Slide 1: Bond investor presentation June 2020
Bond investor presentation June 2020
Slide 2: Contents
Contents Optimizing operations in a shifting paradigm for the retail market 03 10 22 36 A resilient Strong operating Earnings & Appendices company profile levers to face the financial profile health crisis 2
Slide 3: A resilient company profile
A resilient company profile PIERCIALYS
Slide 4: Company profile
Company profile €191.9m in rental revenues Leading listed French real estate company that is a pure player for shopping centers 85% EBITDA margin › Mercialys' portfolio is focused on large and neighborhood shopping centers, as well as high-street retail assets that are leaders in their areas › Asset
Slide 5: Strong revenue, asset value and financial profile over the long term
Strong revenue, asset value and financial profile over the long term Organic growth (%) FFO (€mn) 3.7% 3.6% 3.4% 3.4% 124.2 3.1% 2.6% 114.4 114.0 115.1 0.3% 1.2% 1.9% 108.5 3.5% 3.5% 102.6 2.8% 2.6% 2.5% 1.7% -0.1% -0.1% 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 Indexation effect O
Slide 6: Selective asset base in an increasingly polarized retail market
Selective asset base in an increasingly polarized retail market Concentration on a limited number of sites in Restructuring and expansion of assets with winning dynamic medium-sized cities positions within local “master zones” Optimized letting and asset management Strategic geographical positioning
Slide 7: Shopping center portfolio refocus on regional dominant assets
Shopping center portfolio refocus on regional dominant assets Number of shopping centers and average value 73,874 61,479 38,868 26,907 93 62 58 47 2010 2013 2016 2019 Number of shopping centers in portfolio Average gross asset value of shopping centers (€ mn) Shopping center breakdown by size (% of
Slide 8: Example of polarization of local retail in dominant master-zones: Angers
Example of polarization of local retail in dominant master-zones: Angers AVRILLÉ SAINT-SERGE Key L’ATOLL Turnover for specialized large and mid-size stores ANGERS Turnover for the shopping center (urban area) GRAND MAINE BEAUCOUZÉ ESPACE ANJOU (Mercialys) The size of the circles is proportional to t
Slide 9: Hypermarkets still driving consumption in the regions, within a model specializing in food
Hypermarkets still driving consumption in the regions, within a model that is however specializing in food › Massive decline in non-food turnover for hypermarkets over the past 8 › 94% of French people visited a hypermarket at least once during the years, across all product categories year (2) › Non
Slide 10: Hypermarkets’ rightsizing to support their realignment around food
Hypermarkets’ rightsizing to support their realignment around food › 58 assets held by Mercialys at year-end 2019: › In the 23 shopping centers where Mercialys does not own the ▼ 47 shopping centers ▼ 6 city-center sites ▼ 5 isolated units anchoring food store, they are operated today by: ▼ Casino a
Slide 11: Strong operating levers to face the health crisis
Strong operating levers to face the health crisis
Slide 12: Mercialys’ portfolio amplified positive national dynamics
Mercialys’ portfolio amplified positive national dynamics Client approach boosting local customer Favorable basis for comparison in 2019 Supportive geographic positioning engagement › As medium-sized cities were impacted by social › Strong underlying trend for Mercialys sites, which › Improved knowl
Slide 13: Mercialys’ anchorage in essential businesses allowed them to weather the health crisis
Mercialys’ anchorage in essential businesses allowed them to weather the health crisis Mercialys’ sites continued to serve their communities throughout the lockdown › Mercialys’ shopping centers and high-street retail assets have all continued to operate since the March 15 decree (closure of all non
Slide 14: Footfall progressively improving since May
Footfall progressively improving since May 11 Mercialys’ portfolio is outperforming the France panel and progressing steadily (1) Lifting of lockdown Reopening of restaurants Mercialys Panel France 10% 0% -10% -20% -30% -40% -50% -60% -70% -80% -90% 11-Jun 16-Jun 10-Jun 12-Jun 13-Jun 14-Jun 15-Jun 1
Slide 15: National mediation process to guide support measures for retailers
National mediation process that will help guide the support measures to be offered to retailers Charter supported by the French Ministry of Finance › A mediation process was considered necessary by the French government, which appointed a mediator in April 2020 › This mediation process, completed in
Slide 16: Health crisis driving changes in the regional logistics organization
Health crisis driving changes in the regional logistics organization Centralized warehouse e-Commerce customer e-Commerce flows Shopping center Supply flows Shopping center catchment area From supra-territorial e-commerce… …to multi-local e-commerce from stores › Prohibitive actual cost per order ›
Slide 17: Major steps forward with innovative projects in 2019
Major steps forward with innovative projects in 2019 at the heart of the expansion of retail asset use 5 strategic drivers to further enhance Mercialys sites’ local leadership and feed their future performance Regular personalized Merchandising mixes Multi-functionality Integration within the Local
Slide 18: Driving footfall and winning client insights through powerful digital tools
Driving footfall and winning client insights through powerful digital tools … Database of 1 million clients enabling interaction with visitors, efficient marketing action metrics and selection of appropriate retailers He shows his phone to 41 years old – 3 children Marketing support Profiles Lives i
Slide 19: Ambition to consolidate product distribution channels within our ecosystem
Ambition to consolidate product distribution channels within our ecosystem Product promotion Product collection Physical shopping center Customer visits and buys directly in store Click & Collect: customer collects their order in store Ocitô marketplace Product collection lockers: 24/7 Drive-in: cus
Slide 20: Projects adding distinctive convenience services to our sites
Projects adding distinctive convenience services to our sites Furiani healthcare center 1st healthcare center in a shopping center in Corsica, let to 12 practitioners under usual commercial leases Project structured to integrate an extension of the existing pharmacy, making it possible to offer sust
Slide 21: Cap Cowork structuring the local shared office market
Cap Cowork structuring the local shared office market with a profitable margin Completion and ongoing letting of co-working space in Angers Letting managed in-house by Mercialys’ local teams in order to internalize the profit margin Next openings at Brest, Grenoble, Quimper and Marseille Sainte-Anne
Slide 22: €468.6mn pipeline of meaningful projects on current scope
€468.6mn pipeline of meaningful projects on current scope Investment still Total Target net Target net yield Completion (in millions of euros) to be investment rental income on cost date committed COMMITTED COMMITTED PROJECTS 11.3 5.7 0.8 7.1% 2020 Projects fully secured in terms of land management,
Slide 23: Earnings & financial profile
Earnings & financial profile
Slide 24: Another year of sustained organic growth
Another year of sustained organic growth FY 2019 renewals & relettings: +9.2% 3.7% 3.6% 3.4% 3.4% 3.1% 2.6% 1.2% 0.3% 1.9% 3.5% 3.5% 2.8% 2.6% 2.5% 1.7% -0.1% -0.1% 2014 2015 2016 2017 2018 2019 (1) Organic growth in invoiced rents, incl. indexation Organic growth in invoiced rents, excl. indexation
Slide 25: Q1 2020 activity
Q1 2020 activity Organic growth of +3.1% in Q1 2020 (in thousands of Change at Change at End-March 2019 End-March 2020 euros) current scope (%) constant scope (%) Invoiced rents 46,312 46,518 +0,4% +3,1% Lease rights 820 632 -22,9% Rental revenues 47,132 47,150 0,0% The guidance announced when the 2
Slide 26: Durably sound vacancy rates and occupancy cost ratio
Durably sound vacancy rates and occupancy cost ratio on the back of Mercialys’ sensible lettings strategy Change in recurring financial vacancy rate (1) Change in occupancy cost ratio 2.6% 2.5% 2.5% 10.5% 10.6% 10.4% 2018 H1 2019 2019 2018 H1 2019 2019 (rents + charges including marketing costs + wo
Slide 27: Rental revenues up +2.4%
Rental revenues up +2.4% €191.9m Lease rights €3.0m +2.4% €187.3m + €3.2m Lease rights €2.1m + €3.4m + €1.0m €188.8m +2.0% - €0.6m - €3.4m €185.2m Like-for-like Strategic Disposals Acquisitions and Indexation growth in vacancy(1) and completions invoiced rents non-recurring items Organic growth +3.6
Slide 28: FFO up +7.9%
FFO up +7.9% + €9.3m 20 bp €124.2m - €3.8m Sustained improvement in - €0.9m rental margin at - €0.7m organic growth 94.9% €2.1m of provisions + €1.4m for a dispute + €4.6m relating to a site in Reimbursement Réunion Impact of the sale of of the bond + the Rennes and - €0.7m maturing in Recognition o
Slide 29: €122.4m of asset sales including transfer taxes, above appraisal values
€122.4m of asset sales including transfer taxes, significantly above appraisal values Breakdown of Mercialys’ asset sales in 2019 Gap shopping Isolated units center €1.1m €7.1m Rennes and Anglet hypermarket premises and La Garenne- Investors interested in all three types of adjacent units €17.4m Col
Slide 30: Sound financial structure
Sound financial structure Change in LTV (excluding transfer taxes) and ICR Debt: fixed vs. floating rate exposure (1) 6.7x 7.4x 60,0% 14% 50,0% 5.0x 40,0% 30,0% 2019 20,0% 40.8% 40.9% 39.5% 86% 10,0% 0,0% 2018 H1 2019 2019 Fixed-rate debt Variable-rate debt Change in net debt to EBITDA ratio 1000,0%
Slide 31: Optimized financing costs following the reimbursement of the March 2019 bond
Optimized financing costs following the reimbursement of the March 2019 bond Net debt at end-2019: €1,373.2m including › €1,200.0m of bond debt › €250.0m of commercial paper Change in the cost of drawn debt (1) Undrawn committed credit lines: €410m › Level unchanged to date in 2020 2% 1.8% 2% 2% 1.4
Slide 32: Financing structure and debt schedule
Financing structure and debt schedule Debt schedule at end-2019(1) Debt schedule at end-2018(1) in €m in €m 750 750 480 240 225 300 300 150 150 60 35 50 60 30 30 30 30 30 Confirmed bank facilities Casino cash advance Bonds Revolving credit facility Confirmed bank facilities Casino cash advance Bonds
Slide 33: Current contemplated transaction: proactively managing the debt schedule
Current contemplated transaction: proactively managing the debt schedule › Debt maturity at end-2019 reflects the impact of both the redemption of the €480m inaugural bond from 2012 maturing in March 2019 and the €750m bond maturity in 2023 › First: early partial refinancing process for the 2023 bon
Slide 34: Change in portfolio value
Change in portfolio value Over 12 months Total change on a like-for-like €3,420m excluding basis (1) - 1.4% - €48m transfer taxes of which rent effect + 1.4% + €51m of which yield effect - 3.0% - €108m -3.1% over 6 months of which other effects + 0.2% + €9m -3.9% over 12 months Average 12/2018 06/20
Slide 35: Change in NNNAV per share
Change in NNNAV per share (1) €20.01/share, -1.9% over 6 months, -5.4% over 12 months €21.14 + €1.35 - €0.58 €20.01 - €0.55 - €1.09 - €0.26 EPRA NAV at Rent effect: end-December 2019 + €0.56 › €20.53/share Yield effect: › Down -1.6% over 6 months - €1.18 › Down -1.6% over 12 months Other effects(2):
Slide 36: Dividend payment
Dividend payment › The 2020 General Meeting approved a dividend of €0.95 per share, including the interim dividend of €0.47 per share paid in October 2019, corresponding strictly to SIIC regulation Change in dividend % of FFO 111% 113% 85% 88% 90% 70% 1,24 1,33 1,06 1,09 1,12 0,95 2014 2015 2016 201
Slide 37: Appendices
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Slide 38: Organizational structure
Organizational structure › All core business functions carried out in-house, 111 employees excluding specific mandates at end-December 2019 › Certain support functions brought back in-house, others still outsourced Support functions brought back in-house Support functions currently being brought bac
Slide 39: Rental income structure
Rental income structure Breakdown of Mercialys’ rental income by type of retailer – Consolidated vision Breakdown of Mercialys’ rental income (% of annualized rental income at December 31, 2019 by type of retailer – Economic exposure and December 31, 2018) (% of annualized rental income at December
Slide 40: 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 Lease start date Lease end date Lease characteristics Site Type Lease characteristics Mercialys start date end date Saint-Denis 100% Sup
Slide 41: Rental income structure
Rental income structure Breakdown of Mercialys’ rental income by business sector (% of annualized rental income at December 31, 2019 – Lease expiry schedule including exposure to the Casino group) (percentage of leases expiring / guaranteed minimum rent) 26.8% Personal items Food-anchored tenants 6%
Slide 42: Shareholding structure
Shareholding structure Mercialys’ shareholding structure based on latest public declarations with the French regulator (AMF) Crédit Agricole’s position Treasury shares includes the Casino group's Crédit Agricole 0.38% definitive sale of 15% of 4.47% Mercialys' capital through a Casino group total re
Slide 43: Sainte-Marie
Sainte-Marie Selective investment in an area with development potential €25.0m investment Target net yield on cost: >7.0% Completion: 2023 43
Slide 44: Gassin Saint-Tropez
Gassin Saint-Tropez Consolidating local leadership with a modernized architecture aligned with new practices €25.7m investment Target net yield on cost: >7.0% Completion: 2023 44
Slide 45: Nîmes
Nîmes Diversifying the retail mix by developing a comprehensive dining and leisure offering €27.5m investment Target net yield on cost: >7.0% Completion: 2022 45
Slide 46: High-street retail
High-street retail Saint-Denis project › Building permit submitted › Dedicated company created with the developer Panhard, with a 30% stake held by Mercialys › Project metrics ▼ Circa €17.0m investment & ▼ Target IRR: >8% ▼ Program scheduled for delivery: 2024 Architect: Ateliers 2/3/4/ 46
Slide 47: High-street retail
High-street retail Three additional building permit applications expected for 2020 and 2021 PUTEAUX Mercialys aims to continue building its expertise in › Building permit to be mixed-use urban developments, capitalizing on the submitted: Q4 2020 development projects that are underway & › Program sch
Slide 48: EPRA performance indicators
EPRA performance indicators December 31, 2018 June 30, 2019 December 31, 2019 EPRA earnings - € per share 1.25 0.69 1.35 EPRA NAV - € per share 20.86 20.86 20.53 EPRA NNNAV - € per share 21.14 20.40 20.01 EPRA net initial yield 4.81% 4.89% 4.94% EPRA “topped-up” net initial yield 4.88% 4.95% 5.00% E
Slide 49: FFO & EPRA earnings
FFO & EPRA earnings In thousands of euros December 31, 2018 December 31, 2019 Invoiced rents 185,213 188,849 Lease rights 2,074 3,003 Rental revenues 187,287 191,853 Property taxes -14,339 -14,608 Rebilling to tenants 13,480 13,325 Non-recovered property taxes -860 -1,283 Service charges -31,329 -33
Slide 50: Net income group share
Net income group share In thousands of euros December 31, 2018 December 31, 2019 FFO 115,060 124,168 Depreciation and amortization -37,016 -40,440 Other operating income and expenses 4,780 7,682 Impact of hedging ineffectiveness and banking default risk -387 -1,334 Non-controlling interests: capital
Slide 51: Balance sheet
Balance sheet In thousands of euros December 31, 2018 December 31, 2019 Intangible assets 2,710 3,588 Property, plant and equipment 8 857 Investment property 2,322,755 2,222,452 Rights-of-use assets 0 9,981 Investments in associates 35,160 36,355 Other non-current assets 46,773 51,867 Deferred tax a
Slide 52: Breakdown of assets
Breakdown of assets Average appraisal yield rate: 5.26% at December 31, 2019 Appraisal value Appraisal value Gross leasable Appraised Number net rental of assets (excl. transfer taxes) (incl. transfer taxes) area Type of property at December 31, at December 31, 2019 at December 31, 2019 at December
Slide 53: Disclaimer
Disclaimer › This communication contains forward-looking information factors” in the Registration Document filed by Mercialys on and statements about Mercialys. Forward-looking March 18, 2019. statements are statements that are not historical facts. These statements include financial projections and