Slide 1: First-half 2012 results
First-half 2012 results Tuesday July 24, 2012
Slide 2: Preliminary notice
Preliminary notice The consolidated financial statements for the first half of 2012 were approved by the Board of Directors at its meeting of July 23, 2012. A limited review of these financial statements was performed by the Statutory Auditors. First-half 2012 results 2
Slide 3: Overview of the first half 2012
Overview of the first half 2012
Slide 4: A busy half-year
A busy half-year Organic growth in 4 Esprit invoiced rents Adjusted FFO per Voisin share* projects +4.8% completed +9.4% € 1.25 Bn € 1.0 Bn € 216m of financing of exceptional of assets sales including € 1bn distribution confirmed or drawn under promises A new A new corporate 2 new Partnership First-
Slide 5: A generally positive first half for neighborhood shopping center retailers
A generally positive first half of the year for neighborhood shopping center retailers and Mercialys... Retailers’ sales growth – Comparable scope/All retailers Source: CNCC Positive overall performance for 5% neighborhood shopping centers 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% 2009 2010 2011 To end-May
Slide 6: Esprit Voisin concept allows portfolio to outperform
“Esprit Voisin” concept allows Mercialys’s portfolio to outperform Retailers’ sales growth All retailers - Cumulative to end-May 2012 Very volatile performance from one +2.0% month to the next in 2012, as in +1.5% 2010 and 2011 • Very strong performance in March and June • April and May were difficu
Slide 7: Organic growth: still one of the main growth drivers
Organic growth: still one of the main growth drivers for the first half of the year Organic growth in invoiced rents +4.8% Increase in Organic growth in invoiced rents Acquisitions/Asset sales* and non- invoiced rents recurring items +2.1% +4.8% -2.7% In millions of euros - 2005 pro Rental revenues
Slide 8: Esprit Voisin program fuelling growth in the portfolio
“Esprit Voisin” program fuelling growth in the portfolio... 4 extensions completed in the first half of the year: rental income of Euro +3.8m on an annual basis 51 new stores - 29,700 m² developed Around 10 renovations under the “Esprit Voisin” concept expected in the second half of the year 5 exten
Slide 9: Making our shopping centers more attractive
... and making our shopping centers more attractive ANNEMASSE AUXERRE +28% +61% Increase in shopping center footfall in H1 2012 vs. H1 Increase in shopping center 2011 footfall in H1 2012 vs. H1 2011 MARSEILLE QUIMPER +770 bps +42% vs CNCC average data Increase in cumulative Increase in shopping cen
Slide 10: A solid operating performance and exceptional major events
A solid operating performance in the first half of the year and exceptional major events BBB rating from S&P Debt of Euro 1 billion taken out + liquidity facilities Euro 250m of undrawn 3- Euro 350m Euro 650m year credit 3-year bank 7-year bond facilities loans issue (revolving credit facility, Casi
Slide 11: Million of euros of asset sales signed or under promises
Euro 216 million of asset sales signed or under promises to sell 20 assets sold for more than the appraisal value in accordance with the mandate given by the Board of Directors Sale price Average including transfer capitalization rate taxes (incl. TT) Euro 216m 6.3% In millions of euros Assets sold
Slide 12: The Foncière Commerçante: a new dynamic
The “ Foncière Commerçante ”*: a new dynamic The “ Foncière Commerçante ” is to be closely involved alongside national banners and independant retailers in their local integration in order to enhance their commercial momentum. A modern, proactive and multi-channel support in the development of our s
Slide 13: Foncière Commerçante strategy is launched
The “Foncière Commerçante” strategy is launched! Notable advances in its implementation The company’s organizational structure changes in order to accompany the phased roll-out of the “Foncière Commerçante” strategy at shopping centers: Training of shopping center managers, who will convey the “Fonc
Slide 14: Organized and sequenced approach to transformation
Mercialys is taking an organized and sequenced approach to its transformation S&P rating of BBB Debt of Euro 1 billion Distribution of Euro 1 billion Change in corporate governance Signature of new Partnership Agreement Launch of “Foncière Commerçante” strategy In progress First-half 2012 results Re
Slide 15: First-half 2012 activity
t} mercialys L'Esprit Voisin. First-half 2012 activity
Slide 16: A period of strong organic growth: +4.8%
A period of strong organic growth: +4.8% Further strong growth in invoiced rents on Organic growth in invoiced rents a like-for-like basis before indexation: +4.8%** +2.4% RR Rental revenues: +2.3% RR € 79.2m € 81.0m €+3.1m €-3.8m €+1.8m €-0.3m €+1.8m €-1.0m In millions of euros Acquisitions Increas
Slide 17: Organic growth fuelled by letting activities
Organic growth fuelled by letting activities 149 leases signed in the first Renewals +27%*** half of the year Relets +45%*** Significant increase in rental values post-negotiations IPD benchmark Euro 310 per m²* 213 219 203 Average gross rental value 185 Euro per m² 174 still well below the 147 162
Slide 18: Satisfactory management indicators
Satisfactory management indicators stable Recovery rate* still at a high level 99.1% 98.3% 98.0% 97.9% 98.3% 97.8% 12/31/08 12/31/09 12/31/10 06/30/11 12/31/11 06/30/12 stable Recurring vacancy rate stable at 2.2% 2.1% 2.3% 2.1% 2.4% 2.0% 2.4% a low level 12/31/07 12/31/08 12/31/09 12/31/10 06/30/11
Slide 19: Results reflect asset sales and the new financial structure
Results reflect asset sales carried out in 2011 and the new financial structure adopted in the first half of the year 06/11 06/12 % chg. Funds from operations (FFO)* per Net rental income 74.4 76.3 +2.6% share (diluted) 0.76 0.63 Net operating expenses** -6.2 -6.3 +2.8% Operating income 68.2 70.0 +2
Slide 20: Unusual operating items relating to restructuring
Unusual operating items relating to restructuring of Mercialys’s financial and shareholding structure Non-recurring costs of Euro 4.7m Non-recurring charges relating to the Euro 3.4m taking out of debt Advisory and other charges relating to the adoption of the new financial Euro 1.3m structure Net f
Slide 21: Adjusted FFO growth above management objective
Adjusted for effect of asset sales and based on a like-for-like financial structure, growth in FFO** is well above management’s objective for 2012 Funds from operations** (FFO) Adjusted funds from operations** (FFO) In millions of euros 70.1 58.2 +9.5% Target set in -17.0% 49.9 February 45.6 2012 +6
Slide 22: Adjusted FFO shows intrinsic performance
The adjusted FFO enables to figure out the intrinsic performance of Mercialys in its current form Reported Adjustment Adjustment Adjustment Adjustment Adjusted FFO for net rental for net rental for for FFO income from income from comparable exceptional assets sold assets sold in financial costs and
Slide 23: Payout of an interim dividend of Euro 0.25 per share
Payout of an interim dividend of Euro 0.25 per share At its meeting held on July 23, 2012, Mercialys’s Board of Directors decided to pay an interim dividend of Euro 0.25 per share. This interim dividend will be paid on October 15, 2012. With this new announcement, Mercialys will have already paid 20
Slide 24: Increase in value of the portfolio
Increase in value of the portfolio as a result of organic growth Stable average appraisal yields Appraisal value of portfolio, including NAV per share transfer taxes* incl. transfer taxes (euros) Growth over 6 months 29.25 2,716.4 Euro -3m Change in scope of In millions of euros 2,639.9 consolidatio
Slide 25: Euro 216m of assets sold or under promises to sell
Euro 216m of assets sold or under promises to sell: continuing refocusing of the portfolio Sale price including transfer 2012 gross annual Capital gains taxes rental income** realized*** Euro 216m* 20 assets Euro 11m Euro 57m An average capitalization rate of 6.3% 13 neighborhood shopping centers To
Slide 26: Pro forma portfolio of 71 shopping centers
Pro forma for these asset sales, Mercialys owns 101 properties including 71 shopping centers with a value of Euro 2,550m Portfolio structure June 30, 2012 pro forma for asset sales carried out or under promises to sell as at 07/24/12 Market value incl. Number of transfer taxes (in % of MV incl. TT p
Slide 27: Opening of Quimper Esprit Voisin
Opening of Quimper Esprit Voisin: increase in footfall supporting value creation Footfall Redevelopment of 5,300 m² former +42% June 12 vs. Castorama store June 11 19 new shops opened + 1 mid-size store (Fnac), renovation of the existing shopping mall The center now has 73 shops and 6 mid- size stor
Slide 28: Quimper: site enhanced by new anchor
Quimper: site enhanced by the inclusion of a new anchor generating a high level of customer flows First-half 2012 results 28
Slide 29: Quimper: powerful renovated site
Quimper: a powerful renovated site, leader in its area June 30, 2012 Area: 17,900 m² Investment over the period: Euro 16.3m Annual rental income: Euro 4.4m (acquisition of Feu Vert, redevelopment, Market value: Euro 82.6m* renovation and maintenance) Size x3 2005 - Acquisition Area: 19,600 m² First-
Slide 30: Fréjus doubles in size
Fréjus doubles in size Opening date: June 6, 2012 Enlarged by 4,500 m² 23 new shops + 1 mid-size store, renovation of the existing shopping mall The center now has 42 shops and 3 mid- size stores Total investment*: Euro 23.6m Gross annual rental income: Additional Euro 1.5m Extension yield: 6.5% Inc
Slide 31: Fréjus: extension enhances commercial strength
Fréjus: extension significantly enhances the site’s commercial strength First-half 2012 results 31
Slide 32: Fréjus has quadrupled in value since the IPO
Fréjus has therefore quadrupled in value since the IPO Forecast on completion Area: 8,500 m² Investment over the period: Euro 24.3m Annual rental income: Euro 2.8m (acquisition of extension, renovation Market value: Euro 48.3m* and maintenance) Size x4 2005 - Acquisition Area: 4,000 m² First-half 20
Slide 33: A new financial and shareholding structure
A new financial and shareholding structure
Slide 34: Casino falls below 50% of voting rights
Casino falls below the threshold of 50% of voting rights A remodeled Board of Directors Shareholding structure by voting rights at June 30, 2012 Source: companies 4 Casino directors Other* 45.1% Casino -2 40.2% 7 independent directors +2 Chairman AXA Generali Arrival of E Cunin and MC Levet 6.7% 8.0
Slide 35: Debt of Euro 1bn taken out plus liquidity facilities
Mercialys has taken out debt of Euro 1bn, in addition to Euro 250m of liquidity facilities A secure debt structure... Average cost of debt during Bank loans Bonds H1 Euro 350m Euro 650m Debt drawn 3 years 7 years Euribor + 225bp 4.125% fixed 3.9% Casino current Bank revolving account facility credit
Slide 36: New Board approved Partnership Agreement and 25 projects
The new Board of Directors has approved the new Partnership Agreement and 25 development projects Pipeline secured until 2015: Casino and Mercialys have made a mutual commitment to develop part of the pipeline of development projects presenting strong visibility – 25 projects at present Casino is re
Slide 37: Pricing and settlement terms remain unchanged
Pricing and settlement terms and conditions remain unchanged Calculation of price and settlement remain unchanged Calculated as authorizations are lifted and when at least 60% of developments have been pre-let (as a % of projected rents - leases signed) The grid of capitalization rates remains the s
Slide 38: Casino pipeline as a source of future growth
The Casino pipeline represents a significant source of future growth for Mercialys Euro 623m 350 Other projects (weighted market value*) In millions of euros 109 10 “to be confirmed” projects (market value) First-half 2012 results 164 15 “validated” projects (market value) (*) Value weighted for pro
Slide 39: Projects included in the Partnership Agreement 2013-15
Projects included in the Partnership Agreement cover the period from 2013-15... 2012 2013 2014-2015 Rodez Annecy Arcaloz 2 Lanester (phase 2) Auxerre RP Montauban Brive Malemort Brest (phase 2) Lons (phase 2) Fontaine les Dijon Carcassonne Besançon (phase 2) Anglet Fréjus Dijon Chenove Clermont Ferr
Slide 40: Large-scale projects with CDAC authorization: Toulouse Fenouillet
In the longer term, the pipeline contains large-scale projects for which CDAC authorization has been obtained Toulouse Fenouillet 42,000m² of retail space Extension / Renovation / Creation of a new Retailer Village concept Total of 122 shops including 60 shops and 22 mid-size stores in addition Due
Slide 41: Large-scale projects with CDAC authorization: St Etienne
In the longer term, the pipeline contains large-scale projects for which CDAC authorization has been obtained St Etienne 90,000m² of retail space 83 shops - 37 mid-size stores and 5 small specialist retail units 21 restaurants Due to open: 2016/2017 First-half 2012 results 41
Slide 42: Conclusions and outlook
t} mercialys L'Esprit Voisin. Conclusions and outlook
Slide 43: Our priorities are mainly operational
Our priorities are mainly operational Maintain a constant standard of operating excellence Completion of Mastery of our Mastery of new Extraction of “Esprit Voisin” management areas of organic growth development indicators expertise projects Implementation of the “Foncière Commerçante” strategy Thin
Slide 44: Improving financial performance and sustaining cash flow growth
These should enable us to improve our financial performance and sustain growth in cash flow Maintain a solid operating performance Keep our financial ratios at Improve our financial cautious levels performance Implement a cross- channel/hyper-local retail strategy Objective revised upwards Growth in
Slide 45: Appendices
’ t} mercialys L'Esprit Voisin. Appendices
Slide 46: Income statement
Income statement In millions of euros % chg. 06/30/11 06/30/12 12/11 Invoiced rents 75.6 77.1 +2.1% Lease rights 3.6 3.8 Rental revenues 79.2 81.0 +2.3% Non-recovered property taxes -0.0 0.0 Non-recovered service charges -2.0 -2.1 Property operating expenses -2.7 -2.6 Net rental income 74.4 76.3 +2.
Slide 47: Number of shares
Number of shares 2010 2011 06/30/12 Number of shares outstanding . At January 1 91,968,488 92,000,788 92,022,826 . As at June 30 91,968,488 92,010,013 92,022,826 . As at December 31 92,000,788 92,022,826 Average number of shares 91,968,488 92,011,241 92,022,826 outstanding Average number of shares 9
Slide 48: Condensed balance sheet
Condensed balance sheet Assets In millions of euros 12/31/10 12/31/11 06/30/12 Investment property 1,604.3 1,624.8 1,519.0 Financial assets 11.7 13.6 13.5 Other assets 1.0 0.8 1.5 Total non-current assets 1,617.0 1,639.2 1,534.0 Cash and cash equivalents 77.4 47.5 42.9 Trade and other receivables 40
Slide 49: Portfolio valued at Euro 2,716 million including transfer taxes
Portfolio valued at Euro 2,716 million including transfer taxes Portfolio growth of +2.9% over 6 months Appraisal value Number Gross leasable Appraised net incl. TT at of area at 06/30/12 rental income Type of property 06/30/12* properties 06/30/12 In Euro % m² % In Euro % million million Regional a
Slide 50: Partnership Agreement: grid for second half of 2012
Partnership Agreement: grid for the second half of 2012 remains unchanged relative to the first half of 2012 Grid of capitalization rates applicable to reiterations in the second half of 2012 within the framework of the current Partnership Agreement with Casino Shopping malls Retail parks City cente
Slide 51: 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