Q2 2026 Citycon Oyj Earnings Call
Speaker #2: Good morning, everyone. Welcome to Citycon's half-yearly results presentation. My name is Anni Torkko, and I work in IR here at Citycon. Together with me this morning, I have Eshel Pesti, our CEO, and Hilik Attias, our CFO.
Anni Torkko: Good morning, everyone. Welcome to Citycon's half-yearly results presentation. My name is Anni Torkko, and I work in the IR here at Citycon, and together with me here since 4:00 in the morning, I have Eshel Pesti, our CEO, and Hilik Attias, our CFO. Eshel and Hilik will now present the results of Citycon, and you can submit questions throughout the presentation. We will address them in the end, and you can use the Q&A function at the bottom. Next, I will give the speech to Eshel and Hilik.
Anni Torkko: Good morning, everyone. Welcome to Citycon's Half-Yearly Results Presentation. My name is Anni Torkko, and I work in the IR here at Citycon, and together with me here since 4:00 in the morning, I have Eshel Pesti, our CEO, and Hilik Attias, our CFO. Eshel and Hilik will now present the results of Citycon, and you can submit questions throughout the presentation. We will address them in the end, and you can use the Q&A function at the bottom. Next, I will give the speech to Eshel and Hilik.
Speaker #2: Eshel and Hilik will now present the results of Citycon. You can submit questions throughout the presentation, and we will address them at the end.
Speaker #2: You can use the Q&A function at the bottom. Next, I will give the speech to Eshel and Hilik.
Speaker #3: Huomenta, and thank you for coming. We'll start with the results for the six months. We had a very good opening for 2026. Our like-for-like growth is 5.6%.
Eshel Pesti: Buongiorno, and thank you for coming. We will start the results of the six months. We had a very good opening of 2026. Our like-for-like growth is 5.6%. Our occupancy rate is 94.4. We lost around 0.9%. Retail average rent increased by 1% to EUR 28.5 per square meter. Footfall like-for-like growth by 3.1%, and the like-for-like tenant sales increased by 2.6%. The fair value grew by EUR 2.7 million, and NOI margin is 94.2. The key achievement in H1, we signed leases for about 20,700 square meter. The leasing spread is 9.9%, which is impressive. The like-for-like general mall leasing increased by 26%, which is extraordinary. The operating expenses we cut for 5.5%, and we actually buy back our bond for 2026 and 2027 in an amount of EUR 252 million. We took a loan of EUR 214 in order to stabilize our financial situation.
Eshel Pesti: [Foreign language], and thank you for coming. We will start the results of the six months. We had a very good opening of 2026. Our like-for-like growth is 5.6%. Our occupancy rate is 94.4. We lost around 0.9%. Retail average rent increased by 1% to EUR 28.5 per square meter. Footfall like-for-like growth by 3.1%, and the like-for-like tenant sales increased by 2.6%. The fair value grew by EUR 2.7 million, and NOI margin is 94.2. The key achievement in H1, we signed leases for about 20,700 square meter. The leasing spread is 9.9%, which is impressive. The like-for-like general mall leasing increased by 26%, which is extraordinary. The operating expenses we cut for 5.5%, and we actually buy back our bond for 2026 and 2027 in an amount of EUR 252 million. We took a loan of EUR 214 in order to stabilize our financial situation.
Speaker #3: Our occupancy rate is 94.4%. We lost around 0.9%. Retail average rent increased by 1% to €28.5 per square meter. Footfall like-for-like growth was 3.1%.
Speaker #3: And the like-for-like tenant sales increased by 2.6%. The fair value grew by €2.7 million, and the NRI margin is 94.2%. The key achievement in the first half: we signed leases for about 20,700 square meters.
Speaker #3: The leasing spread is 9.9%, which is impressive. The like-for-like general mall leasing increased by 26%, which is extraordinary. We cut operating expenses by 5.5%.
Speaker #3: And we actually bought back our bond for 2026 and 2027 in an amount of €252 million. We took a loan of €214 million in order to stabilize our financial situation.
Speaker #3: The like-for-like NRI growth for the first half of the year—you can see that Sweden is almost 8%, Norway 5.8%, and Finland 4.1%.
Eshel Pesti: The like-for-like NOI growth for H1, you can see that Sweden dominates almost 8%, Norway 5.8%, and Finland 4.1%. In total, the average is 5.6%, while the European average growth for this year is 3.5%. This is actually the, I would say, Q3, including the last quarter of last year, that we are actually beating the European average. We can see that it is not a coincidence, this is a trend. Go ahead. Regarding divestment, we signed a LOI for three assets in Finland, Myyrmanni, Koskikeskus, and Trio. The deal is a conditional deal. On the day of the closing, the buyer, which is Naga Finland, will issue an IPO in the stock exchange in Tel Aviv, and based on their success IPO, we will do the transaction.
Eshel Pesti: The like-for-like NOI growth for H1, you can see that Sweden dominates almost 8%, Norway 5.8%, and Finland 4.1%. In total, the average is 5.6%, while the European average growth for this year is 3.5%. This is actually the, I would say, Q3, including the last quarter of last year, that we are actually beating the European average. We can see that it is not a coincidence, this is a trend. Go ahead. Regarding divestment, we signed a LOI for three assets in Finland, Myyrmanni, Koskikeskus, and Trio.
Speaker #3: In total, the average is 5.6, while the European average growth for this year is 3.5%. And this is actually the, I would say, third quarter, including the last quarter of last year, that we are actually beating the European average.
Speaker #3: And we can see that it's not a coincidence. This is a trend. Go ahead. Regarding divestment, we signed an LOI for three assets in Finland.
Speaker #3: More money for successful Centrio. The deal is a conditional deal. On the day of the closing, the buyer, which is Noga Finland, will issue an IPO on the stock exchange in Tel Aviv.
Eshel Pesti: The deal is a conditional deal. On the day of the closing, the buyer, which is Naga Finland, will issue an IPO in the stock exchange in Tel Aviv, and based on their success IPO, we will do the transaction. As I mentioned, we signed an LOI, and we believe that between today to 45 days, we are expecting the closing. We are in discussion with a few potential buyers regarding assets in Sweden and in Norway, but nothing is mature yet. I will give the floor to Hilik to do the financial overview.
Speaker #3: And based on their successful IPO, we will do the transaction. As I mentioned, we signed an LOI, and we believe that from today to 45 days, we are expecting the closing.
Eshel Pesti: As I mentioned, we signed an LOI, and we believe that between today to 45 days, we are expecting the closing. We are in discussion with a few potential buyers regarding assets in Sweden and in Norway, but nothing is mature yet. I will give the floor to Hilik to do the financial overview.
Speaker #3: We are in discussion with a few potential buyers regarding assets in Sweden and in Norway, but nothing is mature yet. And now I'll give the floor to Hilik to do the overview.
Speaker #2: Thank you, Eshel. So, as Eshel mentioned, strong results in the performance. NRI for the quarter was €57.5 million versus €53.3 million. That's a 7.8% growth, or 5.9% with the FX adjustment.
Hilik Attias: Thank you, Eshel. As Eshel mentioned, strong results in the performance. NRI for the quarter, 57.5 versus 53.3. That is a 7.8% growth, 5.9 with the FX adjustment. You can see it for the H1, 5.7% growth and 3.9% with FX adjustment. Of course, taking into account the Leppävaara divestment NRI loss, that 3.9% would grow to around 5%. Direct operating profit, again, here we show 4.6% increase from 47.7 to 50.8. Also in the H1, 4.9% increase, EUR 96.6 million versus 19.4. On the EPRA earnings, 17.6 resemble to the Q2 2025, and also the H1, the same trend, 36.6 versus 36.9. The EPRA earnings, excluding hybrids, 25.7 versus 26.3, and the H1, 52.8 versus 54.3. That is 10 cents per share in the quarter and 20 cents for the H1. The EPRA NRV landed at 7.64 versus 8.29 in Q2 2025.
Hilik Attias: Thank you, Eshel. As Eshel mentioned, strong results in the performance. NRI for the quarter, 57.5 versus 53.3. That is a 7.8% growth, 5.9 with the FX adjustment. You can see it for the H1, 5.7% growth and 3.9% with FX adjustment. Of course, taking into account the Leppävaara divestment NRI loss, that 3.9% would grow to around 5%. Direct operating profit, again, here we show 4.6% increase from 47.7 to 50.8. Also in the H1, 4.9% increase, EUR 96.6 million versus 19.4. On the EPRA earnings, 17.6 resemble to the Q2 2025, and also the H1, the same trend, 36.6 versus 36.9. The EPRA earnings, excluding hybrids, 25.7 versus 26.3, and the H1, 52.8 versus 54.3. That is 10 cents per share in the quarter and 20 cents for the H1. The EPRA NRV landed at 7.64 versus 8.29 in Q2 2025.
Speaker #2: And you can see for the half year, 5.7% growth and 3.9% with FX adjustment. And, of course, taking into account the Leap leverage divestment and NRI loss, that 3.9% would grow to around 5%.
Speaker #2: Direct operating profit, again, here we show a 4.6% increase, from €47.7 million to €50.8 million. Also, in the half year, a 4.9% increase: €90.4 million versus €96.6 million.
Speaker #2: On the upper earnings, 17.6 resembles Q2 2025, and also for the half year, the same trend: 36.6 versus 36.9. The upper earnings excluding hybrids: 25.7, sorry, versus 26.3, and for the half year, 52.8 versus 54.3.
Speaker #2: That's 10 cents per share in the quarter, and 20 cents for the half year. The EPRA NRV landed at €7.64, versus €8.29 in Q2 2025.
Speaker #2: In the bridge, you can see that our solid results in the NRI growth and the G&A reduction are a consistent effort from management to try to cut expenses.
Hilik Attias: In the bridge, you can see that our solid results in the NRI growth and the G&A reduction, that is a consistent effort from management to try to cut expenses. We are subsidizing the increased cost that we have here. The main driver here is the higher interest rate environment, in the refinancing process, and is reflected by the interest expenses, somewhat offset by the buyback of hybrid bonds. You can see EUR 1.3 million. On the recent financing actions, we accomplished a lot of actions in the H1, de-risking the balance sheet, while extending maturities. We have done early redemptions of 2026 and 2027 bonds. On the one hand, we drew a secured loan with favorable terms, 240 million. On the other hand, that is the interest-bearing liabilities went down by EUR 38 million quarter to quarter.
Hilik Attias: In the bridge, you can see that our solid results in the NRI growth and the G&A reduction, that is a consistent effort from management to try to cut expenses. We are subsidizing the increased cost that we have here. The main driver here is the higher interest rate environment, in the refinancing process, and is reflected by the interest expenses, somewhat offset by the buyback of hybrid bonds. You can see EUR 1.3 million. On the recent financing actions, we accomplished a lot of actions in the H1, de-risking the balance sheet, while extending maturities. We have done early redemptions of 2026 and 2027 bonds. On the one hand, we drew a secured loan with favorable terms, 240 million. On the other hand, that is the interest-bearing liabilities went down by EUR 38 million quarter to quarter.
Speaker #2: We're subsidizing the increased cost that we have here. The main driver here is the higher interest rate environment in the refinancing process, and this is reflected by the interest expenses.
Speaker #2: Somewhat offset by the buyback of hybrid bonds—you can see €1.3 million. On recent financing actions, we accomplished a lot in the first half of the year, de-risking the balance sheet while also extending maturities.
Speaker #2: We've done early redemptions of 2026 and 2027 bonds, on the one hand, and withdrew a secured loan with favorable terms—€214 million—on the other hand.
Speaker #2: The interest-bearing liabilities went down by €38 million quarter to quarter. And we also established and entered into a €200 million related party credit facility, where we gave a loan of €70 million to GCD with a 6.5% interest rate, at arm's length.
Hilik Attias: We also entered into 200 million related party credit facility where we gave a loan, 70 million to GCT with 6.5% interest arm length. In the amortization schedule, you can see average debt maturity was going up to 3.5 years, from 3.2. Weighted average interest rate, 4.72%. That is an increase. We try to offset it by entering into secured financing, which has favorable terms. Again, the interest environment is still higher than the current coupons. On the key credit metrics, you can see that we are still in a very good place. Loan to value, 51.4%. Net debt to EBITDA, 10.1. Interest coverage ratio at 2.2. Of course, Citycon is in compliance with all of its covenants.
Hilik Attias: We also entered into 200 million related party credit facility where we gave a loan, 70 million to GCT with 6.5% interest arm length. In the amortization schedule, you can see average debt maturity was going up to 3.5 years, from 3.2. Weighted average interest rate, 4.72%. That is an increase. We try to offset it by entering into secured financing, which has favorable terms. Again, the interest environment is still higher than the current coupons. On the key credit metrics, you can see that we are still in a very good place. Loan to value, 51.4%. Net debt to EBITDA, 10.1. Interest coverage ratio at 2.2. Of course, Citycon is in compliance with all of its covenants.
Speaker #2: In the amortization schedule, you can see average debt maturity was going up to 3.5 years from 3.2. Weighted average interest rate is 4.72%. That's an increase.
Speaker #2: We tried to offset it by entering into secured financing, which has favorable terms. But again, the interest environment is still higher than the current coupons.
Speaker #2: And on the key credit matrices, you can see that we're still in a very good place: loan to value, 51.4%; net debt to EBITDA, 10.1.
Speaker #2: Interest coverage ratio at 2.2. And of course, Citycon is in compliance with all of our all of its covenants.
Speaker #1: Well, that was about the presentation. Next, we will go into the Q&A session. If you would like to submit a question to the management, please use the Q&A function available in the toolbar at the bottom.
Anni Torkko: That was about the presentation. Next, we will go into the Q&A session. If you would like to submit a question to the management, please use the Q&A function available in the toolbar at the bottom. We will collect your questions and address them here in the call. We have a few questions coming in on the line. The first one is related to divestments. How do you plan to use the proceeds from divestment of the three shopping centers in Finland?
Anni Torkko: That was about the presentation. Next, we will go into the Q&A session. If you would like to submit a question to the management, please use the Q&A function available in the toolbar at the bottom. We will collect your questions and address them here in the call. We have a few questions coming in on the line. The first one is related to divestments. How do you plan to use the proceeds from divestment of the three shopping centers in Finland?
Speaker #1: We will collect your questions and address them here on the call. We have a few questions coming in on the line. The first one is related to divestment.
Speaker #1: How do you plan to use the proceeds from divestment of the Trees Shopping Centers in Finland?
Speaker #3: Well, in case we do execute the transaction, then I believe the next bonds that we have on the line are in 2028, and some hybrids.
Eshel Pesti: Well, in case we will execute the transaction, then I believe that we will buy the next bonds that we have on the line is 2028 and some hybrids.
Eshel Pesti: Well, in case we will execute the transaction, then I believe that we will buy the next bonds that we have on the line is 2028 and some hybrids.
Speaker #1: Then we have another question, which is partly related to the same. So, also asking about the divestments. What would the net proceeds from this portfolio be?
Anni Torkko: Then we have another question, which is partly related to the same. Also asking about the divestment, what the net proceeds from this portfolio would be. Maybe we can take, there are different parts to the question. This is the first, what the net proceeds would be. I can take the second after your answer too.
Anni Torkko: Then we have another question, which is partly related to the same. Also asking about the divestment, what the net proceeds from this portfolio would be. Maybe we can take, there are different parts to the question. This is the first, what the net proceeds would be. I can take the second after your answer too.
Speaker #1: And maybe we can take our different parts of the question. So this is the first: What would the net proceeds be? I can take the second after your answers.
Speaker #3: I think that we've mentioned that we're talking about book value latest appraisal which is 422.6. And of course, customer adjustments would be made. But this is what we're experiencing.
Hilik Attias: I think that we have mentioned that we are talking about book value, latest appraisal, which is EUR 422.6. Of course, the customary adjustments would be made. But this is what we are experiencing, and this is still all under negotiation and conditional deal.
Hilik Attias: I think that we have mentioned that we are talking about book value, latest appraisal, which is EUR 422.6. Of course, the customary adjustments would be made. But this is what we are experiencing, and this is still all under negotiation and conditional deal.
Speaker #3: And this is still all under negotiation and is a conditional deal.
Anni Torkko: Okay. The second one coming from the same, is related to the vendor financing. If that will be in addition to the mutual loan agreement together with GCT.
Anni Torkko: Okay. The second one coming from the same, is related to the vendor financing. If that will be in addition to the mutual loan agreement together with GCT.
Speaker #1: Then the second one, coming from the same, is that related to the vendor financing? If so, will that be in addition to the mutual loan agreement together, or which is it?
Speaker #3: No, maybe people are confused. There is nothing to do with GCT apart from, let's say, the one minute that Noga will go for the IPO.
Eshel Pesti: No, maybe people are confused. There is nothing to do with GCT apart of the, let's say, one minute that Naga will go for the IPO. Once Naga is a public company, is no more GCT. And the vendor loan will be to Naga Finland, which will be a public company that GCT will hold, if I remember, not more than 25%. So it will be a real public company, and we will give vendor loan as we gave vendor loan before, when we do divestment in the year before, not more than 20%.
Eshel Pesti: No, maybe people are confused. There is nothing to do with GCT apart of the, let's say, one minute that Naga will go for the IPO. Once Naga is a public company, is no more GCT. And the vendor loan will be to Naga Finland, which will be a public company that GCT will hold, if I remember, not more than 25%. So it will be a real public company, and we will give vendor loan as we gave vendor loan before, when we do divestment in the year before, not more than 20%.
Speaker #3: Once Noga is a public company, there is no more GCT. And the vendor loan will be to Noga Finland, which will be a public company that GCT will hold, if I remember correctly, not more than 25%.
Speaker #3: So, it will be a real public company, and we will give a vendor loan as we gave a vendor loan before when we did the divestment in the year before.
Speaker #3: Not more than 20%.
Speaker #1: Then, an additional question: Do you plan any dividends during the second half of 2026?
Anni Torkko: Then an additional question. Do you plan any dividends during the H2 in 2026?
Anni Torkko: Then an additional question. Do you plan any dividends during the H2 in 2026?
Speaker #3: We didn't plan it yet.
Eshel Pesti: We didn't plan it yet.
Eshel Pesti: We didn't plan it yet.
Speaker #1: Then an additional question coming from the line. Related to the credit facility with GCT: How do you think about buying back hybrids instead, even though they have higher coupons and trade well below par?
Anni Torkko: Then an additional question coming from the line, related to the credit facility with GCT. How do you think about buying back hybrids instead, given they have higher coupons and trade well below par?
Anni Torkko: Then an additional question coming from the line, related to the credit facility with GCT. How do you think about buying back hybrids instead, given they have higher coupons and trade well below par?
Speaker #2: I think that we have demonstrated that we can do buybacks of hybrids. We've done, in Q3 2025, €35 million of buybacks, and this is of course part of our toolkit.
Hilik Attias: I think that we have demonstrated that we can do buybacks of hybrids. We have done in Q3 2025, EUR 35 million buybacks. This is, of course, part of our toolkit, and we will consider it, of course.
Hilik Attias: I think that we have demonstrated that we can do buybacks of hybrids. We have done in Q3 2025, EUR 35 million buybacks. This is, of course, part of our toolkit, and we will consider it, of course.
Speaker #2: And we'll consider it, of course.
Anni Torkko: Then an additional question related to hybrids. What is your plan for the EUR 321 million hybrid where coupon reset date is in Q3?
Anni Torkko: Then an additional question related to hybrids. What is your plan for the EUR 321 million hybrid where coupon reset date is in Q3?
Speaker #1: Then, an additional question related to hybrids. What is your plan for the €321 million hybrid, where the coupon reset date is in 30 quarters?
Speaker #3: As I mentioned, I believe that if we do the transaction, we will use the money for both bonds, as we have the next one on the line, the 2028, and partially for the hybrids.
Eshel Pesti: As I mentioned, I believe that if we will do the transaction, we will use the money for both bonds as we have the next on the line, the 2028, and partly for the hybrids.
Eshel Pesti: As I mentioned, I believe that if we will do the transaction, we will use the money for both bonds as we have the next on the line, the 2028, and partly for the hybrids.
Speaker #1: And then one more question related to the divestment—partly already discussed—but the question is: Will the asset sale be done at book value, or at a premium or discount?
Anni Torkko: One more question related to the divestment, partly already discussed. The question is: Will the asset sale be done at book value or premium/discount? About when the timing would be for this divestment.
Anni Torkko: One more question related to the divestment, partly already discussed. The question is: Will the asset sale be done at book value or premium/discount? About when the timing would be for this divestment.
Speaker #1: And about when the timing would be for this divestment.
Speaker #3: Noga: Well, as I mentioned before, the price is the book value price with the last appraisal that we made lately. And as I said, it will be on a book value.
Eshel Pesti: Naga?
Eshel Pesti: Naga?
Anni Torkko: Yeah.
Anni Torkko: Yeah.
Eshel Pesti: Well, as I mentioned before, the price is the book value price with the last appraisal that we make lately. As I said, it will be on a book value. We will give them a loan or vendor loan of up to 20%, and it all depends, of course, on the result of the IPO. That is why I am saying that I am not 100% sure that we will do it. It depends on the results. I hope we will do it because it is a very good deal for us to sell, first time after many, many years, to sell some asset in a book value. On the other hand, we will keep managing these assets, and we will get management fee. So for Citycon, I believe it is a very good transaction. There was a part that I missed.
Eshel Pesti: Well, as I mentioned before, the price is the book value price with the last appraisal that we make lately. As I said, it will be on a book value. We will give them a loan or vendor loan of up to 20%, and it all depends, of course, on the result of the IPO. That is why I am saying that I am not 100% sure that we will do it. It depends on the results. I hope we will do it because it is a very good deal for us to sell, first time after many, many years, to sell some asset in a book value. On the other hand, we will keep managing these assets, and we will get management fee. So for Citycon, I believe it is a very good transaction. There was a part that I missed.
Speaker #3: And we will actually bring—we will give them a loan, or vendor loan, of up to 20%. And it all depends, of course, on the results of the IPO.
Speaker #3: That's why I'm saying that I'm not 100% sure that we will do it. It depends on the results. I hope we will do it because it's a very good deal for us—to sell, for the first time after many, many years, some asset at book value.
Speaker #3: And on the other hand, we will keep managing this asset, so we will get a management fee. So, for Citycon, I believe it's a very good transaction.
Speaker #3: There was a part that I missed.
Speaker #1: Oh, the timing of the divestment.
Anni Torkko: Oh, the timing of the divestment.
Anni Torkko: Oh, the timing of the divestment.
Speaker #3: Yeah. As I mentioned, we expect to do the closing between I believe today to 45, maximum two months.
Eshel Pesti: Yeah. As I mentioned, we expect to do the closing between, I believe today to 45, maximum two months.
Eshel Pesti: Yeah. As I mentioned, we expect to do the closing between, I believe today to 45, maximum two months.
Speaker #1: Thank you, Eshel and Hilik. For now, that's the last question we had on the line, and there are no more open questions. So, thank you.
Anni Torkko: Thank you, Eshel and Hilik. For now, it is the last question we had on the line. There are no more open questions. Thank you.
Anni Torkko: Thank you, Eshel and Hilik. For now, it is the last question we had on the line. There are no more open questions. Thank you.
Speaker #3: So, I want to take one more minute of your time. I know that there are some Cityconners on the line, so I want to tell all of you guys that you did a very great job, and keep going.
Eshel Pesti: I want to take one more minute from your time. I know that there are some Cityconers on the line, so I want to tell all of you guys that you did a very great job, and keep going. Thank you very much, and I wish all of us a good weekend.
Eshel Pesti: I want to take one more minute from your time. I know that there are some Cityconers on the line, so I want to tell all of you guys that you did a very great job, and keep going. Thank you very much, and I wish all of us a good weekend.
Speaker #3: Thank you very much. And I wish all of us a good weekend.
Operator: Goodbye
Operator: Goodbye.
