Good morning, everyone, and welcome to Citycon's Third Quarter Results Audiocast. Last night, we published our third quarter 2023 interim report, which you will find alongside all other results materials in the investors section of our website. I'm Sakari Järvelä, Vice President for Investor Relations at Citycon, and I will be hosting the call today. With me here in the call are our CEO, Mr. Scott Ball, and our CFO, Mr. Bret McLeod. We will start the presentation by Scott going through a summary of our business and operational highlights for the third quarter and the first three quarters of the year. Following that, Bret will go through our financial result and financial guidance for the full year 2023. After the presentations, there will be a separate Q&A session, and we will be opening the line for questions from the audience. With that, I pass on to Scott.
Please go ahead.
Thank you, Sakari. Good morning, everybody. Please forgive my voice. I'm recovering from COVID here. We continue to see strong performance in our business fundamentals as like-for-like tenant sales were 4.1% above Q1 through Q3 2022, and 9.3% above the same period for pre-pandemic levels. We also are seeing more customers in our centers as like-for-like footfall increased 1.9% compared to the previous year. Retail occupancy is now at 95.6%, up 70 basis points versus the same quarter last year. At the same time, average rent per square meter, with comparable FX rates, increased by 1.4 EUR per sq m or 5.9% to 23.8 EUR per sq m.
We continue to benefit from a low occupancy cost ratio of 9.4%, which, together with the increasing tenant sales and improving footfall, positions Citycon for continued compounding rent growth and service charge increases. Sales increases, keeping pace with inflation, were evident in our continued high collection rates of 98% for the quarter. These metrics support our underlying asset values, where net fair value gains are relatively flat on a year-to-date basis, reflecting the impact of compounding rent growth through the indexation-linked leases, which is 93% of our leases, by the way, offsetting pressure on increasing yields, topped out due to a higher interest rate environment. The net effect of these strong KPIs is that like-for-like net rental income grew 7% in the third quarter in comparable FX.
As previously noted, in the first three quarters of this year, there has been adverse volatility of currencies, specifically the NOK and the SEK, which were at nearly 20-year lows. Each quarter, we translate these currencies back to the euro for reporting purposes, with more details on the impact of currency included in our report. However, I should mention that these currencies began to strengthen in Q3, which, if that trend continues, should provide tailwinds to our operations. There are several factors that continue to drive these results: our terrific assets, our strong local teams, the strength of our markets throughout the Nordics, and continued strength of consumers, as evidenced by high level of foot traffic in our assets and the corresponding sales increases reported by our tenants.
This is due in part to our business model, which focuses on necessity-based retail and essential services, addressing the everyday needs of our communities. This type of retail promotes daily traffic to our properties, which is enhanced by locations that are in central urban areas adjacent to public, rail, and bus transportation hubs. Another driver of the consumer strength phenomenon is the average wage growth of 5.5% that has occurred in our markets due to inflation. As is typical in an inflationary environment, price increases work through the entire chain, from wages to cost of goods and services, to higher sales, and ultimately, for Citycon, higher rents.
As noted in the last quarter, we've refinanced and expanded our credit facility in April from EUR 500 million-EUR 650 million, consisting of a EUR 400 million revolver and a EUR 250 million term loan. Following this refinancing, our team has continued their disciplined capital allocation by using the proceeds to execute EUR 236 million bond repurchases for our bonds maturing in the near future, taking advantage of discounts and dislocation in secondary trading. Furthermore, we're currently in advanced negotiations for approximately EUR 90 million, a EUR 90 million mortgage loan secured by one of our Swedish assets, providing evidence that the secured loan market is functioning well. This loan is expected to close Q4 of this year.
Through these actions, we continue to mitigate the earnings impact of higher current market interest rates while also improving our overall balance sheet. We are also seeing some green shoots in the bond market, which should give us further flexibility moving into 2024. In addition to the new credit facility and term loan, we have disposed of approximately EUR 265 million of non-core assets at book value over the last 24 months, including EUR 120 million in December, which is part of our EUR 500 million asset sale target. We have signed NDAs on assets totaling EUR 350 million and believe we can sell between EUR 500 million-EUR 700 million of assets by year-end 2024.
As mentioned, the tenant mix of Citycon's assets, which consist of municipal and grocery tenants, anchored by public transportation with indexation-linked leases, set to support from our peer group. This strategy has demonstrated a strength and resilience through a variety of market conditions. The reopening of Myyrmanni Center this week is our most recent example of our commitment to this strategy. We further improved the tenant mix to increase the share of necessity-based tenants by opening a new Lidl and a 7,300 square meter Prisma hypermarket, resulting in groceries now representing over 60% of the GLA of this asset. This is consistent with what we've achieved in our properties across the portfolio. These actions not only provide stability to revenue growth, it has the added benefit of improving the average credit profile of our tenant base.
These asset management decisions remain aligned with, but separate from, the zoning work we're doing to achieve substantial additional building rights across the portfolio. Our business is quite simple. We own quality real estate, provide the goods and services required by our customers, and provide an environment that is convenient to access. When you layer in the dramatic impact of compounding rent growth, you have the recipe for success. The bottom line is that our business fundamentals remain strong, and our assets continue to perform very well. There is a scarcity of the type of high-quality retail assets we own. We have a proven business model and all of the important metrics, sales, footfalls, rents, occupancy, collections, continue to show sustained growth. For all of these reasons, we remain bullish on the prospects of the business moving forward.
I'll now turn it over to Bret to discuss the financial results for the quarter.
Thanks, Scott, and good morning, everyone. While we continue to experience headwinds from weaker NOK and SEK currencies, as Scott mentioned, the underlying performance of our assets in the third quarter remained very strong, with like-for-like NRI up 7% over Q3, 2022. Looking to the details of our direct EPRA results for the quarter on slide eight, in constant currency, standing net rental income growth increased 4.9%. Our standing portfolio excludes dispositions and includes Lippulaiva and Torvbyen. Lippulaiva is our new state-of-the-art grocery anchored asset in Espoo, Finland. The asset and area continue to grow with the recent addition of the metro and our new residential buildings, and will provide increasing NRI as it stabilizes over the next few years. Torvbyen, you recall, is the Norwegian asset we closed due to structural issues at the end of the first quarter.
In constant currency, standing direct operating profit increased 8.1%, primarily on the strength of G&A, improving nearly 13% versus Q3 2022, mainly due to lower personnel costs. Standing EPRA EPS was up 11.6% in the third quarter versus the same time last year, driven by an improvement in direct share of JV results and direct current taxes, partially offset by increases in direct net financial expenses, which rose due to increases in floating interest rates. Standing adjusted EPRA EPS was up 19.1% in Q3 2023, versus Q2 2022, a result of approximately EUR 500,000 in interest savings from our hybrid bond repurchases. During the quarter, our two largest markets, Norway and Finland, continued to lead the way in terms of like-for-like NRI growth due to increases in occupancy and increased rents.
Sweden continued to lag the portfolio, but remains a relatively small portion of our total asset base. Moving to the year-to-date standing results on slide nine, the story is generally the same as the second quarter, as the third quarter, with a few exceptions. In constant currency, standing net rental income growth increased 5.3% for the standing portfolio, and like-for-like growth in the quarter was up 6.9% over the same period last year. As we discussed last quarter, excluding the one-time benefits we received in Q2, 2022, which skewed 2022 year-to-date figures higher, true like-for-like growth would have been 7.6% year to date.
In constant currency, standing direct operating profit increased 5.6% year to date, as improvements in direct other operating income from lease termination compensations offset EUR 1.4 million in higher admin costs, resulting mainly from higher IT depreciations and higher 2022 bonus payments that accrued, which we've discussed in previous quarters. Year to date, standing EPRA EPS in constant currency increased by 3.3% over the same period last year, with EUR 3.4 million of increases in direct net financing expense having a negative impact on this line item. The main reason for the increase in that is that in 2022, we had lower capitalized expenses as Lippulaiva was still being categorized as a construction project earlier in that year.
However, we did see a marked improvement in standing adjusted EPRA EPS, which was up 6.6% year-to-date, and benefited from our active Hybrid Bond repurchases and the correlating decrease in hybrid interest expense. In addition to providing our normal NRI and EPRA earnings bridges, we wanted to include some additional detail and transparency on the individual and cumulative effect of the three major items that impacted our third quarter and year-to-date results: FX, Torvbyen, and the one-time benefits received in Q2 2022. The impact of these items are highlighted on slide 10. As you can see, FX had the largest impact on our standing results, costing us 585 basis points of growth in Q3 and 580 basis points year-to-date....
However, you can also see that the other two items are meaningful, with Torvbyen costing us 225 and 180 basis points in the quarter and year to date, respectively. In addition, the one-time benefits mentioned in Q2 2022, primarily in Norway, had no impact on the third quarter, but still did impact year-to-date results by an additional 50 basis points. Excluding these items, standing NRI growth, which includes all our existing assets, regardless of development or redevelopment status, was 7.1% and 7.6% for the quarter and half year, respectively.
On slides 11 and 12, we've provided detailed bridges for both total NRI and EPRA earnings, and while I have already described many of the main drivers of change relative to 2022, in addition to divestments, FX clearly had the largest impact, costing us approximately EUR 8.8 million and EUR 6.1 million in year-to-date NRI and EPRA earnings, respectively, compared to the same period last year. Year-to-date, net fair value changes are effectively flat, down EUR 5.7 million or 0.1%, reflecting the stability of our grocery-anchored portfolio. The year-to-date figure is a result of a 10 basis points increase in yields in Q3 2023, where we went from 5.6%, up from 5.5% on average.
Primarily, that was occurring in Sweden and Finland, and that was offset by cash flow improvements from increased rent via indexation during the first half of the year. These changes to fair value improvements were offset by continued NOK and SEK weakness, resulting in an EPRA NRV per share of EUR 10.43 in the third quarter, versus what we saw in the last year of EUR 10.71. EPRA NRV per share would have been EUR 10.78 in constant currency. We did see an improvement in both the NOK and SEK between the second and third quarter of this year, which translated to gains that helped offset some of the impact of yield increases on LTV, EPRA NRV per share, and IFRS equity. That said, and observed on Slide 14, both currencies still remain well behind where they ended in 2022.
If FX rates from year-end 2022 are applied to these metrics, we would have seen an increase in equity of EUR 50.2 million, an LTV of 43.2%, and an EPRA NRV per share of 10.78, as I mentioned. If year-end 2021 rates are applied, we would see an increase in equity of EUR 102.7 million, an LTV of 41.7%, and an EPRA NRV per share of 11.14. Turning to liability management, and as highlighted on Slide 15, we completed the refinancing and extension of our EUR 650 million credit facility in the second quarter, which increased our liquidity and improved our maturity profile significantly.
We continued to execute on our refinancing plan and expect to close soon on a new EUR 90 million mortgage loan secured by one of our Swedish assets, the proceeds of which will be used to repay our upcoming NOK 800 million maturity. This will improve our maturity profile as the new loan carries a seven year term while remaining pre-payable at our option. This is the second secured loan we've done this year, including the EUR 250 million term loan that was a part of our credit facility refinancing. We continue to demonstrate that the secured lending market is functioning well for the types of high-quality retail assets Citycon owns and remains a viable lever for us to utilize as part of our liability management program.
The continued success of this liability management program underlines the strength, liquidity, and flexibility of our balance sheet, as noted on Slide 16. Assuming the paydown of our 800 million NOK bonds at the end of the month, we have no maturities until October 2024, total available liquidity of EUR 442 million, and approximately 85% of our assets remain unencumbered. All debt maturities through 2024 are covered, and we have improved our well-laddered maturity schedule with the RCF term loan and the new Swedish secured mortgage. I would also point out that both the RCF and the term loan have a one-year extension option to 2027, further solidifying that maturity schedule. We remain investment grade with S&P, and they reaffirmed our BBB-minus stable outlook in the second quarter. As noted on Slide 17, our credit metrics remain stable.
Our weighted average interest rate is 2.46%, and as mentioned, FX impacted IFRS LTV in the quarter. Excluding the impact of currency changes, our LTV would have been lower by approximately 70 basis points. Assuming similar exchange rates to year-end 2021, our LTV would have been 41.7%. Moving to our guidance on Slide 18. We are maintaining the same full-year negative currency adjustments we introduced last quarter, which account for our expectations on the impact of weaker FX rates on performance. We continue to forecast that these full-year negative impacts to direct operating profit, EPRA EPS, and adjusted EPRA EPS will be EUR 10 million, EUR 0.08, and EUR 0.08, respectively.
That said, given that we are now in November, we also have narrowed our prior guidance on all three metrics, the result being that our revised midpoints are in line with full-year consensus estimates. The revised full-year ranges with year-end 2022 FX rates are now direct operating profit of EUR 174 million-EUR 182 million, EPRA EPS of EUR 0.69-EUR 0.78 , and adjusted EPRA EPS of EUR 0.51-EUR 0.60 . Applying the full-year negative FX impact to those ranges, which we anticipate at this point in the year, would result in the following effective guidance ranges: Direct operating profit of EUR 164 million-EUR 172 million, EPRA EPS of 0.61-0.70 and adjusted EPRA EPS of 0.43-0.52 . That concludes our prepared remarks, and we are now happy to take your questions.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. The next question comes from Ventsislav Iliev from Kempen & Co. Please go ahead.
Hi, good morning. Thank you for the presentation. Two questions. First one on the disposals. It's quite positive to hear that you're in talks for disposals worth EUR 350 million. Could you indicate at what levels, book levels, those discussions are, or perhaps at what levels you would be willing to sell?
Sure. This is Scott. I would say at this point, our pricing expectations would be that we would be close to book. There may be a slight discount, but it would be not significant.
Okay, thank you. And then second question on the average cost of debt at the period end. In Q2, you reported 2.8. Now, I see that it has come down to roughly 2.5. But then if you look at the year-to-date weighted average, then it's going up. So just curious, what's where the discrepancy comes from and also why or, or how it came the period end one came down in Q3?
Sure. So thanks for the question. It was a result of we actually did a swap, a SEK swap, where we effectively extended and took a gain on our currency swap on a exchange with the 2026 notes in SEK, applied that gain to lower our premium on a new swap to 2028, which we extended, and that effectively increases our interest income or decreases our interest expense. So that's why you have the lower effective interest expense that we've reported.
Okay, clear. That's it from my side.
Thanks.
Thank you.
Thank you for the question.
As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Okay, so I think it's time to close the call today. We thank everyone for attending and, Ventsislav, for your questions. It goes without saying that if you have any more questions, please do reach out to us. We're always happy to talk more about our results. So thank you for now, and wishing you all a great day.
Thanks, everyone.