Slide 1: 2017 Annual Results
2017 ANNUAL RESULTS February 15, 2018
Slide 2: Preliminary remarks
Preliminary remarks The 2017 annual consolidated financial statements were approved by the Board of Directors on February 14, 2018 The audit procedures have been completed by the statutory auditors. The audit certification report is in progress 2
Slide 3: Contents
Contents 01. 02. 03. 04. 05. Strategy Outperformance Portfolio, Disposals, Conclusions & key factors completions financial & 2018 messages & activity & projects structure objectives & results 4 12 22 32 39 3
Slide 4: Strategy & Key Messages
STRATEGY & KEY MESSAGES Eric Le Gentil Chairman & CEO
Slide 5: Mercialys: a winning convenience retail journey
Mercialys: a winning convenience retail journey Portfolio of prime convenience assets Adaptive and omnichannel offer Focused on prime assets that are leaders in their 2 Enhancement of centers’ appeal factors for catchment areas brands and customers, through a dynamic Enhanced by a strong capac
Slide 6: Refocused portfolio
Refocused portfolio Mapping of current portfolio Mercialys aims to stay focused on Since 2010, shopping centers’ average size assets: has increased by +123% and average value by leaders or co-leaders in their catchment areas +160% positioned in areas benefiting from strong demographics and highe
Slide 7: Portfolio offering substantial additional value
Portfolio offering substantial additional value Limited tension on interest rates LTV at end-December 2017 of 39.9%. Excluding the Over the medium-term, Mercialys will maintain a strong impact of the investment in the Le Port project, and taking into account a preliminary sales agreement signed
Slide 8: French market trending up
100 110 120 70 80 90 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Change in retail trade business climate Jan-18 100 110 120 70 80 90 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 J
Slide 9: Driven by innovative convenience
Driven by innovative convenience ACCESSIBLE EFFICIENT BALANCED ADAPTABLE Average distance Average stay Effectively diversified Average yearly retailer between our malls in our malls merchandizing mix turnover over the last 3 and city centers years 87% national < 4 km 36 minutes and international 10%
Slide 10: Committed to responsible management
Committed to responsible management Board of Directors aligned Significant progress with the « » with the best standards CSR program expertise, independence and gender parity ENVIRONMENT Certification: 46% of the portfolio certified at Dec 31, 2017 vs 28% at Dec 31, 2016 +8% energy from renewabl
Slide 11: Key figures
Key figures In millions of euros 2016 2017 % change Invoiced rents 187.6 183.5 -2.2% Organic growth in invoiced rents excluding indexation +3.5% +2.6% Rental revenues 189.8 185.3 -2.4% FFO 114.4 114.0 -0.4% Underlying FFO growth excluding 2017 asset disposals +6.1% EPRA earnings 114.4 114.0 -0.4% LT
Slide 12: Outperformance Factors & Activity
OUTPERFORMANCE FACTORS & ACTIVITY Vincent Ravat Chief Operating Officer
Slide 13: Efficient shopping
Efficient shopping 60% of customers from the 90 seconds from car to shop catchment area within a 20 on average minute drive 4.4 shops visited on average 3 public transport lines on per visitor, 58 times per year average per center Close Fast 1.3 parking spaces available 93% of the top 30
Slide 14: Balanced merchandizing mix & strong focus on customer care
Balanced merchandizing mix & strong focus on customer care Breakdown of annualized rental income Unique digital mobile tool for real-time by business sector improvement of on-site customer (at December 31, 2017) satisfaction 396 296 Personal items Food-anchored tenants 7% 3% 96 71 69 10% 37 32% 25 1
Slide 15: Global letting strategy adapted to local contexts
Global letting strategy adapted to local contexts 295 leases signed in 2017, +5.4% vs. 2016 STRONG LETTING STRATEGY 14 non-food medium-sized stores opened 54% of brands in Mercialys’ portfolio were not present 8 years ago DEEP RENEWAL OF THE > 120 international retailers in the portfolio at
Slide 16: Unique marketing ecosystem
Unique marketing ecosystem Centralized platform providing multiple services to both tenants and end-customers and constituting a powerful advertising tool with enhanced local impacts Single brand for pooling marketing actions Unified ecosystem for digital synergies Capitalizing on national par
Slide 17: High performance omnichannel approach
High performance omnichannel approach +50% increase in the number of digital touchpoints year-on-year, with a total of 3.65m for 2017 Strong boost for +42% more downloads of our Mobile App vs start of the previous season shopping center traffic Traffic generation for retailers, highlighting: g
Slide 18: Progress with our customer satisfaction and loyalty
Progress with our customer satisfaction and loyalty Increasingly tuned in to Increasing customer feedback customer loyalty Activation of opinion pages on social media, where Enhanced loyalty program with new features: sponsoring, customers can proactively share their ratings and opinions daily p
Slide 19: Mercialys continues to outperform its national benchmark
Mercialys continues to outperform its national benchmark Cumulative change in Cumulative change in Footfall at end-December 2017(1) Retailers’ sales at end-November 2017(1) 4.3% 3.9% 3.9% 2.9% +4.5% 2.4% 2.5% 2.1% 1.6% +2.8% +2.1% 0.8% +1.9% 0.9% +1.4% +1.2% +0.4% +0.7% +0.5% -0.9% 0.2% -0.4% -0.7%
Slide 20: Sustainable rents keep vacancy rates at frictional levels
Sustainable rents keep vacancy rates at frictional levels Change in recurring financial Change in occupancy cost vacancy rate ratio 2.5% 2.5% 10.3% 10.2% 10.3% 2.2% 2016 H1 2017 2017 2016 H1 2017 2017 (Rents + charges incl. tax) / tenants’ sales incl. tax, excluding large food stores 20
Slide 21: Solid organic growth and reversion rates maintained
Solid organic growth and reversion rates maintained 4.3% Renewals & relettings: 3.7% 3.5% 3.5% +14.0% 3.4% 3.4% 3.2% 3.1% 3.1% 2.8% 2.7% 2.6% 2.6% 2.6% 2.3% 1.7% 2010 2011 2012 2013 2014 2015 2016 2017 Organic growth in invoiced rents, excl. indexation Organic growth in invoiced rents, incl. indexat
Slide 22: Portfolio, Completions & Projects
PORTFOLIO, COMPLETIONS & PROJECTS Vincent Ravat Chief Operating Officer
Slide 23: Prime convenience portfolio focused on dynamic areas
Prime convenience portfolio focused on dynamic areas 94% of sites in Core and Core + segments, as established by independent appraisers(1) Favorable impact of 2017 disposals, reducing Mercialys’ Gross disposable exposure to the Value Added segment Demographic income per growth(4) inhabitant grow
Slide 24: 2017 completions: hypermarket transformations
2017 completions: hypermarket transformations First half of 2017 Second half of 2017 Nîmes (ph. 2) Fréjus Quimper Angers (ph. 2) Rennes Poitiers Saint-Etienne Narbonne Toulouse (ph. 2) 8 new medium-sized €1.9m of 18,260 sq.m of gross annualized 7.5% overall stores, leasable area yi
Slide 25: 2017 completions: shopping center extensions
2017 completions: shopping center extensions Morlaix Rennes Saint-Étienne 15,920 sq.m of 68 new retailers €3.3m of 7.0% overall including 10 new annualized gross leasable area yield on cost ones rent 25
Slide 26: 2018 projects
2018 projects 3 hypermarket transformations Major extension and outdoor food Annecy Brest (ph. 2) court Besançon Le Port (Reunion Island) 15,000 sq.m of 8 new medium-sized €4.9m of 6.2% overall annualized gross leasable area stores, 48 new shops yield on cost rent 26
Slide 27: 2018 projects: Le Port shopping center extension
2018 projects: Le Port shopping center extension Asset owned by Mercialys since 2007 Leading shopping center 14,800 sq.m of gross leasable area 40 shops, 3 medium-sized stores and a 5,600 sq.m hypermarket 228,000 inhabitants within the catchment area, 27% of the island’s total population 27
Slide 28: 2018 projects: Le Port shopping center extension
2018 projects: Le Port shopping center extension To become the largest on the island Development of 9,600 sq.m of gross leasable area by extending the center and redeveloping its existing space 4 new medium-sized stores 43 new shops 4 Indoor food court 4 new restaurants Project planned pos
Slide 29: Pipeline
Pipeline Total investment Investment still to Net rental income Net yield on cost (in millions of euros) Completion date (€M) be committed (€M) forecast (€M) forecast COMMITTED PROJECTS 79.5 51.5 4.9 6.2% 2018 Le Port extension 73.8 46.2 4.6 6.2% 2018 COMMITTED Other projects 5.7 5.3 0.4 6.1% 2018 P
Slide 30: Examples of projects
Examples of projects Aix-Marseille Nîmes Plan de Campagne Enhancing a major asset located in one of Further strengthening the position of a regional Europe’s most dynamic retail areas leader Controlled pipeline Controlled pipeline Completion: 2019 Completion: 2019 €48m investment €41
Slide 31: Examples of projects
Examples of projects Marseille Gassin Saint-Tropez La Valentine Renewed retail offer in the richest neighborhood Development of a retail offer in a first-class of France’s second largest city location Controlled pipeline Identified pipeline Completion: 2020 Completion: 2021 €16m invest
Slide 32: Disposals, Financial Structure & Results
DISPOSALS, FINANCIAL STRUCTURE & RESULTS Elizabeth Blaise Chief Financial Officer
Slide 33: Disposals and sales agreement at appraisal values
Disposals and sales agreement at appraisal values 8 assets sold in 2017 for a total of €177.2m Toulouse Fenouillet 5 service galleries hypermarket €38.9m incl. TT €32.8m incl. TT 5.8% exit yield 5.0% exit yield Dijon site Poitiers site €27.5m incl. TT €78.0m incl. TT 5.4% exit yield 5.8% exit yield
Slide 34: Strong financial profile
Strong financial profile Change in LTV (excluding transfer taxes) and ICR 3% Change in the cost of drawn debt 3% 2.0% 1.9% 5.3x 2% 60,0% 5.2x 50,0% 2% 40,0% 1% 30,0% 1% 20,0% 41.2% 39.9% 0% 2016 2017 10,0% 0,0% 2016 2017 Debt: fixed vs. floating rate exposure (including commercial paper program) N
Slide 35: Favorable context to refinance the 2019 bond
Favorable context to refinance the 2019 bond 5,0 4,5 Change in debt maturity (in years) Further steps to be completed in 2018 to secure 4,0 the early refinancing in favorable market 3,5 conditions 3,0 2,5 2,0 3.8 3.7 1,5 Carrying cost affecting 2018 FFO, with a positive 1,0 impact for the €480m
Slide 36: Rental revenues
Rental revenues Organic growth above 2017 target: +2.6% €189.8m €185.3m -2.4% Lease rights Lease rights €2.2m + €4.8m €1.8m + €5.3m - €13.7m - €0.6m + €0.1m Disposals Acquisitions Strategic Indexation Like-for-like and vacancy(1) and growth in completions non-recurring invoiced rents items €187.6m O
Slide 37: FFO
FFO Strong increase excluding disposals: +6.1% Impact of the 2016 assets sold to EBITDA margin 83.7% Schroders and Amundi +6.1% €114.4m + €1.8m + €0.3m €114.0m €114.4m €114.1m + €2.1m + €0.5m + €0.3m + €0.5m €107.6m - €5.9m - €6.8m Claim for the reimbursement of the 3% dividend tax for €1.3m -0.4% C
Slide 38: Change in NNNAV per share
Change in NNNAV per share(1) +1.4% over 12 months, +0.9% over 6 months + €0.28 €20.54 €20.26 + €0.94 + €0.10 Rent effect: + €0.06 - €1.04 Yield effect: + €0.38 Scope effect: - €0.16 Average 12/2016 06/2017 12/2017 appraisal capitalization rate 5.25% 5.14% 5.13% EPRA NNNAV at Dividend paid Net income
Slide 39: Conclusions & 2018 Objectives
CONCLUSIONS & 2018 OBJECTIVES Eric Le Gentil Chairman & CEO
Slide 40: Dividend payment
Dividend payment Proposed dividend up +2.8%, corresponding to 88% of 2017 FFO Mercialys will propose a dividend of €1.09 per share Breakdown of the dividend at the 2018 General Meeting, including the interim +2.8% dividend of €0.41 per share paid in October 2017 €1.06 per share €1.09 per share(1)
Slide 41: 2018 objectives
2018 objectives Organic growth in invoiced rents >2% above indexation Change in FFO At least +2% excluding the full impact of the 2019 bond maturity refinancing Dividend policy At least +2% inside a range of 85% to 95% of 2018 FFO 41
Slide 42: Appendices
APPENDICES PIERCIALYS
Slide 43: Financial calendar
Financial calendar 2018 April 23 Activity at March 31, 2018 (after market close) April 26 2018 Annual Shareholders’ Meeting July 25 Press release on 2018 half-year results (after market close) July 26 Conference call on half-year financial results October 17 Activity at September 30, 2018 (after mar
Slide 44: Asset locations
Asset locations Leading listed French real estate company that is Mercialys portfolio 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
Slide 45: Independent appraiser asset classifications
Independent appraiser asset classifications Core Opportunistic Ownership Full Joint Size Regional center Minor center Catchment area Major Limited Competition Low High Positioning Leader Outsider Renovation/extension New Old Development potential Extension Renovation Vacancy Zero High 45
Slide 46: 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 total rental income) (% of annualized rental income at December 31, 2017 – including exposure to the Casino Group) 56.9% 5
Slide 47: Mercialys portfolio
Mercialys portfolio Types of retailers present Lease expiry schedule in Mercialys assets (share of leases expiring / minimum guaranteed rent) (% of annualized rental income at December 31, 2017 – including exposure to the Casino Group) 33.1% 13% 14.3% National and international retailers 8.7% 7.8% L
Slide 48: Financing structure & debt schedule
Financing structure & debt schedule Debt schedule at end-2017(1) Debt schedule at end-2016(1) in €m in €m 750 750 480 480 240 240 50 150 50 60 30 30 30 60 30 Dec. 2019 Dec. 2020 Nov. 2027 Dec. 2019 Dec. 2020 2018 Mar. 2019 Jul. 2020 Jul. 2021 2022 Mar. 2023 2024 2025 2026 2017 2018 Mar. 2019 Jul. 20
Slide 49: Mercialys shareholding structure and number of shares
Mercialys shareholding structure and number of shares Mercialys shareholders at December 31, 2017 8.01% 0.27% December December December Casino Group 31, 2015 31, 2016 31, 2017 40.16% Number of shares outstanding at the (1) 92,049,169 92,049,169 92,049,169 Foncière Euris end of the period Average nu
Slide 50: FFO, EPRA earnings & net income group share
FFO, EPRA earnings & net income group share In thousands of euros December 31, 2016 December 31, 2017 Invoiced rents 187,621 183,514 Lease rights 2,175 1,805 Rental revenues 189,795 185,318 Non-recovered service charges and property taxes -4,323 -5,904 Property operating expenses -7,407 -7,227 Net r
Slide 51: Balance sheet
Balance sheet In thousands of euros December 31, 2016 December 31, 2017 Intangible assets 2,016 2,486 Property, plant and equipment other than investment property 12 10 Investment property 2,325,268 2,305,414 Investments in associates 39,039 38,445 Other non-current assets 54,672 37,529 Deferred tax
Slide 52: Breakdown of assets
Breakdown of assets Average rate of return: 5.13% at December 31, 2017 Appraisal value Appraisal value Gross leasable Appraised Number (excl. transfer taxes) (incl. transfer taxes) area net rental Type of property of assets at December 31, 2017 at December 31, 2017 at December 31, 2017 income at Dec
Slide 53: 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 54: 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