Slide 1: 2016 results
2016 results February 15, 2017
Slide 2: Preliminary remarks
Preliminary remarks The 2016 annual consolidated financial statements were approved by the Board of Directors on February 14, 2017 The audit procedures have been completed by the statutory auditors. The audit certification report is in progress - 2016 ANNUAL RESULTS – FEBRUARY 2017 2
Slide 3: Contents
Contents 1 STRATEGY & KEY MESSAGES 4 2 ACTIVITY 10 3 COMPLETIONS & PROJECTS 16 4 DISPOSALS, FINANCIAL STRUCTURE & RESULTS 22 5 CONCLUSIONS & 2017 OBJECTIVES 32 - 2016 ANNUAL RESULTS – FEBRUARY 2017 3
Slide 4: Strategy & key messages
1 Strategy & key messages Eric Le Gentil Chairman & CEO - 2016 ANNUAL RESULTS – FEBRUARY 2017 4
Slide 5: Riding the cycle to sustain total return
Riding the cycle to sustain total return Organic growth and FFO have quickly benefited from the refueling of the pipeline achieved since 2014 Through €134m of asset sales in Dec. 2016 – Jan. 2017, Mercialys has crystallized value with a favorable timing in the cycle, generating a strong total return
Slide 6: Client focus bringing resilience to the convenience model
Client focus bringing resilience to the convenience model 3,0% 2.9% 2.4% 2.1% Cumulative change in footfall in 2016(1) 2,0% 1.5% 0.8% +1.9% 1,0% +1.4% +1.2% +1.2% 0,0% -1,0% -0.3% -0.9% -0.7% -1.0% -1.2% -2,0% -1.7% -3,0% Dec. 2013 Dec. 2014 Dec. 2015 Jun. 2016 Dec. 2016 Mercialys CNCC Spread 5,0% +
Slide 7: Asset transformation: Mercialys' key expertise
Asset transformation: Mercialys’ key expertise Outperforming asset base Toulouse Fenouillet : from a local Completion of 5 shopping center shopping center and former logistics extensions built on transformed base to a 82,000 sq.m regional hypermarkets and 1 new retail park shopping center Another ye
Slide 8: 2017 roadmap: further strengthening our operating and financial profile
2017 roadmap: further strengthening our operating and financial profile Organic growth Financial structure Objectives •2017 dividend policy •Strong actions to •€72m of asset sales in unchanged vs. 2016 reinforce footfall Jan. 2017 •Organic growth in rents •Completion of 9 •Disposal program, with exp
Slide 9: Key figures
Key figures In millions of euros 2015 2016 % Change Invoiced rents 166.0 187.6 +13.1% Organic growth in invoiced rents excluding indexation +3.5% +3.5% Rental revenues 169.0 189.8 +12.3% FFO 108.5 114.4 +5.4% EPRA earnings 107.4 114.4 +6.5% FFO excluding impact of IAS17 (Spread of rent caps and dedu
Slide 10: Activity
2 Activity Vincent Ravat COO - 2016 ANNUAL RESULTS – FEBRUARY 2017 10
Slide 11: Excellent performance on organic growth
Excellent performance on organic growth 5,0% 4.3% Renewals & relettings: +18.4% 3.7% 3.5% 4,0% 3.2% 3.5% 3.1% 3.1% Casual 3,0% 3.4% Leasing 3.4% 0.6% 2,0% 2.6% 2.7% 2.8% 2.3% 1,0% 1.7% Actions on 0,0% the 2010 2011 2012 2013 2014 2015 2016 portfolio 2.9% Organic growth of invoiced rents, excl. index
Slide 12: Casual Leasing: fully-fledged segment up to cruising speed
Casual Leasing: fully-fledged segment up to cruising speed Strong trend in 2016 Rents up +13.0% to €9.1m (€9.2m taking into account additional rent generated in associated companies) Value of Casual Leasing within Mercialys portfolio: €170m in 2016 Casual Leasing is now part of our global business p
Slide 13: Increasingly personalized customer approach
Increasingly personalized customer approach CUSTOMER FOOTFALL CLIENT OPT’IN PREFERENCES 200 million visitors(1) 200,000 customer 16 malls participating in profiles in database(2) the loyalty program(2) 2017 target : +30% 2017 target : +25% (1) In 2016, including third-party management - 2016 ANNUAL
Slide 14: Digital platform with fast-growing user rates
Digital platform with fast-growing user rates +61% +96K 170K traffic on our websites visits on the mobile app Facebook fans since July 2016 59% 32% 9% (Q4 15 vs Q4 16 on comparable basis) 30K +9% time spent on our websites >15% connections per week on La promotional email opening rate Galerie WiFi (
Slide 15: Local convenience initiatives boosting retail performance
Local convenience initiatives boosting retail performance CLICK AND National and local retailers participating +20% sales for some COLLECT independent retailers Carte +1.4% in restaurant EMPLOYEE 10% discount for lunch in La Galerie DISCOUNT CARD restaurants salariés turnover in eligible malls LOYAL
Slide 16: Completions & projects
3 Completions & projects Vincent Ravat COO - 2016 ANNUAL RESULTS – FEBRUARY 2017 16
Slide 17: Toulouse Fenouillet: a new flagship in less than 3 years
Toulouse Fenouillet: a new flagship in less than 3 years Innovative letting strategy leading to a diversified tenant mix 2 new retailers in France, 25 new retailers in Toulouse, 29 new retailers in the Mercialys portfolio 110 shops, including 12 anchor tenants, 10 restaurants, and an 8-screen cinema
Slide 18: 2016 completions
2016 completions 5 shopping center transformations and 1 retail park contributing to organic growth Aix-en-Provence (H&M), Angers (Calliope & Terranova), Anglet (Boulanger), Nîmes (Go Sport, Courir, Izac), Rennes (Brico Dépôt): hypermarket transformations New retail park in Sainte Marie (Réunion) To
Slide 19: Openings to come in 2017: new wave of hypermarket transformations
Openings to come in 2017: new wave of hypermarket transformations Q2 2017 Q3 2017 Q4 2017 Quimper Poitiers Toulouse (ph. 2) Fréjus Rennes Saint-Etienne Angers (ph. 2) Nîmes (ph. 2) €1.9m of annualized rent Overall yield on cost of 7.6% Narbonne - 2016 ANNUAL RESULTS – FEBRUARY 2017 19
Slide 20: 2017 future openings: 3 major shopping center extensions
2017 future openings: 3 major shopping center extensions Morlaix Saint Martin Saint Etienne Rennes Saint Grégoire des Champs Monthieu Redeveloping the former Brico Creation of 2 medium-size Reinforcing this site’s Dépôt, Maison du Monde and stores and 16 shops to further commercial appeal and Casino
Slide 21: Development pipeline overview: €554m of gross investments
Development pipeline overview: €554m of gross investments The development pipeline has been further strengthened with additional phases for the transformation of large food stores acquired in 2014 and 2015, following the success of the first completions in 2015 and 2016 Investment still to be Net re
Slide 22: Disposals, financial structure & results
4 Disposals, financial structure & results Elizabeth Blaise CFO - 2016 ANNUAL RESULTS – FEBRUARY 2017 22
Slide 23: Disposals completed in 2016 and January 2017
Disposals completed in 2016 and January 2017 H1 2016 - sale of 70% of the €51.3m of capital gains H2 2016 - sale of the Niort & Albertville transformed hypermarket in Rennes & in 2016 (60% distributable) shopping centers to Amundi Immobilier the Anglet site to Schroders Transaction based on a 100% v
Slide 24: Financial structure: deleveraging triggered in 2017
Financial structure: deleveraging triggered in 2017 Net debt: €1,486m, including Proforma LTV at January 31, 2017 (2) €1,230m of bond debt 39.1% €290m of commercial paper €72m of asset sales in Jan. 2017 Undrawn committed credit lines: €410m 2017 disposal program : LTV heading Standard & Poor’s rati
Slide 25: Cost of debt down to 2.0% in 2016
Cost of debt down to 2.0% in 2016 40bp decrease in the cost of debt over the year 2016 net financial expenses of €30.6m (vs. €29.0m in 2015), reflecting higher amount of debt Volume effect: full-year impact of the €200m bond issue from November 2015 based on a cost of 2.203% and increase in commerci
Slide 26: Rental revenues: +12.3%
Excellent performance on organic growth €169.0m Rental revenues: +12.3% €189.8m Lease rights +€21.3m €2.2m +€5.7m Lease rights €3.0m -€3.6m -€0.1m Increase in Indexation invoiced rents -€1.6m Acquisitions Strategic vacancy(1) like-for-like & completions + non-recurring Disposals items Organic growth
Slide 27: Strong FFO growth of +5.4%
Strong FFO growth of +5.4%, with +3.7% excl. the impact of IAS 17(1) EBITDA margin 84.6% vs. 85.3% in 2015 (84.6% excl. €1.1m property dev. margin) +€19.3m IAS17: impact of €0.9m on -€1.1m organic growth and €0.9m on -€1.8m +€0.4m the Espaces Fenouillet -€1.6m extension -€2.0m -€0.3m Volume effect €
Slide 28: Portfolio value up +7.2%, with +6.2% like-for-like growth
Portfolio value up +7.2%, with +6.2% like-for-like growth Breakdown of change in the portfolio’s appraisal value, including transfer taxes(1) +€142m €3,797m €3,565m excl. taxes, of which €437m +€46m +€68m through the fully consolidated stakes €3,542m held in Hyperthethis Participations (9 hypermarke
Slide 29: Focus on partnerships
Focus on partnerships Fully consolidated Hyperthetis companies Immosiris Mercialys stake: 51% Non- controlling interests SCI Rennes Anglet SCI AMR OPCI UIR 2 SNC Aix 2 Mercialys stake: 30% Mercialys stake: 39.9% Mercialys stake: 20% Mercialys stake: 50% Mercialys holds different types of management
Slide 30: Change in NNNAV
Change in NNNAV NNNAV (EPRA, in €/share) +€0.99 €20.22 -€0.22 +€1.20 €19.25(1) -€1.00 Triple net EPRA NAV at Dividend paid Net income Chg. in fair value of assets Chg. in fair value of fin. Triple net EPRA NAV at end-2015 instruments & other items end-2016 - 2016 ANNUAL RESULTS – FEBRUARY 2017 (1) R
Slide 31: Extension of the partnership with Casino to end-2020
Extension of the partnership with Casino to end-2020 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) Mercialys is able to propose development projects to Casino under the partner
Slide 32: Conclusions & 2017 objectives
5 Conclusions & 2017 objectives Eric Le Gentil Chairman & CEO - 2016 ANNUAL RESULTS – FEBRUARY 2017 32
Slide 33: Dividend payment
Dividend payment Proposed dividend corresponding to 85% of 2016 FFO, contributing to a high total return of 10.4% Mercialys will propose a dividend of €1.06 per share at the General Meeting, including the interim dividend of €0.43 per share paid in October 2016 Mercialys distributes for 2016: Mandat
Slide 34: 2017 objectives in a context of significant LTV reduction
2017 objectives in a context of significant LTV reduction Organic growth in invoiced rents > 2% above indexation Change in FFO Around -5% reflecting scope impacts. This trend could be affected by the schedule for disposals Dividend policy 85% to 95% of 2017 FFO - 2016 ANNUAL RESULTS – FEBRUARY 2017
Slide 35: Appendices
6 Appendices - 2016 ANNUAL RESULTS – FEBRUARY 2017 35
Slide 36: Financial calendar
Financial calendar April 19, 2017 Activity at March 31, 2017 (after market close) April 27, 2017 Annual Shareholders’ Meeting July 26, 2017 Press release on 2017 half-year results (after market close) July 27, 2017 Conference call on half-year financial results October 17, 2017 Activity at September
Slide 37: Asset locations
Asset locations The only listed French real estate company that is a pure player for shopping centers Mercialys' portfolio is focused on large and neighborhood shopping centers as well as high street retail assets that are leaders in their areas Assets are concentrated in the most dynamic French reg
Slide 38: Mercialys portfolio
Mercialys portfolio Decreasing exposure for Mercialys rents to the Casino Group: 31.5% of rents, -120 bp vs. 2015 Change in the share of Casino brands in Mercialys’ 54.9% 56.9% annualized rental income (Rent paid by Casino brands as % of total rental income) 27.2% 24.5% 12.4% 11.6% 1.2% 0.7% 4.3% 6.
Slide 39: Mercialys portfolio
Mercialys portfolio Local Types of retailers present in Mercialys assets retailers 12% (% of annualized rental income at December 31, 2016 – including exposure to the Casino Group) National and international retailers 88% Lease expiry schedule (share of leases expiring /minimum guaranteed rent) 23.5
Slide 40: Financing structure & debt schedule
Financing structure & debt schedule Debt schedule at end-2016 (1) 800 750 700 600 RCF 480 500 Bond 400 €m 300 240 Cash advance Casino 200 50 Confirmed bank facility 100 30 30 0 60 2017 2018 Mar. Jul. Dec. Dec. Jul. 2022 Mar. 2019 2019 2019 2020 2021 2023 800 750 700 Debt schedule at end-2015 (1) 600
Slide 41: Mercialys shareholding and number of shares
Mercialys shareholding and number of shares 2014 2015 2016 Number of shares outstanding at the end of the period 92,049,169 92,049,169 92,049,169 Average number of shares outstanding 92,049,169 92,049,169 92,049,169 Average number of shares (basic) 91,826,157 91,767,764 91,856,715 Average number of
Slide 42: FFO, EPRA earnings & net income group share
FFO, EPRA earnings & net income group share In thousands of euros December 31, 2015 December 31, 2016 Invoiced rents 165,958 187,621 Lease rights 2,998 2,175 Rental revenues 168,956 189,795 Non-recovered property taxes -1,081 -1,159 Non-recovered service charges -3,048 -3,165 Property operating expe
Slide 43: Balance sheet
Balance sheet ASSETS (in thousands of euros) December 31, 2015 December 31, 2016 Intangible assets 974 2,016 Property, plant and equipment other than investment property 12 12 Investment property 2,224,080 2,325,268 Investments in associates 20,069 39,039 Other non-current assets 34,154 54,672 Defer
Slide 44: Breakdown of assets
Breakdown of assets Number of Appraisal value (incl. taxes) Gross leasable area at Appraised net rental assets at at December 31, 2016 December 31, 2016 income Type of property December 31, 2016 In €m % Sq.m % In €m % Regional / large shopping centers 25 2,864.4 75% 655,700 71% 143.8 72% Neighborhoo
Slide 45: Capitalization rate grid applicable under the Partnership Agreement
Capitalization rate grid applicable under the Partnership Agreement Applicable capitalization rate grid for reiterations in the first half of 2017 under the Partnership Agreement with Casino Shopping centers Retail parks Corsica and Corsica and Type of property Mainland overseas Mainland overseas Ci
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, obje