Citycon Oyj : Interim Report Q1/2024

Q1/2024

Interim report

January-March

Operational performance Q1/2024

+6.5%	+8.2%	94.9%
Like-for-like NRI growth	NRI growth	Retail occupancy
in Q1/20241	in Q1/20241
(vs. Q1/2023)	(vs. Q1/2023)

+3.0%	+4.1%1	25.1EUR
Like-for-like tenant sales	Avg. rent / sq.m. increase	Avg. rent / sq.m.
(vs. Q1/2023)	(vs. Q1/2023)

+46.2MEUR	86.1MEUR
Fair value change of	IFRS operating profit Q1/2024
investment properties

1 With comparable FX rates.

Q1/2024 2

CEO Henrica Ginström:

First, I want to say that I am both excited and grateful for this opportunity to serve as the next CEO of Citycon. During my 13 years in the company, I have had the privilege to be part of Citycon's journey to become the leading owner and developer of urban hubs in the Nordics and Baltics. We continue to stay committed to our long-stated necessity- based strategy, focusing on high-quality assets in strong, growing urban markets in the major Nordic cities, and most importantly, creating value for all our stakeholders. At the same time, it is important to acknowledge the changes in our operating environment over the last two years, in particular the high interest rates, which have had a major impact on the real estate sector and also Citycon.

Operational performance in January-March 2024 was strong with like-for-like net rental income increasing by 6.5% supported by rent indexation and strong performance of our core assets. Like-for-like tenant sales increased 3.0% as sales development continued strong especially in our main tenant categories. Retail occupancy rate, including Kista Galleria, increased 30 bps compared to same period previous year. There was a decline in the occupancy rate compared to year-end due to the Kista consolidation and normal seasonal variation.

Our EPRA earnings remained stable and was EUR 24.5 million, including some one-time costs and restructuring costs related to organizational changes. Excluding these one-off costs, the EPRA earnings grew and amounted to EUR 28.8 million.

In connection with the financial statements 2023 we outlined actions to be taken in 2024 regarding asset disposals and cost savings measures with the main goal of strengthening our balance sheet and cash flow. I would like to highlight our

commitment to the investment-grade credit rating, which enables us to access the financing market with competitive terms. We demonstrated this commitment during the first quarter as we executed an approximately EUR 50 million share issuance. This action was necessary to defend our investment grade credit rating, and the best solution for the company and all its shareholders. The share issue also facilitated a very successful EUR 300 million new green bond issuance in February, which significantly improved our debt maturity profile and reduced our refinancing risk.

We have set a divestment target of EUR 950 million over next the 24 months and are confident that we will execute that by the end of 2025. In May, we signed a deal to sell Kongssenteret in Norway with pricing close to our book value. With that transaction, we showcase the attractiveness of our necessity-based centers but also highlight the fact that the transaction market is picking up.

During the first quarter of 2024 we have executed several cost-saving measures. Through organizational changes and consolidation of group functions to our Iso Omena head office we have been able to reduce our headcount costs substantially and are committed to delivering on our overhead run-rate target of less than 10% of NRI by the end of this year.

Years 2024 and 2025 will be years of execution and delivery. I am looking forward to building the company's future together with a strong team. Our business fundamentals are strong, and together with a focus on the balance sheet, Citycon is and will be well-positioned going forward. We acknowledge that now is the time to execute on our promises, and that is the key priority for me as a new CEO and for the whole management team.

Q1/2024 3

Citycon results summary:

Strong operational performance

• Total net rental income increased by 6.7% compared to the previous year.
  • In comparable FX rates, total net rental income increased by 8.2%.
• Like-for-likenet rental income increased by 6.5% compared to the previous year.
• The weakening NOK and SEK FX-rates impacted on our results; the impact on total net rental income was EUR -0.7 million.
• Average rent per sq.m. increased by 4.1% with comparable FX to EUR 25.1 per sq.m (vs. Q1/2023).
• Retail occupancy 94.9% vs 94.6% in Q1/2023 (including Kista).
• Like-for-likefootfall unchanged (-0.1%).
• Like-for-liketenant sales increased 3.0%.
• Fair value change of investment properties in Q1/2024 EUR 46.2 million, including Kista.

The strengthening of the balance sheet as a priority

• In Q1, Citycon continued to improve its balance sheet by EUR 48.2 million share issue which was 4-times oversubscribed.
• Citycon placed a 5-year EUR 300 million green bond with an orderbook approximately seven times over-subscribed.
• Citycon executed approx. EUR 213 million tender of its bond maturing in October 2024.
• Following the successful execution of these financing transactions, Citycon's debt maturity profile was significantly improved

and refinancing risk was further reduced.

Q1/2024 4

Key figures1

					FX Adjusted	FX Adjusted	Q1-Q4/
Citycon Group		Q1/2024	Q1/2023	%	Q1/2023	%2	2023
Net rental income	MEUR	51.0	47.8	6.7%	47.2	8.2%	195.7
Like-for-like net rental income development	%	6.5%	9.4%	-	-	-	6.5%
Direct operating profit3	MEUR	39.7	38.3	3.7%	37.7	5.4%	164.8
IFRS Earnings per share (basic)4	EUR	0.33	0.32	3.6%	0.31	4.9%	-0.70
Fair value of investment properties	MEUR	4,082.4	3,996.7	2.1%	-	-	3,858.2
Loan to Value (LTV)3	%	48.3	42.9	12.6%	-	-	46.3
EPRA based key figures3
EPRA Earnings	MEUR	24.5	25.3	-3.0%	24.8	-1.1%	109.6
Adjusted EPRA Earnings5	MEUR	22.1	17.9	23.9%	17.4	27.4%	80.6
EPRA Earnings per share (basic)	EUR	0.138	0.150	-8.0%	0.147	-6.1%	0.651
Adjusted EPRA Earnings per share (basic)5	EUR	0.125	0.106	17.6%	0.103	21.0%	0.479
EPRA NRV per share6	EUR	8.96	10.78	-16.9%	-	-	9.30

1. Standing portfolio key figures have not been presented for Q1/2024 because there have been no divestments impacting the figures during the reporting period or the comparison period.
2. Change from previous year (comparable exchange rates). Change-% is calculated from exact figures.
3. 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.
4. The key figure includes hybrid bond coupons, amortized fees and gains and expenses on hybrid bond repayments.
5. Starting from the beginning of 2024, Citycon excludes reorganisation and one-time costs (Q1/2024: EUR 4.3 million) from Adjusted EPRA Earnings. Due to this, Q1/2024 Adjusted EPRA Earnings is not fully comparable with Q1/2023. The adjusted key figure includes hybrid bond coupons and amortized fees.
6. The effect of currency rates to EPRA NRV/share was EUR -0.20.

Outlook (unchanged)

Direct operating profit	MEUR	185-203
EPRA Earnings per share (basic)	EUR	0.62-0.74
Adjusted EPRA Earnings per share (basic)	EUR	0.46-0.58

The outlook assumes that there are no major changes in macroeconomic factors and no major disruptions from the war in Ukraine. These estimates are based on the existing property portfolio, including Kista 100%, as well as year-end 2023 estimates of inflation, EUR-SEK and EUR-NOK exchange rates, and interest rates.

Q1/2024 5

1. Net rental income

Total net rental income increased by 6.7% to EUR 51.0 million (Q1/2023: EUR 47.8 million) and with comparable FX rates by 8.2%. Kista Galleria increased the total net rental income by EUR 1.0 million. The like-for-like net rental income in Q1 increased 6.5% compared to Q1/2023.

Like-for-like and total net rental income development, Q1/2024 vs. Q1/2023

%
4.5	8.6	8.6	6.8 -1.3	2.5	8.8	27.3	28.2	10.4	2.2	2.3	6.5	6.7	8.2
Finland	Norway	Sweden	Denmark		Total
								& Estonia

 Like-for-like NRI Development (at comparable exchange rates)

 Total NRI Development (at actual exchange rates)  Total NRI Development (at comparable FX rates)

Like-for-like net rental income from the Finnish operations increased by 4.5%. Like-for-like net rental income from Norwegian operations increased by 6.8%. Like-for-like net rental income from the Swedish operations increased by 8.8%. Like-for-like net rental income from the Danish & Estonian operations increased by 10.4%.

Net rental income and gross rental income breakdown

								Gross rental
			Net rental income				income
				Denmark &
MEUR	Finland	Norway	Sweden	Estonia	Other	Total		Total
Q1/2023	18.2	16.5	5.8	7.3	-0.1	47.8	55.1
Acquisitions	-	-	1.0	-	-	1.0	1.6
(Re)development projects	0.8	-0.5	0.6	-0.3	-	0.7	0.4
Divestments	-	0.0	-	-	-	0.0	0.0
Like-for-like properties1	0.7	0.9	0.5	0.4	-	2.5	1.3
Other (incl. exchange rate differences)	0.0	-0.7	-0.5	0.1	0.1	-1.0	-0.9
Q1/2024	19.8	16.3	7.4	7.5	0.0	51.0	57.6

1 Like-for-like properties are properties held by Citycon throughout two full preceding periods and exclude properties under (re)development or extension.

Q1/2024 6

2. Occupancy, sales and footfall

The retail occupancy rate, including Kista, remained stable in Q1/2024 from the previous quarter at 94.9% (Q4/2023: 95.4%).

The economic occupancy declined slightly and was 93.9% (Q4/2023: 94.3%).

The average rent per sq.m. increased by 4.1% with comparable FX to 25.1 EUR (Q1/2023: 24.1 EUR) as we leased 41,000 sq.m. during the first quarter.

In Q1/2024 like-for-like tenant sales increased 3.0% compared to the same time last year. Notably, like-for-like tenant sales are up 11.8% compared to pre-pandemic Q1/2019.

Like-for-like footfall remained stable (-0.1%) compared to the same period last year.

Occupancy rate1

%
95.1	95.0	94.1	94.0	95.2	94.7	90.2	90.8	90.9	95.8	97.2	96.8	93.7	94.3	93.9	94.9
	Finland	Norway	Sweden	Denmark		Total
									& Estonia

 Economic occupancy rate 31 March 2023

 Economic occupancy rate 31 December 2023

 Economic occupancy rate 31 March 2024  Retail economic occupancy rate 31 March 2024

• Including Kista Galleria 100%.

Tenant sales development,

Q1/2024 vs. Q1/20231

%
3.9	5.4	4.5	2.5			2.5	3.0	2.3
				-1.9	-0.2	-2.2
Finland	Norway	Sweden	Denmark	Total
						& Estonia

Footfall development,

Q1/2024 vs. Q1/20231

%
3.7	6.0			5.8	3.8
		-2.9-4.7	-6.1-5.4			-0.1	0.5
							-
Finland	Norway	Sweden	Denmark	Total
				& Estonia

 Like-for-like sales

 Total sales (including impact of divested assets)

 Like-for-like footfall

 Total footfall (including impact of divested assets)

• Sales figures include estimates. Sales figures exclude VAT and the change has been calculated using comparable exchange rates. Including Kista Galleria 100%.

• Footfall figures include estimates. Including Kista Galleria 100%.

Q1/2024 7

Lease portfolio summary1

		31 March 2024	31 March 2023	31 December 2023
Number of leases	pcs	4,124	3,952	4,153
	EUR/sq.m./
Average rent2	month	25.1	24.1	24.1
Average remaining length of lease portfolio	years	3.5	3.5	3.5
Occupancy cost ratio3	%	9.3%	9.0%	9.2%

1. Kista Galleria 100% included.
2. Comparison periods with comparable FX-rate.
3. The rolling twelve month occupancy cost ratio for like-for-like shopping centres.

Leasing activity1

		Q1/2024	Q1/2023	Q4/2023
Total area of leases started	sq.m.	78,016	90,448	258,414
Total area of leases ended	sq.m.	84,832	101,600	259,458

1 Leases started and ended do not necessarily refer to the same premises. Kista Galleria 100% included.

3. Financial result

Operating profit (IFRS) was EUR 86.1 million (Q1/2023: EUR 82.8 million). Impact of the fair value change was EUR 46.2 million

(Q1/2023: EUR 44.7 million) mainly due to the acquisition of Kista Galleria.

Administrative expenses were EUR 11.3 million (Q1/2023: EUR 9.7 million) and included EUR 4.3 million of reorganisation

and one-time costs. At the end of the reporting period, Citycon Group employed a total of 220 (31 March 2023: 251) full-time employees (FTEs) of whom 42 worked in Finland, 72 in Norway, 39 in Sweden, 13 in Denmark & Estonia, and 55 in Group functions.

Net financial expenses (IFRS) increased to EUR 18.0 million (Q1/2023: EUR 12.1 million). Interest cost was EUR 2.7 million higher than last year mainly following increased cost of debt by EUR 3.3 million from refinancing and consolidation on Kista interest expenses starting from end of February. This were partially offset by interest income on cash balances EUR 0.5 million increase compared to corresponding period. In addition, an amount of EUR 4.1 million indirect losses (Q1/2023: EUR 1.3 million loss) was booked related to fair value changes of cross-currency swaps not under hedge accounting, EUR 2.8 million more than during the comparison period.

Share of loss of joint ventures and associated companies totalled EUR -0.8 million (Q1/2023: EUR -15.6 million) mainly due to the completion of the transaction to acquire the remaining interest in Kista Galleria at the end of February after which Kista has no longer been treated as a joint venture.

Profit for the period was EUR 64.9 million (Q1/2023: EUR 44.7 million).

4. Property portfolio value development

The asset value of investment properties increased by EUR 224.2 million from year-end to EUR 4,082.4 million (31 December 2023: EUR 3,858.2 million). Net investments, including both acquisitions and disposals and development projects increased the value by EUR 287.8 million, fair value gains by EUR 46.2 million and changes in right-of-use-assets by EUR 0.2 million.

These increases were offset by changes in FX rates, which decreased the value by EUR 65.3 million and by transfer into investment properties held for sale, which decreased the value by EUR 44.8 million.

Q1/2024 8

Property portfolio summary

		Gross		Properties held
31 March 2024	No. of properties	leasable area	Fair value, MEUR	for sale, MEUR	Portfolio, %
Shopping centres, Finland	9	337,250	1,691.2	-	41%
Other properties, Finland	1	2,200	4.4	-	0%
Finland, total	10	339,450	1,695.6	-	41%
Shopping centres, Norway	13	343,000	993.0	44.8	25%
Rented shopping centres, Norway1	1	14,500	-	-	-
Norway, total	14	357,500	993.0	44.8	25%
Shopping centres, Sweden	6	266,000	912.5	-	22%
Other properties, Sweden	1	-	6.5	-	0%
Sweden, total	7	266,000	919.0	-	22%
Shopping centres, Denmark & Estonia	4	141,600	435.7	-	11%
Other properties, Denmark & Estonia	-	-		-	-
Denmark & Estonia, total	4	141,600	435.7	-	11%
Shopping centres, total	33	1,102,350	4,032.4	44.8	99%
Other properties, total	2	2,200	10.9	-	0%
Investment properties, total	35	1,104,550	4,043.3	44.8	99%
Right-of-use assets classified as investment
properties (IFRS 16)	-	-	39.1	-	1%
Investment properties in the statement of
financial position, total	35	1,104,550	4,082.4	44.8	100%

1 Value of rented properties is recognised within IFRS 16 investment properties based on IFRS rules.

The fair value change of investment properties amounted to EUR 46.2 million (Q1/2023: EUR 44.7 million) mainly due to acquisition of Kista Galleria. Other value changes were minor. The application of IFRS 16 standard had an impact of EUR -1.7 million (Q1/2023: EUR -1.6 million) to the fair value change of investment properties during the January-March reporting period.

Fair value changes

MEUR	Q1/2024	Q1/2023	Q1-Q4/2023
Finland	4.7	3.5	-68.4
Norway	1.0	23.6	-64.5
Sweden	43.2	3.6	-35.3
Denmark & Estonia	-1.1	15.6	-25.5
Investment properties, total	47.9	46.4	-193.7
Right-of-use assets classified as investment properties (IFRS 16)	-1.7	-1.6	-6.6
Investment properties in the statement of financial position, total	46.2	44.7	-200.3
Kista Galleria (50%)	-	-14.8	-40.8
Investment properties and Kista Galleria (50%), total	-	29.9	-241.1

External appraisers, CBRE (in Denmark, Estonia and Norway) and JLL (in Finland and Sweden) measure the fair values for annual financial statements. Citycon measures the fair values of the properties internally in the Q1-Q3. All internal valuation periods are subject to yield and market commentary from Citycon's current external appraisers in its respective markets.

Q1/2024 9

5. Capital recycling

In Q1/2024, Citycon completed the transaction to acquire the remaining interest in Kista Galleria in Stockholm, Sweden. Citycon has managed the centre since 2012 and before the transaction owned 50% of the asset. After the transaction, Citycon has 100% ownership. Kista Galleria had approximately SEK 2,400 million of debt and following the transaction Citycon assumed seller's share of existing debt (approximately SEK 1,200 million) and made a cash payment (approx. EUR 2.5 million). The new loan is secured by additional two assets located in Sweden.

Strengthening the balance sheet remains a key priority for the company. In November 2022, Citycon announced its goal to sell EUR 500 million of non-core assets in the next 24 months. Following the transaction executed in December 2022 the remaining target is EUR 380 million. Citycon is committed to execute the previously disclosed divestment target by the end of 2024 and in February 2024 increased its target to EUR 950 million over the next 24 months.

6. (Re)development projects

Citycon has no significant ongoing development projects and capex requirements are expected to be significantly lower in 2024 compared to the previous years.

Further information on Citycon's completed, ongoing and planned (re)developments can be found in the company's Financial Review 2023.

(Re)development projects in progress on 31 March 2024

				Actual gross
		Area before/after,	Expected gross- investment by 31 March
	Location	sq.m.	investment, MEUR	2024, MEUR	Completion
Barkarby, residentials	Stockholm, Sweden	-/12,950	69.51	6.61	2024

1 The transaction has been structured as a forward commitment, whereby Citycon made a deposit of EUR 6.6 million in April 2022 and will fund the remaining purchase price, pro-rata, at the completion of two construction phases approximately in August 2024. The closing of the transaction will be after the completion of each phase with no additional obligations from Citycon before construction of each phase is complete.

7. Shareholders' equity

Equity per share was EUR 11.07 (31 December 2023: EUR 11.56). Equity per share was impacted by the directed share issue, where a total of 11,900,000 new shares were carried out in February 2024.

At period-end,shareholders' equity attributable to parent company's shareholders was EUR 1,428.1 million (31 December 2023: EUR 1,380.1 million).

Q1/2024 10