Mercialys Sa · EURONEXT:MERY
Mercialys Sa — Debt Investor Presentation (February 2018)
35 slides from Mercialys Sa's debt investor presentation, Feb 19, 2018
Slide 1: Bond investor presentation H1 2018
Bond investor presentation H1 2018
Slide 2: 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
Slide 3: Contents
Contents 01. 02. 03. 04. 05. Strategy Outperformance Pipeline Results Conclusions & key factors & disposals & financial & 2018 messages & activity structure objectives 4 10 16 19 26 3
Slide 4: Strategy & key messages
7 STRATEGY Ee Mp & KEY MESSAGES PIERCIALYS
Slide 5: Pure player for shopping centers
Pure player for shopping centers 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 co
Slide 6: 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 7: 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 8: 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 9: 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 10: Outperformance factors & activity
OUTPERFORMANCE FACTORS & ACTIVITY
Slide 11: 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 12: 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 13: 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 14: 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 14
Slide 15: 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 16: Pipeline & disposals
PIPELINE & DISPOSALS PIERCIALYS
Slide 17: 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 18: 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 19: Results & financial structure
RESULTS & FINANCIAL STRUCTURE
Slide 20: 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 21: 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 22: 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 23: 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 24: First step with early refinancing
First step with early refinancing Change in debt maturity (in years) 5,0 4,5 4,0 3,5 3,0 2,5 2,0 3.8 3.7 1,5 1,0 0,5 0,0 2016 2017 Debt maturity at end-2017 reflects the impact of the inaugural bond from 2012 maturing in March-2019 First step with the early refinancing process for the 2019 bond
Slide 25: 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 26: Conclusions & 2018 objectives
CONCLUSIONS & 2018 OBJECTIVES
Slide 27: 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 28: 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 28
Slide 29: Appendices
APPENDICES PIERCIALYS
Slide 30: 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 31: 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 32: 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 33: 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 34: 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 35: 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%
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