Mercialys Sa · EURONEXT:MERY
Mercialys Sa — H1 2014 Earnings Presentation
47 slides from Mercialys Sa's earnings presentation, Jul 23, 2014
Slide 1: First-half 2014 results
First-half 2014 results Mercredi 23 juillet 2014
Slide 2: Preliminary comments
Preliminary comments The 2014 first-half consolidated financial statements were approved by the Board of Directors at its meeting on July 22, 2014. A limited review of these financial statements was performed by the Statutory Auditors. Mercialys pre-empted the implementation of IFRS 10, 11 and 12 fo
Slide 3: Introduction
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Slide 4: First half of 2014 was significant in terms of development
First half of 2014 was significant in terms of development… Launch of the development of a regional shopping center in Toulouse Fenouillet Three projects were completed: Lanester, Albertville Retail Park and Aix en Provence 7 other projects are under works and will be completed in the second half Ac
Slide 5: Projects in line with our Global and unique retail venues strategy
Projects in line with our “Global and unique retail venues” strategy Widening offer Weight of mid-size stores increased Development of additional areas for Casual Leasing: 12,000 m2 available versus 4,000 m2 at December 31, 2013 Inclusion of Casual Leasing in projects aimed at developing new venues
Slide 6: Rental income on the rise boosted by robust organic growth
Rental income on the rise boosted by robust organic growth Organic growth +2.6% above indexation Rental income up +1.9% Rental income (in the first half) In millions of euros 81.0 79.2 76.7 78.1 72.4 S1 64.5 +1.9% H1 2014 results 2009 2010 2011 2012 2013 * 2014 (*) Adjusted data 6
Slide 7: After two years of exceptional asset sales, first half of 2014 recorded renewed growth
After two years of exceptional asset sales, the first half of 2014 recorded renewed growth Adjusted EBITDA* up +1.6% Funds from operations (FFO)** up +14.0% Including a non-recurring transaction*** that accounted for 8.6 percentage points 66.0 67.1 In millions of euros In millions of euros 57.7 +1.6
Slide 8: Business outlook is positive for our retailers
Business outlook is positive for our retailers… Positive footfall in Mercialys shopping centers Cumulative footfall +1.3% -0,2% -0.9% -1,7% 2013 H1 2014 Growth in sales posted by retailers in Mercialys shopping centers outpaced the market Cumulative sales of retailers +1.6% +0.7% +0.4% H1 2014 resul
Slide 9: Our operating indicators are good
… and our operating indicators are good Low recurring vacancy rate Recovery rate still at a high level 2.6% 2.6% 2.5% 97.6% 97.6% 97.6% 06/30/13 12/31/13 06/30/14 06/30/13 12/31/13 06/30/14 H1 2014 results 9
Slide 10: Robust rental business confirms shopping centers are ever more attractive
Robust rental business confirms that our shopping centers are ever more attractive New brands are joining our shopping centers Concept Kids Activity in lease portfolio 171 leases signed in H1 2014 +15%* Relets +29%** H1 2014 results Renewals +18%** (*) vs. first-half of 2013 (**) Average increase in
Slide 11: The value of assets increased by +4.7%
The value of assets increased by +4.7% thanks to organic growth and investments Portfolio appraisal value, including transfer taxes* 2,580 2,465 In millions of euros +4.7% (+3.3% like-for-like) 12/31/13 06/30/14 12/31/13 06/30/14 Decline in cap. rates: Average H1 2014 results cap.rate of appraisals
Slide 12: Interim dividend payment of Euro 0.36 per share
Interim dividend payment of Euro 0.36 per share At its meeting on July 22, 2014, the Board of Directors decided an interim dividend payment of Euro 0.36 per share Dividend paid in 2014 2013 dividend balance (May 9, 2014) 0.82 In euros per share 2014 interim dividend 0.36 (October 14, 2014) Total pai
Slide 13: Projects and Development
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Slide 14: Mercialys launches development of a regional shopping center in Toulouse
Mercialys launches the development of a regional shopping center in Toulouse… Toulouse Fenouillet, where the Group has operated since 1978, enjoys a strategic location, along a major and captive route, weak competition, as large shopping centers are concentrated in the southern half of the metropoli
Slide 15: Northern zone boasts significant upside potential
… in the northern zone that boasts significant upside potential 50% of population Toulouse Fenouillet North Population is growing twice as fast as in the southern zone Gramont Blagnac 1/3rd of retail business (*) Colomiers St Orens Grand Portet Val Tolosa Labège South 50% of population 2/3rds of ret
Slide 16: Project built around five major areas
A project aimed at developing our existing shopping center built around five major areas 1 4 2 3 5 Useful and essential 1 goods 3 Entertainment area 5 Retail Park project H1 2014 results currently studied Shopping center / Mass with a partner 2 Market 4 Retail Park 16
Slide 17: A project that will unfold in two phases
A project to transform and extend the site that will unfold in two phases.. Phase 1 Creation of a retail park of 9 medium-size stores with a GLA of 24,400 m2 . The opening of this retail park is scheduled in the the spring of 2015. Works have started. Phase 2 Complete redevelopment of the existing s
Slide 18: Project will become the main asset of the portfolio
When deployment phases are completed, this project will become the main asset of the portfolio…. Portfolio’s largest shopping center Final area: 70,000 m² Euro 13.5 million in rent, i.e. about 9% of Mercialys’ rents Investment: Estimated Market Value in Euro 180m the long term at Euro 240m IRR > 10%
Slide 19: Albertville enhances its retail offering
Albertville enhances its retail offering around its retail park Phase 1 Phase 2 Post-development project (phase 1) • 29 shops + 10 mid-sized stores • Annual rent: Euro 1.9m (+ 0.4m Euro) • Letting rate: 100%** • Market value*: Euro 38.8m X 3 since IPO • Area: 10,000 m² (+ 2,300 m²) H1 2014 results N
Slide 20: Lanester welcomes new brands in its extension
Lanester welcomes new brands in its extension of the shopping mall with 11 new stores Post-development project • 74 shops and 1 mid-size store • Annual rent: Euro 4.3m (+0.8m Euro) • Letting rate: 100%** • Market value*: Euro 87m X 4 since IPO • Area: 11,300 m2 (+2,000 m2) H1 2014 results New brands
Slide 21: Aix en Provence: completion of first phase of extension
Aix en Provence: completion of the first phase of the extension of the shopping mall Post-development project (phase 1)*** • 55 stores • Annual rent: Euro 1.2 million (+ 0.9m Euro) • Letting rate: 75%** • Market value*: Euro 19.7 million Euro +3m in creation of • Area: 25,400 m2 (+3,600 m2) value H1
Slide 22: Seven new projects to be completed in the second half
Seven new projects to be completed in the second half of 2014 Nîmes: 90%* Annemasse: 100%* Angers: 125%* November September November nearly 16,700 m2 created or restructured – Additional rents: Euro 5.6m November November November November H1 2014 results Besançon: 100%* St Paul Savanna: 105%* Clerm
Slide 23: Projects at the heart of the strategy aimed at value creation
Projects at the very heart of the strategy aimed at enhancing offering and extracting full potential in terms of value creation Rents (in millions of euros) In millions of euros 12 10 192 169 8 152 6 106 67 87 4 64 52 2 47 30 20 16 H1 2014 results 12 14 0 Angers Annemasse Albertville GM/RP Besançon
Slide 24: Launch of new transformation projects
Launch of 4 new transformation projects in order to enhance the offering of our sites Rennes St Etienne Monthieu Develop a new DIY extension and Strengthen the site with new flagship an extension on the surfaces of brands and develop an extension of the transferred mid-size store the shopping mall W
Slide 25: Development of Villages.Services and outside catering outlets
Development of Villages.Services© and of outside catering outlets We have launched our new Villages.Services© concept that aims to offer our customers a varied offering of services and outside catering, i.e. activities that have vanished from shopping centers for economic reasons The concept consist
Slide 26: First two Villages.Services to be opened in the fall: Clermont-Ferrand
First two Villages.Services© to be opened in the fall Clermont-Ferrand H1 2014 results 26
Slide 27: First two Villages.Services to be opened in the fall: Niort
First two Villages.Services© to be opened in the fall Niort H1 2014 results 27
Slide 28: Half year 2014 results
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Slide 29: Rental revenues back to a rising momentum
Rental revenues back to a rising momentum… Euro 76.7m Rental revenues: +1.9% Euro 78.1m Organic growth +3.0%** Lease rights Euro 2.1m Lease rights Euro 3.5m Euro +0.3m Euro -4.5m Euro +4.8m Euro +1.9m Strategic Euro +0.3m Increase in vacancy* Indexation invoiced rents + non-recurring like-for-like A
Slide 30: Like EBITDA related to recurring business
… like EBITDA related to recurring business 06/13 pro-forma 06/14 % chge. * Net rental income 71.6 73.8 +3.0% In millions of euros Operating expenses net of fees (5.6) (6.7) received* (a) Non-recurring income** (b) +2.2 - EBITDA (c) 68.2 67.1 -1.7% Adjusted EBITDA (c)-(b) 66.0 67.1 +1.6% Adjusted EB
Slide 31: Acquisitions financed by selling mature assets to Casino
Mercialys financed its acquisitions in the first half by selling mature assets to Casino Sale of 5 large food stores Euro 171m net 5 large food stores sale price acquired in 2009 Euro 9.4m in IRR annual rents Realized capital in Paris and Marseille 10.6% gains Euro 57m Sale of the 5.25% stake held i
Slide 32: Significant growth in Funds from operations (FFO)
Significant growth in Funds from operations (FFO) 06/13 Pro- 06/14 14/13 chg. forma* Non-recurring income Recurring income flattened out after dropping before depreciation, 68.3 67.8 -0.7% amortization sharply between 2012 and 2013 Non-recurring income (1.4) (0.3) Including the impact of the Net fin
Slide 33: Financial structure remains conservative
The financial structure remains conservative thanks to the funding of investments by the sale of mature assets • Investments disbursed in H1 2014 Euro 219m • Sales of mature assets (net proceeds) Euro (179m) • Net investments in H1 2014 Euro 40m Debt drawn : Euro 816m Net debt: Euro 819m Debt ratios
Slide 34: The value of the portfolio increased by +4.7%
The value of the porfolio increased by + 4.7% Breakdown of change in portfolio appraisal value, including transfer taxes* Euro +36m** Euro 2,580m Euro +40m Euro +39 m Euro 2,465m (In millions of euros) +4.7% (+3.3% on a like-for-like basis) Change in Decline in Growth in 12/31/2013 scope. average re
Slide 35: Net asset value up +2.6%
Net asset value up +2.6 % over 6 months NAV per share Liquidation NAV incl. transfer taxes (euros) excl. transfer taxes per share (euros) 18.94 19.04 19.53 17.47 17.64 17.91 +2.6% +1.5 % 12/31/12 12/31/13 06/30/14 12/31/12 12/31/13 06/30/14 H1 2014 results 35
Slide 36: Outlook
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Slide 37: First-half results demonstrate pertinence of our strategy
First-half results demonstrate the pertinence of our “global and unique retail venues” strategy Our shopping centers continue to attract new brands Footfall is rising in our shopping centers and is higher than market benchmark Tenants’ sales are growing faster than for the market Mercialys is mainta
Slide 38: The transformation of our portfolio is under way
The transformation of our portfolio is under way Enhancement of offerings in our sites thanks to redevelopment and extension projects Widening of ways of doing business with a new business model and new forms of retail Development of Casual Leasing Creation of Villages.Services© Development of outsi
Slide 39: Our investments create value
Our investments create value Sustained investment pace: Nearly Euro 220m in investments to date, i.e. net of sales of mature assets, Euro 40 million Noteworthy flexibility Low debt ratio Substantial liquidity Development projects launched with target internal rates of return of more than 8%-10% Proj
Slide 40: Strategy fuels 2014 growth and Euro 100 million cash flow threshold
Strategy fuels 2014 growth and will enable the Group to pass the Euro 100 million threshold in cash flows at 2014 year-end 2014 is the year of a return to growth in the portfolio and in cash flows, boosted by a proactive policy of investment and development of shopping centers We are maintaining our
Slide 41: Appendices
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Slide 42: Income statement
Income statement In millions of euros % 14/13 06/30/13* 06/30/14 chge. Invoiced rents 73.2 76.0 3.9% Lease rights 3.5 2.1 Rental revenues 76.7 78.1 1.9% Non-recovered property tax (0.1) - Non-recovered service charges (1.8) (2.1) Property operating expenses (3.2) (2.3) Net rental income 71.6 73.8 3.
Slide 43: Number of shares
Number of shares 2012 2013 06/30/14 Number of shares outstanding . As at January 1 92,022,826 92,022,826 92,049,169 . As at June 30 92,022,826 92,049,169 92,049,169 . As at December 31 92,022,826 92,049,169 Average number of shares 92,022,826 92,038,313 92,049,169 outstanding Average number of share
Slide 44: Breakdown of capital
Breakdown of capital At December 31, 2013 At June 30, 2014 Company savings plan & Company savings plan & Treasury shares: 0.48% Treasury shares: 0.41% Free float: Casino (*) Free float: Casino (**) 51.35% 40.16% 51.41% 40.16% Generali Generali 8.01% H1 2014 results 8.01% (*) besides 3% of economic e
Slide 45: Condensed balance sheet
Condensed balance sheet In millions of euros Assets 12/31/12* 12/31/13 06/30/14 Investment property 1,414.2 1,423.5 1,524.7 Financial assets 27.4 42.1 54.1 Other assets 1.4 2.1 3.2 Total non-current assets 1,443.0 1,467.7 1,582.0 Cash and Casino current accounts 205.9 15.8 6.6 Trade and other receiv
Slide 46: Portfolio valued at Euro 2,579.6 million, including transfer taxes
Portfolio valued at Euro 2,579.6 million, including transfer taxes (As at 06/30/2014) Appraisal value Gross leasable Appraised net Number incl. TT* area rental income Type of property of assets In millions In millions % m² % % of euros of euros Large regional shopping centers 25 1,976.9 77% 454,500
Slide 47: Partnership Agreement: revised grid for second half of 2014
Partnership Agreement: grid for the second half of 2014 has been revised in comparison with the first half of 2014 Grid of capitalization rates applicable to reiterations in the second half of 2014 under the current Partnership Agreement with Casino Shopping malls Retail Parks City center Mainland C