Mercialys Sa · EURONEXT:MERY
Mercialys Sa — H1 2013 Earnings Presentation
49 slides from Mercialys Sa's earnings presentation, Jul 24, 2013
Slide 1: First-half 2013 results
First-half 2013 results Wednesday July 24, 2013
Slide 2: Contents
CONTENTS Overview Projects and Development Results Outlook First-half 2013 results 2
Slide 3: Overview
Overview Eric LE GENTIL, Chairman and Chief Executive Officer
Slide 4: Mercialys: Resilience and growth
Mercialys: Resilience and growth Team and corporate governance in place Robust fundamentals Strategy confirmed First-half 2013 results 4
Slide 5: Mercialys business model proves resilient in the first half 2013
Mercialys business model proves resilient in the first half 2013 Further strong organic growth, driven by increasing rent levels, Continued low ... and high the attractiveness of L’Esprit Voisin and recurring vacancy... recovery rate development of Specialty Leasing Organic growth Recurring Recovery
Slide 6: In a difficult environment, sales in some business sectors remain resilient
In a difficult environment, sales in some business sectors remain resilient Performance index for neighborhood shopping centers at May 31, 2013 CNCC panel of neighborhood shopping centers in France, excluding large food stores (like-for-like sales growth, 12 months rolling) Resilient sectors Struggl
Slide 7: Mercialys drew the benefit of its lease portfolio mix
In this environment, Mercialys drew the benefit of its lease portfolio mix... With its shopping centers mostly exposed to the resilient sectors, Mercialys enjoyed a positive trend in its retailers' sales Weighting of business sectors at Mercialys Retailers’ sales growth (% of rental income)* (To end
Slide 8: Driven by our historical positioning in neighborhood shopping centers
... driven by our historical positioning in neighborhood shopping centers Initiated with L’Esprit Voisin... • Based on a local presence and strong local roots ... continued with the Foncière Commerçante*** concept • Strengthening local ties by offering a package of services €2.4bn €2.4bn to reta
Slide 9: Our core strategy remains enhancing and differentiating our portfolio
Our core strategy remains one of enhancing and differentiating our portfolio Making our shopping Extracting Value creation reversionary centers more attractive potential Extensions Renovations Increasing rent Redevelopments Foncière levels Commerçante Developing Specialty Leasing First-h
Slide 10: Projects and Development
Projects and Development Vincent REBILLARD, Chief Operating Officer Thierry AOUIZERATE, Executive Vice-President
Slide 11: L'Esprit Voisin continues to fuel growth
L’Esprit Voisin continues to fuel growth Some ten projects are in progress or planned, including 8 scheduled for completion in 2013 and 2014 First-half 2013 results Euro +7.4m of 87 new stores / additional rental Euro 94m 22,200 m² created or income on a full-year invested redeveloped basis 11
Slide 12: Completion in 2013 of mid-size stores at Sainte-Marie Duparc
Completion in 2013 of mid-size stores at the Sainte-Marie Duparc site Development of a 2,500 m² retail park: 4 new mid-size stores Total investment*: Euro 3.4m Gross annual rent: Euro +424k Yield on cost: 13% Orchestra, La Halle aux Chaussures, Moving – Fitness Park Average rent on mid-size st
Slide 13: Sainte-Marie Duparc has become one of Mercialys' major assets
In the space of 5 years, Sainte-Marie Duparc has become one of Mercialys’ major assets June 30, 2013 Area: 20,800 m² Annual rental income: Euro 4.9m Market value: Euro 79.0m* Investment: Euro 40m & value x5 2007 - Contribution Area: 3,300 m² Annual rent: Euro 1.1m First-half 2013 results Total marke
Slide 14: Work in progress (1/3): Clermont-Ferrand
Work in progress (1/3) CLERMONT-FERRAND 35,000 m² shopping center 52 shops - 2 mid-size stores Major brands: H&M, Zara, Leroy Merlin 2,700 m² extension of the shopping mall 14 new shops and extension of H&M Letting rate*: 70% Total additional net rental income per year**: Euro 1.0m Opening
Slide 15: Work in progress (2/3): Lanester
Work in progress (2/3) LANESTER 31,700 m² shopping center 64 shops - 1 mid-size store Major brands: Sephora, Celio 2,000 m² extension of the shopping mall 10 new shops and 1 mid-sized store Letting rate*: 62% Total additional net rental income per year**: Euro 0.7m Opening of extension: Ap
Slide 16: Work in progress (3/3): Albertville
Work in progress (3/3) ALBERTVILLE 23,600 m² shopping center 33 shops - 3 mid-size stores Major brands: Intersport, La Halle aux Chaussures Extension of existing retail park (+2,200 m²) and shopping mall (redevelopment of cafeteria) +5 mid-size stores and 12 shops Letting rate of retail park*:
Slide 17: Work due to start soon (1/4): Angers Espace Anjou
Work due to start soon (1/4) ANGERS ESPACE ANJOU 37,200 m² shopping center 92 shops - 5 mid-size stores Major brands: H&M, Zara, Sephora 5,000 m² extension of existing shopping mall (redevelopment of adjacent large specialty store) 16 new shops Letting rate*: 80% Total additional net rental
Slide 18: Work due to start soon (2/4): Annemasse
Work due to start soon (2/4) ANNEMASSE 25,000 m² shopping center 37 shops - 3 mid-size stores Major brands: Décathlon, FNAC, Boulanger Extension of Décathlon store Doubling of store area (+2,000 m²) Letting rate*: 100% Total additional net rental income per year**: Euro 0.2m Opening of ext
Slide 19: Work due to start soon (3/4): Agen Boé
Work due to start soon (3/4) AGEN BOE 19,000 m² shopping center 24 shops - 1 mid-size store Major brands: Naf Naf, Nocibé, McDonalds 1,400 m² extension of the shopping mall 11 new shops Letting rate*: 50% Total additional net rental income per year**: Euro 0.6m Opening of extension: Septem
Slide 20: Work due to start soon (4/4): Besançon
Work due to start soon (4/4) BESANCON 58,200 m² shopping center 72 shops - 10 mid-size stores Major brands: H&M, Boulanger, Leroy Merlin 2,100 m² extension of the shopping mall 14 new shops Letting rate*: 81% Total additional net rent**: Euro 1.2m Opening of extension: November 2014 (work
Slide 21: Foncière Commerçante concept supports L'Esprit Voisin
Foncière Commerçante concept supports L’Esprit Voisin with a three-pronged strategy Local L’Esprit Voisin presence Geomarketing Events Footfall Conversion Offering Digitalization Specialty Leasing First-half 2013 results 21
Slide 22: Local presence: Geomarketing for more effective targeting
Local presence: Geomarketing for more effective targeting and optimization of communications Actions Results Targeting city center communication networks +4% in sales In Brest: geomarketing to and media since better identify the key Street marketing actions January 2013 competitive area Change
Slide 23: Footfall: events to develop footfall
Footfall: events to develop footfall and make our centers more attractive Actions Results Grenoble Footfall: +65% CASERNE DE BONNE over the event Family events period Quimper Footfall: GLANN ODET +9% First anniversary of inauguration over the day Annecy VAL SEMNOZ Footfall: +8% Fathers' Day linked t
Slide 24: Footfall: conversion into additional sales for retailers
Footfall: Conversion of footfall into additional sales for retailers Actions Results Week 20: Marionnaud Sales +70% vs. 2012 Additional non-adjacent Week 21: shop windows Sales +160% vs. 2012 In Store Media 50% of display reserved for the Dynamic display screens center and its (Live Malls) retailers
Slide 25: Digitalization and Web-to-Store
Digitalization and Web-to-Store: reinforcing the supply provided by our retailers Actions E-kiosks (Muuu.fr): online order screens with payment terminal, reserved for e-tailers Round out the retail offering in our centers Currently being rolled out in Nîmes, Quimper, Angers, Toulouse and Marseil
Slide 26: Specialty Leasing: animate the centers and strengthen the offering
Specialty Leasing: animate the centers, strengthen the offering and leverage communal areas Actions Results +7.5% like-for-like Development of exhibitions and roadshows growth in Push on mobile retailing (traders, etc.) SL revenue (excl. assets sold) Provision of new services (buying gold, etc
Slide 27: Development incorporating a CSR approach
Development incorporating a CSR approach, initiated in 2010 Label "V", the cornerstone of Mercialys’ CSR approach: • A multi-criteria label developed by Mercialys 24% of • Integration of the shopping center’s urban design, landscaping and portfolio architecture into the local environment labeled •
Slide 28: Results
Results Marie-Flore BACHELIER, Chief Financial Officer
Slide 29: Rental performance remains a key growth driver
Rental performance remains a key growth driver.... Organic growth in rents buoyed by resilient sales, high quality rental management and growth of Specialty Leasing activities Mercialys shopping centers’ activity • Revenues +0.7%* generated by retailers like-for-like Organic growth Rental management
Slide 30: Organic growth in invoiced rents up by 4.2%
... driving organic growth in invoiced rents up by +4.2% Euro 81.0m Rental revenues: -5.3% Euro 76.7m Lease Organic growth rights +4.2%** Euro -8.3m Lease rights Euro +1.6m Euro +1.6m Euro +1.3m Euro -0.2m Increase in invoiced Strategic Indexation rents like-for- Asset sales Acquisitions vacancy* +
Slide 31: Management indicators remain at good levels
Management indicators remain at good levels 97.7% stable 97.6% Recovery rate* still at a high level 12/31/12 06/30/13 97.6% stable 97.4% Stable recurring financial occupancy rate** 12/31/12 06/30/13 9.9% 10.1% Occupancy cost ratios*** among the lowest in the sector First-half 2013 results 12/3
Slide 32: Financial flexibility strengthened during first half
Financial flexibility strengthened during first half... Finalization of Repayment of LTV ratio asset sale Euro 250m of below 40% program bank loans** Residual debt LTV ratio*** drawn down** Euro 472m* Euro 750m 33.0% First-half 2013 results (*) Including Euro 15m in estimated earn-out payments on va
Slide 33: Dividend of Euro 1.31 per share paid on June 28, 2013
... and by the payment of a dividend of Euro 1.31 per share on June 28, 2013 A recurring dividend of Euro 0.93 per share (including the interim dividend of Euro 0.25 per share already paid in October 2012) A second exceptional dividend of Euro 0.63 per share related to the 2012/H1-2013 asset sal
Slide 34: Operating cash flow down due to asset disposals
Operating cash flow down due to asset disposals... 06/2012 06/2013 % chg. Operating cash flow decreased by Euro 4.0m, Net rental income 76.3 71.7 -6.1% mainly due to: Net operating expenses* -6.3 -5.7 - fall in rental income following the asset sale Operating cash flow 70.0 66.0 -5.7% program (Euro
Slide 35: Continued high EBITDA margin
... and continued high EBITDA margin Trends in EBITDA to Rental Revenues margin stable 87%* 87%* First-half 2013 results 06/30/2012 06/30/2013 (*) Excluding the development margin and earn-out payment on the Bordeaux-Pessac extension 35
Slide 36: Financial flexibility strengthened during the first half
Financial flexibility strengthened during the first half Euro 250m of bank loans repaid* Interest rate structure A conservative debt structure: After repayment of Euro 250m of bank loans* Bank loans Euro 100m* Variable rate At 06/30/2013: 13% Liquidity facility: Euro 250m Unused commercial pap
Slide 37: Portfolio value continues to grow like-for-like
With stable average capitalization rates, portfolio value continues to grow like-for-like Breakdown of change in portfolio appraisal value, including transfer taxes* -5.5% on a variable basis +2.4% like-for-like € 2,561m € +65m € 2,419m (In millions of euros) 105 assets 91 € -197m € -10m assets 12/3
Slide 38: Organic growth also supports NAV
Organic growth also supports NAV NAV per share Liquidation NAV incl. transfer taxes (euros) excl. transfer taxes per share (euros) +1.7% +2.3% 18.94 17.97 18.27 17.47 16.88 Share Share 16.50 price 17.15 price 17.15 14.81 14.81 First-half 2013 results 12/31/12 12/31/12 06/30/13 12/31/12 12/31/12 06/3
Slide 39: Outlook
Outlook Eric LE GENTIL, Chairman and Chief Executive Officer
Slide 40: 2013 target: growth and profitability
2013 target: growth and profitability... 2013 TARGETS Further robust 1.5 points growth in invoiced organic growth rents on top of indexation Continued strong operating EBITDA to Rental Revenues margin performance > 84% Further value creation at our Around ten sites undergoing works shopping centers
Slide 41: Leveraging Mercialys' fundamentals
... leveraging Mercialys’ fundamentals Growth and robust business model • Favorable product mix • Potential for increasing rent levels • Secure acquisition-led growth Strong positioning around local presence • L’Esprit Voisin... • ... strengthened by the Foncière Commerçante concept A dedicate
Slide 42: Questions
€j mercialys L'Esprit Voisin. Questions
Slide 43: Appendices
€j mercialys L'Esprit Voisin. Appendices
Slide 44: Income statement
Income statement (In millions of euros) 06/30/12 06/30/13 % chg. 13/12 Invoiced rents 77.1 73.2 -5.1% Lease rights 3.8 3.5 Rental revenues 81.0 76.7 -5.3% Non-recovered property tax 0.0 -0.1 Non-recovered service charges -2.1 -1.8 Property operating expenses -2.6 -3.1 Net rental income 76.3 71.7 -6.
Slide 45: Condensed balance sheet
Condensed balance sheet (In millions of euros) Assets 12/31/11 12/31/12 06/30/13 Investment property 1,624.8 1,414.0 1,409.5 Financial assets 13.6 27.0 20.3 Other assets 0.8 1.4 15.1 Total non-current assets 1,639.2 1,442.4 1,444.9 Cash and cash equivalents 47.5 206.7 87.5 Trade and other receivable
Slide 46: Number of shares
Number of shares 2011 2012 2013 Number of shares outstanding . As at January 1 92,000,788 92,022,826 92,022,826 . As at June 30 92,010,013 92,022,826 92,049,169 . As at December 31 92,022,826 92,022,826 Average number of shares 92,011,241 92,022,826 92,041,884 outstanding Average number of shares 91
Slide 47: Partnership Agreement: grid remains unchanged
Partnership Agreement: grid remains unchanged Grid of capitalization rates applicable to reiterations in the second half of 2013 under the current Partnership Agreement with Casino City Shopping malls Retail parks center Mainland Corsica Mainland Corsica Type of property France and ODT* France and
Slide 48: Portfolio valued at Euro 2,419 million including transfer taxes
Portfolio valued at Euro 2,419 million including transfer taxes Appraisal Gross leasable Appraised net (As at 06/30/2013) value incl. TT area rental income Number of assets Type of property In Euro In Euro % m² % % millions thousands Large regional and large shopping centers 25 1,774.6 73% 360,200 6
Slide 49: L'Esprit Voisin concept continues to fuel growth
L’Esprit Voisin concept continues to fuel growth Project Start of the Opening Mercialys net Net additional Project Project description Letting rate** Cap rate surface works date* total cost*** annual rent* Ste-Marie Duparc 2,500 m² + 1 retail park of 4 MSS Aug-12 May-13 106% € 3m N/A € 0.4m (La Réun