Slide 1: 2019 Half-Year Results
2019 HALF-YEAR RESULTS July 25, 2019
Slide 2: Preliminary remarks
Preliminary remarks The 2019 first-half consolidated financial statements were approved by the Board of Directors on July 24, 2019. A limited scope review of these financial statements has been performed by the statutory auditors. 2
Slide 3: Contents
Contents 01. 02. 03. 04. Strong and Delivering on Financial Conclusion balanced growth strategic structure in a constantly priorities and results evolving market 4 11 31 40 3
Slide 4: Strong and balanced growth in a constantly evolving market
Strong and balanced growth in a constantly evolving market Vincent Ravat Chief Executive Officer
Slide 5: Consumption and investment cycles
Consumption and investment cycles History of household consumption in France (1) History of investments in retail real estate in France (2) 5% 8 80% Consumption recovering in H1 2019, with +0.4% for May vs. 4% April, including +1.3% for personal items 6 60% 3% Billion of euros 2% 4 40% 1% 2 20% 0% -
Slide 6: Sustainable profitability thanks to a proven ability to anticipate underlying trends
Sustainable profitability thanks to a proven ability to anticipate underlying trends 2013 2014 2015 2016 2017 2018 H1 2019 Launch of the hypermarket and cafeteria space rationalization and tailored store configuration strategy Development of Casual Leasing Start of environmental certification
Slide 7: Strong first half in line with performance for previous years
Strong first half in line with performance for previous years Organic growth (%) FFO (€mn) 3.8% 3.6% 3.3%3.3% 63.0 3.0% 2.9%2.8% 2.8%2.9% 2.6% 2.5% 59.6 59.8 58.7 1.7% 57.0 56.8 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019 Organic growth in invoiced
Slide 8: With the situation improving on the consumption front
With the situation improving on the consumption front Cumulative change in Cumulative change in Footfall at end-June 2019 Retailer sales at end-May 2019 3.9% +4.5% 3.9% 4.3% 3.1% 2.9% 2.4% +2.7% 2.1% +2.1% 1.6% 2.0% +1.9% 1.8% +1.4% +1.4% 0.9% +1.2% +1.3% +1.2% 0.8% +0.3% 1.0% 0.8% +0.3% +0.7% +0.4%
Slide 9: And supportive economic trends for the rest of the year
And supportive economic trends for the rest of the year (1) Change in purchasing power at decade highs Unemployment rate at decade lows 11% 2% 10% 1% 9% 0% 8% -1% 7% -2% 6% Purchasing power (change vs previous quarter) Unemployment rate in metropolitan France Consumer confidence survey showing
Slide 10: Clear priorities for 2019 onwards in an increasingly polarized market
Clear priorities for 2019 onwards in an increasingly polarized market Establishing leading assets Keeping strong in France’s main urban hubs capital discipline Accessible, Balanced and Disposal of efficient and adaptive non-core and Selective modular real omnichannel mature assets developments estat
Slide 11: Delivering on strategic priorities
Delivering on strategic priorities Vincent Ravat Chief Executive Officer Elizabeth Blaise Deputy Chief Executive Officer
Slide 12: What customers want?
What customers want? Customer arbitrage is Customer arbitrage is not Perceived value Physical retail VS. VS. Perceived effort E-commerce Changes in French customers’ top 10 favorite Winning retailers present brands over the decade illustrate these trends(1) three main characteristics 2010 2014 2018
Slide 13: Rapidly delivering on Mercialys' 5 strategic drivers
Rapidly delivering on Mercialys’ 5 strategic drivers 5 strategic drivers From asset manager to retail and services hub 35 in-house projects From landlord to last-mile player Transversal “project mode" organization From customer knowledge to personalized customer relationships “Test and learn" ap
Slide 14: Wide range of initiatives to improve customers' journey
Wide range of initiatives to improve customers’ journey… NEW PRODUCTS AND SERVICES BUILDING ENGAGEMENT Fresh and local New affordable Products delivered at Loyalty program Services for a Collecting clothes further focused on smoother shopping for charities products leisure offers home or at work pur
Slide 15: Benefiting retailers' revenues and customer knowledge
…benefiting retailers’ revenues and customer knowledge MORE SALES MORE SATISFACTION Shared data analysis for better B2B database and surveys to New sources of revenues Targeted marketing actions understanding of consumption measure tenant satisfaction patterns and cross-selling Way to extend shoppin
Slide 16: Focus on the next step with the digital loyalty program: the Wallet
Focus on the next step with the digital loyalty program: the Wallet Capitalizing on Mercialys’ pioneering e-loyalty program: shifting from the G La Galerie app to an embedded phone technology Main features While people focus on their most used apps, the extremely simple and effortless Wallet enrol
Slide 17: Focus on last-mile delivery: an unsolved equation
Focus on last-mile delivery: an unsolved equation Main highlights from the Capgemini research institute(1) Very high online customer expectations Weighing on retailers’ profitability Split of retailers’ supply chain costs 11% 13% Fast delivery Within two hours Warehousing Sorting 20% Frequent deli
Slide 18: Focus on last-mile delivery: an unsolved equation
Focus on last-mile delivery: an unsolved equation In the current economic and technological conditions, the store remains the most rational option Store seen by retailers as the Alternatives at very early stage or best way to fulfill last-mile delivery(1) hardly solving the economic issue(1) Drones
Slide 19: Focus on last-mile delivery: Mercialys seizes the opportunity
Focus on last-mile delivery: Mercialys seizes the opportunity Ocitô: the 1st omnichannel dining offer for shopping centers 3 main features 3 objectives 3 success factors Web-responsive website (mobile, desktop) Bringing additional turnover to our Low customer acquisition cost due to the offeri
Slide 20: Focus on transforming mono sites to multi-functional use: coworking
Focus on transforming mono sites to multi-functional use: coworking Low capex transformation of non-productive space, to respond to changing working habits and make shopping centers the new place to work 2 main features 2 objectives 2 success factors Ideally located, accessible coworking Convert
Slide 21: Capital allocation strictly focused on value creation
Capital allocation strictly focused on value creation Attractive yields with a very low risk profile Commitment to maintain balanced leverage thanks to selective brownfield developments matching investments with disposals 10 assets identified as non-core worth c. €200m of gross asset value 6.9% 6.
Slide 22: Resilient portfolio focused on leading geographies
Resilient portfolio focused on leading geographies(1) Assets located in leading cities outside of Paris with very supportive socio-economic trends Very strong employment and population growth Employment and population growth Population growth and decreasing employment Decreasing population and emplo
Slide 23: €121.1m of asset sales including transfer taxes at end-July 2019
€121.1m of asset sales including transfer taxes at end-July 2019 Preliminary sales agreements signed for the La Garenne-Colombes Monoprix site in May and for the Saint-Germain-en-Laye Monoprix site in July €96.6m High-street retail including Despite Mercialys’ extensive due diligence, these site
Slide 24: A deep and flexible pipeline
A deep and flexible pipeline Investment still to Target net Target net yield (in millions of euros) Total investment Completion date be committed rental income on cost COMMITTED PROJECTS 12.1 11.6 0.9 7.1% 2019 COMMITTED Le Port 12.1 11.6 0.9 7.1% 2019 Projects fully secured in terms of land managem
Slide 25: Investing to further enhance the leadership of our shopping centers
Investing to further enhance the leadership of our shopping centers Indoor food court: 8 units on 750 sq.m GLA €12.1m investment Le Port Outdoor food court: 6 units on 575 sq.m GLA 7.1% target net yield on cost Retail park: 3 medium-sized stores on 3,600 sq.m GLA 25
Slide 26: Investing in living spaces with integrated urban facades
Investing in living spaces with integrated urban facades Project to reconfigure and extend the center to further Extension based around a walkway with open spaces, Gassin strengthen its commercial appeal with 9,200 sq.m additional GLA 26
Slide 27: Investing in living spaces with integrated urban facades
Investing in living spaces with integrated urban facades Mixed-use vertical project, incorporating a leisure, Extension of the center in the parking area based on Mandelieu dining, culture and services selection, to consolidate a walkway with modern urban facades, with an the site’s role as a “l
Slide 28: Investing in mixed functions and programs
Investing in mixed functions and programs Requalification of the Leader Price store and development Provisional schedule Saint-Denis of 14,000 sq.m of residential space, with 186 apartments Q4 2019: building permit application submitted and a 63-room student residence Q3 2022: new Leader Pri
Slide 29: Investing in mixed functions and programs
Investing in mixed functions and programs Requalification of the Monoprix supermarket Mercialys co-developer with Provisional schedule Puteaux on rue Jean Jaurès, the city’s main shopping the Vinci Immobilier group Q2 2020: building permit street, and development of a collective housing €1
Slide 30: Investing in mixed functions and programs
Investing in mixed functions and programs Requalification of the mall, with a Monoprix Mercialys co-developer Provisional schedule Marcq-en- supermarket as its flagship, and development with the Acapace group Q1 2020: building permit application Barœul of a collective housing program, with 2
Slide 31: Financial structure and results
Financial structure and results Elizabeth Blaise Deputy Chief Executive Officer
Slide 32: Strong organic growth benefiting from a positive calendar effect
Strong organic growth benefiting from a positive calendar effect 3.1% 3.4% 3.4% 2.6% 3.7% 3.6% Around +3.0% 1.2% 0.3% 1.9% Around 3.5% 3.5% +1.8% 2.8% 2.6% 2.5% 1.7% At least +1.0% -0.1% -0.1% 2014 2015 2016 2017 2018 H1 2019 2019 objective H1 2019 renewals (1) Organic growth in invoiced rents, excl
Slide 33: Low vacancy rate and reasonable occupancy cost ratio
Low vacancy rate and reasonable occupancy cost ratio Change in recurring financial vacancy rate(1) Change in occupancy cost ratio 10.5% 10.5% 10.6% 2.6% 2.5% 2.5% H1 2018 2018 H1 2019 H1 2018 2018 H1 2019 (rents + charges including marketing costs + work charged back to tenants, including tax) / ten
Slide 34: High level of growth in rental revenues
High level of growth in rental revenues €95.5m +3.6% Lease rights €1.6m + €1.6m €92.2m Lease rights €0.8m + €1.7m + €0.8m - €0.6m - €1.1m €93.8m +2.7% €91.4m Strategic Like-for-like Acquisitions Indexation growth in Disposals vacancy(1) and and invoiced rents non-recurring completions items Organic
Slide 35: FFO up +5.3%, higher than the 2019 objective
FFO up +5.3%, higher than the 2019 objective + €2.9m Sustained organic growth + Extension of Le Port shopping center net of asset disposals + €3.3m - €1.6m €63.0m - €0.7m - €0.1m - €0.3m - €0.4m Reimbursement of Slight increase in 100 bp improvement corporate and Discipline in the the bond maturing
Slide 36: Optimized financing costs following the reimbursement of the March 2019 bond
Optimized financing costs following the reimbursement of the March 2019 bond 3% Change in the cost of drawn debt (1) 3% Net debt: €1,470.2m including 2% 1.8% 1.8% 1.4% 2% 1% €1,200.0 m of bond debt 1% 0% €401.0 m of commercial paper 7,0 H1 2018 2018 H1 2019 6,0 (1) Undrawn committed credit l
Slide 37: Controlled financial structure
Controlled financial structure Change in LTV (excluding transfer taxes) and ICR Debt: fixed vs. floating rate exposure (2) 2018 H1 2019 60,0% 6.7x 20% 50,0% 5.1x 5.0x 37% 40,0% 63% 80% 30,0% 20,0% 40.2% 40.8% 40.9% 39.3% Fixed-rate debt Variable-rate debt Fixed-rate debt Variable-rate debt 10,0% I
Slide 38: Change in portfolio value
Change in portfolio value €3,529m excluding transfer taxes, -0.8% over 6 months, -1.2% over 12 months Over 6 months Total change on a like-for-like basis(1) - 0.5% - €18m of which rent effect + 1.1% + €39m of which yield effect - 1.7% - €59m 06/2018 12/2018 06/2019 Average appraisal yield rate 5.07%
Slide 39: Change in NNNAV per share
Change in NNNAV per share(1) €20.40/share, -3.5% over 6 months, -1.9% over 12 months €21.14 + €0.69 €20.81 - €0.18 €20.40 - €0.62 - €0.40 -€0.23 EPRA NAV at end-June 2019 €20.86/share Rent effect: Stable over 6 months + €0.43 Down -1.6% over 12 months Yield effect: - €0.64 Other effects(2):
Slide 40: Conclusion
Conclusion Vincent Ravat Chief Executive Officer
Slide 41: 2019 objectives confirmed with confidence
2019 objectives confirmed with confidence Organic growth in Change in FFO Dividend policy invoiced rents per share Around +3% vs. 2018, At least stable vs. 2018, At least +4% with at least +1% within a range of vs. 2018 excluding indexation 85% to 95% of 2019 FFO 41
Slide 42: Appendices
Appendices
Slide 43: Financial calendar
Financial calendar 2019 October 16 Activity at September 30, 2019 (after market close) 43
Slide 44: Asset locations
Asset locations Leading listed French real estate company that is a Mercialys portfolio 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 th
Slide 45: 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 June 30, 2019 – including at June 30, 2019) exposure to the Cas
Slide 46: 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 June 30, 2019 – including exposure to the Casino Group) 26.1% 11% 14.9% 14.1% National and international retailers 7.8%
Slide 47: Financing structure & debt schedule
Financing structure & debt schedule Debt schedule at H1 2019(1) Debt schedule at end-2018(1) in €m in €m 750 750 480 240 240 300 300 150 150 50 60 50 60 30 30 30 30 30 Confirmed bank facilities Casino cash advance Bonds Revolving credit facility Confirmed bank facilities Casino cash advance Bonds Re
Slide 48: Mercialys shareholding structure and number of shares
Mercialys shareholding structure and number of shares Mercialys shareholders at June 30, 2019 0.40% December December June 14.98% 31, 2017 31, 2018 30, 2019 Casino group 25.16% Number of shares outstanding Foncière Euris (1) 92,049,169 92,049,169 92,049,169 8.01% at the end of the period Public Aver
Slide 49: FFO, EPRA earnings & net income group share
FFO, EPRA earnings & net income group share In thousands of euros June 30, 2018 June 30, 2019 Invoiced rents 91,381 93,843 Lease rights 771 1,644 Rental revenues 92,152 95,487 Non-recovered service charges and property taxes -3,411 -3,015 Property operating expenses -2,918 -3,408 Net rental income 8
Slide 50: Balance sheet
Balance sheet In thousands of euros December 31, 2018 June 30, 2019 Intangible assets 2,710 2,948 Property, plant and equipment 8 7 Investment property 2,322,755 2,233,696 Right-of-use assets 0 10,430 Investments in associates 35,160 35,620 Other non-current assets 46,773 74,547 Deferred tax assets
Slide 51: Breakdown of assets
Breakdown of assets Average appraisal yield rate: 5.20% at June 30, 2019 Appraisal value Appraisal value Gross leasable Appraised net Number (excl. transfer taxes) (incl. transfer taxes) area rental income Type of property of assets at June 30, 2019 at June 30, 2019 at June 30, 2019 at June 30, 2019
Slide 52: 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 5.6% 6.1% 6.1%
Slide 53: 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