Citycon Oyj

and welcome to Citigon's first quarter 2025 results audiocast. My name is Anni Torkko and I work as the investor relations manager here at Citigon. Last night we published our first quarter 2025 interim report. And in this audiocast, our new CEO, Mr. Oleg Saslavski, and our CFO, Mr. Eero Sihvonen, will present the results. We will start by Oleg going through our business and operational highlights. After that, Eero will go through our financial results. After the presentations, we will be opening the line for questions from the audience. Please, Oleg, go ahead.

Thank you. Good morning, everybody, and thank you for joining us today. This is my first quarterly call as the CEO of Citicon, and I look forward for a productive and transparent cooperation with this forum and all of Citicon stakeholders. Let me take you through key developments and results of the first quarter. Operation-wise, it was a solid quarter for Citicon. Our footfall, like-for-like footfall, increased by 2.4%, while tenant sales grew by 1.2%. Retail occupancy stood at 94.8%, which is slightly decreased from the year-end numbers. Our like-for-like net rental income on same comparable FX basis increased by 3.5%, driven by rent increases, indexation, improved recovery rates, and lower operating cost. Direct operating profit increased by 8.2%, the same comparable FX basis, reaching 42.7 million. Main contributing factor here was reduction in SG&A cost. Throughout the first quarter, we took several important steps to improve our debt portfolio and manage upcoming maturities. During the quarter, we repaid 215 million of debt and additional 200 after the quarter end. In April, we raised 450 million of new bond with six and a quarter years of maturity. The offer was more than six times oversubscribed during the day, and we see it as a lot of confidence from the capital market. As a result of our debt management effort, our closest maturity bond, 26 bond, now is at very manageable 150 million. To further improve our balance sheet, we will continue to dispose our non-core assets. However, due to our debt management effort, we are in a position which we are not pressed and not under pressure to accelerate disposals. We will continue disposals, but we will prioritize making the right deals over fast deals, even if the meaning is slower pace of asset sales. We would like to commit ourselves to asset creation, not just transaction volumes. Guidance for 2025. Our operational performance for 2025 is in line with our expectation. However, as a result of our refinancing exercises, we anticipate an increase in our financial cost. And therefore, we decided to tighten up the upper end of our 2025 guidance. We guide now APRA EPS between 41 to 50 cents per share and APRA EPS excluding hybrid interest between 60 and 69 cents. Looking ahead, we will continue to concentrate on our core necessity-based assets. improving the performance of those assets, and continue to improve our balance sheet, so strategic divestment and debt management. We also, yesterday, Citicom announced that it will consider repurchase of its own shares. We believe that the current price of the share is low and does not fully request underlying value of the company assets. And we believe this is the best deal we can do for the company and stakeholders. Before I conclude and transfer the stage to Errol, I would like to thank our teams across Nordic for their dedication and execution. Thank you. Errol.

Thank you, Oleg, and good morning, everybody, and welcome also on my before half. I will start by giving you a quick snapshot of the Q1 results. First of all, our net rental income was approximately 900,000 below last year's first quarter level, which is a good achievement, taking into account that we disposed quite substantially our centers. And I will be going through the net rental income bridge in a while to go through all the details. As Oleg mentioned, our direct operating profit actually was higher than last year at 42.7 million, like 3 million higher than last year, mostly driven by the lower SG&A costs following our quite extensive cost saving actions. EPRA earnings ended up at 19.4, which was like 3 million below last year level, quite a lot due to the hybrid capital exchange that we did last year. Also, the EPRA earnings I will be showing in a minute in a complete bridge. Our EPRA EPS ended at 10.5 cents, which was a 16.8% below last year. And you will notice that the earnings, EPRA earnings reduced by 13.4%. And so the discrepancy or the difference between the EPRA earnings and per share number percentage change is due to the increased share count. Then turning over to the detailed net rental income and earnings bridges. First of all, net rental income. The components of net rental income change include Gista. We now fully consolidate Gista since the acquisition of the remaining 50% last year. We had a positive like-for-like during first quarter, 1.4 million. And of course, the impact of divestments, particularly Kristine Treganten and a couple of other centers in Norway, was an impact of a total of 5.2 million and resulted in a total net rental income of 50.1 after the FX changes. And the EPRA earnings bridge can be seen here that the impact of G&A savings or difference between SG&A was 4 million. Financial income and expenses, we had higher financial cost by 1.6 million. Then maybe turning over to the property valuation and NAV per share, and we had a very stable fair value picture during Q1, and Q1 is a quarter when we When we do an internal valuation and update all of the rents, costs and everything related to that and have an opinion of the cap rates from our appraisers and the outcome of the valuation for the Q1 was a small 700,000 positively. The NAV that we use currently is mostly the EPRANet replacement value, EPRANRV, and that improved from 7.87 per share to 8.13, driven mostly by the strong SEC and NOC compared to the year-end. Then we have had a quite active balance sheet improvement program going on and debt improvement program going on. And as Oleg already mentioned, we have continued to de-risk the debt portfolio by reducing and repaying short-term maturing debt. This is the situation as of the end of Q1. And since then, we have already reduced the nearest maturing bond, 26 bond, by an additional 100 million. And we have totally prepaid the 100 million term loan maturing in 2027. We have today actually also prepaid the 186 million loan that matures here in 29. And the newly issued bond that we issued 450 million in April, there is a new maturity in 2031. So, these are mainly the main changes. And listed all of the transactions and actions which we have been completing. The RCF term loan has been completely prepaid. i.e. first 150 and then 100 million. And we have had also two tenders on 26 bond, first 100 million and then another 100 million after the quarter in April. And we issued a very successful 450 million bond in April. That was six times oversubscribed. And exactly today, we are going to prepay the 186 million maturing in 29. And this completes my part. Back to you, Anni.

Thank you, Oleg and Eero, for the presentations. We will now open the line for questions from the audience. Please, moderator, over to you.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Othman Eyal Iraqi from Fidelity International. Please go ahead.

Yes. Hi, guys. Thank you for the call. Just a question in terms of looking at your share buyback announcement. This would put you kind of closer to the S&P downgrade threshold. My question is, you know, how committed are you to the investment grade rating as of today? Thank you.

Yes, we are. This is Eero. Yes, we are committed to the investment grade rating. But, of course, going forward, we would like to increase and improve the ratings, and that cannot be secured probably anytime very soon. But a short answer is yes, we are committed. And, of course, all the transactions will be done very mindfully, this in mind.

Okay. Okay. Thank you.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Thank you all for joining the Q1 results audio cast today, and have a good Wednesday.