-19. In May 2020, we issued a tap bond of 200 MEUR with an
orderbook more than threfold oversubscribed. This demonstrated Citycon’s access
to capital markets also in challenging financial market conditions. Furthermore,
we issued an 800 MNOK bond in fall 2020 and renewed and extended our 500 MEUR
RCF with two replacing facilities. Citycon’s Board showed its commitment to
strengthening the balance sheet by adjusting the dividend in Q2 which now stays
at a very attractive 6.3% dividend yield. A strong balance sheet continues to be
a top priority and Citycon therefore continues  its capital recycling
initiatives after a slow-down in the transaction market caused by COVID-19.
Citycon recently signed a deal to sell three of our assets in Stockholm area for
approximately 147 MEUR. Not only was this an important measure for improving our
balance sheet but it also validates our asset values with actual market data.

During the year we continued to make progress in our strategic initiatives. We
continued the construction of Lippulaiva throughout the pandemic and launched
several other development initiatives such as the area development in
Liljeholmen, our existing urban hub located in the heart of Stockholm. This is a
comprehensive project which will include residential and office development in
close co-operation with the City of Stockholm. These are both showcases of our
broader densification strategy and transformation of our portfolio further
towards mix-use by ultimately decreasing the share of retail from current 81% to
approximately 60% while increasing the share of residential and office space.
Going forward, we will continue capitalizing on the densification potential and
realizing the identified building rights potential of ca. 200 MEUR. This value
is embedded in our existing portfolio and will be realized through zoning
processes with essentially no capital investments. We have a strong team in
place to execute on this strategy.

COVID-19 is by no means over and we continue our efforts to adapt and respond to
the changing situation. We continue to work closely with the surrounding
societies and have opened vaccination services to our centres that serve as
local community hubs. The safety of our tenants, visitors and employees
continues to be a priority.  In 2021 we will continue to further define our
operating strategy and progress new development projects from our development
pipeline. We will also continue to execute our capital recycling strategy
transaction market allowing. Our team has demonstrated their ability to execute
under difficult circumstances and I am certain our diversification through
densification strategy will pay big rewards for the company.

OUTLOOK

Citycon forecasts the 2021 direct operating profit to be in range EUR 170-188
million, EPRA EPS EUR 0.651-0.751 and adjusted EPRA EPS EUR 0.558-0.658.

Direct operating profit MEUR 170-188
EPRA Earnings per share (basic) EUR 0.651-0.751
Adjusted EPRA Earnings per share (basic) EUR 0.558-0.658

The outlook assumes that there are no major changes in macroeconomic factors and
that there will not be a second wave of COVID-19 with restrictions resulting in
significant store closures. These estimates are based on the existing property
portfolio as well as on the prevailing level of inflation, the EUR–SEK and
EUR–NOK exchange rates, and current interest rates.

EVENTS AFTER THE REPORTING PERIOD

On 12 February was disclosed that Citycon has agreed to divest a portfolio of
three shopping centres in Sweden.

AUDIOCAST

Citycon's investor, analyst and press conference call and live audiocast will be
arranged on Thursday, 18 February 2021 at 10 am EET. The audiocast can be
participated by calling in and followed live at
https://citycon.videosync.fi/2020-q4
-results (https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Fcityc
on.videosync.fi%2F2020-q4
-results&data=04%7C01%7C%7C8fdd246017434a8e54ea08d8b7c2198f%7Cb8ce972b3da445f6994
995d1668226c6%7C0%7C0%7C637461391563209626%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLj
AwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C1000&sdata=xa%2BoTnQEY1rIV
X9D1u5qGTMfPcKQuSaFZCGpSCVal4o%3D&reserved=0)

Conference call numbers are:

Participants from Europe +44 3333 000 804
Participants from US +1 6319 131 422

PIN: 57695011#

For more investor information, please visit the company’s website at
www.citycon.com.

Espoo, 17 February 2021
Citycon Oyj
Board of Directors

For further information, please contact:
Eero Sihvonen
Executive VP and CFO
Tel. +358 50 557 9137
eero.sihvonen@citycon.com

Laura Jauhiainen
VP, Strategy and Investor Relations
Tel. +358 40 823 9497
laura.jauhiainen@citycon.com

Citycon is a leading owner, manager and developer of mixed-use centres for urban
living including retail, office space and housing. We are committed to
sustainable property management in the Nordic region with assets that total
approximately EUR 4.4 billion. Our centres are located in urban hubs with a
direct connection to public transport. Placed in the heart of communities, our
centres are anchored by groceries, healthcare and services to cater for the
everyday needs of customers.

Citycon has investment-grade credit ratings from Moody's (Baa3), Fitch (BBB-)
and Standard & Poor's (BBB-). Citycon Oyj’s share is listed in Nasdaq Helsinki.

For more information about Citycon Oyj, please visit www.citycon.com.

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