Mercialys Sa · EURONEXT:MERY
Mercialys Sa — Debt Investor Presentation (August 2024)
46 slides from Mercialys Sa's debt investor presentation, Aug 30, 2024
Slide 1: Bond investor presentation
Bond investor presentation August 30, 2024
Slide 2: Contents
Contents 01 02 03 04 The leading REIT for Strong earnings & resilient Outlook Appendices accessible retail financial profile allowing for investments Page 3 Page 20 Page 34 Page 36 Bond investors presentation 2
Slide 3: The leading REIT for accessible retail
01 THE LEADING REIT FOR ACCESSIBLE RETAIL
Slide 4: Company profile
Company profile €178.3m Leading listed French real estate company that is a pure player Rental revenues for shopping centers and the only European retail property company to partner with all the major French food retailers › Mercialys' portfolio is focused on large and neighborhood shopping centers
Slide 5: Operating and financial track record
Operating and financial track record ORGANIC GROWTH EBITDA MARGIN (incl. indexation) Health crisis impact Health crisis impact +3.7% +3.6% +4.1% +4.1% +4.1% 85.0% 84.0% 83.2% 83.9% 83.1% +3.0% 82.0% 74.8% -7.0% 2018 2019 2020 2021 2022 2023 H1 2024 2019 2020 2021 2022 2023 H1 2023 H1 2024 LOAN-TO-VA
Slide 6: Shopping center portfolio structure
Shopping center portfolio structure NUMBER OF SHOPPING CENTERS SHOPPING CENTER BREAKDOWN BY SIZE AND AVERAGE VALUE (% of portfolio gross asset value including rights at June 30, 2024) 73.5 12,227 14,940 17,049 16,570 16,090 16,095 16,222 65.9 64.1 61.5 59.6 61.0 48.7 7% 6% 3% 3% 4% 4% 4% 32% 31% 31%
Slide 7: New milestones achieved with our sustainable roadmap looking ahead to 2030
New milestones successfully achieved with our sustainable roadmap looking ahead to 2030 FOR OUR STORES › Asset certification: 100% of strategic assets certified FOR OUR ENVIRONMENT (in line with target) › Carbon neutrality: 15.2 kgCO2eq.sq.m vs. 23.3kg in 2017 › Responsible retail offering and servi
Slide 8: Mercialys stands as one of Europe's top CSR performers
Mercialys stands as one of Europe’s top CSR performers Score : 8,8 (2) #1 on SBF 120 BPR Rating: A Score: 93.4/100 Score: 89/100 Industry and Rating: B- Grand Prix “All Gold Award 2023 Green Star status A List status N/A Regional Top-Rated Rating: A Prime status Categories” sBPR #2 on maintained SBF
Slide 9: Winning suburban equation: shopping centers structuring their offer around choice, sustainability and pricing
Winning suburban equation: shopping centers structuring their offer around choice, sustainability and above all pricing CHOICE AND 44% OF THE FRENCH POPULATION LIVE IN FUNDAMENTAL IN-STORE BENEFITS: THE PERIPHERY OF TOWNS WHERE 72% OF new concepts, MERCIALYS’ PORTFOLIO IS LOCATED optimized customer
Slide 10: Price-positioning is a key catalyst for consumers to satisfy their continued spending desire
Price-positioning is a key catalyst for consumers to satisfy their continued spending desire (1) 71% of respondents said that they enjoy AIX-EN-PROVENCE: +29% footfall growth for the shopping center since shopping either systematically, often or SELLING A LARGE VARIETY OF PRODUCTS AT THE Action’s op
Slide 11: Pricing also a key catalyst for continued consumption while spending better
Pricing also a key catalyst for continued consumption while “spending better” 95% (1) of French people want to consume more responsibly, but only 13% say they have actually changed their habits, linked in particular to their financial constraints 72% (2) of French people bought a second-hand product
Slide 12: Hypermarkets: no.1 solution for spending on food in an inflationary context
Hypermarkets: no.1 solution for spending on food in an inflationary context 89% OF MERCIALYS’ SITES ARE NOW ANCHORED BY ONE OF FRANCE’S TOP 15 RETAIL BRANDS 11 OF THE 15 LARGEST FRENCH RETAILERS PRIVATE LABELS MARKET SHARE (1) ANCHOR MERCIALYS’ SITES (2) (Hypermarkets & supermarkets in France) (100
Slide 13: Retenanting of hypermarkets almost completed, which will support Mercialys' shopping centers
Retenanting of hypermarkets almost completed, which will support Mercialys’ shopping centers Marcq-en-Barœul RISK DISPERTION OPTIMIZED ACROSS 15.9% OF THE RENTAL BASE June 30, 2024 June 30, 2024 FOOD DISTRIBUTION BRANDS % of rental revenues % of rental revenues Paris (1) (economic exposure (economic
Slide 14: Mercialys has already largely pivoted its merchandizing mix
Mercialys has already largely pivoted its merchandizing mix to cater to rebalanced consumer spending CONTRASTING TURNOVER TRENDS BY CONSUMER BREAKDOWN OF MERCIALYS’ RENTAL INCOME BY SEGMENTS WITH SHOPPING CENTERS BUSINESS SECTOR OUTPERFORMING THE GENERAL RETAIL SECTOR (1) (% of annualized consolidat
Slide 15: Strong fundamentals contributing to sustained growth in footfall and retailer sales
Strong fundamentals contributing to sustained growth in footfall and retailer sales CUMULATIVE 6-MONTH CHANGE CUMULATIVE CHANGE IN FOOTFALL AT END-JUNE 2024 (1) IN RETAILER SALES AT END-MAY 2024 (1) Mercialys +2.0% Mercialys +3.4% +70 bp +170 bp Quantaflow +1.3% FACT +1.7% › Significant footfall gro
Slide 16: Opening of rebranded hypermarkets: examples of renewed appeal
Opening of rebranded hypermarkets: examples of renewed appeal QUIMPER HYPERMARKET MARSEILLE LA VALENTINE HYPERMARKET (Footfall - % change vs. previous year) (Footfall - % change vs. previous year) +36.4% +36.1% From opening (1) From opening (2) until end-June 2024 until end-June 2024 -11.1% -17.2% 2
Slide 17: Opening of rebranded hypermarkets: examples of renewed appeal
Opening of rebranded hypermarkets: examples of renewed appeal ANNECY HYPERMARKET NARBONNE HYPERMARKET (Footfall - % change vs. previous year) (Footfall - % change vs. previous year) +50.6% +35.2% From opening (1) From opening (2) -7.9% until end-June 2024 until end-June 2024 -15.5% 2023 2023 (1) Ope
Slide 18: Current financial vacancy rate stabilized at a low level of 3.0%
Current financial vacancy rate stabilized vs. end-2023 at a low level of 3.0% thanks to dynamic letting activity FINANCIAL VACANCY RATE (1) (2) 5.4% 4.9% 4.4% 4.4% 4.7% 4.4% 3.2% 1.6% 1.7% 1.5% 1.5% 1.4% 1.4% 0.7% 3.8% 3.2% 3.3% 3.0% 2.5% 2.9% 2.9% 2019 2020 2021 2022 2023 H1 2023 H1 2024 Current fi
Slide 19: Measured OCR for tenants and normalized recovery rate
Measured OCR for tenants and normalized recovery rate OCR REMAINS SUSTAINABLE FOR MERCIALYS’ TENANTS, DESPITE THE IMPACT OF INDEXATION OCCUPANCY COST RATIO (1) COLLECTION OF RENTS AND CHARGES (end of period) (2) 11.1% 10.9% 10.7% 96.1% 96.2% 95.1% 92.9% 2022 2023 H1 2024 2022 2023 H1 2023 H1 2024 (1
Slide 20: Strong earnings & resilient financial profile allowing for investments
02 STRONG EARNINGS & RESILIENT FINANCIAL PROFILE ALLOWING FOR INVESTMENTS
Slide 21: High level of organic growth over time sustained by the resilient business model
High level of organic growth over time sustained by the resilient business model AVERAGE ORGANIC RENTAL REVENUE GROWTH OVER THE PERIOD: +3.6% (1) › Mercialys has generated an average annual +3.4% +3.4% +2.6% +3.7% +3.6% -7.0% +3.0% +4.1% +4.1% +4.1% organic growth rate of +3.6% since 2015 (excluding
Slide 22: Organic growth driven by sustained indexation and positive trend on variable rents
Organic growth driven by a sustained level of indexation and a positive trend on variable rents Organic growth +4.1% €91.6m +3.9% +€0.2m +€3.9m +€0.1m Lease rights €0.2m -€0.1m -€0.4m €88.2m Lease rights €0.3m -€0.0m -€0.1m €87.9m €91.4m +4.0% Rental revenues Acquisitions Strategic Indexation Contri
Slide 23: H1 2024 net recurrent earnings of €59.3m (+3.3%)
H1 2024 net recurrent earnings (NRE) of €59.3m (+3.3%), with +3.0% per share, above the +2.0% full-year growth target €0.63 €0.62 +3.0% /SHARE /SHARE EBITDA margin 83.1% + €1.4m +3.3% + €3.4m €59.3m + €0.1m €57.5m - €1.1m - €0.7m - €0.8m - €0.4m NRE Change in Change in Change in Change in Change in
Slide 24: Rebound in the portfolio valuation through a positive rent impact
Rebound in the portfolio valuation through a positive rent impact Change in portfolio value excluding transfer taxes LIKE-FOR-LIKE CHANGE (1) H1 2023 FY 2023 H1 2024 of which rent effect +4.0% +6.1% +2.3% of which yield effect -7.4% -13.1% -2.0% TOTAL CHANGE IN PORTFOLIO VALUE -3.4% -7.0% +0.4% MERC
Slide 25: Mercialys' portfolio yield of 6.68% delivers a +340 bp premium over the risk-free rate
Mercialys’ portfolio yield of 6.68% delivers a +340 bp premium over the risk-free rate Potential yield and EPRA NIY 12/2018 12/2019 12/2020 12/2021 12/2022 06/2023 12/2023 06/2024 Average appraisal yield rate 5.10% 5.26% 5.72% 5.71% 5.75% 6.21% 6.61% 6.68% EPRA Net Initial Yield 4.81% 4.94% 5.28% 5.
Slide 26: Change in EPRA Net Disposal Value per share
Change in EPRA NET DISPOSAL VALUE per share EPRA NDV €17.10 › €16.53/share (1) (2) › Down -3.3% over 6 months + €0.63 › Down -12.0% over 12 months €16.53 - €0.04 - €0.13 - €0.04 EPRA NET REINSTATEMENT - €0.99 VALUE Rent effect + €0.67 › €17.80/share › Down -2.5% over 6 months Yield effect - €0.57 ›
Slide 27: Sale of 4 hypermarkets in July 2024, strengthening liquidity and investment capacity
Sale of 4 hypermarkets in July 2024, strengthening Mercialys’ liquidity and investment capacity HYPERMARKETS owned by 4 Hyperthetis Participations & operated by The sale of these hypermarkets is in line with Mercialys’ asset 51% rotation strategy and constant focus on balancing its rental 2 ANCILLAR
Slide 28: Development pipeline capitalizing on Mercialys' real estate expertise
Development pipeline capitalizing on Mercialys’ real estate expertise TOTAL INVESTMENT STILL COMPLETION (€m) INVESTMENT TO BE COMMITTED DATE COMMITTED PROJECTS 18.9 18.3 2024/2027 Dining and leisure 0.5 0.4 2024 Tertiary activities 18.4 17.9 2024/2027 CONTROLLED PROJECTS 186.2 176.7 2025 / 2028 Reta
Slide 29: Synergies to be developed with the hypermarket operators
Synergies to be developed with the hypermarket operators, on both operations and real estate Promoting visibility and Uniting vibrant hypermarkets Adapting the real estate driving footfall and lively shopping centers › Store sign visibility › Promoting sales: highlighting the 3 possibilities opening
Slide 30: Progress with the development pipeline
Progress with the development pipeline SAINT-ANDRÉ (REUNION ISLAND) TOULOUSE FENOUILLET 13,000 SQ.M retail park developed on Project to redevelop the older part Mercialys landbanks is 63% pre-let of the shopping center has been Building permit to be submitted launched, with administrative in Q4 2024
Slide 31: Healthy level of liquidity, with well-spread debt maturities
Healthy level of liquidity, with well-spread debt maturities Over the coming months and subject to market conditions, Mercialys aims to finalize the early refinancing of the bond issue maturing in July 2027, which DEBT SCHEDULE AT END-JUNE, 2024 would require new financing to be issued (in €m) 500 C
Slide 32: Sound financial profile, with a cost of debt nearly unchanged vs. 2023
Sound financial profile, with a cost of debt nearly unchanged vs. 2023 CHANGE IN LTV AND ICR CHANGE IN THE COST OF DRAWN DEBT 5.2x 5.1x 5.5x 2.3% 2.2% 40.0% 2.1% 38.6% 38.9% 39.4% 36.1% 36.4% 37.4% 36.9% H1 2023 FY 2023 H1 2024 H1 2024 H1 2023 FY 2023 H1 2024 (1) Proforma LTV (%) - excluding transfe
Slide 33: Current contemplated transaction: proactively managing the debt schedule
Current contemplated transaction: proactively managing the debt schedule Further steps contemplated to optimize the bond schedule › Mercialys aims to finalize the early refinancing of the bond issue maturing in July 2027, by exercising its make-whole early redemption option › In this context, the Co
Slide 34: Outlook
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Slide 35: 2024 targets confirmed
2024 targets confirmed: performances in line with the Company’s steady long-term growth trajectory CHANGE IN NET RECURRENT EARNINGS / SHARE Increase of at least +2% vs. 2023 DIVIDEND POLICY Dividend ranging from 75% to 95% of 2024 NRE ESG Optimize the carbon trajectory, with a goal of neutrality & c
Slide 36: Appendices
APPENDICES PIERCIALYS
Slide 37: Mercialys portfolio and shareholding structure
Mercialys portfolio and shareholding structure SHAREHOLDING STRUCTURE (at June 30, 2024) Leading listed French real estate company that is a commercial real estate pure player AXA IM 5.3% Treasury shares › Mercialys' portfolio is focused on large and neighborhood shopping 0.5% centers that are leade
Slide 38: Rental income structure and lease expiry schedule
Rental income structure and lease expiry schedule BREAKDOWN OF MERCIALYS’ LEASE EXPIRY SCHEDULE RENTAL INCOME BY TYPE OF RETAILER (percentage of leases expiring / guaranteed minimum rent at June 30, 2024) CONSOLIDATED VISION (% of annualized rental income at June 30, 2024 and Dec. 31, 2023) 23.6% 86
Slide 39: Breakdown of food retail anchors (owned by Mercialys)
Breakdown of food retail anchors (owned by Mercialys) SITES % OWNERSHIP BY MERCIALYS FORMER FOOD OPERATOR CURRENT FOOD OPERATOR TRANSFER DATE ANNEMASSE 100% Casino Hyperfrais Intermarché Apr 30, 2024 AIX-EN-PROVENCE 51% Casino Hyperfrais Auchan May 31, 2024 (SOLD, July 2, 2024) AJACCIO 60% Géant Cas
Slide 40: Breakdown of food retail anchors (not owned by Mercialys)
Breakdown of food retail anchors (not owned by Mercialys) SITES FORMER FOOD OPERATOR CURRENT FOOD OPERATOR TRANSFER DATE AGEN Casino Hyperfrais Intermarché Apr 30, 2024 ALBERTVILLE Intermarché Intermarché Oct 15, 2023 ANGOULEME Casino Hyperfrais Auchan Apr 30, 2024 ANGLET Leclerc Leclerc Not concern
Slide 41: EPRA performance indicators
EPRA performance indicators JUNE 30, 2023 DECEMBER 31, 2023 JUNE 30, 2024 EPRA earnings - € per share 0.62 1.17 0.63 EPRA NRV - € per share 19.03 18.25 17.80 EPRA NTA - € per share 16.99 16.29 15.85 EPRA NDV - € per share 18.80 17.10 16.53 EPRA net initial yield - % 5.63% 5.97% 6.04% EPRA “topped-up
Slide 42: Net recurrent earnings (NRE) & EPRA earnings
Net recurrent earnings (NRE) & EPRA earnings IN THOUSANDS OF EUROS JUNE 30, 2023 JUNE 30, 2024 Invoiced rents 87,910 91,385 Lease rights 254 175 Rental revenues 88,164 91,560 Property taxes -13,729 -14,265 Rebilling to tenants 11,453 11,872 Non-recovered property taxes -2,276 -2,393 Service charges
Slide 43: Net income attributable to owners of the parent
Net income attributable to owners of the parent IN THOUSANDS OF EUROS JUNE 30, 2023 JUNE 30, 2024 Net recurrent earnings 57,453 59,322 Depreciation and amortization -18,926 -19,097 Other operating income and expenses -18,216 194 Impact of hedging ineffectiveness, banking default risk, net impact of
Slide 44: Balance sheet
Balance sheet IN THOUSANDS OF EUROS DECEMBER 31, 2023 JUNE 30, 2024 Intangible assets 3,144 3,220 Property, plant and equipment other than investment property 5,825 7,192 Investment property 1,864,950 1,734,533 Right-of-use assets 10,615 10,573 Investments in associates 39,557 39,385 Other non-curre
Slide 45: Breakdown of assets
Breakdown of assets Average appraisal yield rate: 6.68% at June 30, 2024 APPRAISAL VALUE APPRAISAL VALUE GROSS LEASABLE APPRAISED NET (Excl. Transfer taxes) (Incl. Transfer taxes) AREA AT NUMBER OF AT JUNE 30, 2024 AT JUNE 30, 2024 RENTAL INCOME JUNE 30, 2024 TYPE OF PROPERTY ASSETS AT JUNE 30, 2024
Slide 46: 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, obj