Slide 1: First-half 2011 results
First-half 2011 results Tuesday, July 26, 2011
Slide 2: Preliminary notice
Preliminary notice The consolidated financial statements for the first half of 2011 were approved by the Board of Directors at its meeting held on July 25, 2011 A limited review of these financial statements was performed by the Statutory Auditors First-half 2011 results 2
Slide 3: Overview of the first half of 2011
Overview of the first half of 2011
Slide 4: A strong first half of 2011 for Mercialys
A strong first half of 2011 for Mercialys An active six months characterized by: Robust growth Numerous completions of “Esprit Voisin” development projects A second program of asset sales The creation of a new partnership First-half 2011 results 4
Slide 5: Strong growth in rental revenues
Strong growth in rental revenues Rental revenues of Euro 79 million up +9.3% Rental revenues In millions of euros – 2005 figures pro forma 72.7 H2 72.4 79.2 57,0 64.5 37.2 39.6 48.4 H1 2005 2006 2007 2008 2009 2010 2011 Organic growth maintained: +3.1% Significant impact of acquisitions and “Esprit
Slide 6: Esprit Voisin development projects completed during the first half
7 “Esprit Voisin” development projects completed during the first half of the year 7 completions in the 16,700 m² created* / 2,200 m² redeveloped* 26,700 m² renovated first half of 2011 In particular: Coop d’Alsace partnership in Geispolsheim: Leclerc at Mercialys! Corsica: completion of phase 1 of
Slide 7: Second program in progress to sell mature assets
Second program in progress to sale mature assets Assets sales of Euro 84 million under promises to sell = 3% of the portfolio We are continuing to sell our mature assets and small portfolio items to long-term institutional investors Assets sold or under promises to sell In millions of euros 121,5 Fi
Slide 8: Launch of partnership with Union Investment
Launch of partnership with Union Investment* Creation of a fund of mature retail properties 80%-owned by UI and 20% by Mercialys Mercialys is operator of the fund: in charge of Asset Management and letting First property acquired in Bordeaux - Pessac for around Euro 80 million Fund set to acquire it
Slide 9: Strong growth in cash flow and FFO
Strong growth in cash flow and FFO** Cash flow Funds from operations* (FFO) 70.3 70.1 In millions of euros 64.4 63.0 +9.2% +11.2% 06/30/2010 06/30/2011 06/30/2010 06/30/2011 Euros per share** 0.70 0.77 0.69 0.76 +9.1% +11.1% First-half 2011 results Figures for the first half of 2011 include Euro 1.3
Slide 10: Payment of interim dividend of Euro 0.54 per share
Payment of interim dividend of Euro 0.54 per share At its meeting of July 25, 2011, Mercialys’s Board of Directors decided to pay an interim dividend of Euro 0.54 per share The interim dividend will be paid on September 29, 2011 +8% vs. interim dividend paid in 1.26 October 2010 Dividend per share i
Slide 11: First-half activity and results
First-half activity and results
Slide 12: Neighborhood shopping centers continue to perform well
With no clear trend in sector conditions, neighborhood shopping centers continue to perform well Retailers’ sales growth Source: CNCC – Comparable scope / all retailers All shopping Downtown Regional Neighborhood centers shopping shopping centers shopping centers centers +1.7% +1.4% +0.8% +0.7% +0.3
Slide 13: 55% of revenues come from growing business sectors
55% of Mercialys’s revenues come from growing business sectors Sales of retailers at shopping centers* 2009 Cumulative growth 2010 Cumulative to end-May 2011 3.0% 2.5% 2.8% 2.9% 2.4% 2.1% 0.8% 1.1% 1.0% 0.6% 0.3% -0.5% -0.1% -0.7% -1.5% -1.4% -2.7% -2.6% Total -5.2% -7.0% -7.8% Food and Personal Hou
Slide 14: Esprit Voisin projects have tangible impact on retailers' sales growth
“Esprit Voisin” development projects have a tangible impact on retailers’ sales growth Retailers’ sales growth All retailers / Comparable scope +2.6% +2.2% +1.7% +1.4% +0.7% +0.3% Cumulative to end-May Rolling to end-May 2011 2011 CNCC panel, all shopping CNCC panel, neighborhood Mercialys centers s
Slide 15: We remain vigilant about management indicators
We remain vigilant about management indicators Stable recovery rate*: 97.9% (98.0% Slight increase in recurring vacancy at December 31, 2010) rate: 2.4% (2.1% at December 31, 2010) Moderate occupancy cost ratio** Reduction in strategic vacancy rate 8.6% 8.9% 9.1% due to completion of “Esprit Voisin”
Slide 16: Rental values still below benchmark
Rental values still below benchmark Average gross rental value of Euro 205 per m² IPD benchmark Euro 301 per m²* 205 203 185 174 Euros per m² 162 147 136 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 12/31/10 06/30/11 First-half 2011 results (*) Rental value per m² at end-2010 – Shopping centers excl
Slide 17: Steady growth in rental revenues
Steady growth in Mercialys’s rental revenues… Growth relating primarily to: Organic growth in Negotiations relative to assets in the portfolio rental income The impact of completions in 2010 and 2011, as well as the +3.1%** inclusion of Caserne de Bonne in the portfolio at end-2010 The effect of ass
Slide 18: …and continuing brisk letting activity
…and continuing brisk letting activity H1 2010 H1 2011 59 leases renewed 73 leases renewed 48 relets 54 relets 65 leases signed for “Esprit 71 leases signed for “Esprit Voisin” and Grenoble Voisin” and Grenoble development projects development projects _________________________ _____________________
Slide 19: Results boosted by Esprit Voisin ramp-up and new partnership
Results boosted by ramp-up of the “Esprit Voisin” program and new partnership 06/10 06/11 Var. Funds from operations (FFO)* Net rental income 68.7 74.4 +8.3% per share (diluted) Net operating expenses** -5.6 -6.2 +9.2% Union Investment partnership - 2.0 NS 0.76 fees In millions of euros 0.69 Non-rec
Slide 20: Growth in cash flow fuelled by four growth drivers
Growth in cash flow fuelled by Mercialys’s four growth drivers Cash flow benefited from Organic growth Acquisitions and openings in 2010 and 2011, which – net of asset sales in 2010 – had a significant positive impact on rental income and lease rights received Fees of Euro 1.3 million (net of tax) r
Slide 21: Stabilization in average appraisal yield
Stabilization in average appraisal yield in the first half of the year (-5bp) Growth over 6 Appraisal value of portfolio, including months transfer taxes * 2,642.1 Euro +28m 2,566.6 Change in scope of 2,437.2 2,467.8 consolidation In millions of euros 2,061.2 1,913.8 Euro +20m Reduction in average y
Slide 22: Further improvement in NAV per share
Further improvement in NAV per share driven by growth in appraisal values NAV per share incl. transfer taxes (euros) 28.91 28.39 27.00 27.10 26.78 25.70 +1.8% +6.7% 12/31/2007 12/31/2008 12/31/2009 06/30/2010 12/31/2010 06/30/2011 First-half 2011 results Liquidation NAV per share (excl. transfer tax
Slide 23: Other highlights of the first half of 2011
Other highlights of the first half of 2011
Slide 24: More awards for the Esprit Voisin program
2 more awards for the “Esprit Voisin” program Mercialys won two awards at the 6th CNCC awards ceremony: The CNCC “2010 Extension-Renovation” award for the quality of the Esprit Voisin conversion of the Val Semnoz shopping center near Annecy. The CNCC “2010 Sustainable Development” award in general r
Slide 25: Sustainable development partnership with GreenYellow
Mercialys strengthens its positioning in sustainable development in partnership with GreenYellow: a key player in the development and construction of photovoltaic systems on large roofs and car parks in France GreenYellow was founded by Casino in 2009 to design, develop, finance and build photovolta
Slide 26: Sites installed with positive client feedback
17 sites installed: an advantage for shopping centers and very positive feedback from clients GreenYellow has developed a “toolbox” of mature, proven technologies benefiting from a significant experience, including in France: Water-resistant photovoltaic paving tiles St André de Cubzac Bordeaux Pess
Slide 27: Installations in pictures
Installations in pictures First-half 2011 results Saint-Paul (La Réunion) – 2,500KWp - Operational since August 2010 27
Slide 28: Installations in pictures
Installations in pictures First-half 2011 results Le Port (La Réunion) – 3,900KWp – Operational since September 2010 28
Slide 29: Mercialys owns 5.25% of GreenYellow
Mercialys owns 5.25% of GreenYellow In 2009, at the outset, Mercialys reinvested rents received upfront for the first tranche of roof-based developments by acquiring shares (at nominal price) worth Euro 0.5 million when GreenYellow launched its capital increase The following three tranches of develo
Slide 30: New program of asset sales launched in 2011
New program of asset sales launched in 2011… Euro 84 million of mature assets subject to bilateral promises, representing approximately 3% of the portfolio Estimated capital gain of Euro 30 million on this basis 14 assets spread across 5 portfolios representing full-year net rental income of Euro 5.
Slide 31: Focused on portfolios of small and mature properties
… still focused on portfolios of small and mature properties Mature and/or small properties to be sold in order to maintain a dynamic asset management policy Portfolios built up on the basis of geographical consistency Total value between Euro 5 million and Euro 30 million per portfolio to target a
Slide 32: Partnership with Union Investment
Mercialys has developed a partnership with Union Investment (UI) Union Investment is a German investment company specializing in open-ended real estate funds for institutional or private investors. It manages around Euro 19 billion of real estate assets via six funds. Aim of the partnership To devel
Slide 33: Partnership with Union Investment: fund structure
Mercialys has developed a partnership with Union Investment (UI) Creation of a fund owned 80% by UI / 20% by Mercialys Mercialys is responsible for Asset Management and Letting as well as sourcing of new assets Target: mature retail properties Potential size: Euro 300 to 500 million OPCI real estate
Slide 34: Developments: Overview and outlook
Developments: Overview and outlook
Slide 35: Esprit Voisin projects: successful openings in first half 2011
“Esprit Voisin” development projects: 7 successful openings in the first half of 2011 7 completions in H1 2011 Letting of developments* March April June May 100% 107% 113% 106% 93% 100% 100% Nîmes Les Sables d’Olonne Geispolsheim Montauban V. im io es y an ec cc Marseille La V. La . e îm ub l.. MS A
Slide 36: Ajaccio: extension enhancing a leading site in Corsica
Ajaccio: extension enhancing a leading site in Corsica Opening date: April 27, 2011 Enlarged by 1,470 m² 14 new stores opened, renovation of existing shopping mall The shopping center now has 47 shops Phase 1 and 1 mid-size store Total investment*: Euro 12.2m (1) Gross annual rental income: addition
Slide 37: Ajaccio: extension enhancing a leading site in Corsica
Ajaccio: extension enhancing a leading site in Corsica First-half 2011 results 37
Slide 38: Ajaccio: extension enhancing a leading site in Corsica
Ajaccio: extension enhancing a leading site in Corsica June 30, 2011 Area: 28,750 m² Investment over the period: Euro 13.4m (1) Annual rental income: Euro 4.4m (1) (extension, renovation Market value: Euro 74.3m* (1) and maintenance) Size x 1.5 2006 - Acquisition (1) O/w Mercialys share = 60% Area:
Slide 39: Geispolsheim: extension on a Leclerc site with Coop d'Alsace
Geispolsheim: development of extension on a Leclerc site in partnership with Coop d’Alsace Opening date: March 11, 2011 Enlarged by 2,700 m² 19 new stores opened, renovation of existing site and extension of shopping mall The shopping center now has 33 shops and 2 mid-size stores + 1 cafeteria Inves
Slide 40: Geispolsheim: extension on a Leclerc site with Coop d'Alsace
Geispolsheim: development of extension on a Leclerc site in partnership with Coop d’Alsace First-half 2011 results 40
Slide 41: Geispolsheim: extension on a Leclerc site with Coop d'Alsace
Geispolsheim: development of extension on a Leclerc site in partnership with Coop d’Alsace June 30, 2011 Area: 7,800 m² Investment over the period: Euro 10.3 million (1) Annual rental income: Euro 1.6m (1) (land, extension, renovation Market value: Euro 28.2m* (1) and maintenance) Size x 3 2009 – Ac
Slide 42: Marseille La Valentine: hypermarket and mall conversion
Marseille La Valentine: large-scale project to convert hypermarket and shopping mall into new stores Enlarged by 6,240 m² and Successive opening dates: redevelopment of 1,890 m² Phase 1 on March 30, 2011 20 new shops opened + 2 mid-size stores, renovation of existing site, Phase 2 planned for August
Slide 43: Marseille La Valentine: hypermarket and mall conversion
Marseille La Valentine: large-scale project to convert hypermarket and shopping mall into new stores First-half 2011 results 43
Slide 44: Marseille La Valentine: hypermarket and mall conversion
Marseille La Valentine: large-scale project to convert hypermarket and shopping mall into new stores June 30, 2011 Investment Area: 32,250 m² over the period: Euro 88.7m Annual rental income: Euro 8.8m** (purchase of hypermarket premises, extension and maintenance) Total market value: Euro 167.5m *
Slide 45: Les Sables d'Olonne: extension and redevelopment project
Les Sables d’Olonne: mixed extension and redevelopment project Enlarged by 1,385 m² and Opening date: May 11, 2011 redevelopment of 350 m² of mid-size stores 14 new shops and renovation of existing site The shopping center now has 38 shops, 1 cafeteria (renovated) and 4 mid-size stores Investment*:
Slide 46: Les Sables d'Olonne: extension and redevelopment project
Les Sables d’Olonne: mixed extension and redevelopment project First-half 2011 results 46
Slide 47: Les Sables d'Olonne: extension and redevelopment project
Les Sables d’Olonne: mixed extension and redevelopment project June 30, 2011 Investment Area: 9,100 m² over the period: Euro 9.5m Annual rental income: Euro 1.5m (acquisition of 2 mid-size stores**, extension, renovation and maintenance) Market value: Euro 22.0m* Size x 3 2005 - Contribution Area: 5
Slide 48: Nîmes: conversion of hypermarket area into new stores
Nîmes: conversion of hypermarket area into new stores Enlarged by 1,400 m² 3 new stores opened and enlargement of H&M store Opening date: March 5, 2011 The shopping center now has 67 shops, 4 mid-size stores and 1 cafeteria Investment*: Euro 7.0m Gross annual rental income: additional Euro 0.5m Yiel
Slide 49: Nîmes: conversion of hypermarket area into new stores
Nîmes: conversion of hypermarket area into new stores First-half 2011 results 49
Slide 50: Nîmes: conversion of hypermarket area into new stores
Nîmes: conversion of hypermarket area into new stores June 30, 2011 Area: 18,050 m² Investment Annual rental income: Euro 6.2m over the period: Euro 7.5m (acquisition of hypermarket and works) Market value: Euro 134.1m* Size x 2 2005 - Contribution Area: 16,650 m² First-half 2011 results Annual rent
Slide 51: New openings planned for second half of 2011
7 new openings planned for second half of 2011 7 completions of “Esprit Voisin” extensions in preparation for H2 2011 and more than a dozen for 2012 H2 2011 schedule Q3 Q4 Troyes Barberey RP ph.1 Marseille la V. ph.2 Villefranche sur Saône Angers (HM redev.) Annemasse Auxerre GM Orléans ph.1 Letting
Slide 52: 50% of properties to benefit from Esprit Voisin by end-2012
50% of properties will benefit from the Esprit Voisin development program by end-2012 End-June 2011 End-2012 Euro 100-200 million of investment per year 50% of projects completed* Around Euro 10 million in annualized More than 425,000m² rents created per year upgraded and renovated* 28% of projects
Slide 53: Casino pipeline still the main driver for acquisitions
Casino pipeline still the main driver for acquisitions in the years to come Pipeline* of Casino development projects in millions of euros Large and growing pipeline of “Esprit Voisin” extension projects Numerous completions planned for H2 2011 and 2012 No change to rates grid under Partnership Agree
Slide 54: Conclusion and outlook
mercialys L'Esprit Voisin. Conclusion and outlook
Slide 55: An active first half, a simple business model and robust performance
An active first half of the year, a simple business model and a robust performance We are actively continuing to implement our strategy: value creation is our priority Our pure-player business model is simple and effective We are stepping up the number of entrepreneurial initiatives capitalizing on
Slide 56: Our business model: enhancing the value of assets
Our business model: enhancing the value of assets to be developed and encouraging initiative Asset Management Entrepreneurship • Reversion • Entrepreneurial innovations: • Development of associated GreenYellow, Specialty Leasing... revenues • Teams on the look-out for • Redevelopment/ Extension oppo
Slide 57: Clearer outlook for 2011
Clearer outlook for 2011 Maintaining the rate of organic growth Reversion Indexation back to positive growth These factors allow us to raise our growth target Automatic negative impact of 2010 for 2011: asset sales on cash flow Arbitrage of 2011 asset sales will have a limited Growth in funds from m
Slide 58: Appendices
1 mercialys L'Esprit Voisin. Appendices
Slide 59: Detailed income statement
Detailled income statement In millions of euros % chg. 06/30/10 06/30/11 11/10 Invoiced rents 70.5 75.6 +7.1% Lease rights 1.8 3.6 Rental revenues 72.4 79.2 +9.3% Non-recovered property taxes -0.1 -0.0 Non-recovered service charges -1.6 -2.0 Property operating expenses -1.9 -2.7 Net rental income 68
Slide 60: Number of shares
Number of shares 2008 2009 2010 06/30/2011 Number of shares outstanding . As at January 1 75,149,959 75,149,959 91,968,488 92,000,788 . As at June 30 75,149,959 90,537,634 91,968,488 92,010,013 . As at December 31 75,149,959 91,968,468 92,000,788 - Average number of 75,149,959 85,483,530 91,968,488
Slide 61: Condensed balance sheet
Condensed balance sheet Assets In millions of euros 12/31/10 06/30/11 Investment property 1,604.3 1,538.9 Financial assets 11.7 12.2 Other assets 1.0 0.7 Total non-current assets 1,617.0 1,551.1 Cash and Casino current account 77.4 45.1 Trade and other receivables 40.9 33.2 Investment property held
Slide 62: Portfolio valued at Euro 2,642 million incl. transfer taxes
Portfolio valued at Euro 2,642 million incl. transfer taxes Increase of +2.9% over 6 months Appraisal value Gross leasable Appraisal net Number incl. transfer area at 06/30/11 rental income Type of property of assets taxes at 06/30/11* 06/30/11 Euro % m² % Euro % millions millions Regional and large
Slide 63: Partnership Agreement: grid for second half of 2011 unchanged
Partnership Agreement: grid for second half of 2011 remains unchanged Grid of capitalization rates applicable to call options exercised in the second half of 2011 within the framework of the Partnership Agreement with Casino Shopping malls Retail parks City center Mainland Corsica Mainland Corsica F
Slide 64: Enhancing the value of the pipeline by stage of completion
Enhancing the value of the pipeline taking into account the stage of completion of each project Each stage of completion has its own probability The development pipeline as it currently stands contains projects with widely varying stages of completion and chances of going ahead The valuation method