Slide 1: 2008 full-year results
2008 full-year results February 12, 2009 "Neighborhood Spirit" 1
Slide 2: Speakers
Speakers Jacques Ehrmann, Chairman and Chief Executive Officer Géry Robert-Ambroix, Chief Operating Officer Yves Cadelano, Executive Vice President 2008 FY results 2
Slide 3: Contents
Contents Page Overview of the year 4 2008 activity and results 19 Marketing and development 32 Partnership agreement and financing 39 Trends and outlook 43 2008 FY results Appendices 47 3
Slide 4: Overview of 2008
Overview of 2008
Slide 5: Lanester extension and renovation
LANESTER EXTENSION AND RENOVATION HM SALES AREA : 11,960 m² EXISTING SHOPS : 7,542 m² HM SALES AREA : 10,100 m² NEW SHOPS : 2,760 m² HM STORAGE AREA : 12,919 m² HM STORAGE AREA : 11,223 m² 2008 FY results BEFORE AFTER 5
Slide 6: Lanester extension and renovation
LANESTER EXTENSION AND RENOVATION BEFORE 2008 FY results AFTER 6
Slide 7: Lanester extension and renovation
LANESTER EXTENSION AND RENOVATION 2008 FY results 7
Slide 8: Valence Sud extension and renovation
VALENCE SUD EXTENSION AND RENOVATION BEFORE 2008 FY results AFTER 8
Slide 9: Valence Sud extension and renovation
VALENCE SUD EXTENSION AND RENOVATION 2008 FY results 9
Slide 10: Arles - Fourchon extension and renovation
ARLES - FOURCHON EXTENSION AND RENOVATION BEFORE 2008 FY results AFTER 10
Slide 11: Le Puy extension and renovation
LE PUY EXTENSION AND RENOVATION BEFORE 2008 FY results AFTER 11
Slide 12: Le Puy extension and renovation
LE PUY EXTENSION AND RENOVATION 2008 FY results 12
Slide 13: Mandelieu customization
MANDELIEU CUSTOMIZATION BEFORE 2008 FY results AFTER 13
Slide 14: Mandelieu customization
MANDELIEU CUSTOMIZATION 2008 FY results 14
Slide 15: Neighborhood Spirit is part of our lives
Neighborhood Spirit is part of our lives A strategy, a positioning 9 Proof of a reinvented neighborhood Gateways with a strong Modern and high quality Welcome halls Everyday services Bicycle parking: Comfortable relaxation local footing architecture for our customers commitments to the community are
Slide 16: 2008: a year of solid growth, ahead of initial targets
2008: a year of solid growth... ... ahead of initial targets Rental revenues Recurring operating cash flow* Cash flow** +16.8% 116.2 +15.7% +15.2% 99.5 99.7 97.0 86.6 83.8 million euros 2007 2008 2007 2008 2008 FY results 2007 2008 * Cash flow excluding interest income on cash net of tax and non-rec
Slide 17: Resilient share price performance
Resilient share price performance... ... favored by Mercialys's profile 9 A pure-player in shopping centers with potential 9 A debt-free real estate company 130 120 110 100 90 Mercialys: -13.4% in 2008 80 70 60 CAC 40: -41.05% 50 2008 FY results 40 EPRA: -56.9% Jan-08 Feb-08 M ar-08 Apr-08 M ay-08 J
Slide 18: Dividend of Euro 0.88 per share, up 9%
Dividend of Euro 0.88 per share, up 9% Proposed option of final dividend payment in shares A dividend of Euro 0.88 per share* for 2008** Dividends in euros per share 0,88 0,81 0,71 0,59 At the Annual General Meeting, Mercialys will propose the option of paying the final dividend in shares (ie 0.48 e
Slide 19: 2008 activity and results
2008 activity and results
Slide 20: Stronger than expected growth in rents
Stronger than expected growth in rents Combined effect of robust organic growth and acquisitions Growth in invoiced rents + 3.4 113.6 +4.1 + 9.5 - 0.9 -0.2 Organic 97.7 Non-recurring Valuation of growth Impact of Indexation existing assets items** million euros variable rents Acquisitions in +7.5%*
Slide 21: Lettings: 232 leases signed in 2008
Lettings: 232 leases signed in 2008 Efforts relating to existing leases and new developments 9 232 leases signed this year by Mercialys teams 155 commercial leases (vs. 184 in 2007) 177 leases renewed or relet 22 non-commercial leases out of the existing portfolio 55 new leases relating to new
Slide 22: Speciality leasing: a source of additional rental revenues
Speciality leasing*: a source of additional rental revenues Mercialys is developing this high potential business 9A pro-active strategy 9Dedicated tools Around 50 shopping centers in operation, E.g.: mobile sales kiosks, retail including 20 with a large specific offering merchandising units, made
Slide 23: Tenants benefit from reasonable occupancy cost ratios
Our tenants continue to benefit from one of the most reasonable occupancy cost ratios in the market Cushioning the impact of economic conditions for our retailers Average gross rental value of Euro 174 per m² IPD benchmark Euro 285 per m² Stable occupancy cost of 8.2%** Euros per m² 174 8.1% 8.2% 7.
Slide 24: Introduction of the retail rent index (ILC)
A new development in 2008: introduction of the retail rent index ( ‘ILC’) Over 1,600 leases already concerned 9 A more relevant and historically more stable index Mercialys took a pro-active End-2007: signature of a protocol agreement to approach in 2008 create the retail rent index to give a more
Slide 25: Diversified merchandising minimizes the risks
Diversified merchandising minimizes the risks 9 Limited risk thanks to diversified Breakdown of retailers by type (% of 2008 rents) merchandising Group self-service restaurants No focus on a particular business sector Other Group 10.6% retail banners 7.3% National No over-exposure or dependence
Slide 26: Rental management indicators still satisfactory
Rental management indicators still satisfactory A vigilant monitoring of key indicators 9 Current vacancy rate: 2.0% (vs. 2.2% at end-2007) 9 Strategic vacancy rate relating to the Alcudia program: 1.1% (vs. 0.7% in 2007) 9 Some current defaults, many constituting sources of opportunities Low numb
Slide 27: Main aggregates up 45% to 60% since the IPO
Mercialys's main aggregates have increased by 45% to 60% since the IPO Rental revenues Cash flow* + 59.9% 116.2 + 47.4% 99.5 99.7 86.6 82.3 76.4 72.7 67.7 +16.8% +15.2% million euros 2005 2006 2007 2008 2005 2006 2007 2008 Net income, Group share Recurring operating cash flow** + 47.8% + 44.7% 97.0
Slide 28: Investment: a more selective approach in 2008
Investment: a more selective approach in 2008... ... focusing on assets with significant potential for value creation A portfolio of 3 shopping malls 40.8* (Narbonne, Pau Lons and Istres) 3 Alcudia extensions 23.4 (Lanester**, Valence Sud and Le Puy) Miscellaneous condominium lots 2.8 (Montceau Les
Slide 29: An investment strategy focusing on value creation
An investment strategy focusing on value creation Our business: working on properties 9 Yield on IPO contributions: 7.3% at the time of the IPO, rising to 9.4% at end-2008 9 Change in yield rates of main acquisitions since IPO contributions: Amount Return on Target yield** (million Initial yield inv
Slide 30: Appraisal value of portfolio over Euro 2 billion
Appraisal value of portfolio of over Euro 2 billion with a capitalization rate of 6.0% at January 1, 2009 Values supported by organic growth Appraisal value of portfolio including transfer taxes* 2 073,9 2 061,2 Euro +162 1 913,8 million Like-for-like rental +7.7% revenue growth 1 346,9 million euro
Slide 31: Net Asset Value supported by organic growth
Net Asset Value supported by organic growth Components of change in NAV between end- Replacement NAV per share 2007 and end-2008 in value Euro + 98 million Euros per share 27.91 27.00 2008 cash flow: Euro +100 million 25.70 Acquisitions: Euro +80 million 20.08 17.07 15.62 Impact of rise in rental re
Slide 32: Marketing and Development
Marketing and Development 32
Slide 33: Neighborhood Spirit positioning tailored to new consumer expectations
Neighborhood Spirit - positioning tailored to new consumer expectations and economic conditions Two dynamic marketing Shift from accumulative consumption positionings to meaningful consumption Shopping center formats Consumer expectations Shopping for pleasure Shopping Having destinations THE RESOUR
Slide 34: Neighborhood Spirit: local proximity reinvented
Neighborhood Spirit: local proximity reinvented A modernized and reinvented local presence meeting customer expectations 9 The current crisis is stepping up the pace of changes in consumer habits already under way Trend towards traveling less “Customers are looking for the reassurance of a local
Slide 35: The Neighborhood Spirit trademarks
The Neighborhood Spirit trademarks Neighborhood Spirit: tailored to new consumer expectations More ties More simplicity More local More enjoyable More pleasure More welcoming More services More soberness More community-spirited 2008 FY results 35
Slide 36: The Alcudia program: 2008-2009 developments
The Alcudia program: 2008-2009 developments 9 In 2008 Lanester, Le Puy, Valence Sud phase 1 3 extensions completed Creation of about 4,700 m² shopping mall GLA and 530 m² of hypermarket selling area (net: extensions – retrocession) 9 sites renovated Marseille La Valentine, Saint-Etienne Monthieu, Na
Slide 37: The Alcudia program: solid pipeline with limited risk
The Alcudia program: an intrinsically solid pipeline, with limited risk and enhancing the value of existing sites Encouraging performances for first 2008 completions 9 In essence less risky than pure property development, offering greater security for retailers and investors: sites in operation al
Slide 38: A development pipeline combining security, selectivity and profitability
A development pipeline combining security, selectivity and profitability Solid investment outlook 9 A pipeline of new projects and extensions over a 5-year horizon valued at Euro 706 million* 9 50% of the pipeline consists of Alcudia developments (i.e. Euro 350 million) Developments at existing si
Slide 39: Partnership agreement and financing
Partnership agreement and financing 39
Slide 40: Partnership agreement improved and extended to end-2014
Partnership agreement improved and extended to end-2014 A stronger competitive advantage, exclusive purchase options 9 With both parties having been satisfied with their experience over the last three years, the Partnership agreement with Casino has been extended and enhanced, subject to authorizati
Slide 41: Partnership agreement: applicable rates in 2009
Partnership agreement: applicable rates in 2009 9 After taking into account the change in appraisal average yields for the portfolio, the Board of Directors has approved the yield rate options for 2009 first semester in accordance with the new partnership agreement subject to authorization from Casi
Slide 42: Sources of financing secured for 18 months
Sources of financing secured for 18 months No debt and sources of financing fitted to the investment program 9 Mercialys: is not in debt (net cash position of Euro 8.9 million at end-2008) generated operating cash flow of Euro 97 million in 2008 will propose the option of payment of the 2008 f
Slide 43: Trends and Outlook
Trends and Outlook 43
Slide 44: Mercialys is in good shape
Mercialys is in good shape... 9 "Local presence" seems suited to current market environment Research and development of the Neighborhood Spirit to meet consumer expectations Good Resilience of neighborhood shopping centers positioning Strong local footing and presence in fast-growing regions 9
Slide 45: To cope with more challenging economic conditions
... to cope with more challenging economic conditions Possible incident in Risk absorbers in the Possible effects on Possible impact the current context current context Mercialys Defaults Vacancy French lease right system (enhancing loyalty) and Occupancy ratio and Default payments Proce
Slide 46: In summary: the targets are maintained
In summary: the targets are maintained 2-year growth targets (2009 vs. 2007) in rental revenues and recurring operating cash flow* of +25%** (Reminder of targets set in July 2008) 2008 FY results * Cash flow excluding interest income on cash net of tax and non-recurring items ** Base 2009 versus 200
Slide 47: Appendices
Appendices
Slide 48: A one-of-a-kind portfolio of shopping centers with potential
Mercialys is a one-of-a-kind portfolio of shopping centers with potential 9 A pure-play retail property group 9 A portfolio of substantial size > 100% retail property assets > 168 sites including 98 shopping centers > Assets of more than Euro 2 billion > Neighborhood shopping centers with better- >
Slide 49: Lease expiry schedule
Lease expiry schedule Lease expiry schedule Guaranteed minimum rent in million euros 15.6 15.8 14.5 13.3 10.6 10.7 7.6 6.7 4.5 4.9 4.2 2.4 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Beyond 2008 FY results Value of stock of expired leases at 12/31/2008 Flow in value of expiring leases 49
Slide 50: Asset portfolio valued at Euro 2,061.2 million
Asset portfolio valued at Euro 2,061.2 million including transfer taxes Portfolio value up +7.7% over 12 months Type of asset Number Appraisal value incl. Gross leasable area Appraisal net rents of assets lease rights at at 12/31/08 at 12/31/08* 12/31/08 Euro m % m² % Euro m % Large shopping centers
Slide 51: Detailed income statement
Detailed income statement million euros 12/31/06 12/31/07 12/31/08 Change 2008/2007 Invoiced rents 80.7 97.7 113.6 +16.3% Lease rights 1.6 1.8 2.6 Rental revenues 82.3 99.5 116.2 +16.8% Non-recovered property taxes -0.1 -0.3 -0.1 Non-recovered service charges -1.4 -1.7 -2.5 Property operating expens
Slide 52: Condensed balance sheet
Condensed balance sheet Assets million euros 31/12/07 31/12/08 Investment property 1,165.2 1,231.3 Financial assets 11.0 11.7 Other assets 1.0 1.0 Total non-current assets 1,177.1 1,244.0 Cash and Casino current account 70.7 10.6 Trade and other receivables 12.5 13.3 Total assets 1,260.3 1,267.9 Equ
Slide 53: Valuing the pipeline by stage of completion
Valuing the pipeline taking into account the stage of completion of each project Each stage of completion has its own probability 9 The development pipeline as it currently stands contains projects with widely varying stages of completion and chances of going ahead 9 The pipeline valuation method ta