Slide 1: 2016 Half-Year Results
2016 HALF-YEAR RESULTS L JULY 28, 2016
Slide 2: Preliminary Remarks
PRELIMINARY REMARKS The consolidated financial statements for the 1st half of 2016 were approved by the Board of Directors on July 27, 2016 A limited review of these financial statements was performed by the Statutory Auditors - 2016 HALF-YEAR RESULTS – JULY 2016 2
Slide 3: Contents
CONTENTS 1 STRATEGY & KEY MESSAGES 4 2 ACTIVITY 12 3 OPENINGS & ASSET ROTATION 21 4 FINANCIAL STRUCTURE & RESULTS 31 5 DIVIDEND & 2016 OBJECTIVES 39 - 2016 HALF-YEAR RESULTS – JULY 2016 3
Slide 4: Strategy & Key Messages
1 STRATEGY & KEY MESSAGES Eric Le Gentil Chairman and CEO - 2016 HALF-YEAR RESULTS – JULY 2016 4
Slide 5: Underlying Consumer Trends as Systemic Growth Drivers
UNDERLYING CONSUMER TRENDS AS SYSTEMIC GROWTH DRIVERS Changes in consumption habits and demographic factors favoring convenience Fragmentation of shopping journeys driven by search for efficiency Preference for local “village-like” consumption behaviors favoring proximity - 2016 HALF-YEAR RESULTS –
Slide 6: Fragmentation of Shopping Journeys and Demographic Factors
FRAGMENTATION OF SHOPPING JOURNEYS AND DEMOGRAPHIC FACTORS BENEFITING CONVENIENCE CHANNELS… Breakdown of the population based on the Increase in number and smaller households(2) number of monthly shopping journeys (1) (as %) 3,5 27 534 3,0 24 332 16% 21 942 23% 2,5 19 589 17 745 2,0 43% 2,9 +7 pts 2
Slide 7: Increasingly Strong Trends for Recurrent Purchases
…AND INCREASINGLY STRONG TRENDS FOR RECURRENT PURCHASES 8% 20% Shopping visits are more Several times per week 52% of very Once per week regular visits regular 40% At least once per month 32% Less often Shopping visits are massively motivated by the mall only or Shopping center a mix with the hyperm
Slide 8: Efficiency Is Key: Shopping Visits Efficient and Price-Driven
EFFICIENCY IS KEY: SHOPPING VISITS ARE INCREASINGLY EFFICIENT AND PRICE-DRIVEN Shopping visit drivers Main reasons for visiting shopping malls (1) PRICE Prices are attractive 55% Convenient parking 52% Product availability 45% Store staff are welcoming 42% Convenience 41% EFFICIENCY Store staffs are
Slide 9: Shaping Convenience to Empower Clients
SHAPING CONVENIENCE TO EMPOWER CLIENTS 1. OFFER CLIENTS LOCAL CHOICES AND SERVICES Casual Leasing, Villages Services, relevant merchandizing mix (incl. physical services), click & collect 2. GIVE CLIENTS RECOGNITION Loyalty program, Facebook, digital client feedback, iconic brand ambassador 3. ASSIS
Slide 10: Dynamic Underlying Trend and Balanced Investment Strategy in H1 2016
DYNAMIC UNDERLYING TREND AND BALANCED INVESTMENT STRATEGY IN H1 2016 SOLID RENTAL GROWTH, with +2.9% organic excl. indexation Positive impact of acquisitions Strong organic growth generated Upside for 2017: project with immediate returns achieved mostly by relettings and completions in H2 2016 in 20
Slide 11: Key Figures
KEY FIGURES In millions of euros H1 2015 H1 2016 % change Invoiced rents 80.6 91.9 +14.0% Organic growth in invoiced rents excluding indexation +3.3% +2.9% Rental revenues 82.3 93.0 +13.1% FFO 56.8 58.7 +3.3% EPRA earnings 56.8 58.7 +3.3% LTV 39.2% 40.6% Average cost of drawn debt 2.1% 2.1% NNNAV /
Slide 12: Activity
2 ACTIVITY Vincent Ravat Executive Vice-President - 2016 HALF-YEAR RESULTS – JULY 2016 12
Slide 13: Robust Sustainable Organic Growth
ROBUST SUSTAINABLE ORGANIC GROWTH Renewals & relettings: +16.1% 5,0% 4,3% 3,7% 4,0% 3,5% 3,1% 2,9% 3,0% Casual 3,4% Leasing 2,8% 0.6% 2,8% 2,0% 2,3% 1,0% 1,7% Actions on the 0,0% portfolio 2012 2013 2014 2015 H1 2016 2.3% Organic growth in invoiced rents, excl. indexation Organic growth in invoiced
Slide 14: Positive Performance by Mercialys Assets Benefiting Tenants
POSITIVE PERFORMANCE BY MERCIALYS ASSETS BENEFITING TENANTS IN A CHALLENGING MARKET 2,5% +1.9% CUMULATIVE CHANGE IN FOOTFALL AT END-JUNE 2016* 2,0% 1,5% +1.2% 1,0% 0,5% 0,0% -0,5% -0.3% -1,0% -1,5% -1.0% 2015 June 2016 CNCC Mercialys CUMULATIVE CHANGE IN RETAILERS’ SALES AT END-MAY 2016* 5,0% +4.5%
Slide 15: Casual Leasing Continuing to Boost Organic Growth
CASUAL LEASING CONTINUING TO BOOST ORGANIC GROWTH Sustained rental growth, up +16.9% to €3.4m Casual Leasing now fully spread across the portfolio Further move upmarket and progress on national brands o New brands present in H1 2016: Coyote, Peter Polo, Go Sport, Boulangerie Paul, Texto, Beautybar O
Slide 16: Accelerated Deployment of Anchor Tenants
ACCELERATED DEPLOYMENT OF ANCHOR TENANTS, STRENGTHENING THE INTERNATIONAL FOCUS FOR MERCHANDIZING Mercialys moved forward with its strategy to roll out more medium-size stores across its portfolio in H1 2016 These units will provide additional rent and footfall, contributing to future reversion 10 d
Slide 17: Virtuous Journey of Convenience
VIRTUOUS JOURNEY OF CONVENIENCE AT HOME • E-commerce • Web to shop • Mobile application • E-offers • Traffic generation ON THE GO • Digital display • Website / mobile application • Loyalty program • Digital display / digital merchandising • Shop to web IN STORE • Beacon - 2016 HALF-YEAR RESULTS – JU
Slide 18: Unique Transversal Brand Ecosystem
UNIQUE TRANSVERSAL BRAND ECOSYSTEM Single check-in & unified database Products & promotions Personalized content Services Single ID to connect to WiFi, Clients benefit from a large Use client knowledge to target Provide a relevant answer to mobile application (2) and choice of offers with click & pr
Slide 19: Reinforcing Loyalty Through Our Local Footprint
REINFORCING LOYALTY THROUGH OUR LOCAL FOOTPRINT Targets • Create, for each center, a loyal VIP shopper community who will promote the center and the brand • Enrich customer knowledge 9 malls enrolled Key principles 330 shops participating • Dematerialized program on La Galerie mobile application rew
Slide 20: Fully Operational Platform by Year-End
FULLY OPERATIONAL PLATFORM BY YEAR-END Push “Personalized offers”. Personalized Loyalty content. Personalization Push Push “Facebook” “Practical info” with push to stay in itinerary, opening touch. hours, etc. Participation Facility • Launched in 31 malls • Deployed in 52 malls • New features availa
Slide 21: Projects & Asset Rotation
3 PROJECTS & ASSET ROTATION Vincent Rebillard Chief Operating Officer - 2016 HALF-YEAR RESULTS – JULY 2016 21
Slide 22: Opening of Extensions and Sainte-Marie Retail Park in H2 2016
OPENING OF SHOPPING CENTER EXTENSIONS AND THE SAINTE-MARIE RETAIL PARK IN H2 2016 €3.0m of annualized rent Overall yield on cost of 10.8% Aix-en-Provence Angers Anglet Opening in Opening in Opening in September December September Main brands: Main brand: Main brand: Calliope & H&M Boulanger Terranov
Slide 23: Toulouse Espace Fenouillet: Opening Imminent
TOULOUSE ESPACE FENOUILLET: OPENING IMMINENT! Opening scheduled for November 8, 2016* - letting almost fully completed (95% to date) * Mercialys holds a fair value call option for this project that can be exercised at the - 2016 HALF-YEAR RESULTS – JULY 2016 23 opening at the latest
Slide 24: Toulouse Espace Fenouillet: Opening Imminent
TOULOUSE ESPACE FENOUILLET: OPENING IMMINENT! - 2016 HALF-YEAR RESULTS – JULY 2016 24
Slide 25: Progress on Mixed-Use Projects Bought in 2015
PROGRESS ON MIXED-USE PROJECTS BOUGHT IN 2015 Asnières-sur-Seine project Chaville project Advanced Planning discussions held permissions Architects selected Projects finalized with local elaborated from H2 representatives 2016 Marcq-en-Baroeul project - 2016 HALF-YEAR RESULTS – JULY 2016 These proje
Slide 26: Progress on Mixed-Use Projects Bought in 2015
PROGRESS ON MIXED-USE PROJECTS BOUGHT IN 2015 Asnières-sur-Seine Chaville Puteaux Extension of the Monoprix sales area Construction of ~90 housing units Construction of ~130 housing units Construction of ~100 housing units Extension of the retail space Extension of the Monoprix sales area (construct
Slide 27: Further Development of Mixed-Use Projects on High Street Retail Sites
FURTHER DEVELOPMENT OF MIXED-USE PROJECTS ON HIGH STREET RETAIL SITES Acquisition of 2 sites for transformation for €69.6m incl. transfer taxes and an immediate yield of 5.6% €30m investment as part of mixed-use projects, for an IRR of ~9% (*) Construction of ~30 housing units SAINT-GERMAIN-EN-LAYE
Slide 28: Further Development of Mixed-Use Projects on High Street Retail Sites
FURTHER DEVELOPMENT OF MIXED-USE PROJECTS ON HIGH STREET RETAIL SITES Current structure: LA GARENNE-COLOMBES Construction of 5 levels with ~80 senior housing units Extension of the Monoprix (+600 sq.m) 16 mn from Paris Saint Lazare Future project: PARIS LA DEFENSE - 2016 HALF-YEAR RESULTS – JULY 201
Slide 29: Partnerships with Major Investors
MERCIALYS CONTINUING TO IMPLEMENT PARTNERSHIPS WITH MAJOR INVESTORS Transaction based on a 100% valuation of these assets for Sale of 70% of the transformed €61.8m incl. transfer tax hypermarket in Rennes & the Anglet site Rennes 1 Overall IRR of 9.0% and cumulated consolidated capital gain of €2.8m
Slide 30: Development Pipeline Overview: €636M of Gross Investments
DEVELOPMENT PIPELINE OVERVIEW: €636M OF GROSS INVESTMENTS Investment still to be Net rental income Net yield on cost In millions of euros Total investment Completion date initiated forecast forecast Transformation of 3 large food stores acquired in H1 2014 31.5 31.4 2.9 9.1% 2016 to 2017 Transformat
Slide 31: Financial Structure & Results
4 FINANCIAL STRUCTURE & RESULTS Elizabeth Blaise CFO - 2016 HALF-YEAR RESULTS – JULY 2016 31
Slide 32: Financial Structure
FINANCIAL STRUCTURE Net debt: €1,415m, including The LTV represents 40.6% The ICR remains at a very high level, with 6,1x* o €1,230m of bond debt In July 2016, Mercialys obtained additional confirmed bank lines for a total of o €258m of commercial paper €60m, further strengthening its liquidity prof
Slide 33: Cost of Financing
COST OF FINANCING The cost of financing remains attractive Stable level of net financial charges at end-June 2016 with €13.3m, but increasing to €15.3m when restated for a €1.9m one-off impact for marking-to-market of financial instruments o volume effect: full-year impact of the €200m bond issue fr
Slide 34: Increase in Rents and Organic Growth
INCREASE IN RENTS AND ORGANIC GROWTH €82.3m Rental revenues: +13.1% €93.0m Lease rights + €11.5m €1.2m Lease rights + €2.3m €1.7m - €2.4m - €0.1m Increase in Strategic invoiced rents Acquisitions vacancy* Indexation like-for-like & completions & non-recurring items Organic growth +2.8%** €80.6m Invo
Slide 35: Solid Trend for FFO Growth: +3.3%
SOLID TREND FOR FFO GROWTH: +3.3% In millions of euros EBITDA margin 85.4% 70,0 +9.9 +0.7 (0.9) 65,0 (2.2) (0.2) (0.1) 60,0 58.7 56.8 (5.2) 55,0 Volume effect for debt Positive impact of low cost of Full-year impact of 2015 50,0 commercial paper (0.02%) sales of non-controlling interests 45,0 40,0 3
Slide 36: Portfolio Value Up +4.1%, with +4.5% Like-for-Like
PORTFOLIO VALUE UP +4.1%, WITH +4.5% LIKE-FOR-LIKE Breakdown of change in the portfolio’s appraisal value, including transfer taxes* 4000 +€102m €3,689m €3,542m +€54m 3500 (9) 3000 +4.1% (+4.5% on a like-for-like basis) 2500 Dec. 31, 2015 Chg. in basis for consolidation Lower appraisal cap. rate Lik
Slide 37: Change in NNNAV
CHANGE IN NNNAV NNNAV (EPRA, in €/ diluted number of shares) 21,00 +1.10 20.48 (0,02) 20,00 19.42 +0.54 19,00 (0.57) 18,00 17,00 16,00 15,00 Triple net EPRA NAV at Dividend paid Net income Chg. in FV of assets FV of debt & fin. Triple net EPRA NAV at Dec. 31, 2015 Instruments and other June 30, 2016
Slide 38: Partnership Agreement with Casino
PARTNERSHIP AGREEMENT WITH CASINO: A FLEXIBLE SOURCE OF DEVELOPMENTS AND A CORE STRENGTH FOR MERCIALYS Main features of the partnership Call option granted to Mercialys on all commercial real estate developments by Casino in France (related to Mercialys’ area of activity) Since 2014, Mercialys has b
Slide 39: Dividend & 2016 Objectives
5 DIVIDEND & 2016 OBJECTIVES Eric Le Gentil Chairman and CEO - 2016 HALF-YEAR RESULTS – JULY 2016 39
Slide 40: Interim Dividend and Distribution Policy
INTERIM DIVIDEND AND DISTRIBUTION POLICY Interim dividend of €0.43 / share Considering the good operating performance for H1 2016, and the outlook for the year, the Board of Directors has approved an interim dividend of €0.43 / share, to be paid on October 13, 2016 This amount corresponds to 50% of
Slide 41: 2016 Objectives Reiterated
2016 OBJECTIVES REITERATED Organic growth in invoiced rents > 2% above indexation FFO growth +2% vs. 2015 - 2016 HALF-YEAR RESULTS – JULY 2016 41
Slide 42: Appendices
6 APPENDICES - 2016 HALF-YEAR RESULTS – JULY 2016 42
Slide 43: Financial Calendar
FINANCIAL CALENDAR October 12, 2016 Activity at September 30, 2016 (after market close) - 2016 HALF-YEAR RESULTS – JULY 2016 43
Slide 44: Asset Locations
ASSET LOCATIONS The only listed French real estate company that is a pure player in shopping centers o Mercialys' portfolio is focused on large and neighborhood shopping centers as well as high street retail assets that are leaders in their areas o The assets are concentrated in the most dynamic Fre
Slide 45: Mercialys Portfolio
MERCIALYS PORTFOLIO Stable exposure for Mercialys rents to the Casino Group: 32.7% of 60,0% 54.9% 55.1% rents, unchanged vs. 2015 CHANGE IN THE SHARE OF CASINO BRANDS IN 50,0% MERCIALYS’ ANNUALIZED RENTAL INCOME 40,0% • (Rent paid by Casino brands as % of total rental income) 27.2% 30,0% 25.4% 20,0%
Slide 46: Financing Structure and Schedule
FINANCING STRUCTURE AND SCHEDULE 800 750 700 600 DEBT SCHEDULE AT END OF H1 2016 480 500 €m 400 300 240 200 100 50 60 30 30 0 2016 2017 Dec. Mar. July Dec. July 2022 Mar. 2018 2019 2019 2020 2021 2023 RCF 800 750 Bond 700 Cash advance Casino DEBT SCHEDULE AT END OF 2015 600 Confirmed bank facility 4
Slide 47: Mercialys Shareholding and Number of Shares
MERCIALYS SHAREHOLDING AND NUMBER OF SHARES 2014 June 30, 2015 2015 June 30, 2016 Number of shares outstanding at end of period 92,049,169 92,049,169 92,049,169 92,049,169 Average number of shares outstanding 92,049,169 92,049,169 92,049,169 92,049,169 Average number of shares (basic) 91,826,157 91,
Slide 48: FFO, EPRA Earnings & Net Income Group Share
FFO, EPRA EARNINGS & NET INCOME GROUP SHARE In thousands of euros June 30, 2015 June 30, 2016 Invoiced rents 80,558 91,869 Lease rights 1,698 1,155 Rental revenues 82,256 93,025 Non-recovered service charges and property taxes -2,382 -2,910 Property operating expenses -2,669 -3,042 Net rental income
Slide 49: Balance Sheet
BALANCE SHEET ASSETS (in thousands of euros) December 31, 2015 June 30, 2016 Intangible assets 974 1,363 Property, plant and equipment other than investment property 12 13 Investment property 2,224,080 2,254,159 Investments in associates 20,069 28,893 Other non-current assets 34,154 68,073 Deferred
Slide 50: Breakdown of Assets
BREAKDOWN OF ASSETS Number of Appraisal value (incl. taxes) Gross leasable area at Appraised net rental assets at at June 30, 2016* June 30, 2016 income Type of property June 30, 2016 In €m % Sq.m % In €m % Regional / large shopping centers 25 2,745.5 74% 637,991 70% 138.5 71% Neighborhood shopping
Slide 51: Capitalization Rate Grid Under the Partnership Agreement
CAPITALIZATION RATE GRID APPLICABLE UNDER THE PARTNERSHIP AGREEMENT Capitalization rate grid applicable for reiterations in the second half of 2016 under the Partnership Agreement with Casino Shopping centers Retail parks City center Corsica Corsica and and Mainland Mainland Type of property France
Slide 52: Disclaimer
DISCLAIMER This communication contains forward-looking information and statements about Mercialys. Forward-looking statements are statements that are not historical facts. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objec