Mercialys Sa · EURONEXT:MERY
Mercialys Sa — H1 2021 Earnings Presentation
54 slides from Mercialys Sa's earnings presentation, Jul 29, 2021
Slide 1: 2021 half-year results
2021 half-year results July 29, 2021
Slide 2: Preliminary remarks
Preliminary remarks The 2021 first-half consolidated financial statements were approved by the Board of Directors on July 28, 2021 A limited scope review of these financial statements has been performed by the statutory auditors 2
Slide 3: Contents
Contents 01 02 03 Resilient and value- Financial results Moving forward with accretive business model at end-June 2021 Mercialys’ adaptation to over the cycles evolving consumer trends Page 6 Page 18 Page 29 3
Slide 4: Mercialys firmly convinced that its evolving business model strong past performance will endure
Mercialys firmly convinced that its evolving business model strong past performance will endure in a post-Covid world Sites anchored in day-to-day Geographical positioning Continuous adaptation of both purchases and powerful enough to continuously enhanced through assets and the commercial offering
Slide 5: Mercialys well positioned to benefit from the strong recovery expected in France from 2021
Mercialys well positioned to benefit from the strong recovery expected in France from 2021 onwards, with retail likely to be boosted by the exceptional level of “forced savings” FRENCH GDP GROWTH GROSS HOUSEHOLD CHANGE IN NUMBER OF FORECASTS (1) SAVINGS RATE (2) COLLECTIVE PROCEEDINGS (3) 8% 30% 40
Slide 6: Resilient and value-accretive business model over the cycles
Resilient and value-accretive business model over the cycles Vincent Ravat Chief Executive Officer Élizabeth Blaise Deputy Chief Executive Officer & Chief Financial Officer
Slide 7: Structural outperformance for footfall at Mercialys sites vs. the national market
Structural outperformance for footfall at Mercialys sites vs. the national shopping center market, independently from cycles Mercialys’ year-on-year change in footfall outperforming the France panel despite a challenging basis for comparison +1.2% +1.4% +3.0% +1.4% +1.9% +2.1% Mercialys centers’ foo
Slide 8: Efficient and recurrent shopping translating into retailer sales with a structurally positive trend
Efficient and recurrent shopping translating into retailer sales with a structurally positive trend Year-on-year change in retailer sales +4.5% 2021 vs. 2020 +2.7% +2.1% +0.4% +0.5% +0.7% 0.0% -0.4% +0.2% -0.9% -1.2% +0.7% January -2.1% -2.0% -6.7% -15.0% May +8.4% +250bp +90bp +430bp +160bp +390bp
Slide 9: Strong upturn in footfall levels supported by BtoC marketing actions
Strong upturn in footfall levels supported by BtoC marketing actions capitalizing on the Company’s powerful proprietary digital ecosystem Large-scale communication across Center events / activities Ocitô first and last-mile multiple media for the centers and loyalty program logistics platform › Reop
Slide 10: Accounts at end-June 2021 reflect impact of support measures for the 2 lockdowns in 2020
The accounts at end-June 2021 reflect the impact of the support measures for the 2 lockdowns in 2020 No rent relief granted for the 2021 lockdown in view of government commitments to provide support covering rent and charges EFFECTS RECOGNIZED EFFECTS RECOGNIZED EFFECTS RECOGNIZED at June 30, 2020 a
Slide 11: Normalization of collection significantly affected by lack of visibility over reopening date
Normalization of collection significantly affected by the lack of visibility over the reopening date for stores following the 3rd lockdown COLLECTION FOR 2020 COLLECTION FOR 2020 (at December 31, 2020) (at June 30, 2021) 100.0% 100.0% 99.1% 97.8% 99.0% 100.0% 100.0% 98.9% 99.5% 97.4% 98.6% 97.7% 95.
Slide 12: Full amounts invoiced are due, no provisions recorded pending government support
As the full amounts invoiced are due, Mercialys has not recorded any provisions pending the rollout schedule for government support packages COLLECTION FOR 2021 (at June 30, 2021) RESIDUAL ARREARS 81.0% › Additional €2.3m collected for H1 2021 vs. June 30, 2021, 75.0% reaching a 76.9% collection rat
Slide 13: Resilient revenue profile built around a food offering
Mercialys benefits from a resilient revenue profile, built around a food offering that drives recurrence and an attractive mix that combines international, national and local retailers BREAKDOWN OF MERCIALYS’ RENTAL INCOME HYPERMARKET REMAINS A DOMINANT FORMAT IN FOOD BY BUSINESS SECTOR DISTRIBUTION
Slide 14: Local retailers strongly incentivized to develop the value of their store
Local retailers in particular represent a category of tenants strongly incentivized to develop and grow the value of their store over time Tenants for whom their store has strong value, in terms of the asset OUT OF THE 13.0% OF LOCAL RETAILERS itself and on a personal level AT MERCIALYS: › Embedding
Slide 15: Diversification of the rental base limits exposure to closures
This diversification of the rental base and the quality of the asset portfolio limit exposure to closures and network rationalization MERCIALYS’ TOP 10 TENANTS IMPACT ON MERCIALYS RENTAL BASE (excl. brands linked to Casino group) OF RETAILERS IN LIQUIDATION PROCEEDINGS (% of annualized rental income
Slide 16: Lease expiry schedule effectively staggered over time
Lease expiry schedule effectively staggered over time and benefiting from new signatures and ongoing deals LEASE EXPIRY SCHEDULE (percentage of leases expiring / guaranteed minimum rent at June 30, 2021) › 149 renewals and relettings completed in H1 2021 for €8.6m, i.e. 5% of the total rental base,
Slide 17: Vacancy levels are effectively under control
With these actions, vacancy levels are effectively under control CHANGE IN VACANCY RATE (1) 5.4% 5.7% › Scope impact vs. H1 2020 with the assets acquired and divested in Q4 2020 representing c. +100bp of 3.4% total vacancy › Tenants left in H1 2021 vs. end-2020 also represent 1.7% +100bp of addition
Slide 18: Financial results at end-June 2021
Financial results at end-June 2021 Vincent Ravat Chief Executive Officer Élizabeth Blaise Deputy Chief Executive Officer & Chief Financial Officer
Slide 19: Organic growth impacted by the Covid-19 crisis
Organic growth (1) impacted by the Covid-19 crisis +3.4% +2.6% +3.7% +3.6% -7.0% -4.0% IMPACTS LINKED TO 1.2% THE HEALTH CRISIS 1.9% 3.5% 2.6% 2.5% › Covid-19 impacts linked to the 1.7% 1.6% 2020 lockdowns 0.3% -0.1% -0.8% -0.4% › Lower contribution by Casual Leasing, following the order to -2.3% cl
Slide 20: Rental revenues down -8.0%
Rental revenues down -8.0% €92.0m Organic growth Lease rights -4.0% €1.3m €84.7m - €3.6m -8.0% €0.0m - €0.7m + €0.2m - €0.4m - €2.1m Lease rights €90.7m - €0.8m €1.2m -8.1% €83.4m (1) June June30, 30, 2020 2020 Acquisitions and Strategic vacancy Rent reliefs linked to Indexation Lower contribution A
Slide 21: FFO at €55.7m
FFO at €55.7m €63.0m - €0.1m €55.7m - €7.3m + €5.7m - €6.0m Tight control + €0.8m + €0.2m of the cost structure Impacts Including reversal of - €0.5m detailed provisions for doubtful Impact of the Lower tax burden Impact of the on slide 20 receivables and a July 2020 (corporate value- health crisis
Slide 22: Sound financial structure
Sound financial structure CHANGE IN LTV AND ICR DEBT: FIXED VS. FLOATING RATE EXPOSURE (1) 13% 10.6x H1 2021 5.0x 5.6x 87% Fixed-rate debt Variable-rate debt 41.1% 38.6% 38.1% 38.3% 35.8% 36.0% 8% H1 2020 2020 H1 2021 2020 92% LTV - excluding transfer taxes LTV - including transfer taxes ICR Fixed-r
Slide 23: Strong level of liquidity
Strong level of liquidity DRAWN DEBT: €1,449.5m INCLUDING CHANGE IN THE COST OF › €1,299.5m of bond debt DRAWN DEBT (1) › €150m of commercial paper Impact of the bond refinancing CASH AND EQUIVALENTS: €287.8m operation carried out in July 2020 UNDRAWN COMMITTED CREDIT LINES: €405m 1.9% H1 2021 reneg
Slide 24: Rolled debt schedule
Rolled debt schedule DEBT SCHEDULE AT END-DECEMBER 2020 (1) In €m 568.7 225 300 300 150 35 30 30 25 30 30 Jan. 2022 Jun. 2022 Jul. 2022 Dec. 2022 Mar. 2023 Jun. 2023 Jul. 2023 Dec. 2023 Jun. 2024 Jul. 2024 2025 Feb. 2026 Jul. 2027 Nov. 2027 Confirmed bank facilities Casino cash advance Bonds Revolvi
Slide 25: Limited impact of the share dividend on the shareholding structure
Limited impact of the share dividend on the shareholding structure At June 30, 2021 Results of the option for the 2020 dividend paid in shares › 43.3% of rights exercised › 1,837,332 new shares issued on May 21, 2021, taking the 0.27% total capital up to 93,886,501 shares › €22.4m of cash dividends
Slide 26: Change in portfolio value
Change in portfolio value At June 30, 2021 OVER 6 MONTHS €2,996.6m excluding transfer taxes Total change on a like-for-like basis (2) -2.3% -€69m -2.3% over 6 months (1) of which rent effect -1.9% -€58m of which yield effect -0.4% -€11m -9.6% over 12 months (1) of which other effects ns ns AVERAGE A
Slide 27: Appraisers' assumptions underlying portfolio values at end-June 2021
Appraisers’ assumptions underlying portfolio values at end-June 2021 SPREAD BETWEEN RISK FREE RATE AND MERCIALYS AVERAGE APPRAISAL YIELD RATE 6% MERCIALYS 5% Average annual rent 222 (€/sq.m) 4% 3.9 pts 3.3 pts 4.8 pts 4.4 pts 4.6 pts 4.3 pts 4.4 pts 5.1 pts 6.1 pts 5.6 pts 3% Net rental income CAGR
Slide 28: Change in EPRA NDV per share
Change in EPRA NDV per share (1) €17.17/SHARE, -6.8% OVER 6 MONTHS, -13.7% OVER 12 MONTHS €1,608.1m at end-June 2021 + €0.59 (2) €18.42 -4.6% vs. end-December 2020 -11.8% vs. end-June 2020 - €0.42 - €0.71 + €0.01 - €0.49 €17.17 - €0.23 EPRA NRV Rent effect: - €0.62 › €20.32/share › Down -4.1% over 6
Slide 29: Moving forward with Mercialys' adaptation to evolving consumer trends
Moving forward with Mercialys’ adaptation to evolving consumer trends Vincent Ravat Chief Executive Officer Élizabeth Blaise Deputy Chief Executive Officer & Chief Financial Officer
Slide 30: Opinion polls revealing the crisis may not have changed consumption habits
Opinion polls revealing that the crisis may not have resulted in significant changes to previous consumption habits or desires… Nearly 70% of respondents say that their 73% of respondents want to consume at 81% of respondents do experience of the health crisis has not led least as much as before the
Slide 31: But more where to live, benefiting mid-size cities
… but more where to live, benefiting mid-size cities VOLUMES OF EXISTING HOUSE AND APARTMENT SALES VS. MERCIALYS’ PORTFOLIO (1) Volume of sales (in 2020) 5,000 Particularly significant increase in Saint-Denis volumes of sales Paris 1,000 of existing houses and apartments Brest Morlaix Chartres in mi
Slide 32: Consumers' hunger for omni-channel buying experiences driving initiatives
In these cities, consumers’ hunger for omni-channel buying experiences is clear and driving meaningful initiatives at Mercialys Research Buying decision Payment Order collection Returns CUSTOMER JOURNEY I want to see all the I want personalized advice I do not want to queue at I want to see the I wa
Slide 33: Clear incentives to support retailers' omnichannel transition
Clear incentives for Mercialys to support its retailer base’s omnichannel transition Omnichannel consumers spend 3 to 4x more (2) AVERAGE CUSTOMER SPEND (1) EXAMPLE OF OMNICHANNEL CONSUMERS: (base 100, 2020) Extensive national store network: 80% of the French population is <15mn from a ~300-400 Prom
Slide 34: Ocitô, now widely deployed and supporting omni-channel anchoring
Ocitô, now widely deployed and supporting the omni-channel anchoring of the stores… TEST & LEARN APPROACH FROM THE OUTSET, MAKING IT NUMBER OF PHYSICAL AND DIGITAL MARKETING POSSIBLE TO CONSOLIDATE THE BUSINESS MODEL TODAY BY OPERATIONS SUPPORTING AWARENESS ANCHORING IT AS CLOSELY AS POSSIBLE TO THE
Slide 35: Very positive feedback from user-retailers
… generating very positive feedback from user-retailers CHARLOTTE, Manager CÉLINE, Manager ONDER, Director (Besançon) (Lanester) (Clermont-Ferrand) Ocitô enables you to create your own online store at We are very satisfied about our A big THANK YOU! We have been using Ocitô for no cost, while benefi
Slide 36: Same Test & Learn approach applied to Cap Cowork spaces
Same Test & Learn approach applied to continue developing Cap Cowork spaces Projects in 2021 have benefited from the success of the first spaces in Grenoble and Angers and feedback on them TYPICAL CUSTOMER PROFILE OF PROFESSIONALS, SHOWING A PREFERENCE FOR FIXED AND CLOSED OFFICES, WITH REDUCED CAPA
Slide 37: Pipeline with a strong multi-usage focus
Pipeline with a strong multi-usage focus alongside constant monitoring of opportunities for acquisitions outside of the current asset portfolio TOTAL INVESTMENT STILL TARGET NET TARGET NET YIELD (€m) COMPLETION DATE INVESTMENT TO BE COMMITTED RENTAL INCOME ON COST COMMITTED PROJECTS 27.0 24.9 0.8 (1
Slide 38: Multi-local real estate and commercial expertise across more than 60% of portfolio
Multi-local real estate and commercial expertise deployed across more than 60% of the portfolio Tours Saint-Denis Annecy TOURS Mixed-use reconfiguration of the shopping center around coworking spaces, services and leisure, dining and logistics SAINT-DENIS Requalification of a high-street asset, incl
Slide 39: 2021 objectives
2021 objectives › The first half of 2021 was marked by a particularly long period › Nevertheless, there is still significant uncertainty surrounding of government-ordered closures affecting shopping centers the coming months due to changes in the health situation, as for more than 3.5 months well as
Slide 40: Appendices
Appendices PIERCIALYS
Slide 41: Financial calendar
Financial calendar 2021 October 18 Activity at September 30, 2021 (after market close) 41
Slide 42: Company profile
Company profile Leading listed French real estate company that is €169.8m a pure player for shopping centers Annualized rental basis › 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 concent
Slide 43: Historical indicators
Historical indicators CURRENT FINANCIAL VACANCY RATE (1) ORGANIC GROWTH 4.0% 3.8% 3.7% 3.6% 2.6% 2.6% 2.5% 1.7% 2.5% 2.5% 2.5% Organic growth in invoiced rents, excluding indexation -4.3% -4.0% 2017 2018 2019 2020 H1 2021 Organic growth in invoiced rents, including indexation -7.0% -8.6% 2017 2018 2
Slide 44: Organizational structure
Organizational structure 131 › All core business functions carried out in-house, excluding specific mandates employees › All support functions brought back in-house or currently being brought back at end-June 2021 in-house SUPPORT FUNCTIONS BROUGHT BACK IN-HOUSE Real Estate Human Resources Real Esta
Slide 45: Shopping center portfolio structure
Shopping center portfolio structure NUMBER OF SHOPPING CENTERS AND AVERAGE VALUE 73.5 65.9 64.4 61.5 48.7 26.9 34.3 93 69 59 58 48 49 49 2010 2012 2014 2016 2018 2020 H1 2021 Number of shopping centers in portfolio Average gross asset value of shopping centers (€m) SHOPPING CENTER BREAKDOWN BY SIZE
Slide 46: Rental income structure
Rental income structure BREAKDOWN OF MERCIALYS’ RENTAL INCOME BREAKDOWN OF MERCIALYS’ RENTAL INCOME BY TYPE OF RETAILER – CONSOLIDATED VISION BY TYPE OF RETAILER – ECONOMIC EXPOSURE (% of annualized rental income) (% of annualized rental income at June 30, 2021) 64.4% 60.9% Strongly decreasing expos
Slide 47: Rental income structure
Rental income structure CASINO GROUP LEASE SCHEDULE H&M GROUP LEASE SCHEDULE (main leases: hypermarkets, supermarkets & Monoprix stores) % HELD BY LEASE LEASE SITE TYPE LEASE CHARACTERISTICS SITE LEASE START DATE LEASE END DATE LEASE CHARACTERISTICS MERCIALYS START DATE END DATE Grenoble 100% Monopr
Slide 48: Outstanding CSR strategy regularly recognized since its launch in 2015
Outstanding CSR strategy regularly recognized since its launch in 2015 No review to No review to No review to No review to No review to No review to No review to No review to No review to 2021 date date date Score: 68/100 date date date date date date Score: 87/100 Rating: #1 on SBF 120 BPR Rating:
Slide 49: EPRA performance indicators
EPRA performance indicators JUNE 30, 2020 DECEMBER 31, 2020 JUNE 30, 2021 EPRA earnings - € per share 0.69 1.04 0.60 EPRA NRV - € per share 22.00 21.18 20.32 EPRA NTA - € per share 19.68 (1) 19.04 18.26 EPRA NDV - € per share 19.90 18.42 17.17 EPRA net initial yield - % 5.16% 5.28% 5.26% EPRA “toppe
Slide 50: FFO & EPRA earnings
FFO & EPRA earnings IN THOUSANDS OF EUROS JUNE 30, 2020 JUNE 30, 2021 Invoiced rents 90,732 83,419 Lease rights and despecialization indemnities 1,271 1,246 Rental revenues 92,003 84,665 Property tax -14,327 -13,775 Reinvoiced to tenants 13,004 12,170 Non-recovered property tax -1,323 -1,606 Service
Slide 51: Net income attributable to owners of the parent
Net income attributable to owners of the parent IN THOUSANDS OF EUROS JUNE 30, 2020 JUNE 30, 2021 FFO 62,993 55,694 Depreciation and amortization -20,236 -19,557 Other operating income and expenses -11,112 -5,579 Hedging ineffectiveness, banking default risk and partial redemption of 1,394 683 the 2
Slide 52: Balance sheet
Balance sheet IN THOUSANDS OF EUROS DECEMBER 31, 2020 JUNE 30, 2021 Intangible assets 4,052 3,968 Property, plant and equipment other than investment property 1,605 2,465 Investment property 2,050,907 2,031,973 Right-of-use assets 8,902 8,392 Investments in associates 38,918 38,412 Other non-current
Slide 53: Breakdown of assets
Breakdown of assets Average appraisal yield rate: 5.74% at June 30, 2021 APPRAISAL VALUE APPRAISAL VALUE GROSS LEASABLE AREA APPRAISED NUMBER (excl. transfer taxes) (incl. transfer taxes) at June 30, 2021 NET RENTAL INCOME TYPE OF PROPERTY OF ASSETS at June 30, 2021 at June 30, 2021 at June 30, 2021
Slide 54: Disclaimer
Disclaimer › This communication contains forward-looking information › This presentation has been prepared solely for information and statements about Mercialys. Forward-looking statements purposes and must not be interpreted as a solicitation or an are statements that are not historical facts. Thes