Citycon Oyj

Good morning everyone and welcome to Citycon's half yearly 2025 results audio cast. My name is Anni Torcco and I work as the investor relations manager here at Citycon. Last night we published our half yearly report and in this audio cast our CEO Oleg Soslavski and CFO Eero Sihonen will present the results. We will start by Oleg going through our business and operational highlights. After that Eero will go through our financial result. After the presentations we will be opening the line for questions from the audience. Please Oleg.

Thank you Anni. Good morning and thank you all for joining today's call. We just closed the first half of 2025 with solid momentum and continue to deliver stable operational results. In the period we achieved .2% of NRI growth, like for like NRI growth, while maintaining high retail occupancy at the level of 95%. We also saw modest improvement but stable improvement in like for like tenant sales and food flow, which underlines the continued resilience of our necessity-based retail centres. As you can see our NRI growth came from all our segments and markets with Finland and Estonia leading the way with an impressive 7.6%. Our average rent per square metre grew 3% to 25.8 euro per square metre. During the quarter we performed external valuations of approximately 92% of our portfolio covering all assets in Finland, Sweden and Norway. The result was 34.3 million net fair value gain primarily driven by improved cash flow in our key assets. And we see in this fair value gain a beginning of the stabilisation and our asset values and hope for the beginning of the rebound in asset values in the future. During the first half of the year we also continue to manage our debt. In six months we repaid effectively over 750 million of debt, including loans and debt. We will continue further to repay our debt and strengthen our balance sheet. As a result of a new green bond issued in April 2025, 400 million bond, our financial cost increased during the period. But despite the increase in financial cost we would like to reaffirm our guidance for full year 2025 at the level of between 41 to 50 cents for APRA earnings per share and between 60 to 69 cents for APRA earnings per share excluding hybrid bond interest. Thank you. And with this I would like to transfer the stage to Eero to guide you through the details of our financial performance.

Yes, thank you. Thank you all again. Good morning. Good morning everybody. I will start with the highlights of the quarter and the year so far. So we had a net rental income of 53.3 million for the quarter, which was 1.4 million below previous year's second quarter. And we had APRA earnings of 17.5 compared to 25.3 million one year ago, i.e. 7.8 million less. And I will now explain the main points and main differences between the two years and two quarters. And turning over to detailed net rental income bridge for the quarter. As mentioned, on a quarterly basis we had 1.4 million less net rental income, but actually that was a good achievement taken into the account that we had disposals of 5.3 million. And that was largely compensated by a good performance in our existing -for-like properties. We had on a quarterly basis 6.8 percent -for-like improvement of our net rental income. And also if we look at the first six months on the bottom of this page, where we had disposals impacting negatively by 10.5 million, we had a positive input from the -for-like properties of 4.2 million, i.e. approximately 5.2 percent -for-like for the first six months. And as a result, our net rental income came down only 2.3 million despite the disposals. If you then have a look at the EPRA earnings, and nowadays of course the EPRA earnings are after hybrid costs, the impact is bigger due to the fact that we refinanced our power part of our hybrid stack. The first hybrid bond was refinanced in the beginning of 24, and the impact of that on a quarterly basis is approximately 2 million. And we had quite substantial savings in SG&A, and the impact of other financing apart from hybrid was 1.2 million negative on a quarterly basis and 2.8 million on a like a six-monthly basis. So these numbers are quite modest taken into the account that we have achieved a very substantial de-risking of the balance sheet, which I will come back in a while. And we have refinanced a lot of legacy bonds which were at quite low historical levels. So taking all of this on board, it was a good quarter and good first six months. Then turning over to property valuation and the EPRA per share. One of the highlights of the quarter, and in my opinion, one of the most important highlights was the fact that we conducted essentially a full external valuation. And I say essentially because not exactly everything was externally appraised, but approximately 92 percent of our properties were externally appraised by our regular appraisers. JLL appraised all of our Finnish and Swedish assets, and CBRE appraised all of our Norwegian assets. And we have reason to be as management positive about the valuation cycle, and currently at least we believe that the trough in valuation also here in the Nordics was reached about the end of last year. And our valuation result, this full external valuation, resulted in a gain of 33.5 million. Some components of the positive valuation were cap rate reduction of approximately 10 basis points in Norway, essentially in all Norwegian properties. And we also feel that appraisers' view on the growth prospects in particularly in the Swedish centres has improved. And also, of course, we have managed ourselves as a company to keep the cash flows at a strong level and improve the valuation also also via that. Our net, our EPRNRV also improved compared to previous quarter, so pretty much driven by the positive valuation, so that was an additional highlight. Then turning over to the debt management, proactive debt management, as the de-risking improving the balance sheet has been one of the top priorities of the management. And we have been extremely active in improving the balance sheet. We issued very successfully the 450 million, a new green bond in April, which was like six times over subscribed. We proactively repaid shortest maturing bonds, i.e. this September 26 bond was tendered back in April immediately. Then the other theme apart from repaying shortest maturing bonds has been to prepay secured debt and thereby also improving our unsecured to secured mix. I will come back to that in a while. And we prepaid 186 million of a secured loan maturing in 29 and 100 million of a secured bank loan maturing in April 27. And then in June conducted a further 100 million tender of a January 27 bond, all serving the same purpose, i.e. de-risking the balance sheet and improving the balance sheet. And this all can be seen here in graphical form, so we have quite modest maturing debt remaining, like this 150 million maturing in 26 and 142 maturing in 27. And in general, our debt structure looks very well laddered now. And additionally, we have a very small pool of secured debt, i.e. approximately 5 percent, and this gives us a very good additional financing opportunities should the bond market, for whatever reason, not work particularly well for the period of time. So we have a very large unencumbered asset pool right now. The key credit metrics can be seen here. Actually, the loan to value improved. Interest cover ratio slightly improved despite the fact that the weighted average interest rate did increase, and that is naturally due to the fact that we have been repaying the old cheap bonds and at the same time improved the balance sheet and de-risked the balance sheet. This is all from me. Back to you, Anni. Thank you.