Slide 1: 2013 full-year results
2013 full-year results Thursday, February 13, 2014
Slide 2: Preliminary notice
Preliminary notice The 2013 full-year consolidated financial statements were approved by the Board of Directors at its meeting of February 12, 2014. Audit procedures have been conducted by the statutory auditors. Finalization of the statutory auditors’ report on the consolidated financial statements
Slide 3: Introduction
A mercialys & L'Esprit Voisin. 0) A g Introduction
Slide 4: Shopping center real estate faced a complex economic climate in 2013
Real estate companies specializing in shopping centers were subject to a complex economic climate in 2013 Flat GDP growth* in Unemployment rate** France 10.5%*** +0.1% Slightly positive purchasing power +0.5% Decline in shopping Retailers’ sales down center footfall overall in the sector 2013 full-y
Slide 5: Mercialys has demonstrated the relevance of its business model
Against this backdrop, Mercialys has once again demonstrated the relevance of its business model... Mercialys’ shopping centers have outperformed the market Cumulative footfall to end- Cumulative sales to end-December 2013 December 2013 CNCC Neighborhood Mercialys* CNCC Mercialys* shopping centers A
Slide 6: Ability to attract new retailers and concepts
... and its ability to attract new retailers and new concepts to its portfolio Have chosen our Developing their shopping centers new concept at to set up their our shopping first store in the centers city Mango plus-size concept store 250 m² flagship store HAMMERSMITH 2013 full-year results Joining
Slide 7: Strong organic growth exceeding targets
Mercialys achieved another year of strong organic growth and exceeded its targets... Organic growth in invoiced rents +3.7% o/w 1.7pts Compared with a excluding target of growth of indexation +1.5 pts Lease portfolio activity Specialty leasing* Relets +35%** +16% vs 2012 like-for-like*** Euro 5.0m R
Slide 8: Growth momentum and preserved operational margins
... while maintaining a growth momentum and preserving operational margins Growth in funds from operations (FFO)*** Restated** EBITDA*/rental income ratio adjusted for the effects of 2012 and 2013 asset sales 85% +4% Above the target set at the start of the year of 84% 2013 full-year results (*) EBI
Slide 9: Reinforcing the overall approach of our sites
Reinforcing the overall approach of our sites will allow for greater opportunities for value creation A 360°view of the site as a whole to make our shopping A global approach centers more attractive and maximize value created Concept L’Esprit Voisin A value-creating Customers partnership with our “L
Slide 10: 2013 full-year results
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Slide 11: Organic growth remains a powerful driving force
Organic growth remains a powerful driving force for Mercialys, which has exceeded its initial target Euro Rental revenues: -6.7% Euro 159.7m 149.0m Lease Organic growth rights Euro -16.0m +3.7%** Euro 7.8m Lease Euro +2.5m rights: Euro 6.0m Euro +3.1m Euro +2.0m Euro -0.5m Increase in rents like-for
Slide 12: Management indicators remain relatively stable
Management indicators remain relatively stable at low levels Recovery rate* still at a high 97.7% 97.6% 97.6% stable level 12/31/12 06/30/13 12/31/13 2.6% 2.6% Recurring vacancy rate stable at 2.4% stable a low level 12/31/12 06/30/13 12/31/13 9.9% 10.1% 10.3% Limited occupancy cost ratio** 2013 ful
Slide 13: Rents and charges a limited weighting in retailers' P&Ls
Rents + charges continue to represent a limited weighting in our retailers’ P&Ls Average gross rental value still well below the benchmark: Euro 242 per m² Competitive level of charges 242 230 203 213 IPD benchmark Euro per m² Euro 319 per m²* 185 174 162 147 136 2013 full-year results 12/31/05 12/3
Slide 14: Plan of asset sales finalized
Plan of asset sales launched in 2012 has been finalized 2007 Asset portfolio 12/31/13 Euro 232m** of asset sales 61 shopping centers carried out in Other Other 2013 10%* 3%* Neighborhood Neighborhood shopping centers shopping centers 28%* 23%* 42 assets sold in 2012/2013 a refocused portfolio Sale p
Slide 15: Strengthened financial structure and debt refinancing
Mercialys has strengthened its financial structure by repaying debt of Euro 250m and refinancing its revolving credit facility Debt drawn Euro 750m Net debt Euro 742m Lower average cost of debt Debt ratios allow for a high level of flexibility 3.9% 3.7% 3.6%**** S1 2012 2012 2013 LTV* ICR** ... and
Slide 16: Overhead costs reduced by 4%
Overhead costs reduced by 4% The reduction in overhead costs allows for targeted reinvestment in order to make our shopping centers more attractive 12/12 pro 12/13 % chg. Change forma* In millions of euros Net rental income 150.7 139.4 -7.5% Net operating expenses -12.9 -12.4 -4.4% -0.6 Communicatio
Slide 17: High margin to EBITDA ratio maintained
Attention paid to expenses has enabled us to maintain a high margin to EBITDA ratio EBITDA* EBITDA adjusted for income realized on the sale of the Bordeaux-Pessac extension** 146.9 136.6 129.5 126.5 In millions of euros -11.9% -7.4% 2012 2013 2012 2013 Adj. EBITDA** / rental income 86% 85% 2013 full
Slide 18: FFO increased by 4% excluding asset sales
Excluding the impact of assets sold in 2012 and 2013, FFO increased by 4% Reported Adjustment Adjustment of Funds from funds from of net rental net rental operations (FFO) operations income / income / adjusted for (FFO)* assets sold assets sold in impact of in 2012 2013 2012/2013 asset sales 108.7 -
Slide 19: Asset value increased by 3.6% like-for-like
The value of assets increased by +3.6% like-for-like, driven by organic growth in rental income Average appraisal yields remain stable Appraisal value of portfolio, including transfer taxes* 2,561.1 Growth over 12 months Euro -181m Change in scope of 2,464.9 consolidation In millions of euros Acqu./
Slide 20: All-in yield as a percentage of NAV of 8.5%
All-in yield as a percentage of NAV of 8.5% NAV per share incl. transfer Liquidation NAV per share excl. transfer taxes (euros) taxes (euros) 18.94 19.04 17.47 17.64 +0.5% +1.0% 12/31/12 12/31/13 12/31/12 12/31/13 2013 full-year results Euro 1.31 per share Dividends paid over year 2013 equal to an a
Slide 21: 2013 dividend
2013 dividend Mercialys will propose to the general shareholders’ meeting the payment of a dividend of Euro 1.16 per share*, including the interim dividend paid in June 2013 of Euro 0.34 per share Payment of the final dividend, Dividends paid representing Euro 0.82 per (euros per share) share on May
Slide 22: Strategic approach stepped up
Strategic approach stepped up
Slide 23: Years of a winning strategy centered around proximity and value creation
8 years of a winning strategy centered around proximity and value creation Customer-focused positioning centered around local presence: L’Esprit Voisin concept A dynamic value-creating approach at our sites Extraction of the portfolio’s “inherited” organic growth Extension/redevelopment of sites and
Slide 24: Entering a new strategic phase with solid fundamentals
Mercialys entering a new strategic phase with solid fundamentals A portfolio refocused on assets consistent with the “Foncière Commerçante” strategy A strong and unique positioning: L’Esprit Voisin Assets with value creation potential both in terms of architectural redevelopment and commercial power
Slide 25: Our beliefs
Our beliefs We believe into local roots; The strength of customer-oriented shopping centers in connection with their environment and respectful of their tenants; The possibility of conducting in medium-sized cities of France a development policy, value creating-oriented, thanks to an approach both d
Slide 26: Our vision
Our vision Make our sites global and unique retail venues by capitalizing on our strengths and our partners, primarily the Casino Group 2013 full-year results 26
Slide 27: A 360° view of the site as a whole
A 360°view of the site as a whole … A global approach Concept L’Esprit Voisin Customers Developing ways “La Foncière of creating Commerçante” different and complementary Multi-channel forms of retail 2013 full-year results Merchandising / competition 27
Slide 28: To develop potential on the scale of the site
… to develop potential on the scale of the site … Merchandising A global approach Customers Multi-channel Concept / competition Treat the site as a whole in collaboration with our partners: hypermarket, shopping mall, car parks, neighboring land, external offering located within the commercial area
Slide 29: Putting the client at the center of the evolution
… and put the client at the center of the evolution of our shopping centers and their offering Merchandising A global approach Customers Multi-channel Concept / competition Develop a multi-criteria approach based on studies conducted locally on clients, positioning, competition and demographic trend
Slide 30: A multi-channel strategy to boost footfall
A multi-channel strategy to boost footfall and create a more unique offering Qualified local Internet- databases connected Impossible d’afficher l’image. Impossible d’afficher l’image. points Physical Impossible d’afficher l’image. marketplace & differentiating immediate availability Click & Collect
Slide 31: 2014 activity
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Slide 32: 2014 actions inspired by the evolution of the strategy
2014 actions will be inspired by the evolution of the strategy Growth: keep on extracting reversionary potential and developing our shopping centers; Attractiveness: develop new form of retail and enhance offering; Differentiation: thanks to our positioning centered around local presence and our pri
Slide 33: L'Esprit Voisin concept will boost portfolio growth in 2014
In 2014, the L’Esprit Voisin concept will boost portfolio growth and make shopping centers more attractive 10 projects currently under development due to be completed in 2014 2013 full-year results Euro 8.1m in additional rental income*- 26,100 m² of newly created or redeveloped space (*) Annualized
Slide 34: Projects developed in 2014 reinforce local positioning
Projects developed in 2014 will reinforce the offering and the local positioning of shopping centers Besançon reinforces its leading position as a Regional centre with Nîmes strengthens its offer with the a third extension restructuring of a mid-size store into 4 new shops and welcome Mango on 1,000
Slide 35: Secured pipeline feeds future growth
Furthermore, a secured pipeline feeds future growth and enhances shopping centers marketability 10 projects for 2014* and 8 projects under review** to be developed by Other projects in the Casino pipeline** Mercialys Euro 144m Euro 379m Projects that may be included in the Completions between Q2 201
Slide 36: Specialty Leasing takes a new dimension in 2014
Specialty Leasing takes a new dimension in 2014 and complements the offering of our shopping centers A practice developed outside France: e.g. US and Australia 2013 full-year results 36
Slide 37: Specialty Leasing formats already developed
Specialty Leasing: an activity already developed under a number of different formats in our shopping centers… Concept stores Vending machines Roadshow events Posters and advertising Local retail 2013 full-year results Themed trade stalls 37
Slide 38: Important potential of growth in the mid-term
… and which could represent an important potential of growth in the mid-term future Generate additional footfall Provide customers with a unique offering that is updated regularly Increase revenues at all of our shopping centers: prospect of 8-10% of sales in the long term Create value without inves
Slide 39: Differentiation with preferred partner Cdiscount
Differentiation is also to ally with our preferred partner Cdiscount to enhance the customer experience,… • 10 million unique visitors per month • Around 850,000 fans on Facebook • Business volume incl. marketplace: Euro 1.6bn marketplace since 2011 • 2013 marketplace business volume: Euro 217 milli
Slide 40: Testing a unique multi-channel approach
…testing a unique multi-channel approach Objectives A real opportunity for the Sell products online on the Cdiscount portal entire shopping center: Offer internet users the ability to pay for products online and then collect them Show internet users what is on offer immediately from shopping center
Slide 41: Tailormade actions to sustain footfall
Lastly, it’s also imaginating tailormade actions to sustain footfall in shopping centers… To accompany tenants at each important milestone Main highlights in the year: Sales, Christmas, Back-to-school days… Main highlights in the shopping center life: Inauguration, re-opening of shops, … Election of
Slide 42: Innovative multi-channel tools for retailers
… thanks to a large range of innovative and multi-channel tools dedicated to servicing retailers Geomarketing studies of the catchment area to support the positioning and the communication strategy of the shopping center Hyper qualified and local databases 10,000 clients per centre A tool to manage
Slide 43: Outlook
mercialys & L'Esprit Voisin.
Slide 44: A real estate company thinking as a retailer
A real estate company thinking as a retailer A global approach Our objectives Make our shopping centers more marketable by Concept increasing the different types of complementary retail Customers Make our sites more attractive by developing a more customer-focused offering Support the activity of ou
Slide 45: A model tailored to the customer of today
A model tailored to the customer of today A global approach Customer-centric approach Coherent with changes Concept in consumer habits increasingly focusing on local presence Adopted by customers and retailers Customers Multi-channel 2013 full-year results Merchandising / competition 45
Slide 46: A model that creates value
A model that creates value A global approach A relevant, responsive and differentiating model Concept New sources of value creation: Transformation of unproductive space into retail space Customers Development of new retail concepts Additional income taken into account in appraisal values Multi-chan
Slide 47: A strategy driving growth in 2014
A strategy driving growth in 2014 Confident about the relevance of its strategy, Mercialys’ management team is maintaining its dual focus on growth and profitability in 2014 Organic growth • Stronger organic growth 2.0 points of growth in invoiced than in 2013 rents above indexation Funds from opera
Slide 48: Appendices
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Slide 49: L'Esprit Voisin development projects in 2014
L’Esprit Voisin development projects in 2014 Market value incl. Additional rental Project Size Description Start of works Opening date Letting rate* transfer income taxes Extension: Lanester 2,000 m² July 2013 April 2014 94% Euro 12m Euro 0.8m +10 shops, +1 mid-size store Albertville (RP) 2,200 m² E
Slide 50: Development projects: Albertville
Development projects due for completion in 2014 ALBERTVILLE 23,600 m² shopping center 33 shops - 3 mid-size stores Major retailers: Intersport, La Halle aux Chaussures Extension of existing retail park (+2,200 m²) and shopping mall (redevelopment of cafeteria) +5 mid-size stores and 12 shops Retail
Slide 51: Development projects: Lanester
Development projects due for completion in 2014 LANESTER 31,700 m² shopping center 64 shops - 1 mid-size store Major retailers: Sephora, Celio 2,000 m² shopping mall extension 10 new shops and 1 mid-size store Letting rate*: 94% Total additional net rental income**: Euro 0.8m per year Opening of ext
Slide 52: Development projects: Clermont-Ferrand
Development projects due for completion in 2014 CLERMONT-FERRAND 35,000 m² shopping center 52 shops - 2 mid-size stores Major retailers: H&M, Zara, Leroy Merlin 2,700 m² shopping mall extension 14 new shops and H&M extension Letting rate*: 59% Total additional net rental income**: Euro 1.0m per year
Slide 53: Development projects: Besançon
Development projects due for completion in 2014 BESANCON 58,200 m² shopping center 72 shops - 10 mid-size stores Major retailers: H&M, Boulanger, Leroy Merlin 2,100 m² shopping mall extension 14 new shops Letting rate*: 94% Total additional net rental income**: Euro 1.2m per year Opening of extensio
Slide 54: Development projects: Angers Espace Anjou
Development projects due for completion in 2014 ANGERS ESPACE ANJOU 37,200 m² shopping center 92 shops - 5 mid-size stores Major retailers: H&M, Zara, Sephora 5,000 m² extension of existing shopping mall (redevelopment of attached large specialty store) 16 new shops Letting rate*: 92% Total addition
Slide 55: Development projects: Annemasse
Development projects due for completion in 2014 ANNEMASSE 25,000 m² shopping center 37 shops - 3 mid-size stores Major retailers: Décathlon, FNAC, Boulanger Extension of Décathlon store Doubling the retailer’s selling space (+2,000 m²) Letting rate*: 100% Total additional net rental income**: Euro 0
Slide 56: Development projects: Saint Paul Savanna
Development projects due for completion in 2014 SAINT PAUL SAVANNA La Réunion Shopping mall of 14 shops with GLA of 834 m2 3 national retailers: Esprit, Alain Afflelou, La Croissanterie 1,604 m² shopping mall extension 9 new shops Letting rate*: 103% Total additional net rental income**: Euro 0.5m p
Slide 57: Development projects: Aix-en-Provence
Development projects due for completion in 2014 AIX-EN-PROVENCE 25,000 m² shopping center 37 shops Major retailers: Micromania, Camaïeu, Nocibé Project 50%-owned* 4,800 m² shopping mall extension in 2 phases and acquisition of 3 existing lots 28 new shops Letting rate**: 70% Total additional net ren
Slide 58: Development projects: Nimes
Development projects due for completion in 2014 NIMES 37,000 m² shopping center 65 shops Major retailers: H&M, Sephora, Bershka 2,360 m² shopping mall extension and redevelopment of shell of former Boulanger store 3 new shops and 1 Mango mid-size store Letting rate*: 89% Total additional net rental
Slide 59: Enhancing the value of the pipeline by stage of completion
Enhancing the value of the pipeline taking into account the stage of completion of each project Each stage of completion has its own probability The development pipeline as it currently stands contains projects with widely varying stages of completion and chances of going ahead The valuation method
Slide 60: FFO impacted by the effect of 2013 asset sales
Funds from operations (FFO) are impacted by the effect of 2012/2013 asset sales 12/12 12/13 Change pro forma* Net rental income 150.7 139.4 -7.5% Net operating expenses** -14.6 -13.8 Operating cash flow 136.0 125.6 -7.7% Union Investment partnership 10.3 3.4 In millions of euros Non-current -5.4 -2.
Slide 61: Stronger financial position and increased flexibility
Stronger financial position and increased flexibility A cautious debt structure Bank loans Debt drawn Euro 750m (February 2015) Net debt Euro 742m Euro 100m 13% Average maturity of loans drawn: Variable rate 4.7 years 33% Bonds Fixed rate (April 2019) Undrawn back-up credit line of 67% 87% Euro 650m
Slide 62: Income statement
Income statement In millions of euros Change 12/31/12* 12/31/13 13/12 Invoiced rents 151.9 143.0 -5.9% Lease rights 7.8 6.0 Rental revenues 159.7 149.0 -6.7% Non-recovered property taxes -0.0 -0.1 Non-recovered service charges -3.9 -4.2 Property operating expenses -5.1 -5.2 Net rental income 150.7 1
Slide 63: Number of shares
Number of shares 2011 2012 2013 Number of shares outstanding . As at January 1 92,000,788 92,022,826 92,022,826 . As at June 30 92,010,013 92,022,826 92,049,169 . As at 31 December 92,022,826 92,022,826 92,049,169 Average number of shares 92,011,241 92,022,826 92,038,313 outstanding Average number o
Slide 64: Condensed balance sheet
Condensed balance sheet In millions of euros Assets 12/31/11* 12/31/12* 12/31/13 Investment property 1,615.9 1,414.2 1,423.5 Financial assets 18.6 27.4 42.1 Other assets 0.8 1.4 2.1 Total non-current assets 1,635.3 1,443.0 1,467.7 Cash, cash equivalents and Casino current account 45.7 205.9 15.8 Tra
Slide 65: Portfolio valued at Euro 2,465 million including transfer taxes
Portfolio valued at Euro 2,465 million including transfer taxes Appraisal value Gross leasable Appraised net Number incl. TT at area at 12/31/13 rental income of 12/31/13* Type of property properties 12/31/13 In millions (in millions % m² % % of euros of euros) Large regional shopping centers 25 1,8
Slide 66: Partnership Agreement: capitalization rate grid for first half of 2014
Partnership Agreement: grid for the first half of 2014 remains unchanged relative to the second half of 2013 Grid of capitalization rates applicable to reiterations in the first half of 2014 within the framework of the current Partnership Agreement with Casino Shopping malls Retail parks City center