Citycon acquires Kista Galleria Press meeting / Investor meeting, 19.12.2012
We proudly present: Established and listed in Finland 1988 (NASDAQ OMX: CTY1S) Owner and manager of approx. 40 shopping centres in Finland, Sweden, Estonia, Lithuania and Denmark Market leader in Finland (23 centres) and Estonia (3 centres) 9 centres in Sweden (before Kista), operational since 2005 Total asset value EUR 2.7 billion (before Kista) Full control of centres by own local Citycon management High sustainability standards 2
Citycon has a focused strategy Geography Assets and location Operation Finance Nordic and Baltic region Shopping centres in growing cities Urban locations connected to public transportation Supermarket-anchored Maximizing future potential through active retail management Solid financing policy Supportive large shareholders (Gazit-Globe approx. 48%, Ilmarinen 9%, as of 30.09.12) Top-tier joint venture partners 3
Kista Galleria: The deal in a nutshell Acquisition price approx. SEK 4.6 billion (MEUR 526) First-year net yield is expected to be approx. 5.5 % Citycon and Canada Pension Plan Investment Board (CPPIB) will have a joint 50/50 ownership of Kista Galleria First investment in the Nordics for Canadian CPPIB, which has many high quality global and European investments CPPIB s involvement brings a seal of quality to both the asset and the manager Citycon will be responsible for the asset and property management of the shopping centre First joint investment by Citycon together with CPPIB 4
Kista Galleria today 5 Retail sales, 2011: SEK 2.4 billion (280 MEUR) 3rd highest in Stockholm Visitors: 18.1 million (2011) Highest in Stockholm ~90,000 m 2 of leasable area, 60,000 m 2 retail 185 shops and restaurants Stockholm s second-largest cinema Hotel with 166 rooms 10,000 m 2 of student housing 9,000 m 2 of health care/services Accessibility Integrated with Kista metro station, 17 min from the Stockholm CBD Close to major highway systems Parking facility with 2,500 parking spaces Opening hours 10 am to 9 pm, daily Longest opening hours in Stockholm Kista Galleria s milestones Built in 1977 Redeveloped and extended in 2002 Extended in 2009
6 Welcome to Kista City!
Kista City: As urban as it gets Kista is more than a shopping centre! 7
Strong residential growth and growing purchasing power Sweden is among the strongest economies in Europe Stockholm is among the fastest growing European cities, set to rise by 23% by 2025 (from 2.1 million to 2.6 million) Total catchment 345,000 inhabitants, of which primary catchment area 125,000 + 70,000 workers per day Purchasing power in Kista Galleria s catchment will grow by 62% by 2025, driven by population and economic growth 8
Kista - Growing Kista Science City Largest office sub-market outside city centre, over 1 million m 2 office space Kista is Sweden s foremost ICT* hub with companies and universities such as: Additional key properties Kistamässan Stockholm s second largest exhibition centre Victoria Tower 35-story hotel adjoining Kistamässan Kista Science Tower 32-story office tower Newly built Kista Torn highest residential building in Sto A natural footfall of over 50,000 daily visitors to Kista Galleria 9
Infrastructure: All roads lead to Kista City Kista has a busy metro station and bus terminal 25,000 people use the metro or bus in Kista daily E4 and E18 motorways will be better connected The new junction Trafikplats Ärvinge will serve 115,000 vehicles daily All major road work is scheduled to be completed 2015 The access to Kista will be considerably improved Helenelund commuter train station close by New tram line will improve Kista s link to the commuter train in 2018 (est. daily users 34,000) 10
Kista Galleria: SWOT Strengths Location and traffic connections Opportunities Expansion possibilities driven by Kista City concept Weaknesses Unbalanced footfall Threats Competition will get tougher 11
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Kista Galleria: Development opportunities in three stages 1-3 years: Expand seating area in the food court Improve footfall in the extension opened in 2009 Carry out a face-lift programme 3-5 years: Commercialize roof top Further optimize food court Intensify centre with residential, medical and/or hotel facilities >5 years: Build extension of up to 10,000 m 2 retail space towards the metro station 14
15 Kista Galleria: Investment and Financing
Investment rationale Attractive first-year net yield is expected to be approx. 5.5 %. Strategic acquisition that makes Citycon one of the three largest players in the Swedish market More balanced portfolio geographically within Citycon (Sweden s share increases from approx. 25% to 40% in NRI) Strong and unique location Strong natural catchment area with a growing/improving residential area and expanding office sub-market Excellent infrastructure in terms of public transportation and road access Dominant shopping centre in its catchment area Development and extension opportunities Opportunity to potentially grow the CPPIB joint venture platform in the Nordics 16
Portfolio balance Net Rental Income of Business Units on Sept. 30, 2012 Net Rental Income of Business Units with Kista 15,1 % 12,1 % 48,6 % 24,4 % 60,5 % 39,3 % GLA of Business Units on Sept. 30, 2012 13,1 % GLA of Business Units with Kista 11,9 % 27,4 % 59,5 % 33,7 % 54,4 % 17
Financing of the acquisition Citycon will finance half of the acquisition with a stand-alone property-based loan financing jointly with CPPIB, and the remainder of Citycon s part from its existing lines of credit and cash. Citycon also considers possibilities to re-finance up to 50% of company s investment by issuing new equity through a capital increase in order to strengthen its balance sheet. The details of such capital increase are still in the planning stages and any decision is subject to approval by the shareholder s General Meeting. 18
Financial impact of the acquisition The investment will be fully consolidated to Citycon Balance sheet will grow by approx. EUR 530 million to approx. EUR 3.3 billion from EUR 2.8 billion (Q3 2012) Will increase company s net rental income, operating profit and earnings By bringing Kista under Citycon s management it will be possible to improve Kista s performance due to economies of scale, as well as to improve the efficiency Citycon s Swedish operations 19
Contact information CITYCON Mr Marcel Kokkeel CEO Tel. +358 207 664 521 Marcel.Kokkeel@citycon.fi Mr Eero Sihvonen CFO, Exec. VP Tel. +358 50 5579 137 Eero.Sihvonen@citycon.fi CPPIB Mr Nils Styf CIO Tel. +46 733 5060 39 Nils.Styf@citycon.se Linda Sims Director of Media Relations Tel. +1 416 868 8695 lsims@cppib.ca 20
21 Additional information
Citycon s geographical overview with key figures Q1-Q3 2012 FINLAND Market leader Net rental income EUR 72.5 million 60.5% of total net rental income Currently 23 shopping centres, 35 other retail properties, one unbuilt lot Citycon Total, EUR million Turnover Q1-Q3/2012: 177.1 Market value 30 Sept 12: 2,695.5 Net rental income: 119.9 Sweden ( m) 743.2 47.2 29.3 1,640.9 Finland ( m) 105.9 72.5 SWEDEN Net rental income accounted for 24.4% of Citycon s total NRI Net rental income EUR 29.3 million 9 shopping centres, 5 other retail properties BALTIC COUNTRIES AND NEW BUSINESS NRI 15.1% of Citycon s total NRI Includes the Danish Albertslund Centrum Net rental income EUR 18.1 million 5 shopping centres, 3 countries MV Property Turnover 311.4 MV Property Net Rental Income 24.0 Turnover MV Property Baltic Countries and New Business( m) 18.1 Net Rental Income Turnover Net Rental Income 22
Canada Pension Plan Investment Board CPPIB is based in Toronto and its purpose is to invest the assets of the Canada Pension Plan The CPPIB Fund is C$170 billion of which C$18 billion (approx. 11%) is real estate The real estate portfolio contains mostly office and retail properties located in major centres across Canada, US, UK, Australia, Mexico, Brazil, Europe and the Asia-Pacific region CPPIB invests in assets through joint ventures and real estate funds A key strategy for CPPIB in their joint venture investments is to partner with top-tier investment managers around the world Current real estate JV partners include: Aliansce Shopping Centre SA Ancar Ivanhoe Shopping Centres The Westfield Group ING Real Estate Grosvenor 10,70% Real Estate 23
Key ongoing property development projects in Kista City completed SEK 600 million hotel and office property development completed in 2011 299 hotel rooms 5,000 m 2 office space Developed next to the Kista Fair 20,000 m 2 expo center built in 2008 Over 60 trade fairs per year Developed by Arthur Buchardt, Norwegian hotel investor Hotel is operated by Scandic Hotels NOD Victoria Tower ongoing SEK 700 million office/educational property development 25,000 m 2 Developed by Atrium Ljungberg Main tenant is Stockholm University, pre-let of ca 30% of space Construction has started and the project will be completed in Q1 2014 Kista Torn KISTA TORN 30 and 17 floor residential buildings next to Kista Galleria 290 apartments At 120 meters Stockholm s tallest residential building Developed by Swedish developer JM and its subsidiary AB Borätt Sales started in November 2012 Apartments will be sold as condominiums Estimated completion in Q3 2014 ongoing 24 Additional pipeline expected (new developments and redevelopments) to cater for the anticipated growth in workers, students, researchers and residents
Kista: Residential developments In the next 10 years, 3,500 apartments and single-family houses are planned for construction in Kista Areas include Kista Gård, Kista Äng, Kistahöjden and Kista Torn Developers include NCC, Ikano, Veidekke, Einar Mattsson and Familjebostäder The Municipality of Stockholm aims for a population increase of 20,000-40,000 people within 15 years Apartments will consist of a mix of condominiums and rental apartments, which will raise the income level Construction has started in Kista Gård and will start in Kistahöjden and in Kista Äng during 2013 Kista Gård Kistahöjden Old IBM campus Kista Äng NOD Kista Torn In the next ten years, 3,500 new apartments will be built in Kista 2,000 of these will be finalized by 2018 An increase of 20,000-40,000 people within 15 years 25