Slide 1: 2011 full-year results
2011 full-year results A new vision and a new strategy Becoming a “Foncière commerçante” “Think and act as a Retailer” Thursday, February 9, 2012
Slide 2: Preliminary notice
Preliminary notice The 2011 full-year consolidated financial statements were approved by the Board of Directors at its meeting of February 9, 2012. Audit procedures have been conducted by the statutory auditors. Finalization of the statutory auditors’ report on the consolidated financial statements
Slide 3: Overview of 2011
t} mercialys L'Esprit Voisin. Overview of 2011
Slide 4: 2011: A successful year
2011: A successful year Rental revenues up +7.7% Funds from operations (FFO) per share* up +10.0%, much ahead of management’s objectives (+5% in February 2011, revised to +7% in July 2011) Another record year in terms of lettings with 402 leases signed Second part of the asset rotation program: Merc
Slide 5: Esprit Voisin: a successful program led at a brisk rate of completions
Esprit Voisin: a successful program led at a brisk rate of completions… 11 Esprit Voisin development projects completed over the year Successful openings on a B to B basis (excellent lettings) and on a B to C basis (sharp increase in footfall) And in the second half of the year… 2011 full-year resul
Slide 6: Mercialys continuing with its dynamic asset rotation policy
Mercialys continuing with its dynamic asset rotation policy A policy initiated at end-2010 (end of the fiscal lock-up period) Euro 120m* of mature 16 properties sold across 6 properties sold in 2011 portfolios equal to approximately 5% of the value of the portfolio Initial buyer yield** 6.36% better
Slide 7: 2011 emphasizes years of growth based on the strategic principles adopted at IPO
2011 emphasizes 6 years of growth based on the strategic principles adopted at the time of the IPO (the “Alcudia” years) A period characterized by the implementation of powerful growth drivers… The Alcudia / Esprit Voisin program: implementation of an exhaustive program of creating value, modernizin
Slide 8: A track record allowing for an exceptionally large distribution
A track record allowing for an exceptionally large distribution (including more than 90% from the contribution premium account) Mercialys wants to mark the end of this first strategic phase, the “Alcudia years”, with a payout of Euro 1.25 billion to be paid during 2012 in addition to the final insta
Slide 9: 2012: A new vision and the start of a new strategy
2012: A new vision and the start of a new strategy: becoming the “Foncière commerçante”* Becoming a “Foncière commerçante”*: stepping up its efforts to differenciate from the rest of the market by enhancing Mercialys’s strategic positioning initiated with the launch of the “Esprit Voisin” brand An e
Slide 10: La Foncière commerçante: preserving growth and resilience, improving returns
La “Foncière commerçante”: preserving growth and resilience, improving returns while maintaining strong ties with Casino • Roll-out of the “Foncière commerçante” strategy Stronger growth • Refocusing of the portfolio on the assets most fitted to the roll-out of this profile concept • Acceleration of
Slide 11: 2011 activity
1 mercialys L'Esprit Voisin. 2011 activity
Slide 12: Retailers' sales remain more or less stable
For the second year in a row, retailers’ sales remain more or less stable Neighborhood shopping centers continue to hold up well Cumulative retailers’ sales growth Source: CNCC – like-for-like scope / all retailers All shopping Downtown Regional Neighborhood centers shopping shopping centers shoppin
Slide 13: Performances vary depending on sector and brand strengths
Performances vary depending on the sector and strengths specific to each brand Sales of retailers at shopping centers* Cumulative growth to end-December 2010 and 2011 4,0% 2010 2011 3,0% 2.8% 2.5% 2.5% 2.1% 2,0% 1.1% 0.8% 0.6% 0.8% 0.1% 0.0% -0.5% 0,0% -0.8% -2,0% -4,0% -6,0% 2011 full-year results
Slide 14: Retailers benefit from the impact of Esprit Voisin extensions
Against this backdrop, our retailers benefit from the positive impact of “Esprit Voisin” shopping center extensions Retailers’ sales growth All retailers – Cumulative to end-December 2011 +0.9%** +0.3% Mercialys CNCC panel* Neighborhood shopping centers -0,8% CNCC panel* Total scope “Esprit Voisin”
Slide 15: A record year in terms of leases signed
Following an exceptional year in 2010, a record year for Mercialys in terms of leases signed 2011 2010 157 leases renewed 130 leases renewed 98 relets 107 relets 147 leases signed for Esprit Voisin 114 leases signed for Esprit Voisin development projects development projects 402 leases signed 351 le
Slide 16: Slight improvement in management indicators
Slight improvement in management indicators, demonstrating the resilience of the portfolio once again Recovery rate* remaining at a high Slight improvement in level: 98.3% (98.0% at December 31, recurring vacancy rate to 2010) 2.0% (2.1% at December 31, 2010) Continuing modest occupancy Stable strat
Slide 17: 2011 enhanced by Esprit Voisin program completions
2011 enhanced by the “Esprit Voisin” program with 11 successful completions… 11 completions in 2011 April Sept Nov May Aug July June Mar Dec Oct Nîmes Les Sables d’Olonne Marseille La V. ph2 Villefranche Geispolsheim Montauban Annemasse Marseille La V. ph1 Annecy MS Havard Auxerre Ajaccio ph 1 Anger
Slide 18: Symbolic openings in the second half of the year
… and symbolic openings in the second half of the year Symbolic completions: phase 2 of Marseille La Valentine, Villefranche, Auxerre, Annemasse etc. Marseille La Valentine Villefranche sur Saône Extension opened on August 24, 2011 Extension opened in November 9, 2011 • Increase of +19.4% in shoppin
Slide 19: Annemasse: from 500,000 to 700,000 visitors
Annemasse: from 500,000 visitors in Nov/Dec 2010 to 700,000 in the last 2 months of 2011 Enlarged by 4,300 m² Opening date: November 16, 2011 17 new shops opened + 1 mid-size store (Fnac), renovation of the existing shopping 1st floor mall The center now has 32 shops and 4 mid- size stores including
Slide 20: At the heart of a leading retail area next to Geneva
At the heart of a leading retail area next to Geneva 2011 full-year results 20
Slide 21: Auxerre: a number of shops that doubled
Auxerre: a number of shops that doubled Opening date: November 23, 2011 Enlarged by 6,000 m² 21 new shops opened + 1 mid-size store (H&M), renovation of the existing shopping mall The center now has 44 shops and 3 mid- size stores Total investment*: Euro 23.8m Gross annual rental income: Additional
Slide 22: Auxerre: a leading site in a dominant regional retail area
Auxerre: a leading site in a dominant regional retail area 2011 full-year results 22
Slide 23: Villefranche: transformation of a small shopping mall
Villefranche: the transformation of a small shopping mall in a shopping center Opening date: November 9, 2011 Enlarged by 2,500 m² 19 new shops opened, renovation of the existing shopping mall The center now has 35 shops and 2 mid- size stores Total investment*: Euro 15.8m Gross annual rental income
Slide 24: Villefranche: market leader in a niche area
Villefranche: market leader in a niche area 2011 full-year results 24
Slide 25: Brive Malemort: another center to be converted to Esprit Voisin
Brive Malemort: another center to be converted to the “Esprit Voisin” concept Acquired for Euro 14.8m One of the two main shopping centers in Corrèze, attached to a long-standing hypermarket Annual rental value of Euro 950,000 34 shops with a total GLA of 2,700 m² as well as 3 mid-size stores, inclu
Slide 26: Controlled asset rotation plan in 2011
Mercialys continued with the implementation of a controlled asset rotation plan in 2011… 2010 2011 Euro 122m Euro 120m Asset sales for 45 properties for 16 properties As % of portfolio 5% 5% Service malls and Type of assets sold Small properties standalone assets Capital gain Euro 31.1m Euro 30.6m I
Slide 27: A major refocusing of the portfolio
… contributing to a major refocusing of the portfolio 2009 2011 Other* Other 69 properties – 13%** 36 properties – 5%** Neighborhood shopping centers 52 properties – 26% Neighborhood shopping centers 70 properties – 28%** Large and regional shopping centers 29 properties – 59%** Large and regional s
Slide 28: Average rental income still below the benchmark
Average rental income for the portfolio still below the benchmark: room for maneuver maintained Average gross rental value of Euro 213 per m² below the benchmark IPD benchmark 213 Euro 301 per m²* 203 185 In euros per m² 174 162 147 136 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11
Slide 29: Solid growth in rental revenues
Against this backdrop, Mercialys achieved solid growth in rental revenues Continuing robust organic growth Organic growth in Acquisitions carried out in 2010 and 2011 rental income +3.2%** boosted growth during the year RR Rental revenues : + 7,7% RR Euro 149.5m Euro 161.0m Euro+12.7m Euro -8.3m Eur
Slide 30: Strong growth in cash flow and FFO
Strong growth in cash flow and FFO**… Growth largely exceeding management’s objectives Cash flow Funds From Operations* (FFO) 142.9 140.8 In millions of euros 132.9 128.0 Objective +5% in Feb. 2011 revised to +7.6% +10.0% +7% in July 2011 31/12/2010 31/12/2011 31/12/2010 31/12/2011 Euro per 1.45 1.5
Slide 31: Productivity margins and services development for third parties
…as a result of generation of productivity margins and development of services activities for third parties Strong growth in gross rental 2011 2010 % chg. income Improvement in gross / net Net rental income 151.7 140.3 +8.1% conversion rate Operating expenses -16.7 -15.5 +7.8% Overhead costs control
Slide 32: Increase in value of the portfolio from organic growth
Increase in value of the portfolio as a result of organic growth Stable average appraisal yields Appraisal value of portfolio, including NAV per share incl. transfer taxes transfer taxes* (euros) Growth over 12 months 29.25 2,566.6 2,639.9 Euro -1m 28.38 Change in scope of In millions of euros conso
Slide 33: 2006-2011: the Alcudia years, the construction of a track record
2006-2011: the Alcudia years, the construction of a track record
Slide 34: 2006: Casino and Mercialys come up with the Alcudia program
2006: Casino and Mercialys come up with the Alcudia program and the repositioning of the portfolio A redevelopment program that is … and exhaustive ambitious… 2011 full-year results 34
Slide 35: Mercialys creates its trademark Esprit Voisin
Mercialys creates its trademark – “l’Esprit Voisin” - reflected in all aspects of value creation Transformation of shopping centers: proof of the “Esprit Voisin” concept A gateway in local Modern and high A welcome message Everyday services Commitment to the Comfortable rest areas colors quality arc
Slide 36: Asset rotation policy completes the Group's approach
Asset rotation policy adopted in 2010 completes the Group’s approach and allows for refocusing of the portfolio… 2007 2011 Other* Other 70 properties – 36 properties – 5%** Neighborhood Neighborhood 10%** shopping centers shopping centers 68 properties – 52 properties – Euro 141m Euro 201m 26% 28%**
Slide 37: Growth and value creation through partnership with Casino
… and generating, thanks to the close and beneficial partnership with Casino, growth and value creation 2005 2006 2007 2008 2009 2010 2011 Sale of 16 Sale of 45 mature mature properties for Major acquisition of properties Euro 120m 25 properties from for Euro the Casino Group for 122m Acquisition of
Slide 38: Strategy behind robust growth over the entire period
Strategy behind robust growth over the entire period Rental revenues Cash flow 161.0 CAGR +14.2% 142.9 CAGR +13.3% 72.7 67,7 2005 2006 2007 2008 2009 2010 2011 2005 2006 2007 2008 2009 2010 2011 Funds from operations per share * distribution per share 13,59 (FFO) Euros per share 1.53 (Euros per shar
Slide 39: 2012: Becoming a Real Estate Company-Retailer
2012: Becoming a “Real Estate Company-Retailer” New vision / New strategy
Slide 40: Our vision: a multi-channel hyperlocal retailer
Our vision: Going beyond the mere status of lessor to become a multi-channel hyperlocal ‘retailer’… 1 Enhancing our unique approach thanks to the Esprit Voisin B to B and B to B to C The Esprit Voisin concept explained to customers: From actual experience… …to displaying a philosophy Rolled out at 3
Slide 41: Retailer among retailers: stimulating demand
Retailer among retailers … … 2 Stimulating demand Position itself as a multi-channel hyperlocal marketing agency Develop in-depth knowledge of the customers at each shopping centers Define and operate as best possible local communications networks Offer a range of innovative services to ... all arou
Slide 42: Developing retail partnership initiatives
… and even developing retail partnership initiatives 3 Enlarging our offering Aim: To meet customers’ unsatisfied expectations. A changing retail climate: Different fields of action: Different approaches: 53% of people in France e-commerce (web to store, drive, In case of absence of existing high sh
Slide 43: A new model giving properties mass appeal and creating value
A new model requiring acceleration in the momentum of the last few years: giving properties mass appeal and creating value… In 2012 – 2014, Mercialys stepped up its program of shopping center renovation and extension, still basing its approach on its fundamental principles: Giving shopping Increasin
Slide 44: 2012: another intensive year of Esprit Voisin completions
2012: another intensive year in terms of Esprit Voisin completions 13 Esprit Voisin extensions due to open in 2012 and 14 renovations under the Esprit Voisin concept 2012 timetable Q1 Q2 Q3 Q4 Ste Marie MS Jouets Montauban St Paul Savannah Agen Boé* Quimper Troyes Barberey RP Narbonne Pessac Rodez P
Slide 45: Selling assets that do not fit the new strategy
A model that implies to sell assets which profile do not fit the new strategy Approximately Halve the number of properties to be managed to allow for development of the “Foncière commerçante” strategy across a number of properties presenting critical mass and a profile fitted to the new concept Hori
Slide 46: An asset and marketing intensive strategy focused on target properties
An “asset and marketing intensive” strategy focused on 60 to 70 target properties 2011 End-2012 Other * 36 properties – 5%** Other * Neighborhood Approx. 3% shopping centers Neighborhood 52 properties – shopping 26%** Centers Approx. 23% Large and Large and regional regional shopping shopping center
Slide 47: Components of the new strategy spread out over 2012
The strategic and financial components of the new strategy will spread out over 2012 Asset sales Financing of Euro 1bn (Euro 500m in 2012) 1 3 Acceleration of the « Esprit Voisin » program: 2012 completions and launch of 2013/2014 projects The « Foncière A unique = + Demand + Offer commerçante » app
Slide 48: Leverage normalised in line with the sector
The leverage was normalised in line with the sector, conservative in view of the company’s profile Target Loan to Value (LTV) ratio of less than 40%, in line with the sector median Conservative level of debt in view of the company’s resilient and visible cash flow Solid targeted rating: Investment G
Slide 49: A financing already secured
A financing already secured Financing Estimated all-in Amount cost as of today Bank debt (maturity of 3 years, forward repayment) Euro 500m* approx. 3.5% Bridge to bond (maturity of 18 months, refinanced by a bond 2.35% - 4.35%** Euro 500m issue equivalent to at least the same amount) approx. Total
Slide 50: Stronger growth profile despite uncertain economic conditions
Stronger growth profile despite uncertain economic conditions Mercialys’s growth profile evolution Uncertainty about the Restoration of the 2011 rental base Strong, healthy and economic climate controlled growth + =/-? + + + Mercialys Uncertain Refocusing on the Acceleration of The “Foncière Mercial
Slide 51: Maintaining a low risk profile despite financial leverage
Maintaining a low risk profile despite use of financial leverage Mercialys’s risk profile New strategy allowing for the return to Lack of financial a normal balance sheet structure for leverage an equivalent level of risk Reduction in portfolio risk = - = - ++ = Mercialys Pure-play Refocusing on Poo
Slide 52: Higher returns for shareholders
Higher returns for shareholders Mercialys’ s rate of return evolution Double-digit growth Improvement in FFO / NAV of approx.100bp Buoyant economic Improved return on equity conditions Financial leverage 0% + + =/- ? + Mercialys The “Foncière Uncertain Financial Mercialys 2006-2011 commerçante” clim
Slide 53: New strategy fully supported by Casino, the main shareholder
New strategy fully supported by Casino, the main shareholder, for the benefit of all shareholders Deconsolidation in Casino accounts / validation of use of leverage effect Keeping a 30-40% stake and adapting governance accordingly New strategy fully supported Partnership agreement: The practical ter
Slide 54: The next key steps
The next key steps General Meeting of shareholders approving the first exceptional distribution: April 13, 2012 Issuance of a Euro 1 billion debt: before end of June 2012 Payment of the final installment of 2011 ordinary dividend and exceptional distribution of Euro 1 billion: before end of June 201
Slide 55: Outlook
1 mercialys L'Esprit Voisin. Outlook
Slide 56: 2012 – a turning point: major strategic changes
2012 – a turning point: Major strategic changes, Mercialys enters adulthood… Becoming a «Foncière commerçante » The Alcudia years A business strategy based A balance sheet • Steady growth based structure on on organic and • the « Esprit Voisin » normalized external growth concept, • Launch of the •
Slide 57: 2012 will be marked by an exceptionally large payout
2012 will be marked by an exceptionally large payout, unprecedented in the sector … In less than two years, the amount of payout paid or to be paid to shareholders would pay back the historic contributions from shareholders In Euro million 100% of historic contributions 60% of market capitalization
Slide 58: Dynamic target for cashflow growth on a refocused portfolio
… and by a dynamic target in terms of cashflow growth on a refocused portfolio The focus on the extraction of organic growth is a priority The number of « Esprit Voisin » completions in 2012 will fuel the growth The « Foncière commerçante » vision will reinforce the resilience and growth Approx. -15
Slide 59: Significant lasting improvement of the return rate
On the short and mid term, the shareholders should benefit from a significant lasting improvement of the return rate Targeted change in FFO/NAV per share rate* Approx. +100 bp Average 2008-2011 2011 full-year results (*) Based on NAV excluding transfer taxes and FFO per share 59
Slide 60: As of 2015, restoration of rental base and portfolio value
As of 2015, an objective of total restoration of the annualized rental base and of the portfolio value Net rental income on a full- Portfolio value* year basis Objectives A portfolio value restored as of 2015 NAV of Euro 1.7bn in 2015 after the pay-back of the total contributions A new strategy with
Slide 61: Appendices
1 mercialys L'Esprit Voisin. Appendices
Slide 62: Detailed income statement
Detailed income statement In millions of euros % chg. 12/31/09 12/31/10 12/31/11 11/10 Invoiced rents 130.9 144.7 153.4 +6.0% Lease rights 3.3 4.8 7.6 +58.4% Rental revenues 134.2 149.5 161.0 +7.7% Non-recovered property taxes - 0.2 - 0.2 - Non-recovered service charges - 3.1 - 3.7 - 3.6 Property op
Slide 63: Number of shares
Number of shares 2009 2010 2011 Number of shares outstanding . As at January 1 75,149,959 91,968,488 92,000,788 . As at December 31 91,968,488 92,000,788 92,022,826 Average number of shares 85,483,530 91,968,488 92,011,241 outstanding Average number of shares 85,360,007 91,744,726 91,865,647 (basic)
Slide 64: Condensed balance sheet
Condensed balance sheet Assets In millions of euros 12/31/10 06/30/11 12/31/11 Investment property 1,604.3 1,538.9 1,624.8 Financial assets 11.7 12.2 13.6 Other assets 1.0 0.7 0,8 Total non-current assets 1,617.0 1,551.1 1,639.2 77.4 45.1 47.5 Cash and Casino current account Trade and other receivab
Slide 65: Partnership Agreement: new terms
Partnership Agreement: new terms Grid of capitalization rates applicable to call options exercised in the first half of 2012 within the framework of the current Partnership Agreement with Casino Shopping malls Retail parks City center Mainland Corsica Mainland Corsica France and France and Type of p
Slide 66: The Casino pipeline remains our main external growth driver
The Casino pipeline remains our main external growth driver for the next few years A still large pipeline of Esprit Voisin extension projects Numerous completions planned for 2012 and 2013 Pipeline* of Casino development projects (in millions of euros) No change to rates grid under Partnership Agree
Slide 67: 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 development projects with widely varying stages of completion and chances of going ahead The valua