Citycon Oyj ($CTY1S)

Good morning. Happy to have you here on this Friday to summarize our Citycon first quarter 2026. Next to me is Hilik. And after, I will give you the management review, the operational, I will leave the floor to Hilik. We had a solid first quarter, and the operational results are the following. We have a like-for-like growth in NRI, 4.5%. Our retail occupancy is almost 95%, 94.8%. The rent per square meter grew by 0.9% to EUR 28.4 per square meter. The footfall grew by 2.1% and the tenant sales growth by 3.5%, which is a good indicator. Our valuation grew by EUR 2.2 million, and the NRI margin is almost 90%, 89.9%. The key achievement in the quarter, we focus on the general mall leasing, and we achieved growth of 25% between the years, and we will keep focused on that. This is what we call here money on the floor. We signed and leased 18,700 square meters of retail, and we decreased our administrative cost by 17.5%. We have signed 2 loans for almost EUR 500 million, EUR 490 million, and we have additionally accordion of EUR 250 million. So it's a good backup to our facility. The cash flow has continued to be strong. The like-for-like growth, as I mentioned before, is 4.5%, Norway donate, 4.8% and Sweden, Denmark, Finland and Estonia each one of them 4.5%. And on the right side, you can see the growth of the price per square meter during the quarters. In general mall leasing, as I mentioned, we focus in this year, and we had a growth of 25%. And new long-term specialty leasing deals signed and opened during the first quarter, new media and advertising actually agreement with the providers has been signed new possibilities to create and reshaping centers in order to have more [ GMLs ] and energy project, which will generate new revenue in the coming soon. We have significant income growth potential in the general mall leasing and we will focus also in having better results in the leasing. Looking forward, we continue to work on optimizing our asset portfolio by identifying and carrying out potential asset divestment. During the quarter, we have been approached by several potential buyers related to selected assets in Finland, Sweden and Norway. These days, post quarter 1, we start negotiating NDA with some potential buyers. We will focus on increasing the general mall leasing income and on improving of the leasing activity. We are well positioned to deliver strong operational results for 2026. So for now, I will leave the floor to Hilik in order to review the financial overview. Please, Hilik.

Thank you all. Thank you, Eshel. Key financials for Q1 2026. NRI landed at EUR 51.8 million versus EUR 50.1 million. That's a 3.5% uplift and 1.8% FX adjusted. The direct operating profit, EUR 45.8 million versus EUR 42.7 million, 7.2% uplift and 5.3% FX adjusted. This is thanks to the G&A savings of EUR 1.3 million compared to the corresponding quarter in 2025. EPRA earnings, EUR 19 million versus EUR 19.4 million, we will go through the EPRA bridge in the next slide. EPRA per share of EUR 0.10 versus EUR 0.11 in the corresponding quarter in 2025 and EUR 0.15 excluding the hybrids versus EUR 0.15. EPRA NRV EUR 7.61 versus EUR 8.13. And in the next slide, you can see in the bridge, the remaining assets gave us EUR 1.5 million. This is a good growth. On the other hand, we lost NRI from the Lippulaiva residential divestments. G&A, as mentioned, savings, EUR 1.3 million. And on the other hand, financials expenses, this is coming from increased costs, mainly the 2031 bond we issued in 2025 April. On the other hand, we bought EUR 35 million of hybrids. That gave us back EUR 600,000 for this quarter, as you can see. Overall, after FX impact, we landed on EUR 19 million. And this is a strong results and solid results for the quarter 1. With respect to financing actions, we are pleased that we have done a lot of actions in Q1 and the subsequent event. We've managed to sign and draw EUR 270 million loan with an accordion option of another EUR 250 million. We bought back some bonds, and then we distribute dividends of an aggregate amount of EUR 202 million. And on April, we did early redemption of the 2026 bond EUR 124 million. We signed another secured loan, EUR 220 million with attractive terms. That was already drawn in beginning of May. And we announced to -- for an early redemption of the 2027 bond. So following all of that actions, we are in a much better position, and there's no near-term maturities. The next one would be March 2028 bond. And this is something that we would like to emphasize significantly derisking the balance sheet as of today. With respect to the debt maturity, so after the subsequent event, the pro forma of the average debt maturity is 3.7 years. We are experiencing a gradually higher interest rates. This is coming from external interest rate -- base interest rate. But on the other hand, we're kind of trying to offset it by entering to a secured loan with a relatively attractive terms and potentially buying back bonds in the future. Liquidity as of March 2026, EUR 153 million. We have -- this is something that, after that, we have did the make-whole of 2026. On the other hand, got the [ RA ] loan. And so we are well positioned currently as well. In the maturity schedule, this is for March. So 2026, 2027 would be cleared. 2027 will be cleared in the next month. And so you can see that next in line would be only March 2028, which is just less than 2 years from now. Key credit metrics loan-to-value below 50%, 49.4%. And the upper loan-to-value is coming from the dividend distribution mainly. Net debt to EBITDA, 9.9%, interest coverage at 2.3% and weighted average interest rate is mentioned, 4.22%.

Thank you. And now we will open for questions.

[Operator Instructions] Currently, we have no open questions on the line. [Operator Instructions] And now we have a question coming. So there is a question where you have been asked, can you please provide an update on negotiations related to disposals, [ asset for ] sale? What is the strategic plan with regard to the hybrids? You say focus on derisking the balance sheet, but LTV is up and you prepare for further dividends for launch to G City. How do you want to retain access to capital markets?

Okay. So I see here 3 questions and I will start with the divestment. As I said, last year and when we summarize 2025, our target for this year is start to optimize our portfolio. We have, as I say, approached by a few good potential buyers for asset here in Finland, Norway and Sweden, nothing is premature yet that I can report specifically. But as I said, we signed a few NDAs already and we are negotiating now NDA about asset here in Finland. I believe that when we will summarize the 6 months, we'll be able to be more specific at the moment, I cannot expose more than that. But we are definitely in the direction that we want.

Yes. And I would say for the hybrids. So the decision-making would be close to the reset period, which is September 2026. As mentioned, we bought EUR 35 million hybrids we can do in the open market and try to get benefit of the fact that it's traded below par. And regarding the LTV, 49% is still something that is well monitored and we keep monitoring it. And of course, we're in compliance with every covenant that we have. and we'll continue to do so. With respect to dividends, again, looking at our dividend policy, any excess of cash would be considered as a dividend and of course, in compliance with all of our covenants at any given time.

And then we have our next question coming. Do you expect any negative rating action from S&P from increased secured debt? And how does that impact your plans, if any, to come back to the bond market in the future?

Well, from S&P, we are expecting the unexpected. And to be honest, it's not affecting our activity.

The rating for Silicon given S&P methodology that once G City crossed 50% it is viewed in a group level and not as a stand-alone level. By the way, if you look at the report itself, it does give emphasize that the performance is stable and improving on a stand-alone basis. But once the rating is as such and clearly, from that point of time of the rating decrease G City had increased their stake to 86.4%. So I don't think that our actions here are something that would be just for the sake of the rating. The secured financing is something that we're looking at because the terms are very favorable the market here was frozen, and there was no transaction regarding debt for years and now there's a lot of interest. It also echoes our quality of assets. And I think that when it's hot, I think one of our responsibility is to try to take and close secured financing to support our P&L.

Then we have an additional question coming. Congratulations for the results and the various efficiencies you are working on. Now that you have cleared a way until March '28, what is the next with the capital structure, once you raise more cash via secured debt or disposals?

We are considering a few channels. The money just arrived, still hot, warm. For the next few days, we secure it. We put it in a closed the account. And we will think what to do with it. But basically, we feel better that the money is in our bank account, and we will see how to leverage is to have the best benefit for our shareholders.

Then an additional question. You disclosed you bought EUR 5 million of the 2029 bonds in open market. Do you have similar plans for your hybrids?

Well, we are right now, again, we're having the cash. We're trying to do the conservative and responsible actions, which would be to clean the debt maturities that are coming due 2027, as mentioned. And I think that if we'll have excess of cash and we -- this is the reason why we will pursue more secured financing in the future, we would consider every option including buyback of hybrids, again, trying to be more opportunistic and supporting the P&L. So I think this is something yet to be seen, but it's an option on the table.

Thank you for the answers. So there are no further open questions on the lines. So I hand over back to you, Eshel and Hilik, for the closing words.

So again, I thank you for joining us. I'm happy to deliver a good result for the first quarter. And this is just the beginning. I believe that in the next quarter, we will have more details to tell you about the operational results. I hope that I will be able to come with more, I would say, strong stories regarding divestment. By the way, all what we are negotiating regarding divestment is in book value. We got some proposals which are under the book value, and we reject them. So we are negotiating at the moment only what is the book value, and we have potential buyers. And I wish you all a happy weekend and thank you.