Slide 1: 2014 Results
2014 Results February 12, 2015
Slide 2: Preliminary remarks
Preliminary remarks The 2014 annual consolidated financial statements were approved by the Board of Directors on February 11, 2015. The audit procedures were performed by the statutory auditors. The audit certification report is in progress. 2014 Annual Results 2
Slide 3: Contents
Contents I. Strategy and key messages II. 2014 activity & development pipeline III. Financing IV. 2014 results V. Conclusion and 2015 objectives 2014 Annual Results 3
Slide 4: Strategy and key messages
Strategy and key messages Eric Le Gentil, Chairman and CEO 4
Slide 5: Key data
Key data In million euros 2013 2014 Change (%) Invoiced rents 143.0 148.8 4.1% Organic growth in invoiced rents excluding indexation +1.7% +2.8% +110 bps Rental revenues 149.0 152.8 2.6% FFO 96.2 102.5 +6.5% EPRA earnings 96.1* 98.1 +2.2% Investments (gross) 63.0 530.5 na Disposals 232.0 262.0 +12.9
Slide 6: Mercialys delivers results on the 360-degree view of its sites
Mercialys delivers results on the 360-degree view of its sites Continually transform the portfolio: extensions, redevelopments Enhance the attractiveness of centers and maximize the value created A global Listen to the needs of the brands approach and facilitate connections with their customers Conc
Slide 7: Mercialys continues to extract potential from its portfolio of assets
Mercialys continues to extract potential from its portfolio of assets Reversion on portfolio assets in 2014 continued to trend strongly upward High level of activity in 2014: 293 leases signed vs. 261 in 2013 The impact of renewals and relettings remained significant Renewals Relettings Average incr
Slide 8: Continuous innovation: sustaining Casual Leasing and its strong value creation
Continuous innovation: sustaining Casual Leasing and its strong value creation Rents increased +22% to €6.1 million, and +38% on a like-for-like basis Mercialys, pioneer of Casual Leasing in France This activity is now an integral part of the business model Development of additional areas o 12,000 m
Slide 9: Continuous innovation: the launch of Villages.Services
Continuous innovation: the launch of Villages.Services® Launch of this new concept in 2014 Complement a shopping center’s merchandising with a new and diversified offer Bring daily services back to the shopping centers Create a differentiated catering offer Standardize a low-cost model to tailor the
Slide 10: Click & Collect
Click & Collect New ways to make customers’ lives easier An innovative concept for consumers and retailers, melding the strengths of “bricks” and “clicks”: give customers the option to order products from the mall shops online through the Mercialys and Cdiscount websites, thanks to GPS-enabled track
Slide 11: 30% of the portfolio BREEAM In-Use certified in February 2015
30% of the portfolio (in value) BREEAM In-Use certified in February 2015 Caserne de Bonne – Grenoble: 1st center to achieve “outstanding” level for both its asset and building management (Sept. 2014) “Outstanding” level for the building Chateaufarine – Besançon (Nov. 2014) management of these center
Slide 12: Refueling a 3-year development pipeline
Refueling a 3-year development pipeline A development pipeline structured around the continuous transformation of assets… Ongoing construction at the flagship site of Toulouse Fenouillet, where Phase 1 €210m (retail park) is now 100% let works, €180m of which to be Launch of construction on Phase 2
Slide 13: Favorable market environment for large-scale refinancing transactions
Mercialys has benefited from a favorable market environment for large- scale refinancing transactions Bond exchange new €550 million bond issue redemption of €170 million on the 2019 issue Bank refinancing: repayment of the term loan and increase of undrawn available lines to €300 million Optimizati
Slide 14: Mercialys exceeded its objectives
Thanks to the commitment of its teams, Mercialys exceeded its objectives Results Operation Objective: Organic growth in rents of +2%, revised to +2.5% Target: Strengthen the attractiveness of Mercialys’ sites excluding indexation Achievement: Outperformance in terms of footfall and Achievement: +2.8
Slide 15: Presentation of activity & development pipeline
Presentation of activity & development pipeline Vincent Rebillard, Chief Operating Officer 15
Slide 16: Mercialys shopping centers outperformed the French market
Mercialys shopping centers outperformed the French market Cumulative change in footfall in 2014 2,0% (Mercialys: major shopping centers and main neighborhood centers) 1,5% 1,4% 1,4% (CNCC: all shopping centers excluding Primark impact) 0,9% 1,0% 0,7% 0,5% 0,0% -0,5% -0,2% -0,2% -1,0% -0,7% -0,7% -0,
Slide 17: Organic growth momentum remained very strong
Organic growth momentum remained very strong Invoiced rents increased by +3.1% on a like-for-like basis in 2014 with an increase of +2.8% excluding indexation, well above the initial forecast of +2% and the revision to +2.5% Indexation 0.3% Breakdown of organic growth of +3.1% Casual in invoiced ren
Slide 18: Continuous improvement of shopping centers marketability
Continuous improvement of shopping centers marketability is the core of the Mercialys business model Increasing reversion Maintaining a reasonable Improving customer flows potential occupancy cost ratio Occupancy cost ratio (Rents + charges incl. tax) / tenant sales incl. tax 12,0% 10,3% 10,3% 9,9%
Slide 19: Management indicators remained at excellent levels
Management indicators remained at excellent levels Management indicators reflect the strength of the underlying real estate The recurring financial vacancy rate improved 20 bps to 2.4% vs. 2.6% in 2013 The recovery rate remained high at a level of 97.6% Change in recurring Recovery rate financial va
Slide 20: Strong relaunch of investments in 2014
Strong relaunch of investments in 2014 Mercialys completed 10 extensions and is positioned on ambitious upstream transformation projects With its projects and its ability to innovate, Mercialys offers the retailers efficient sites to allow the renewal and best expression of their concepts Change in
Slide 21: New growth phase initiated in 2014
New growth phase initiated in 2014 €531 million* in investments in 2014 Acquisitions: €455.2 million Large food stores Service and catering spaces Work on ongoing projects: €29.5 million Toulouse Fenouillet Work on projects completed in 2014: €37.1 million 5% reduction of large food stores surface a
Slide 22: Successful project completions in 2014
10 successful project completions in 2014 Enhancing our shopping universe at leader sites 84 new tenants on these sites, including: Total investment: €110 million Annualized net rents: €8.1 million, representing a yield on cost of 7.4% Value creation: €145 million 2014 Annual Results 22
Slide 23: Nîmes Cap Costières: enhancing the offering
Nîmes Cap Costières: enhancing the offering Post-development project • 4 new lots with a mid-size store in the • Annual rent: €9.3 million (+€0.2 million) mall, a mid-size store outside, and 2 shops • Market value*: €203.4 million • Letting rate: 90%** 2014 Annual Results New brands: (*) Including t
Slide 24: Besançon Chateaufarine: 3rd extension
Besançon Chateaufarine: confirms its leadership as a regional center with a 3rd extension Post-development project • 17 additional shops • Annual rent: €8.9 million (+€1.3 million) • Letting rate: 112%** • Market value*: €185.4 million • Surface area: 35,120 m2(+2.176 m2) New brands: 2014 Annual Res
Slide 25: Saint-Paul Savanna: doubling the size of its mall
Saint-Paul Savanna: now a shopping destination after doubling the size of its mall Post-development project • 5 additional shops and 4 additional restaurants • Annual rent: €1.0 million (+€0.5 million) • Letting rate: 103%** • Market value*: €13.1 million • Surface area: 2,409 m² (+1,575 m2) 2014 An
Slide 26: Annemasse Praz du Léman: strengthening the anchor
Annemasse Praz du Léman: strengthens the shopping center’s anchor to sustain its position at the site Post-development project • Extension of the mid-size Decathlon store • Annual rent: €2.9 million (+€0.2 million) • Letting rate: 100%** • Market value*: €59.5 million • Surface area: 9,112 m2 (+1,40
Slide 27: Albertville: larger shopping mall and adjacent retail park
Albertville: intensifies its offer with a larger shopping mall and adjacent retail park Post-development project • 10 additional lots • Annual rent: €2.3 million (+€0.5 million) • Letting rate: 100%** • Market value*: €43.8 million • Surface area: 10,626 m² (1,987 m2) 2014 Annual Results New brands:
Slide 28: Clermont-Ferrand Nacarat: 2nd extension
Clermont-Ferrand Nacarat: reinforces its position through a 2nd extension and the opening of its Village.Services Post-development project • 13 additional lots • Annual rent: €5.7 million (+€0.9 million) • Letting rate: 93%** • Market value*: €101.4 million • Surface area: 16,900 m2 (+1,717 m2) 2014
Slide 29: Angers Espace Anjou: affirms regional leadership
Angers Espace Anjou: affirms its regional leadership and attracts new anchor tenants Post-development project • 3 mid-size stores and 21 additional stores and restaurants • Annual rent: €11.5 million (+€2.1 million) • Market value*: €240.7 million • Letting rate: 126%** • Surface area: 23,868 m² (+5
Slide 30: Toulouse Fenouillet: key stages in this flagship project
Toulouse Fenouillet: key stages in this flagship project 1 4 2 3 5 EXISTING MALL INDOOR MALL ENTERTAINMENT AREA RETAIL PARK 2014 Annual Results 1 2 3 4 USEFUL AND ESSENTIAL FASHION, BEAUTY & HOME LEISURE, RESTAURANTS & MOVIE FURNISHINGS AND FAMILY THEATER 5 RETAIL PARK PROJECT developed with a partn
Slide 31: Toulouse Fenouillet: key stages in this flagship project
Toulouse Fenouillet: key stages in this flagship project The retail park (Phase 1) is already 100% let Store shells completed Opening in June 2015 9 mid-size stores in a GLA of 24,400 sq.m €2.3 million in annualized net rental income Accelerating the letting of the mall (Phase 2) and launch of const
Slide 32: Acquisition of transformation projects in 2014
Acquisition of 12 transformation projects in 2014 Acquisition of large food stores immediately producing rent 4 food stores acquired in H1 2014: €140 million Total amount: €418 million (incl. taxes) 8 food stores acquired in H2 2014: €278 million Total immediate yield (before works): 5.4% 4 food sto
Slide 33: Controlled development pipeline of €210 million (1/2)
A controlled development pipeline of €210 million expected to generate IRRs of 8% to 10% and a target return of 6.8% (1/2) Transformation of 4 food stores acquired in the 1st half of 2014 Openings in 2015 and 2016 construction: €30 million additional net rents: €2.6 million expected yield: 8.7% surf
Slide 34: Controlled development pipeline of €210 million (2/2)
A controlled development pipeline of €210 million expected to generate IRRs of 8% to 10% and a target return of 6.8% (2/2) Toulouse Fenouillet Phase 1: Retail Park Opening Spring 2015 construction: €33.5 million, of which €20.8 million to be spent additional net rents: €2.3 million expected yield: 7
Slide 35: Disposals to refocus the portfolio
Disposals to refocus the portfolio while participating in the financing of acquisitions Sales of property assets for €257 million in 2014 5 mature large food 17 cafeterias 21 geographically 5 projects acquired stores and dispersed assets in 2009 standalone assets (€176m incl. transfer tax) (€31m inc
Slide 36: Optimized profile after in-depth transformation of assets
Mercialys has an optimized profile after in-depth transformation of its assets 2014 €2,894 million (incl. tax) Other sites Leading 0,6% neighborhood 2013 centers €2,465 million (incl. tax) 21% Other sites Major 3% regional / Leading large centers neighborhood 78% 2007 centers €1,914 million (incl. t
Slide 37: Financial structure
Financial structure Elizabeth Blaise, CFO 37
Slide 38: Successful bond and bank refinancing transactions
Successful bond and bank refinancing transactions Bond exchange transaction New bond issue of €550 million with a maturity > 8 years (2023) o spread of 98 bps over the mid-swap rate o coupon of 1.787% Bond exchange: Repayment of In parallel, redemption of €170.3 million on the “inaugural” 2019 issue
Slide 39: Change in financing structure and debt maturity profile
Change in financing’s structure and debt maturity profile Mercialys schedule after refinancing 600 Bond Bond 500 400 €129 million in commercial paper €m outstanding at 12/31/2014 paid at a 300 RCF 550 range of 0.1% to 0.3% 480 200 100 240 Confirmed bank lines 60 Casino C/C 50 0 Dec. 2017 March 2019
Slide 40: Optimization of the cost of debt in 2015
Optimization of the cost of debt in 2015 Considering the timing of operations, 2014 financial expenses were not impacted by refinancing and primarily reflect: the effect of bank debt early repayments made in 2013, which lowered the amount of debt drawn during the year proceeds corresponding to the s
Slide 41: Mercialys maintains a very strong financial profile
Mercialys maintains a very strong financial profile LTV remains below 40% Financial rating Standard & Poor’s: BBB / Stable ICR is back to a high level The maturity of the debt has been significantly extended by refinancing transactions LTV (excluding transfer tax) and ICR Change in debt maturity (ye
Slide 42: 2014 Results
2014 Results Elizabeth Blaise, CFO 42
Slide 43: Organic growth remains a powerful driver
Organic growth remains a powerful driver for Mercialys, exceeding its initial objective €149.0 million Rental revenues: +2.6% €152.8 million Lease rights +€4.0 €4.0 million million Lease rights +€11.2 -€0.6 +€0.4 €6.0 million -€9.3 million million million million Strategic Indexation Increase in vac
Slide 44: FFO & EPRA earnings
FFO & EPRA earnings Thousands of EUR 2013 2014 % Chg Invoiced rents 142,951 148,755 Lease rights 6,008 4,032 Rental revenues 148,959 152,787 +2,6% Non-recovered property taxes (105) (75) Non-recovered service charges (4,231) (4,536) Property operating expenses (5,220) (5,072) Net rental income 139,4
Slide 45: Portfolio value increased by +17.4%
Portfolio value increased by +17.4% and +9.4% on a like-for-like basis Breakdown of change in the portfolio’s appraisal value, including transfer tax* +€128m ** €2,894m +€80 m +€221m €2,465m +17.4% (+9.4% on a like-for-like) Chg. in scope Lower Growth in 12/31/2013 of appraisal cap. rental income 12
Slide 46: Strong growth in NNNAV
Strong growth in NNNAV NNNAV (EPRA, in €/share) 19,5 +0.88 19 +0.03 18.85 (0.14) 18,5 +1.66 18 17.58 17,5 17 16,5 (1.16) 16 15,5 2014 Annual Results 15 Triple net EPRA NAV Dividend Dividend paid Net income Chg. in FV of assets FV of debt and fin. Other Triples netnet Triple EPRA NAV EPRA in 2013 ins
Slide 47: Conclusion
Conclusion Eric Le Gentil, Chairman and CEO 47
Slide 48: High total return for shareholders thanks to growth in NAV and dividend
High total return for shareholders thanks to growth in NAV and dividend Proposed dividend up +6,9% to €1.24 per share, contributing to a 13.8% total return in 2014 At the Annual Shareholders’ Meeting, Mercialys will propose a dividend of €1.24* per share, including the interim dividend of €0.36 per
Slide 49: 2015 Objectives
2015 Objectives Organic growth in invoiced rents > +2% above indexation FFO +2% i.e. +6.5% on 2014 basis excluding proceeds from disposal of Green Yellow stake 2014 Annual Results 49
Slide 50: Appendices
Appendices 50
Slide 51: Financial calendar
Financial calendar April 2015 Activity at March 31, 2015 (after market close) May 5, 2015 Annual Shareholders’ Meeting July 27, 2015 Press release on 2015 half-year results (after market close) July 28, 2015 Conference call on half-year financial results October 2015 Activity at September 30, 2015 (
Slide 52: Profile of assets
Profile of assets The only listed French real estate company that is a pure player in shopping centers o The Mercialys portfolio is focused on large shopping centers and neighborhood shopping centers that are leaders in their areas o The assets are concentrated in the most dynamic French regions The
Slide 53: The Mercialys portfolio: lease schedule
The Mercialys portfolio Lease schedule (share of leases expiring / minimum guaranteed rent) 18,0% 17.1% 16,0% 14,0% 13.1% 11.7% 12,0% 10,0% 9.4% 9.1% 8,0% 6.8% 6.4% 5.9% 6.2% 6,0% 4.9% 4.4% 4.9% 4,0% 2014 Annual Results 2,0% 0,0% Expired 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 > 2024 end 2
Slide 54: The Mercialys portfolio: retailers and sectors
The Mercialys portfolio Type of retailers present on Mercialys assets Breakdown of rental income by business sector (in % of annualized rental income 2014) (in % of annualized rental income 2014) Services 4% Culture, gifts, Other leisure Casino group 17% brands Casino 21% Personal items cafeterias /
Slide 55: Shareholding in Mercialys and number of shares
Shareholding in Mercialys and number of shares at December 31, 2014 2012 2013 2014 Number of shares outstanding - at January 1 92,022,826 92,022,826 92,049,169 - at December 31 92,022,826 92,049,169 92,049,169 Average number of shares outstanding 92,022,826 92,038,313 92,049,169 Average number of sh
Slide 56: Income Statement
Income Statement In € millions 31.12.13 31.12.14 Chg. 14/13 Invoiced rents 143.0 148.8 4.1% Lease rights 6.0 4.0 Rental revenues 149.0 152.8 2.6% Non-recovered property taxes -0.1 -0.1 Non-recovered service charges -4.2 -4.5 Property operating expenses -5.2 -5.1 Net rental income 139.4 143.1 2.7% Ma
Slide 57: Condensed balance sheet
Condensed balance sheet In € millions Assets 31.12.13 31.12.14 Investment property 1,423.5 1,751.8 Financial assets 42.1 54.5 Other assets 2.1 2.3 Total non-current assets 1,467.7 1,808.6 Cash and cash equivalents 15.8 121.0 Trade and other receivables 63.5 83.1 Investment property held for sale 27.
Slide 58: Breakdown of assets
Breakdown of assets Number Appraisal value (incl. Gross leasable Appraised net of assets tax) at end-14* area at end-14 rental income Type of property at 12/31/14 In € In € % m² % % millions millions Regional / large shopping centers 25 2,247.0 78% 539,700 74% 119.6 74% Neighbourhood shopping center
Slide 59: Breakdown of investments in 2014
Breakdown of investments in 2014 (€ millions) 300,0 278 250,0 200,0 150,0 140 100,0 50,0 37 34 13 17 9 3 0,0 Construction Construction ofon 1010 4 large 4 hypermarkets food stores Service and catering Acquisition of 8 hypermarkets 8 large food Phase 1 Toulouse Phase 2 Toulouse Other investments proj
Slide 60: Controlled development pipeline
Controlled development pipeline Remaining Date of Surface area Total Investment Forecasted net Forecasted yield In million euros investment to be completion created (sq.m) investment already paid rental income on cost incurred 4 food stores acquired in H1 2014 2015 and 2016 ~ 9,000 29.9 0 29.9 2.6 8
Slide 61: Grid of capitalization rates under the Partnership Agreement
Grid of capitalization rates applicable under the Partnership Agreement Applicable capitalization rates for reiterations in the first half of 2015 under the Partnership Agreement with Casino Shopping malls Retail parks City center Mainland Corsica & Mainland Corsica & Type of property France ODT* Fr
Slide 62: Disclaimer
Disclaimer This presentation contains forward-looking statements concerning Mercialys. Forward-looking statements do not represent historical facts. These statements include financial projections and estimates, as well as the underlying assumptions, statements regarding plans, objectives and expecta