Slide 1: 2007 annual results
2007 annual results February 21, 2008
Slide 2: Speakers
Speakers Jacques Ehrmann, Chairman and Chief Executive Officer Géry Robert-Ambroix, Chief Operating Officer Yves Cadelano, Executive Vice President 2007 annual results 2
Slide 3: Contents
Contents Page Overview of the year 4 Alcudia : projects now underway 10 2007 activity and results 17 Environment and outlook 35 2007 annual results 3
Slide 4: Overview of the year
Overview of the year
Slide 5: 2007: an exceptional year in terms of growth
2007: an exceptional year in terms of growth Total revenue exceeds Euro 100 million Rental revenues Recurring Cash flow* operating cash flow ** +20.9% 99.5 +13.3% +19.7% 86.6 83.8 82.3 In millions of euros 76.4 97.7 70.1 80.7 Guidance x2 2006 2007 2006 2007 2006 2007 Rental revenues + invoiced fees
Slide 6: 2007: a major milestone in NAV growth
2007: a major milestone in NAV growth Mercialys has doubled in size in 2½ years Portfolio appraisal value, Replacement net asset value including transfer taxes (in euros per share) (in millions of euros) x2 since the +42%* 1,913.8 IPO +28%* 25.70 1,613.3 Growth in rents on a like-for-like basis * 23
Slide 7: A year of high yield external growth
A year of high yield external growth The first ever investment outside mainland France 9 Effectiveness of business model confirmed: Euro 183.5 m of acquisitions average yield remains high at 7% Euro 198.0 m of > Acquisitions negotiated privately: 3 shopping investments centers in Corsica, 5 in La Ré
Slide 8: Base strengthened in 2007 providing a springboard for 2008/2009
Base strengthened in 2007 providing a springboard for 2008/2009 Strengths of shopping centers: Strengths of Mercialys buoyancy and resilience 9 Dynamic activity 9 Strong organic growth > A buoyant retail sector > High reversionary potential > Work on merchandising > Experienced lease renewal and rel
Slide 9: Passing on our strong cash flow momentum to our shareholders
Passing on our strong cash flow momentum to our shareholders Dividend up 14.1% 9 2007: not a typical year in certain respects … > Timing of 2006 and 2007 acquisitions particularly favorable, having a significant impact on growth in rental revenue > High indexation effect > Cash position still positi
Slide 10: Alcudia program: first projects now launched
Alcudia program: first projects now launched
Slide 11: From strategic planning to rollout and implementation
From strategic planning to rollout and implementation Projects are now being rolled out for implementation as soon as 2008 80* Ö 100** Value-creating projects identified Rollout/project start and validated transversally by 10 projects to start in 2008 Mercialys/Casino 5 new extensions due to open in
Slide 12: L'Esprit Voisin
An associated marketing approach: definition of a common theme From proximity to Neighborhood Spirit Our strengths Consumer expectations 9 Human-scale centers in mid-sized 9 Welcoming, user-friendly towns Ö Excellent positioning 9 Time saving, effectiveness 9 Commitments to consumers, a 9 Simplicity
Slide 13: L'Esprit Voisin: living places with a strong personality
« L’Esprit Voisin » : living places with a strong personnality
Slide 14: Neighborhood Spirit
Differentiation of centers, massification of portfolio Quality-based actions across the entire portfolio A visual identity Neighborhood Spirit Large open gateways Tree-lined walkways Reception halls Architectural vocabulary Human scale Openness and light Sustainable development Local roots Architect
Slide 15: 2008: projects, administrative authorizations, theming
2008: projects, administrative authorizations, theming 3 major areas of action in 2008 Apply for the most Complete extension and Renovate and theme possible number of redevelopment work 10 centers, which will administrative on 10 centers not be redeveloped authorizations after the until 2011-2012 mu
Slide 16: 2008: towards operational rollout
2008: towards operational rollout An example: Valence Sud 2007 annual results 16
Slide 17: Activity and results for the year
Activity and results for the year
Slide 18: Shopping center performance is key to our growth
Shopping center performance is key to our growth Our business: retail 9 Household spending on Trends in retail sales manufactured products Large centers - year-on-year at end remained buoyant over 12 November 2007 months (+3.0%*) +9.8% 9 Our centers achieve above average growth 9 Our pro-active appr
Slide 19: Mission number 1 for the Shopping Center Manager
Mission number 1 for the Shopping Center Manager… Adventure The city of science Minstrels and baladins
Slide 20: Stimulate consumer traffic
…« stimulate consumer traffic » Christmas tree in Nimes Formula 1 Professional training
Slide 21: Organic growth fueled by our teams' dynamic approach
Organic growth fueled by our teams’ dynamic approach Strong growth in rental revenues Rental revenues 9 Brisk activity during the year: 184 lease renewed or relet In millions of euros > Rents +39%* on lease renewals +20.9% 99.5 > Rents +115%* on relets Organic growth** (like-for-like) 82.3 +9.3 poin
Slide 22: Growth also driven by acquisitions made in the year
Growth also driven by acquisitions made in the year Average yield more than 400 bp higher than the deflated 10-year OAT* yield 5 shopping malls in La Réunion (St Marie, St Benoit, St Euro 73.8m Pierre, Le Port Sacré Cœur, Savanna St Paul) 3 shopping malls (Béziers, Bordeaux Villenave d'Ornon, Euro 2
Slide 23: Acquisitions in La Réunion
> Acquisitions in La Réunion
Slide 24: Retail parc in Annecy Seynod
> Retail parc in Annecy Seynod
Slide 25: Sharp rise in various portfolio performance indicators
Sharp rise in various portfolio performance indicators 9 Activity during the year had a positive impact on average indicators > Occupancy cost: 8.1%* 8.1% 7.3% 7.4% 7.1% Boosted by: 12/31/05 12/31/06 06/30/07 12/31/07 • indexation • growth in rents due to portfolio improvements > Average gross renta
Slide 26: Strong revenue growth had a positive impact on the bottom line
Strong revenue growth had a positive impact on the bottom line Operating income up 23% Net income, Recurring Cash flow* Group share operating cash flow** In millions of euros +13.3% +19.7% +18.3% 86.6 83.8 76.4 71.5 70.1 60.5 69.7 +22.7% 56.8 2006 2007 2006 2007 2006 2007 * Cash flow (net income bef
Slide 27: Portfolio value has doubled since the IPO
Portfolio value has doubled since the IPO… Portfolio value up 42% over 1 year Portfolio appraisal value, x2 1,913.8 including transfer taxes* 1,613.3 In millions of euros 1,346.9 1,120.0 1,027.0 957.0 06/30/2005 12/31/2005 06/30/06 12/31/06 06/30/07 12/31/07 Average 7.3% 7.0% 6.6% 6.3% 5.8% 5.5% app
Slide 28: Transactions
2007 retail deal rates underpins expert appraisals Yields still above those achieved in market deals including 2007 second half Examples of yields on 2007 retail deals Regional centers and large Large centers and Value leading centers neighborhood centers added/Opportunistic Transactions 3,7% - 4,5%
Slide 29: 2007 transaction rates at a rational risk premium
2007 transaction rates at a rational risk premium … … even if Mercialys criterias in terms of yields are more stringent 9 Yields still 100 - 400 bp higher on average than the deflated OAT yieldwhere the risk of the activity is moderate and organic growth is steady Average capitalisation rates on 200
Slide 30: NAV up sharply
NAV up sharply… 28% growth over the year Replacement net asset value Components of change in NAV (Euro per share) December 2007 vs December 2006 Euro +467m 25.70 2007 cash flow: Euro +87m 23.04 20.08 17.93 New acquisitions: Euro +202m 17.07 15.62 Compression of yields: Euro +230m IPO 12/31/05 06/30/
Slide 31: Four drivers feeding future growth
… but still a static figure which does not reflect growth factors specific to Mercialys Four drivers feeding future growth wth A track record building up o External gr Casino sourcing: a major acquisitions acquisitions e ur strength External u t F Acquisitions Partnership Agreement from Casino Size
Slide 32: Development pipeline: strong competitive advantage for Mercialys
Development pipeline: strong competitive advantage for Mercialys New assets + Alcudia extensions = over 140 projects 9 Completions spread over the next 5 years 9 New, high quality projects like Besançon Châteaufarine (2008-2009), Valence Sud (2008-2009), Toulouse Muret « Porte des Pyrénées » (2012),
Slide 33: Partnership Agreement: 2008 yield set at 6.0% - 6.4%
Partnership Agreement: 2008 yield set at 6.0% - 6.4% Favorable compared with the market 9 5-year Partnership Agreement with Casino: > acquisition at an "attractive" yield determined at each year end for the following year, keeping the margin over market rates set in 2005; > shared risks: Casino bear
Slide 34: An increasingly selective approach to external acquisitions
An increasingly selective approach to external acquisitions Benefit from the size of our new development pipeline 9 A large pipeline of investments which avoids us having to bid competitively in too stretch open market deals for the benefit of our shareholders 9 Acquisition criteria unchanged > Reta
Slide 35: Environment and outlook
Environment and outlook
Slide 36: Some changes in the contractual or regulatory environment
Some changes in the contractual or regulatory environment A definite change: A possible change: The ILC* Commission Attali / Commercial town planning 9 50% IPC**, 25% ICAV***, 25% ICC**** 9 More relaxation than abrogation of new > Historical proforma evolution over 5 space autorizations years: an av
Slide 37: Mercialys business model and macroeconomic correlations
Mercialys business model and macroeconomic correlations Fundamentals similar to commerce ones Low sensitivity Sensitive Short term cycles of growth Long term cycles of consumption (buoyant for the last 20 years) Portfolio Short term interest rates Long term interest rates (down for the last
Slide 38: Mercialys: growth based on solid foundations
Mercialys : growth based on solid foundations 9 Index linked rents: protected basis 9 A growing company gathering 9 A strong and transparent financial technical skills specialised in structure commercial centers in an environment driven by 9 A track record : consumption and commerce > 3 years of goo
Slide 39: Which outlook for Mercialys?
Which outlook for Mercialys? 9 For 2008, Mercialys set a growth target of approximately +12% for rental revenues and recurring operating cash flow 9 We maintain our double-digit growth target for rental revenues and recurring operating cash flow for 2009 9 2010 and following years will be impacted b
Slide 40: Appendices
Appendices
Slide 41: Detailed income statement
Detailed income statement In millions of euros 12/31/05 12/31/06 2007 Change pro forma 2007/2006 Invoiced rents 71.8 80.7 97.7 +21.1% Lease rights 0.8 1.6 1.8 Rental revenue 72.7 82.3 99.5 +20.9% Non-recovered property taxes -0.1 -0.1 -0.3 Non-recovered service charges -1.1 -1.4 -1.7 Property operat
Slide 42: Condensed balance sheet
Condensed balance sheet Assets In millions of euros 12/31/06 12/31/07 Investment property 989.3 1,165.2 Financial assets 10.3 11.0 Other assets 0.0 1.0 Total fixed assets 999.6 1,177.1 Cash and Casino current account 128.4 70.7 Trade and other receivables 28.7 12.5 Total assets 1,156.8 1,260.3 Equit
Slide 43: Asset portfolio valued at Euro 1,914m including transfer taxes
Asset portfolio valued at Euro 1,914m including transfer taxes Portfolio value up 42% over 1 year Real estate Number of Appraisal value incl. Gross leasable area at Appraised net rents asset class assets at TT at 12/31/07 12/31/07 12/31/07 Euro m % m² % Euro m % Large shopping centers 29 1,179 62 31
Slide 44: Valuing the pipeline taking into account the stage of completion
Valuing the pipeline taking into account the stage of completion of each project Each stage of completion is worth its probability 9 The development pipeline as it currently stands contains projects with widely varying stages of completion and chances of going ahead 9 In the past, we valued projects
Slide 45: Casino pipeline of new developments and Alcudia extensions: more than 140 projects
Casino pipeline of new developments and Alcudia extensions: more than 140 projects Consistency of a probabilistic approach Changes due to local elections In millions of euros* Fine-tuning of analysis Breakdown in several phases of big Alcudia projects 815 -21 Natural volatility of a probabilistic -3