Slide 1: 2018 Annual Results
2018 ANNUAL RESULTS February 14, 2019
Slide 2: Preliminary remarks
Preliminary remarks The 2018 annual consolidated financial statements were approved by the Board of Directors on February 13, 2019. The audit procedures have been completed by the statutory auditors. The audit certification report is underway. 2
Slide 3: Contents
Contents 01. 02. 03. 04. Foreword Leveraging our Financial Dividend and operating structure 2019 objectives excellence in a and results resilient market 4 8 33 42 3
Slide 4: Foreword
Foreword Eric Le Gentil Chairman
Slide 5: Dual governance structure set up, in line with best practices
Dual governance structure set up, in line with best practices Separation of the roles of Chairman & CEO Shareholding structure as at December 31, 2018 As proposed by the Chairman & CEO, E. Le Gentil, the Chairman & CEO roles have been separated E. Le Gentil will continue as Chairman of the B
Slide 6: Proving our operating excellence over the years
Proving our operating excellence over the years Organic growth, including indexation (%) FFO (€mn) 3.7% 114.4 115.1 2014-18 3.4% 3.4% 114.0 3.1% average: 3.2% 2.6% 108.5 102.6 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 excluding +2.8% +3.5% +3.5% +2.6% +2.5% indexation EPRA NNNAV (€mn) 1,939.
Slide 7: Dividend payment
Dividend payment Proposed dividend up +2.8%, corresponding to 90% of 2018 FFO Breakdown of the dividend Mercialys will propose a dividend of €1.12 per share at the +2.8% 2019 General Meeting, including the interim dividend of €1.09 per share €1.12 per share(1) €0.50 per share paid in October 2018
Slide 8: Leveraging our operating excellence in a resilient market
LEVERAGING OUR OPERATING EXCELLENCE IN A RESILIENT MARKET Vincent Ravat Chief Executive Officer
Slide 9: Another year of strong performance
Another year of strong performance Cumulative change in Cumulative change in Footfall at end-December 2018 Retailer sales at end-November 2018 3.9% +4.5% 3.7% 3.9% 3.3% 4.3% 3.1% 3.0% 2.9% 2.4% +2.7% 2.5% 2.1% +2.1% +2.1% +1.9% +1.8% 1.6% 1.9% +1.4% +1.4% 0.9% +1.2% +1.2% +0.7% +0.8% +0.5% +0.1% +0.
Slide 10: Negative impact of yellow vests protests in Q4
Negative impact of “yellow vests” protests in Q4 Partially offset by targeted marketing initiatives and on-site events Year-on-year weekly footfall change for Mercialys’ Angers shopping center Black Friday Marketing pushes Marketing pushes Peak of the crisis marketing pushes Marketing pushes Marketi
Slide 11: France: no major economic recovery in 2018, but consumption structurally sound and balanced
France: no major economic recovery in 2018, but consumption structurally sound and balanced Sustained change in household consumption Change in consumption habits, but virtually no changes and high level of savings over the long term(1) in household consumption per destination(1) 12% 50% 11% 48%
Slide 12: Complementarity between on-line and off-line channels
Complementarity between on-line and off-line channels Consumer choice matrix Big spenders online are big spenders offline The shop remains the main medium in shopping habits(1) Need for Perceived effort 65% of French respondents prefer buying products in-store in any category, Need for Need for
Slide 13: Winning brands, winning shopping locations
Increasingly polarized retail market offering a premium to clearly positioned players Winning Winning brands shopping locations In-store experience: customer care (personalized suggestions, Motion: continuous adaptation of merchandising mixes and asset workshops, trials and demos), service (serv
Slide 14: Mercialys asset features aligned with customers' search for the best value for money
Mercialys asset features aligned with customers’ search for the best value for money Maximal value Minimal effort Most customer needs addressed Time-effective 100% of France’s top-selling brands present in our centers(1) 80% of France’s highest-selling online products present in our centers(
Slide 15: 5 strategic drivers to further boost our shopping centers' attractiveness
5 strategic drivers to further boost our shopping centers’ attractiveness 35 in-house projects aimed at strengthening sites’ local anchoring and continuing to better address the 3 fundamental customer needs 1 From asset manager to retail & services hub From mono to multi-functional sites 5 BEST PERC
Slide 16: 1 - From asset manager to retail & services hub
1 - From asset manager to retail & services hub Objective: widen the range of value-added services offered for Mercialys retailers and end-customers You feel good Ongoing projects: “dramatization” of spaces through spectacular yet capex-light decoration, enabling major changes in the visual percep
Slide 17: 2 - From landlord to last mile player
2 - From landlord to last mile player Objective: leverage Mercialys shopping center locations and offers You order when you want Ongoing projects: setting up a food delivery system; pilots at selected sites based on the structure of their primary catchment Development of a dedicated area, the cent
Slide 18: 3 - From customer knowledge to personalized customer relationships
3 - From customer knowledge to personalized customer relationships End-customers You say who you are You get what you need Events, competitions Personalized and games services Data Buying Directories Personalized offers Power Traffic & with beacon sensors Sales Traffic & Sales Purchases € WiFi Perso
Slide 19: 3 - From customer knowledge to personalized customer relationships
3 - From customer knowledge to personalized customer relationships Tenants Audience / qualified database Synergies on commercial efforts between retailers ROI analysis per center/ per store / per customer Always more granular data collected Always more customers known and understanding of expectatio
Slide 20: 4 - From mass market consumption to better living
4 – From mass market consumption to better living Objective: further strengthen our positive local impact on communities You help us to be greener Ongoing projects: setting up dedicated selling spaces for local producers and equipment for recycling (batteries, textiles, waste) “La fermette”, a ded
Slide 21: 5 - From mono to multi-functional sites
5 - From mono to multi-functional sites Objective: leverage a strong asset base with mixed-use space planning You have fun You launch your business Ongoing projects: designing a large indoor / outdoor leisure offer for some specific Ongoing projects: designing coworking spaces at some adapted sh
Slide 22: Further leveraging our 3 proven fields of expertise
Further leveraging our 3 proven fields of expertise Knowledge of our tenants and end-customers’ expectations and needs Proactive retail approach Retail expertise 700k qualified contacts in database with early identification of more retail 2019 target: 25% of unique customers in our catchment are
Slide 23: New paradigm for portfolio management
New paradigm for portfolio management Increased capital discipline and selectivity in investments Value crystalized through asset Commitment to ensuring value Ability to capitalize on disposals in 2018, but reduced creation and attractive shareholder Mercialys’ asset management 1 appetite among inve
Slide 24: More selective pipeline of Eur 568m at year-end 2018
More selective pipeline of Eur 568m at year-end 2018 High selectivity on development projects: Strong and flexible pipeline: Eur 257m pipeline contraction vs end-June 2018 on the back of Eur 79.5m of 2018 30 assets with projects identified out of the 55(1) in Mercialys’ total portfolio proje
Slide 25: Reunion Island – Project phases
2018 completions Reunion Island – Project phases 3 2021 projects Multistory car park 2 550 spaces 7 Extension 44 new shops including 5 medium- Promenade 1 sized stores on 8,300 sq.m gross 3,400 sq.m GLA, including 800 sq.m of leisure leasable area space and 2,600 sq.m of restaurants and stores Space
Slide 26: Reunion Island Le Port – Outdoor food court
Reunion Island Le Port – Outdoor food court €0.8m investment Target net yield on cost: c.7.0% Completion: 2019 26
Slide 27: Reunion Island Le Port – Promenade
Reunion Island Le Port – Promenade €20.0m investment Target net yield on cost: >7.0% Completion: 2021 27
Slide 28: Aix-Marseille Plan de Campagne – Project phases
Aix-Marseille Plan de Campagne – Project phases Transformation Hypermarket space requalification 6 news shops including 4 medium-sized stores on 7,500 sq.m gross leasable area Extension phase 1 Outdoor foot court Multistory car park 16 units on 4,600 sq.m 1,020 spaces gross leasable area Already ful
Slide 29: Aix-Marseille Plan de Campagne – Outdoor food court
Aix-Marseille Plan de Campagne – Outdoor food court €13.5m investment Target net yield on cost: >7.0% Completion: 2020 29
Slide 30: Mandelieu – A new urban shopfront
Mandelieu – A new urban shopfront €12.2m investment Target net yield on cost: >7.0% Completion: 2022 30
Slide 31: Sainte-Marie – An international destination
Sainte-Marie – An international destination €101.6m investment Target net yield on cost: >7.0% Completion: 2022 31
Slide 32: Saint-Denis – Mixed-use project
Saint-Denis – Mixed-use project €6.3m investment Target IRR: >8.0% Completion: 2022 Architect: Ateliers 2/3/4 32
Slide 33: Financial structure and results
FINANCIAL STRUCTURE AND RESULTS Elizabeth Blaise Deputy Chief Executive Officer & CFO
Slide 34: Organic growth continuing to benefit from dynamic relettings
Organic growth continuing to benefit from dynamic relettings 2018 renewals & relettings: +10.1% 3.7% 3.4% 3.4% 3.1% Around +3.0% 2.6% 1.2% Around 0.3% +1.8% 0.0% 3.5% 3.5% 2.8% 2.6% 2.5% -0.1% -0.1% At least +1.0% 2014 2015 2016 2017 2018 2019 (1) Organic growth in invoiced rents, excl. indexation I
Slide 35: Stable vacancy rate and occupancy cost ratio
Stable vacancy rate and occupancy cost ratio Change in recurring financial vacancy rate(1) Change in occupancy cost ratio 10.5% 10.5% 2.5% 2.5% 2.5% 10.3% 2017 H1 2018 2018 2017 H1 2018 2018 (rents + charges including marketing costs + work charged back to tenants, including tax) / tenants’ sales in
Slide 36: Rental revenues
Rental revenues Organic growth above the 2018 target €187.3m +1.1% Lease rights €185.3m €2.1m Lease rights €1.8m + €4.7m - €3.7m + €0.6m Disposals Acquisitions 185.2 +0.9% - €2.1m + €2.2m 183.5 and completions Strategic Like-for-like vacancy(1) and 180,5in Indexation growth non-recurring invoiced re
Slide 37: FFO
FFO +1.0 % increase including the carrying cost, +4.5% without, significantly higher than the 2018 target + €4.1m €119.1m + €1.2m + €2.0m + €1.2m + €1.3m - €0.4m €115.1m €114.0m 90bp improvement - €2.4m Dynamic in the rental - €1.8m organic growth Including the carrying Strong margin at 2017 benefit
Slide 38: Resilient financial profile: Optimized financing cost
Resilient financial profile Optimized financing cost 3% (1) Change in the cost of drawn debt 3% Net debt: €1,478.2m including 1.9% 2% 1.8% 1.8% €1,679.7 m of bond debt, of which €479.7m to be 2% 1% reimbursed in March 2019 1% €183.0m of commercial paper 0% 7,0 2017 H1 2018 2018 Undrawn commi
Slide 39: Resilient financial profile: Controlled leverage
Resilient financial profile Controlled leverage Change in LTV (excluding transfer taxes) and ICR Debt: fixed vs. floating rate exposure 60,0% 5.2x (1) (including commercial paper program) 5.1x 5.0x 50,0% 40,0% 30,0% 20,0% 39.9% 40.2% 40.8% 10,0% 0,0% 37% 2017 H1 2018 2018 Fixed-rate debt Variable-ra
Slide 40: Change in portfolio value
Change in portfolio value €3,557m excluding transfer taxes, +1.2% over 12 months, -0.4% over 6 months +0.4% like-for-like over 12 months(1), including: The -3bp compression in the yield rate at end-2018 versus end-2017 primarily factors in: +0.6% from capex spent over the period, + €19.7m a mi
Slide 41: Change in NNNAV per share
Change in NNNAV per share(1) €21.14/share, +2.9% over 12 months, +1.6% over 6 months + €0.63 €21.14 EPRA NNNAV at end-2018 is up +2.9% over 12 months to + €1.25 + €0.06 - €0.16 €21.14/share, benefiting from a positive contribution for the €20.54 marking to market of Mercialys’ fixed-rate debt, wit
Slide 42: 2019 Objectives
2019 OBJECTIVES Vincent Ravat Chief Executive Officer
Slide 43: 2019 objectives
2019 objectives Organic growth in invoiced rents: Dividend policy: Around +3%, with at least +1% Change in FFO: excluding indexation At least stable At least +4% within a range of 85% to 95% of Strong level of organic growth while 2019 FFO maintaining sustainable retailer OCRs 43
Slide 44: Appendices
APPENDICES
Slide 45: Financial calendar
Financial calendar 2019 April 23 Activity at March 31, 2019 (after market close) April 25 2019 Annual Shareholders’ Meeting July 24 Press release on 2019 half-year results (after market close) July 25 Conference call on half-year results October 16 Activity at September 30, 2019 (after market close)
Slide 46: Asset locations
Asset locations Leading listed French real estate company that is a pure Mercialys portfolio 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
Slide 47: Mercialys portfolio
Mercialys portfolio Change in the share of Casino brands in Breakdown of rental income Mercialys’ annualized rental income by business sector (Rent paid by Casino brands as % of annualized rental income (% of annualized rental income at December 31, 2018 – including at December 31, 2018) exposure to
Slide 48: Mercialys portfolio
Mercialys portfolio Types of retailers present Lease expiry schedule in Mercialys assets (percentage of leases expiring / guaranteed minimum rent) (% of annualized rental income at December 31, 2018 – including exposure to the Casino Group) 39.3% 11% National and international retailers 14.2% Local
Slide 49: Financing structure & debt schedule
Financing structure & debt schedule Debt schedule at end-2018(1) Debt schedule at end-2017(1) in €m in €m In February 2018, Mercialys successfully placed a €300m bond issue, maturing in February 2026 A December 2019 €30m confirmed bank facility was refinanced in 2018, with a new €30m bank facili
Slide 50: Mercialys shareholding structure and number of shares
Mercialys shareholding structure and number of shares Mercialys shareholders at December 31, 2018 0.41% December December December 17.76% Casino group 25.16% 31, 2016 31, 2017 31, 2018 Number of shares outstanding Foncière Euris (1) 92,049,169 92,049,169 92,049,169 at the end of the period Public Av
Slide 51: FFO, EPRA earnings & net income group share
FFO, EPRA earnings & net income group share In thousands of euros December 31, 2017 December 31, 2018 Invoiced rents 183,514 185,213 Lease rights 1,805 2,074 Rental revenues 185,318 187,287 Non-recovered service charges and property taxes -5,904 -5,000 Property operating expenses -7,227 -6,920 Net r
Slide 52: Balance sheet
Balance sheet In thousands of euros December 31, 2017 December 31, 2018 Intangible assets 2,486 2,710 Property, plant and equipment 10 8 Investment property 2,305,414 2,322,755 Investments in associates 38,445 35,160 Other non-current assets 37,529 46,773 Deferred tax assets 319 1,727 ASSETS Non-cur
Slide 53: Breakdown of assets
Breakdown of assets Average rate of return: 5.10% at December 31, 2018 Appraisal value Appraisal value Gross leasable Appraised net Number (excl. transfer taxes) (incl. transfer taxes) area rental income Type of property of assets at December 31, 2018 at December 31, 2018 at December 31, 2018 at Dec
Slide 54: Capitalization rate grid
Capitalization rate grid Applicable under the Partnership Agreement with Casino Type of property Shopping centers Retail parks City center Corsica and Corsica and Mainland Mainland overseas depts. overseas depts. France France & territories & territories Rates applicable > 20,000 sq.m 5.5% 6.0% 6.0%
Slide 55: 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