Regulatory News:
Mercialys (Paris:MERY):
- The food retailers Intermarché, Auchan and Carrefour will
gradually replace the Casino group banners and therefore
considerably improve the Company’s rental risk profile from 2024.
On the basis of publicly available information, these three
retailers are expected to respectively represent 5.2%, 4.1% and
2.0% of Mercialys’ pro- forma rental base.
- Net recurrent earnings (NRE) came to Euro 109.0 million
(+3.3%), with Euro 1.17 per share, up +3.3%, exceeding the
target for growth of at least +2%. The basis for comparison for
2022 incorporated various elements relating to the health crisis.
On a basis restated for these non-recurring impacts, 2023 NRE are
up +11.0%.
- The combination of the stabilization of the reversion rate,
the +4.1% organic growth in invoiced rents and the limited
vacancy rate of 2.9% fully contributed to the growth in
NRE.
- Tenant retailer sales, up +2.2% from 2022, illustrate
the good level of resilience of business for the Company’s
retailers, supported by the sustainable occupancy cost ratio of
10.7%, compared with 11.1% in 2022.
- The EBITDA margin came to 83.9%, reflecting an
improvement compared with 2022 (83.2%), thanks to the robust
letting performance and the effective management of operating
costs.
- The portfolio value including transfer taxes is down
-7.0% like-for-like at end-2023 (-3.7% for the second half of the
year) factoring in an +86bp increase in the average appraisal rate
to 6.61% (+40bp during the second half of the year). Mercialys’
asset portfolio offers a particularly high yield of 405pb above the
risk-free rate. The EPRA NDV came to Euro 17.10 per share,
down -18.4% for 2023 and -9.1% for the second half of the year,
reflecting the decrease in the value of sites and the revaluation
of fixed-rate debt in marked to market.
- The Company’s growth potential remains intact and is in line
with its focus on maintaining a sound financial structure. The
loan to value ratio (excluding transfer taxes) for 2023 came to
an effectively managed level of 38.9% despite the contraction in
asset values, with an ICR of 5.1x.
- Mercialys’ strong financial position will also enable it to
deploy its project pipeline, which represented Euro 429
million at end-2023, with a view to supporting its future growth,
while maintaining a very strict profitability criterion for
projects of at least 250bp above the refinancing cost.
- A proposed dividend of Euro 0.99 per share for 2023, up
+3.1% from 2022. It represents 85% of NRE and offers a
particularly high yield of 9.9% on the end-2023 closing
price.
- 2024 objectives: The Company will maintain its highly
selective approach for choosing its projects and will continue to
focus on ensuring an attractive yield for its shareholders.
Mercialys is targeting NRE per share growth of at least +2.0%,
combined with a dividend ranging from 75% to 95% of 2024 NRE.
Dec 31, 2022
Dec 31, 2023
Change (%)
Organic growth in invoiced rents including
indexation
+4.1%
+4.1%
-
EBITDA (€m)
144.2
149.4
+3.6%
EBITDA margin
83.2%
83.9%
-
Net recurrent earnings (€m)
105.5
109.0
+3.3%
ICR (EBITDA / net finance costs)
5.9x
5.1x
-
LTV (excluding transfer taxes)
35.3%
38.9%
-
LTV (including transfer taxes)
33.0%
36.4%
Portfolio value including transfer taxes
(€m)
3,091.2
2,872.0
-7.0%1
EPRA NRV (€/share)
20.54
18.25
-11.2%
EPRA NTA (€/share)
18.42
16.29
-11.6%
EPRA NDV (€/share)
20.94
17.10
-18.4%
Dividend (€/share)
0.96
0.992
+3.1%
i. full-year business and results
1 - Mercialys is becoming the only real estate partner of all
the major French food distribution networks
On December 18, 2023, the Casino group announced that it had
entered exclusive negotiations with Intermarché and Auchan Retail
with a view to selling virtually the entire scope of Casino group
hypermarkets and supermarkets (excluding Corsica) to Groupement Les
Mousquetaires and Auchan Retail. Following these exclusive
negotiations, Casino announced on January 24 that it had reached
agreements with Auchan Retail and Groupement Les Mousquetaires to
sell 288 stores. This operation, which remains subject to approval
by the competition authorities, is expected to be carried out in
the second quarter of 2024, after consulting with the relevant
employee representative bodies. The agreements plan for the stores
to be transferred in three successive waves: on April 30, 2024, May
31, 2024 and July 1, 2024.
The portfolio of Casino group hypermarkets and supermarkets in
Corsica, where Mercialys has a 60% stake in five Casino
hypermarkets that it owns in partnership with the company Corin,
has not been included by the Casino group in this sales
agreement.
On January 24, 2024, Carrefour also announced that it has
entered into exclusive negotiations with Groupe Intermarché to
acquire 31 stores. Under the terms of the agreement, Carrefour will
substitute Intermarché for the purchase of 26 stores from Casino,
while the remaining 5 stores will be acquired directly from
Intermarché.
On January 25, 2024, the magazine LSA published the list of the
31 points of sale, including the Lanester and Le Puy hypermarkets,
owned by Mercialys.
Through this deep realignment of the retail sector in France,
Mercialys, whose food anchoring was represented exclusively by the
Casino group, which accounted for 20.5% of its rental income in
2023 on a consolidated basis, will become the only European retail
property company to partner with all the major French food
retailers.
Mercialys is once again setting out its strategic conviction to
maintain significant exposure within its rental revenues to food
retail, an asset class offering a foundation for recurring
index-linked revenues.
At end-2023, Mercialys’ rental exposure to large food stores is
split between:
- 5 food stores (including one Monoprix store) operated by Casino
and fully owned by Mercialys
- 5 food stores operated by Casino and 60% owned by
Mercialys
- 10 food stores (9 operated by Casino and 1 by Intermarché since
October 1, 2023) 51% owned by Mercialys (through SAS Immosiris and
SAS Hyperthetis Participation, both 49% owned by BNPP Real
Estate)
- 5 food stores (3 operated by Monoprix, 1 by Casino and 1 by
Intermarché since October 1, 2023) 25% owned by Mercialys (through
SCI AMR, 75% owned by Amundi).
Taking into account the share of rental income depending on how
assets are held through these various entities, Mercialys’ economic
exposure to rent from retailers operated by the Casino Group comes
to 17.4%.
On a pro forma basis and based on information published in the
press (above and article of January 22, in the magazine LSA) and
subject to the final breakdown of the various hypermarkets, the
retailers Intermarché, Auchan and Carrefour would respectively
represent 5.2%, 4.1% and 2.0% of rents on an economic basis.
This realignment will modify and considerably improve the
Company’s rental risk profile. It will make it possible to replace
single-tenant exposure to one struggling retailer with multi-tenant
exposure to retailers that have sound financial foundations and
robust commercial performance levels.
This operation will also make a significant contribution to the
drive to diversify Mercialys’ rental base: the Company’s current
leading tenant will represent considerably less than 10% of the
rental base.
In addition, Mercialys may be able to support these operators,
if required, to optimize their concept and format, capitalizing on
its experience with asset transformation and in synergy with the
adjoining shopping centers.
Looking beyond this scope for sites where Mercialys is directly
exposed to large food stores:
- 19 of its shopping centers are currently anchored by Casino
hypermarkets whose premises it does not own and which are subject
to proposed food banner transfers to Intermarché and Auchan;
- 7 of its shopping centers are already anchored by hypermarkets
whose premises it does not own and which are operated by retailers
other than Casino: Super U in Rennes, Rodez, Montauban, Carrefour
in Le Port, Saint-Benoît and Saint-Pierre (Reunion Island),
RunMarket (Intermarché partner) in Sainte-Marie (Reunion
Island).
Across all these sites, the attractive price positioning of
Intermarché, Auchan and Carrefour will consolidate Mercialys’
retail mix, focused on affordable day-to-day products, and will
support the consistency of the offering, help drive footfall in its
centers and boost the retailers’ operational performances.
2 - The excellent commercial performances by the centers,
focused on day-to-day needs, are supporting the good trend for
operational indicators
In 2023, the +0.6% increase in household purchasing power,
supported by higher wages and savings income, was reflected in
+0.7% growth in consumption, following +2.1% in 2022, according to
the latest projections of the Banque de France (Dec 19, 2023). This
trend masks a number of trade-offs made by consumers with their
spending to limit the impacts of inflation, which remained high in
2023, with consumer prices climbing +4.5 % year-on-year in the last
quarter of 2023.
Footfall in Mercialys’ shopping centers (excluding hypermarkets)
is up +1.4% for 2023, compared with +1.9% for the Quantaflow
national index. The -50bp performance differential compared with
the national index was reduced throughout the year (-140bp at
end-June and -80bp at end-September) and reflects the attractive
positioning of the centers, offsetting the deceleration of the
hypermarkets managed by the Casino group, which recorded a -8.7%
decline in footfall over the year.
From October 15, 2023, the opening under the Intermarché banner
of two hypermarkets previously operated by Casino and owned by
Mercialys in Le Puy (51% stake, with the remaining interest held by
BNPP Real Estate) and Besançon (25% stake, with the remaining
interest held by Amundi), has been well-received by customers. As a
result, the footfall at the Besançon hypermarket have shown a
significant improvement in the last two months of the year, with an
increase of +24.9% in November and +37.5% in December, compared to
stable footfall in the first 9 months of 2023.
In this context, the average basket for consumption at the
Company’s centers continued to progress in 2023 to reach Euro 20.3
per visitor, compared with Euro 19.3 in 2022 (+5.2%). Looking
beyond the impact of inflation, this increase reflects the
continued attractive positioning of Mercialys’ shopping centers
through their affordable offering focused on essential needs, which
is proving resilient faced with the trade-offs that consumers are
being forced to make.
This increase in the transformation rate helped drive further
progress with retailer sales across Mercialys’ portfolio, up +2.2%
in 2023 compared with 2022, while the national panel (FACT)
increased by +3.3%.
Change in the relative performance of Mercialys shopping
centers vs. the national panel (FACT) for 2023
Sales (year to)
1st half of 2023
2nd half of 2023
End-December 2023
Mercialys’ retailers
+3.5%
-1.3%
+2.2%
FACT activity index
+4.8%
-1.4%
+3.3%
Delta
-130bp
+10bp
- 110bp
The outperformance by the FACT panel, linked mainly to a very
favorable base effect during the first quarter (large shopping
centers had been affected by the rollout of the vaccine pass in the
first quarter of 2022), reversed during the second half of the
year, reflecting the good commercial performance by Mercialys’
retailers.
The occupancy cost ratio3 was 10.7% in 2023, compared
with 11.1% in 2022 and 10.9% for the first half of 2023. This
ratio, which shows an improvement and remains at a particularly
measured level, makes it possible to assess the sustainability of
rents for the Company’s tenant retailers. This reasonable real
estate occupancy cost is underpinned by an average level of service
charges per sq.m (excluding property taxes) for retailers of Euro
48, reflecting the increase in charges due to inflation, as well as
the Company’s extensive work to limit its impact, particularly
through energy efficiency measures.
Alongside this, the collection rate for rent and charges
for 2023 was 96.3% at end-January 2024, while noting that to date,
the Casino group is paying its rents in line with its contractual
commitments.
The current financial vacancy rate4 came to 2.9% at
end-December 2023, showing a significant improvement compared with
the 3.3% recorded at end-June 2023 and in line with the 2.9% from
end-December 2022.
This stability of the current financial vacancy rate is
particularly satisfactory considering the significant number of
retailers, primarily in the textile sector, that filed for
bankruptcy or went into liquidation in 2023 in a context of the
emergence from the health crisis and the withdrawal of government
support measures.
Mercialys’ intense reletting activity throughout 2023 enabled it
to keep the current financial vacancy level effectively under
control at just 40bp above its all-time low of 2.5% from 2019.
This robust performance is illustrated by the 150 leases signed
for renewals or reletting during 2023, as in 2022. While the
year-on-year comparison is not meaningful considering the diversity
of the lease schedule, Mercialys recorded a very sustained
commercial performance and an acceleration in the last quarter.
The 2023 reversion rate, linked to these negotiations,
was stable (+0.1%) and consistent with the high level of indexation
in 2023 of +3.7%.
Mercialys’ strategy of continuing to focus its retail mix moving
towards recognized, affordable and essential retailers for
consumers was illustrated by the leases signed in 2023, reflecting
its focus on continuing to enhance the letting potential and
attractive features of its sites. This concerns both leading assets
and sites that are looking to reconquer positions within Mercialys’
portfolio.
Among the leading centers, Angers and Nîmes saw new leases
signed in 2023 with retailers that are popular with clients, such
as Rituals, Darty, Intimissimi, The Waffle Factory and Amorino in
Angers, and Adidas Originals, Project X Paris, Adopt, Rituals,
Bouygues Telecom and La Fabrique Cookies in Nîmes.
In terms of the centers that are in a reconquest phase, the
Fenouillet center in Toulouse benefited from 14 leases signed in
2023, with 4 in the culture-leisure-gifts segment (including Wizzle
and Media Clinic) and 3 in health-beauty (Krys Audition, Afflelou
and La Boutique du Coiffeur), as well as the discount fashion
retailer Naumy in a mid-size unit. The Annecy center, which also
opened a Megarama cinema at the start of the year, signed several
leases with leading national retailers such as New Yorker and
Normal.
These leases illustrate Mercialys’ ability to relet its units
following defaults by retailers, while scaling back the weighting
of textiles and expanding the selection offered to consumers,
helping further strengthen the letting potential of its sites.
The retail mix, excluding large food stores, of the 150 leases
signed for renewals and relettings in 2023, presented in the chart
below, clearly illustrates this in-depth trend.
Personal items accounted for 20% of the new leases signed (in
terms of the number), while this category represents 36.5% of the
Company’s rental base excluding large food stores at end-2023.
Health-beauty accounted for just under 27% of the leases signed in
2023, while this segment currently represents 16.4% of the rental
base excluding large food stores at end-2023.
Breakdown of renewals or reletting leases signed in 2023 by
business segment
[Graphic omitted]
3 - Net recurrent earnings growth exceeding the target set,
driven by sustained organic growth and the effective management of
operating costs and financial expenses
Invoiced rents came to Euro 177.5 million, up +2.8% on a
current basis and +4.1% like-for-like. These changes reflect the
following elements:
Year to end-December
2022
Year to end-December
2023
Indexation
+1.9 pp
+€3.3m
+3.7 pp
+€6.3m
Contribution by Casual Leasing
+0.7 pp
+€1.3m
-0.3 pp
-€0.5m
Contribution by variable rents
-0.1 pp
-€0.3m
+1.1 pp
+€1.9m
Actions carried out on the portfolio
+1.0 pp
+€1.7m
-0.8 pp
-€1.4m
Accounting impact of “Covid-19 rent
relief” granted to retailers
+0.5 pp
+€0.9m
+0.4 pp
+€0.8m
Like-for-like growth
+4.1 pp
+€6.9m
+4.1 pp
+€7.1m
Asset acquisitions and sales
-2.5 pp
-€4.3m
-1.2 pp
-€2.0m
Other effects
-0.2 pp
-€0.4m
-0.1 pp
-€0.2m
Growth on a current basis
+1.3 pp
+€2.3m
+2.8 pp
+€4.9m
Organic growth5 in invoiced rents, up +4.1%,
reflects the impact of indexation at +3.7% and the contribution by
variable rents, illustrating the good level of business for tenant
retailers.
The contribution from Casual Leasing is down slightly for
the full year in 2023. This business was impacted by the decrease
in hypermarket footfall levels for certain types of activities.
The scope effects had a Euro -2.0 million impact on
rental income for 2023, linked mainly to the sales completed in
April 2022 (Géant Casino hypermarkets in Annecy Seynod and
Saint-Etienne Monthieu) and December 2022 (Marseille Sainte-Anne
and Marseille Croix-Rouge centers).
Rental revenues are up Euro +4.7 million (+2.7%) compared
with 2022 to Euro 178.0 million, reflecting the change in invoiced
rents and the drop in lease rights and despecialization
indemnities.
Net rental income is up +3.0% end-2023 to Euro 170.9
million. Two key factors were behind this change.
The Company benefited from the lower level of management fees
paid after various activities were brought in-house beginning 2023
for around Euro 6 million. However, in 2022, Euro +7.8 million of
net income was recorded for various impacts relating to the health
crisis: a non-recurring positive effect linked to reversals of
provisions for arrears recorded for 2020-2021 for a total of Euro
+9.2 million and, alongside this, a Euro -1.4 million expense
relating to rent relief. In 2023, the net impact relating to this
exceptional situation was very limited, representing Euro +0.4
million, split between a Euro -0.7 million expense corresponding to
relief on the rent billed and a reversal of provisions relating to
the arrears resulting directly from the health crisis for Euro +1.1
million. Excluding these non-recurring items associated with the
health crisis, net rental income would be up +7.8% for 2023.
Despite this strong basis of comparison effect, EBITDA
totaled Euro 149.4 million, up +3.6% from 2022. An indicator for
the efficiency of the Company’s operational management, EBITDA
benefited from the rental income growth achieved and was supported
by strict control over site operating costs and overheads. The
EBITDA margin is up to 83.9% (vs. 83.2% in 2022).
The net financial expenses used to calculate net
recurrent earnings totaled Euro 29.6 million, stable compared with
2022 (Euro 29.7 million). The real average cost of drawn
debt was 2.3% for the full year in 2023, compared with 2.1% at
end-June 2023. The +30bp increase compared with end-2022 (2.0%) is
linked primarily to the fixed/floating rate products extinguished,
helping further strengthen the hedging of fixed-rate debt, up to
96%, in line with what the Company had announced in a context of
interest rate volatility. However, the increase in financial income
from the cash invested made it possible to largely offset the
increase in the average cost of drawn debt.
Other operating income and expenses (excluding capital
gains or losses on disposals and impairment) came to Euro +2.2
million, compared with Euro +0.6 million in 2022, primarily
including the impact of net reversals of provisions. Specifically,
a Euro 2.1 million provision for a dispute concerning a site on
Reunion Island, relating to an issue with the road network, was
reversed at the end of June 2023.
The tax retained to calculate net recurrent earnings
represents a Euro -0.6 million expense at end-December 2023,
compared with Euro -0.5 million at end-December 2022. This amount
corresponds primarily to a CVAE corporate value-added tax
expense.
The share of net income from associates and joint
ventures (excluding capital gains or losses, amortization and
impairment) came to Euro 3.6 million in 2023, compared with Euro
3.7 million at December 31, 2022.
Non-controlling interests (excluding capital gains or
losses, amortization and impairment) came to Euro -11.2 million for
2023, compared with Euro -10.4 million in 2022.
Net recurrent earnings are up +3.3% from 2022 to Euro
109.0 million. This operational performance enabled the Company to
record Euro 1.17 of net recurrent earnings per share6, up +3.3%,
with this performance exceeding the target set for net recurrent
earnings per share growth of at least +2% versus 2022. As indicated
above, the basis for comparison at December 31, 2022 benefited from
Euro +7.8 million of net income for various impacts relating to the
health crisis, compared with Euro +0.4 million of net income in the
accounts at end-December 2023. Net recurrent earnings restated for
these non-recurring items would be up +11.0%.
(In thousands of euros)
Dec 31, 2022
Dec 31, 2023
Change (%)
Invoiced rents
172,602
177,495
+2.8%
Lease rights and despecialization
indemnities
674
515
-23.6%
Rental revenues
173,277
178,010
+2.7%
Non-recovered building service charges and
property taxes and other net property operating expenses
-7,345
-7,086
-3.5%
Net rental income
165,932
170,924
+3.0%
Management, administrative and other
activities income
2,846
3,078
+8.1%
Other income and expenses
-5,859
-4,433
-24.3%
Personnel expenses
-18,690
-20,169
+7.9%
EBITDA
144,229
149,400
+3.6%
EBITDA margin (% of rental revenues)
83.2%
83.9%
-
Net financial items (excluding
non-recurring elements 7)
-29,659
-29,593
-0.2%
Reversals of / (Allowances for)
provisions
-2,527
-4,774
+88.9%
Other operating income and expenses
(excluding capital gains or losses on
disposals and impairment)
624
2,179
na
Tax expense
-463
-634
+36.9%
Share of net income from associates and
joint ventures
(excluding capital gains or losses,
amortization and impairment)
3,680
3,574
-2.9%
Non-controlling interests
(excluding capital gains or losses,
amortization and impairment)
-10,360
-11,191
+8.0%
Net recurrent earnings 8
105,524
108,961
+3.3%
Net recurrent earnings per share
(€)
1.13
1.17
+3.3%
ii. Very healthy financial structure making
it possible to absorb the portfolio value adjustment
1. - EPRA Net Disposal Value (NDV) down -9.1% over six months
and -18.4% over 12 months, reflecting the lower valuation of sites
and a significant impact of the revaluation of fixed-rate debt in
marked to market
Mercialys’ portfolio value came to Euro 2,872.0 million
including transfer taxes, down -3.8% over six months and - 7.1%
over 12 months. Like-for-like9, it is down -3.7% over six months
and -7.0% over 12 months.
Excluding transfer taxes, the portfolio value was Euro 2,692.3
million, down -3.8% over six months and -7.1% over 12 months.
Like-for-like9, it is down -3.7% over six months and -7.0% over 12
months.
At end-December 2023, Mercialys’ portfolio mainly comprised
48 shopping centers10, with 25 large regional shopping centers and
23 leading local retail sites.
The average appraisal yield rate was 6.61% at December
31, 2023, compared with 5.75% at December 31, 2022 and 6.21% at
June 30, 2023. This decompression of the appraisal rates by 40bp
during the second half of the year and 86bp over the full year
reflects the context of rising interest rates between 2022 and
2023, as well as an overall increase in the risk premium recognized
by the appraisers across the real estate sector in general and
specifically for Mercialys, with this risk considered to be higher
with regard to the sustainability of rental income from the Casino
group, before the completion of the restructuring process. However,
the economic and financial assumptions retained by the appraisers
do not show any fundamental changes from year to year, reflecting
the strong position of the Company’s sites, illustrated by a low
vacancy rate and the positive indexation.
This decompression of the appraisal rate to 6.61% enables
Mercialys to offer a significant yield spread on its assets of
405bp versus the risk-free rate (10-year OAT) at December 31,
2023.
One would need to go back to 2006 to find a relatively similar
appraisal rate of 6.30% for Mercialys, which at the time
represented a yield spread versus the OAT of 231bp, some way below
the level recorded at end-2023. During this period of over 15
years, the Company has made in-depth changes to the structure of
its asset portfolio through a large-scale realignment,
transitioning from 157 assets to 48 sites. The Company has further
strengthened its portfolio considerably through these successive
rationalizations, with the unit value of its assets up to Euro 60
million in 2023 compared with Euro 8.1 million in 2006.
The EPRA net asset value indicators are as follows:
EPRA NRV
EPRA NTA
EPRA NDV
Dec 31, 2022
Jun 30, 2023
Dec 31, 2023
Dec 31, 2022
Jun 30, 2023
Dec 31, 2023
Dec 31, 2022
Jun 30, 2023
Dec 31, 2023
€ / share
20.54
19.03
18.25
18.42
16.99
16.29
20.94
18.80
17.10
Change over 6 months
+0.9%
-7.4%
-4.1%
+1.0%
-7.8%
-4.1%
+6.6%
-10.2%
-9.1%
Change over 12 months
+0.1%
-6.5%
-11.2%
+0.2%
-6.9%
-11.6%
+19.0%
-4.3%
-18.4%
The EPRA Net Disposal Value (NDV) came to Euro 17.10 per
share, down -9.1% over 6 months and -18.4% over 12 months. The Euro
-3.84 per share change over 12 months takes into account the
following impacts:
- Dividend payment: Euro -0.96;
- Net recurrent earnings: Euro +1.17;
- Change in unrealized capital gains or losses11: Euro -2.04,
including a yield effect for Euro -4.07, a rent effect for Euro
+1.90 and other effects12 for Euro +0.13;
- Change in fair value of fixed-rate debt: Euro -1.53;
- Change in fair value of derivatives and other items: Euro
-0.49;
2. - Loan to value ratio (LTV) including transfer taxes of
36.4% and ICR of 5.1x reflecting a particularly solid financial
profile
The real average cost of drawn debt13 for 2023 came to
2.3%, following a limited increase compared with the 2.0% recorded
at end-2022 and 2.1% at end-June 2023. This change is linked mainly
to the instruments set up to fix and extinguish the fixed/floating
rate products, helping further strengthen debt hedging. In a
context of interest rate volatility and significant increases in
rates from the first half of 2022, Mercialys further strengthened
its hedging rate for its fixed-rate debt, up to 96% for 2023. For
2024, the hedging instruments set up on the residual debt will make
it possible to reach 100% hedging for fixed-rate debt, with
the real average cost of drawn debt, on this basis, expected to
move closer to the average cost of bond debt, i.e. 2.6%.
At end-December 2023, drawn debt represented Euro
1,192 million. It is made up of three bond issues and a private
placement, with a residual nominal amount of Euro 1,150 million, as
well as commercial paper, with Euro 42 million outstanding at
end-December 2023. Alongside this, the cash position totaled Euro
118 million at end-2023.
The average maturity of drawn debt was 3.8 years
at December 31, 2023, compared with 4.2 years at end-June 2023 and
4.5 years at December 31, 2022. Excluding commercial paper,
Mercialys does not have any drawn debt maturities before February
2026.
Mercialys continues to benefit from a very healthy financial
structure, with an LTV ratio excluding transfer taxes14
of 38.9% at December 31, 2023 (compared with 38.6% at June
30, 2023 and 35.3% at December 31, 2022) and an LTV ratio including
transfer taxes of 36.4% on the same date (versus 36.1% at June 30
and 33.0% at December 31, 2022). The LTV ratio is significantly
below the bank covenant level of 55% concerning 92% of the undrawn
lines.
The ICR was 5.1x 15 at December 31, 2023, compared with
5.2x at June 30, 2023 and 5.9x at December 31, 2022, reflecting the
impacts of the operational performance on EBITDA. It is
significantly higher than the minimum level of at least 2x set by
the bank covenants.
Mercialys also has Euro 385 million of undrawn financing
resources, stable compared with end-December 2022, with the
maturity of 90% of them extended in 2023. The average maturity of
undrawn bank resources represents 2.9 years. In addition, at
end-2023, 100% of the undrawn bank lines included ESG criteria,
compared with just over 53% at end-2022.
On October 20, 2023, Standard & Poor’s confirmed its BBB
/ stable outlook rating for Mercialys.
With its particularly robust balance sheet, Mercialys has the
capacity to accelerate its growth through its major project
pipeline, as well as opportunities for acquisitions.
iii. Resilient risk profile and effectively
managed growth
At the end of the financial year 2023, with an uncertain
economic environment, excellent operational and financial
performances and relatively marked adjustments to the property
values by the appraisers, Mercialys is moving into 2024 with a
significant change in its food retail exposure.
In this context, the Company will continue to be ambitious as it
looks to grow its real estate fundamentals, while benefiting from
the relaunch of the hypermarkets anchoring its portfolio and
deploying its resources to work on its project pipeline and
potential for investments.
1. - Focusing on the key financial balances
Following an intense phase to rationalize its portfolio from
2019 to 2022, when Mercialys divested close to Euro 500 million of
assets (100%-owned) after considerably developing their attractive
positioning, the Company is maintaining its opportunistic approach
to new disposals with a view to focusing on the most promising
sites with potential for medium-term growth in terms of value
creation.
Thanks to its very sound financial structure, the Company has
resources in place to firmly commit to a development phase over the
coming years.
This growth strategy will be achieved through the development
pipeline or through targeted accretive acquisitions focused on
retail property or related activities, including shopping centers,
retail parks and storage centers. Specifically, the Company will
aim to ensure that the yield on these operations is at least 250bp
higher than the refinancing cost for the projects or
acquisitions.
2. - Continuing to make progress with the Company’s
management in line with the core pillars of the 2020-2030 CSR
strategy
In 2023, Mercialys made concrete progress with key milestones
from the roadmap set out with its 10-year CSR strategy “4 Fair
Impacts for 2030”.
Various objectives aimed at improving the environmental
footprint of sites are showing very positive trends, including:
- a reduction in greenhouse gas emissions per sq.m by -24%
compared with 2020 and -35% versus 2017, the date when Mercialys
rolled out its carbon trajectory,
- a waste recovery rate of 66.2%,
- 100% BREEAM In Use certification for strategic centers,
including the regular renewal of this certification in line with
the increasingly demanding rating criteria. Illustrating this, the
average score of strategic assets in part 2 is 72.0%,
- nearly 60% of the strategic centers have multifunctional
spaces and 75.9% are equipped with electric vehicle charging
stations.
This strategy also concerns the Company’s ethical management,
and this dimension is illustrated in particular by its very good
performance in terms of gender equality, measured by the workplace
equality index (drawn up by the French Ministry of Labor,
Employment and Inclusion), after Mercialys scored 93 / 100 in 2023,
compared with a national average of 88 / 100.
Lastly, Mercialys structures its governance in line with the
best corporate governance standards, as illustrated by its Board of
Directors, since 78% of its directors are independent and 56% are
women.
The Company’s committed approach around the various CSR pillars
is recognized by the leading sustainability rating agencies and
public authorities. In 2023, Mercialys was once again ranked second
for the representation of women in management structures on the SBF
120. The Company also maintained its second-place ranking in its
category (listed retail property companies in Europe) in the GRESB,
with a high score of 89/100, and was recognized as a “Regional and
Industry Top ESG Performer” for the third year running by
Sustainalytics. Lastly, in February 2024, Mercialys was included in
the Carbon Disclosure Project’s Climate A List for the sixth
consecutive year.
3. - Capitalizing on opportunities for external growth,
illustrated by the achievements in 2023
The two external growth operations carried out in 2023
contribute to the desire for development and the creation of new
real estate tools.
In September 2023, Mercialys announced the acquisition, in two
phases, of the investment management company Imocom Partners. In
December 2023, after this operation was approved by the French
financial markets authority (AMF), Mercialys acquired 30% of the
capital from the company’s longstanding shareholders for Euro 5.7
million. The remaining 70% will be acquired by the Company during
the first half of 2025, after the approval by the French financial
market authority and following an interim period during which the
current management team will accompany and support the company’s
development. The price of this second tranche will be adjusted
based on the performance of the SGP and the underlying fund.
Imocom Partners manages the OPPCI investment fund ImocomPark,
which holds a portfolio of 33 retail parks in France, with a total
rental area of over 385,000 sq.m, let to around 400 tenants. The
fund’s assets represent a value of Euro 652 million including
transfer taxes and generate Euro 40 million of annual rental
income.
This operation offers increased visibility in relation to tenant
retailers, while increasing the Company’s capacity to work on
retail or mixed real estate development projects. In a context of
pressures on land reserves, linked in particular to the French
Climate and Resilience Act, land management is becoming
increasingly important and will open up opportunities that
Mercialys and Imocom Partners aim to capitalize on.
Lastly, the development of new retail property funds represents
a major source of value creation for Mercialys.
In 2023, Mercialys also took up a major stake in the round of
fundraising carried out by DEPUR Expériences to become this
company’s second largest shareholder, after its founder, with just
under 23% of its capital, for a total of Euro 1.1 million.
This investment in a company specialized in the design and
execution of major Food & Beverage & Entertainment
(F&B&E) projects, alongside Bouygues Immobilier and the BPI
Tourism/Leisure fund, further strengthened Mercialys’ expertise
covering fine-grained consumption trends.
DEPUR’s approach involves structuring in one place a range of
food and beverage and entertainment services for a customer
experience that extends well beyond culinary know-how.
Thanks to the funds raised with this operation, DEPUR has
resources in place to accelerate its development and further
strengthen its expertise, with its ambition to establish itself as
the first vertically integrated operator specialized in the
F&B&E sector, from conceptualization through to
operations.
4. - Implementing the project pipeline
At end-2023, the pipeline of projects already identified and
likely to be deployed on the mid-term represented Euro 429 million,
as presented below. Mercialys will continue to focus its
development on the retail sector, while capitalizing on its various
areas of real estate expertise, enabling it to take part in calls
for tenders for mixed-use development projects organized by cities
or local authorities looking to reposition their neighborhoods or
developments incorporating property development margins.
The pipeline’s other projects concern 28 sites out of the 48
shopping centers held by Mercialys and include retail space
projects (redevelopments, extensions, retail parks), dining and
leisure projects, and tertiary activity projects (housing,
healthcare, coworking, etc.). This potential reconfiguration of
sites will make it possible to ensure their continued appeal
looking beyond purely convenience retail aspects, while ensuring
the sustainability of their strong positioning in their catchment
areas and their cash flow generation profile over the long
term.
The increase in both borrowing rates and construction costs is
leading to a highly selective approach for projects, which must
meet a demanding criterion for a yield of 250bp above the
refinancing cost. Investments will also need to meet strict quality
criteria in terms of rental exposure (resilient sectors) and
geographic location.
Around 30% of the investment projects concern dining, leisure
and tertiary activities, illustrating the diversification around
projects connected to the retail sector.
(In millions of euros)
Total investment
Investment still to be
committed
Completion date
COMMITTED PROJECTS16
20.2
18.8
2024 / 2026
Tertiary activities
20.2
18.8
2024 / 2026
CONTROLLED PROJECTS
181.2
171.3
2024 / 2026
Retail
152.2
142.6
2024 / 2026
Dining and leisure
14.1
14.0
2025 / 2026
Tertiary activities
14.9
14.7
2025 / 2026
IDENTIFIED PROJECTS
227.5
227.2
2024 / > 2028
Retail
148.5
148.3
2024 / > 2028
Dining and leisure
65.9
65.8
2026 / > 2028
Tertiary activities
13.1
13.1
2025 / > 2028
Total
428.8
417.4
2024 / > 2028
- Committed projects: projects fully secured in terms of land
management, planning and related development permits
- Controlled projects: projects effectively under control in
terms of land management, with various points to be finalized for
regulatory urban planning (constructability), planning or
administrative permits
- Identified projects: projects currently being structured, in
emergence phase
IV. Outlook and dividend
Outlook for 2024
In an environment in which interest rates could remain
considerably higher than the levels from 2015 to 2022, the Company
is moving forward in 2024 with significant assets in place.
Mercialys’ rental risk profile will improve considerably and see
a clear pivot, thanks to the gradual replacement of the Casino
group banners, the Company’s legacy tenant, which still represented
17.4% of rental income in 2023, while benefiting from a diversified
anchoring with all of the major food operators in France.
Mercialys is also once again setting out its strong attachment
to food retail as the foundation for its rental base considering
the proximity and recurrence that it generates with consumers, in
line with the positioning of the centers.
The Company’s sound financial foundations and the visibility
offered by indexation, a core pillar supporting a balanced
landlord-tenant relationship, while continuing to carefully monitor
the solvency of client retailers, enable Mercialys to set the
following objectives for 2024:
- Net recurrent earnings per share growth of at least +2.0% vs.
2023;
- Dividend to range from 75% to 95% of 2024 net recurrent
earnings.
The change in the lower range to 75% of net recurrent earnings
for the year, compared with 85% previously, will make it possible
to free up additional capacity to fund investments in 2024 if
necessary.
Mercialys could capitalize on the opportunity opened up by the
changes in the hypermarkets anchoring its sites to work in
partnership with the new retailers to further strengthen the appeal
for clients (comfort, services, renovations) and establish new
mid-size stores and retailers with activities that effectively
complement those of the hypermarkets, the majority of which have
realigned around their food offering.
In connection with its project pipeline following the work
carried out in the last two years on significant calls for projects
(Chartres and Angers), the Company will need to hold land reserves
while waiting for the work to start up.
This payout range contributes to a yield per share that will
continue to be particularly attractive for 2024, with the financing
potential freed up in this way to support the return for
shareholders over the medium term.
Dividend for 2023
Mercialys’ Board of Directors will submit a proposal at the
General Meeting on April 25, 2024 for a dividend of Euro 0.99
per share, compared with a dividend of Euro 0.96 per share for
2022. The payout corresponds to 85% of 2023 net recurrent earnings
and offers a yield of 5.8% on the NDV of Euro 17.10 per share at
end-2023 and 9.9% on the year’s closing price.
For the last three years, Mercialys will have paid out Euro 2.87
of dividends, representing 85% of its recurrent earnings and
providing an average yield of 10.1% for its shareholders over this
period. Mercialys is therefore fulfilling its role as a listed real
estate investment company (SIIC).
The proposed dividend for 2023 is based on the distribution
requirement with the SIIC tax status concerning exempt profits
from:
- property rental or sub-letting operations (including dividends
paid by the subsidiaries subject to the SIIC system), i.e. Euro
0.86 per share;
- the distribution of exempt income recorded on the Company’s
balance sheet for Euro 0.13 per share.
The ex-dividend date is April 29, 2024, with the dividend to be
paid on May 2, 2024.
* * *
This press release is available on
www.mercialys.com.
A presentation of these results is also
available online, in the following section:
Investors / News and press releases / Financial
press releases
About Mercialys
Mercialys is one of France’s leading real estate companies. It
is specialized in the holding, management and transformation of
retail spaces, anticipating consumer trends, on its own behalf and
for third parties. At December 31, 2023, Mercialys had a real
estate portfolio valued at Euro 2.9 billion (including transfer
taxes). Its portfolio of 2,038 leases represents an annualized
rental base of Euro 175.5 million. Mercialys has been listed on the
stock market since October 12, 2005 (ticker: MERY) and has “SIIC”
real estate investment trust (REIT) tax status. Part of the SBF 120
and Euronext Paris Compartment B, it had 93,886,501 shares
outstanding at December 31, 2023.
IMPORTANT INFORMATION
This press release contains certain forward-looking statements
regarding future events, trends, projects or targets. These
forward-looking statements are subject to identified and
unidentified risks and uncertainties that could cause actual
results to differ materially from the results anticipated in the
forward-looking statements. Please refer to Mercialys’ Universal
Registration Document available at www.mercialys.com for the year
ended December 31, 2022 for more details regarding certain factors,
risks and uncertainties that could affect Mercialys’ business.
Mercialys makes no undertaking in any form to publish updates or
adjustments to these forward-looking statements, nor to report new
information, new future events or any other circumstances that
might cause these statements to be revised.
Financial report
Pursuant to Regulation (EC) No. 1606/2002 of July 19, 2002, the
Mercialys Group’s consolidated financial statements were prepared
in accordance with International Financial Reporting Standards
(IFRS) issued by the International Accounting Standards Board
(IASB) as adopted by the European Union and applicable at December
31, 2023. These standards are available on the European Commission
website at:
https://ec.europa.eu/info/business-economy-euro/company-reporting-and-auditing/company-reporting/financial-reporting_en.
The accounting policies set out below were applied consistently to
all the periods presented in the consolidated financial statements,
after taking into account, or with the exception of, the new
standards and interpretations described below.
1. Financial statements
The audit procedures on the consolidated accounts have been
completed. The certification report is currently being issued.
1.1. Consolidated income statement
(In thousands of euros)
Dec 31, 2022
Dec 31, 2023
Rental
revenues
173,277
178,010
Service
charges and property tax
(45,159)
(51,079)
Charges
and taxes billed to tenants
37,883
45,201
Net
property operating expenses
(69)
(1,208)
Net rental income
165,932
170,924
Management, administrative and other
activities income
2,846
3,078
Other
income
424
-
Other
expenses
(6,283)
(4,433)
Personnel expenses
(18,690)
(20,169)
Depreciation and amortization
(37,729)
(38,540)
Reversals of / (Allowances for)
provisions
(2,527)
(4,774)
Other
operating income
88,740
10,647
Other
operating expenses
(86,486)
(30,915)
Operating income
106,227
85,818
Income
from cash and cash equivalents
246
3,185
Gross
finance costs
(53,480)
(38,194)
(Expenses)/ Income from net financial
debt
(53,234)
(35,009)
Other
financial income
1,089
774
Other
financial expenses
(3,939)
(6,085)
Net financial items
(56,083)
(40,321)
Tax
expense
(709)
(495)
Share of
net income from associates and joint ventures
2,380
1,727
Consolidated net income
51,814
46,730
Attributable to non-controlling
interests
8,720
(6,643)
Attributable to owners of the
parent
43,094
53,373
Earnings per share17
Net
income attributable to owners of the parent (in euros)
0.46
0.57
Diluted
net income attributable to owners of the parent (in
euros)
0.46
0.57
1.2. Consolidated statement of financial position
ASSETS (in thousands of euros)
Dec 31, 2022
Dec 31, 2023
Intangible assets
3,381
3,144
Property, plant and equipment other than
investment property
4,743
5,825
Investment property
1,907,148
1,864,950
Right-of-use assets
10,184
10,615
Investments in associates
35,203
39,557
Other
non-current assets
50,219
37,577
Deferred
tax assets
1,601
1,614
Non-current assets
2,012,478
1,963,282
Trade
receivables
28,557
35,936
Other
current assets
31,854
31,902
Cash and
cash equivalents
216,085
118,155
Investment property held for sale
0
1,400
Current assets
276,496
187,393
Total assets
2,288,974
2,150,676
EQUITY AND LIABILITIES (in thousands of
euros)
Dec 31, 2022
Dec 31, 2023
Share
capital
93,887
93,887
Additional paid-in capital, treasury shares
and other reserves
631,246
583,337
Equity
attributable to owners of the parent
725,132
677,224
Non-controlling interests
205,294
188,871
Shareholders’ equity
930,426
866,095
Non-current provisions
1,225
1,406
Non-current financial liabilities
1,131,974
1,131,627
Deposits
and guarantees
23,622
24,935
Non-current lease liabilities
9,409
9,529
Other
non-current liabilities
2,377
4,834
Non-current liabilities
1,168,607
1,172 332
Trade
payables
13,910
9,265
Current
financial liabilities
126,353
53,037
Current
lease liabilities
1,084
1,331
Current
provisions
13,279
15,581
Other
current liabilities
35,237
32,940
Current
tax liabilities
78
95
Current
liabilities
189,941
112,249
Total equity and liabilities
2,288,974
2,150,676
1.3. Consolidated cash flow statement
(In thousands of euros)
Dec 31, 2022
Dec 31, 2023
Net
income attributable to owners of the parent
43,094
53,373
Non-controlling interests
8,720
(6,643)
Consolidated net income
51,814
46,730
Depreciation, amortization(1) and provisions,
net of reversals
46,161
64,054
Calculated expenses/(income) relating to
stock options and similar
773
763
Other
calculated expenses/(income)(2)
(386)
5,559
Share of
net income from associates and joint ventures
(2,380)
(1,727)
Dividends received from associates and joint
ventures
3,065
2,525
Income
from asset disposals
(8,486)
(766)
Expenses/(income) from net financial
debt
53,234
35,009
Net
financial interest in respect of lease agreements
321
344
Tax expense (including deferred tax)
709
495
Cash flow
144,825
152,987
Taxes
received/(paid)
(1,033)
(569)
Change
in working capital requirement relating to operations, excluding
deposits and guarantees(3)
5,816
(19,464)
Change
in deposits and guarantees
515
1,313
Net cash flow from operating
activities
150,124
134,267
Cash
payments on acquisitions of:
investment properties and other fixed
assets
(19,098)
(22,532)
non-current financial assets
(43)
(4)
Cash
receipts on disposals of:
investment properties and other fixed
assets
81,161
3,964
non-current financial assets
1,274
3,146
Investments in associates and joint
ventures
(6,312)
-
Impact
of changes in scope with change of control
(4,292)
-
Change
in loans and advances granted
-
Net cash
flow from investing activities
59,002
(21,740)
Dividends paid to shareholders of the parent
company (final)
(86,025)
(89,565)
Dividends paid to shareholders of the parent
company (interim)
-
-
Dividends paid to non-controlling
interests
(5,437)
(9,780)
Capital
increase and reduction
-
-
Other
transactions with shareholders
-
-
Changes
in treasury shares
(439)
(744)
Increase
in borrowings and financial debt
754,809
109,000
Decrease
in borrowings and financial debt
(880,222)
(192,204)
Repayment of lease liabilities
(1,398)
(1,231)
Interest
received (4)
20,999
17,880
Interest
paid
(52,484)
(43,727)
Net cash flow from financing
activities
(250,198)
(210,371)
Change in cash position
(41,072)
(97,844)
Net cash
at beginning of year
257,071
215,999
Net cash
at end of year
215,999
118,155
of which
cash and cash equivalents
216,085
118,155
of which
bank overdrafts
(87)
-
(1)
Depreciation and amortization exclude the
impact of impairment on current assets
(2)
Other calculated expenses and income
mainly comprise:
- discounting adjustments to construction
leases
(236)
(207)
- lease rights received from tenants and
spread over the firm term of the lease
(662)
2,920
- deferred financial expenses
826
648
- interest on non-cash loans and other
financial income and expenses
(362)
2,024
(3)
The change in working capital requirement
breaks down as follows:
- trade receivables
8,392
(7,462)
- trade payables
(2,863)
(4,646)
- other receivables and payables
287
(7,356)
Total working capital requirement
5,816
(19,464)
(4)
Primarily comprising interest received on
debt hedging instruments in accordance with IAS 7.16
2. Key developments in 2023
Financing
At end-June 2023, Mercialys set up a new credit line for Euro
180 million, maturing in June 2026, with two options for a one-year
extension. This new credit line, which has not been drawn down to
date, incorporates ESG criteria and replaces the Euro 180 million
line due to mature in December 2024.
Change in the rental base
On December 18, 2023, the Casino group announced that it had
entered exclusive negotiations with Intermarché and Auchan Retail
with a view to selling virtually the entire scope of Casino group
hypermarkets and supermarkets (excluding Corsica) to Groupement Les
Mousquetaires and Auchan Retail. Following these exclusive
negotiations, Casino announced on January 24 that it had reached
agreements with Auchan Retail and Groupement Les Mousquetaires to
sell 288 stores. The sales will be completed in the second quarter
of 2024, after consulting with the relevant employee representative
bodies. The agreements plan for the stores to be transferred in
three successive waves: on April 30, 2024, May 31, 2024 and July 1,
2024.
This operation remains subject to the relevant approvals being
obtained from the competition authorities.
The portfolio of Casino group hypermarkets and supermarkets in
Corsica, where Mercialys has a 60% stake in five Casino
hypermarkets that it owns in partnership with the company Corin,
has not been included by the Casino group in this sales
agreement.
On January 24, 2024, Carrefour also announced that it has
entered into exclusive negotiations with Groupe Intermarché to
acquire 31 stores. Under the terms of the agreement, Carrefour will
substitute Intermarché for the purchase of 26 stores from Casino,
while the remaining 5 stores will be acquired directly from
Intermarché.
On January 25, 2024, the magazine LSA published the list of the
31 points of sale, including the Lanester and Le Puy hypermarkets,
owned by Mercialys.
3. Summary of the main key indicators for the period
Dec 31, 2023
Organic growth in invoiced
rents
+4.1%
EBITDA18
149.4
EBITDA/rental revenues
83.9%
Net recurrent earnings 19
109.0
Net recurrent earnings per
share20
1.17
Fair value of the portfolio
(including transfer taxes)
2,872.0
Change vs. Dec 31, 2022 (current
basis)
-7.1%
Change vs. Dec 31, 2022
(like-for-like)
-7.0%
EPRA NDV per share
17.10
Change vs. Dec 31, 2022
-18.4%
Loan to Value (LTV) – excluding
transfer taxes
38.9%
4. Review of activity
4.1. Main management indicators
- The following table presents details of the lease
schedule:
At Dec 31, 2023
Number of leases
Annual MGR* + variable rents
(€m)
Share of leases expiring (%
annual MGR + variable)
Expired at December 31, 2023
350
23.6
13.5%
2024
157
9.0
5.1%
2025
125
7.8
4.4%
2026
170
16.3
9.3%
2027
205
40.7
23.2%
2028
196
15.1
8.6%
2029
176
11.7
6.7%
2030
255
26.0
14.8%
2031
187
11.6
6.6%
2032
118
6.9
3.9%
2033 and beyond
99
6.8
3.9%
Total
2,038
175.5
100%
* MGR: minimum guaranteed rent
- The stock of expired leases at end-2023 reflects the
negotiations underway, refusals to renew leases with the payment of
compensation for eviction, global negotiations for each retailer,
tactical delays, etc. Among the 13.5% of leases due at the end of
2023, 1.7% are the subject of agreements signed in January
2024.
- At end-January 2024, the collection rate for rent and
charges from 2023 represents 96.3%.
- The current financial vacancy rate - which excludes
“strategic” vacancies following decisions to facilitate the
deployment of extension and redevelopment plans - came to 2.9%21 at
December 31, 2023, stable compared with the level from end-2022 and
showing a significant improvement compared with June 30, 2023
(3.3%). Mercialys’ robust letting activity enabled it to offset the
impact of the retailers going into turnaround or liquidation
proceedings, particularly in the textiles sector.
- The total vacancy rate22 was 4.4% at December 31, 2023,
which is also significantly lower than end-June 2023 (4.7%) and
stable compared with end-2022.
- Mercialys’ robust underlying letting performance led to 150
leases being signed for renewals or relettings in 2023, securing a
reversion rate that is stable (+0.1%) and relevant
considering the combination of high indexation in 2023 at
+3.7%.
- Thanks to the positive trend for retailer activity levels, the
occupancy cost ratio23 remained at a still very measured
rate of 10.7% at end-December 2023, down from end-June (10.9%) and
end-December 2022 (11.1%), despite the like-for-like increase in
rents.
The rents received by Mercialys come from a very diverse range
of retailers as, with the exception of the Casino group retailers
(details presented below), no other tenant represents more than 2%
of total rental income.
The Casino group’s restructuring and the in-depth realignment of
the food retail landscape in France, as presented earlier, will
significantly change Mercialys’ rental structure from 2024.
Casino group retailers accounted for 20.5% of total rental
income at December 31, 2023, down from 21.4% at June 30, 2023 and
21.0% at December 31, 2022. This decrease of exposure to the Casino
group is generated by the transfer of the Besançon and Le Puy
hypermarkets to Intermarché.
This consolidated accounting exposure is calculated factoring in
all of the rent paid by Casino group retailers. Mercialys’ economic
exposure to rent from retailers operated by the Casino group came
to 17.4% vs. 18.3% at June 30 and 18.0% at end-2022, after being
adjusted:
(1) downwards for the 49% minority interest held by BNP Paribas
REIM in SAS Hyperthetis Participations and SAS Immosiris, which
together own a total of nine hypermarkets operating under the Géant
Casino banner (with the Le Puy site operated by Intermarché since
October 2023), and
(2) upwards for Mercialys’ 25% minority interest in SCI AMR,
which holds three Monoprix stores and two hypermarkets operating
under the Géant Casino and Intermarché banners.
The lease schedule for Mercialys’ main tenant is presented
below:
Schedule for key Casino group leases
Site
% held by Mercialys
Type
Lease start date
Lease end date
Lease characteristics
Grenoble
100%
Monoprix
02/2010
02/2022
3 - 6 - 9 - 12 commercial
lease
Quimper
100%
Hypermarket
12/2014
12/2026
3 - 6 - 9 - 12 commercial
lease
Aix-en-Provence
51%
Hypermarket
06/2015
06/2027
3 - 6 - 9 - 12 commercial
lease
Marseille
100%
Hypermarket
06/2015
06/2027
3 - 6 - 9 - 12 commercial
lease
Brest
51%
Hypermarket
06/2015
06/2027
3 - 6 - 9 - 12 commercial
lease
Nîmes
51%
Hypermarket
06/2015
06/2027
3 - 6 - 9 - 12 commercial
lease
Angers
51%
Hypermarket
06/2015
06/2027
3 - 6 - 9 - 12 commercial
lease
Lanester
100%
Hypermarket
06/2015
06/2027
3 - 6 - 9 - 12 commercial
lease
Niort
51%
Hypermarket
06/2015
06/2027
3 - 6 - 9 - 12 commercial
lease
Fréjus
51%
Hypermarket
06/2015
06/2027
3 - 6 - 9 - 12 commercial
lease
Narbonne
51%
Hypermarket
11/2015
11/2027
3 - 6 - 9 - 12 commercial
lease
Istres
51%
Hypermarket
11/2015
11/2027
3 - 6 - 9 - 12 commercial
lease
Clermont-Ferrand
51%
Hypermarket
11/2015
11/2027
3 - 6 - 9 - 12 commercial
lease
Annemasse
100%
Hypermarket
12/2015
12/2027
3 - 6 - 9 - 12 commercial
lease
Ajaccio
60%
Hypermarket
07/2018
06/2030
12-year commercial lease, 9-year
firm period
Corte
60%
Supermarket
07/2018
06/2030
12-year commercial lease, 9-year
firm period
Furiani
60%
Hypermarket
07/2018
06/2030
12-year commercial lease, 9-year
firm period
Porto-Vecchio
60%
Hypermarket
07/2018
06/2030
12-year commercial lease, 9-year
firm period
Toga
60%
Hypermarket
07/2018
06/2030
12-year commercial lease, 9-year
firm period
Top 10 tenant retailers (excluding Casino
Group)
H&M
Feu Vert
Armand Thiery
Nocibé
FNAC
Mango
Orange
Jules
Sephora
Intersport
13.4% of contractual rents on
an annualized basis
The breakdown by retailer (national, local and retailers
associated with the Casino group) of contractual rents on an
annualized basis is as follows:
Number of leases
Annual MGR* + variable rents
(€m)
Percentage of rent (%)
Dec 31, 2023
Dec 31, 2023
Dec 31, 2022
Dec 31, 2023
National and international retailers
1,401
116.4
65.5%
66.3%
Local retailers
591
23.2
13.5%
13.2%
Casino cafeterias / restaurants
2
0.2
0.1%
0.1%
Monoprix
1
1.2
0.7%
0.7%
Géant Casino and other entities
43
34.5
20.2%
19.7%
Total
2,038
175.5
100.0%
100.0%
* MGR: minimum guaranteed rent
The breakdown by business sector (including large food
stores) of Mercialys’ rents is still highly diversified. Through
its various divestment operations, the Company has further
strengthened its strategy for balanced retail-mixes, while
continuing to scale back its exposure to textiles in favor of
sectors such as health and beauty, culture, gifts and sport:
Percentage of rent (%)
Dec 31, 2022
Dec 31, 2023
Restaurants and catering
8.3%
8.6%
Health and beauty
12.7%
13.0%
Culture, gifts and sports
17.5%
17.9%
Personal items
30.0%
28.9%
Household equipment
7.7%
7.7%
Food-anchored tenants
20.5%
20.9%
Services
3.2%
3.0%
Total
100.0%
100.0%
The rental income structure at December 31, 2023 shows
that the majority of leases, in terms of overall rental income,
include a variable clause. The Company’s exposure to purely
variable rents is however very limited, representing 1.7% of the
rental base.
Number of leases
Annual MGR + variable rents
(€m)
Percentage of rent (%)
Dec 31, 2023
Dec 31, 2023
Dec 31, 2022
Dec 31, 2023
Leases with variable clause
1,338
107.5
58%
61%
- of which MGR
103.4
57%
59%
- of which variable rent with MGR
1.1
0%
1%
- of which variable rent without MGR
3.0
2%
2%
Leases without variable clause
700
68.0
42%
39%
Total
2,038
175.5
100%
100%
The rental income structure at December 31, 2023 shows a
predominant share of leases indexed against the French commercial
rent index (ILC). In 2024, as a result of the lease anniversary
dates, the indexation of Mercialys’ rents will be linked for 15% to
the index published in the first quarter of 2023 (+6.69%), with 22%
for the index published in the second quarter of 2023 (+6.60%), 47%
for the index published in the third quarter of 2023 (+5.97%), and
10% for the index published in the fourth quarter of 2023, while
the other indexes represent a residual balance of 6%.
Number of leases
Annual MGR + variable rents
(€m)
Percentage of rent (%)
Dec 31, 2023
Dec 31, 2023
Dec 31, 2022
Dec 31, 2023
Leases index-linked to the retail rent
index (ILC)
1,771
164.8
95%
96%
Leases index-linked to the construction
cost index (ICC)
89
5.4
3%
3%
Leases index-linked to the tertiary
activities rent index (ILAT) and non-adjustable leases
158
1.2
1%
1%
Total
2,018
171.4
100%
100%
5. Review of consolidated results
5.1. Invoiced rents, rental revenues and net rental
income
Rental revenues mainly comprise rents invoiced by the
Company plus a smaller element of lease rights and despecialization
indemnities paid by tenants and spread over the firm period of the
lease (usually 36 months).
(In thousands of euros)
Dec 31, 2022
Dec 31, 2023
Change %
Invoiced rents
172,602
177,495
+2.8%
Lease rights and despecialization
indemnities
674
515
-23.6%
Rental revenues
173,277
178,010
+2.7%
Property taxes
-13,948
-14,265
+2.3%
Rebilling to tenants
11,701
12,048
+3.0%
Non-recovered property taxes
-2,247
-2,217
-1.3%
Service charges
-31,211
-36,813
+18.0%
Rebilling to tenants
26,182
33,152
+26.6%
Non-recovered service charges
-5,029
-3,661
-27.2%
Management fees
-7,073
-952
-86.5%
Rebilling to tenants
4,113
4,032
-2.0%
Losses on and impairment of
receivables
3,263
-4,441
na
Other expenses
-372
153
na
Net property operating expenses
-69
-1,208
na
Net rental income
165,932
170,924
+3.0%
The +2.8 points change in invoiced rents primarily
reflects the following factors:
- the impact of indexation for +3.7 points, representing
Euro +6.3 million;
- contribution by Casual Leasing for -0.3 points,
representing Euro -0.5 million;
- the increase in variable rents for +1.1 points,
representing Euro +1.9 million;
- the actions carried out on the portfolio for -0.8
points, representing Euro -1.4 million;
- the accounting impact of the rent relief granted to retailers
in connection with the health crisis for +0.4 points,
representing Euro +0.8 million;
- the asset acquisitions and sales completed in 2022 and 2023
for -1.2 points, representing Euro -2.0 million;
- other effects primarily including strategic vacancies linked
to current redevelopment programs for -0.1 points,
representing Euro -0.2 million.
Considering the first five effects presented above, organic
growth in invoiced rents shows an increase of +4.1
points.
Lease rights and despecialization indemnities invoiced over
the period24 totaled Euro 3.4 million (compared with Euro 0.2
million at December 31, 2022). After taking into account deferrals
over the firm period of leases as required under IFRS, lease rights
for 2023 totaled Euro 0.5 million, compared with Euro 0.7 million
for 2022.
Rental revenues therefore came to Euro 178.0 million at
December 31, 2023, up +2.7% from end-2022.
Net rental income is up +3.0% from 2022 to Euro 170.9
million. It corresponds to the difference between rental revenues
and the costs that are directly allocated to the sites. These costs
include property taxes and service charges that are not billed back
to tenants, as well as net property operating expenses (primarily
fees paid to the property manager that are not re-invoiced and
various charges relating directly to site operations).
The costs included in the calculation of net rental income
represent Euro 7.1 million for 2023, compared with Euro 7.3 million
in 2022.
In parallel the Company benefited from the lower level of
management fees paid after various activities were brought in-house
in 2022 for around Euro 6 million. However, in 2022, Euro +7.8
million of net income was recorded for various impacts relating to
the health crisis: a non-recurring positive effect linked to
reversals of provisions for arrears recorded for 2020-2021 for a
total of Euro +9.2 million and, alongside this, a Euro -1.4 million
expense relating to rent relief. In 2023, the net impact relating
to this exceptional situation was very limited, representing Euro
+0.4 million, split between a Euro -0.7 million expense
corresponding to relief on the rent billed and a reversal of
provisions relating to the arrears resulting directly from the
health crisis for Euro +1.1 million. Excluding these non-recurring
items intended to spread the impacts associated with the health
crisis, net rental income would be up +7.8% for 2023.
5.2. Management income, operating costs and EBITDA
(In thousands of euros)
Dec 31, 2022
Dec 31, 2023
Change (%)
Net rental income
165,932
170,924
+3.0%
Management, administrative and other
activities income
2,846
3,078
+8.1%
Other income and expenses
-5,859
-4,433
-24.3%
Personnel expenses
-18,690
-20,169
+7.9%
EBITDA
144,229
149,400
+3.6%
% rental revenues
83.2%
83.9%
-
Management, administrative and other activities income
primarily comprises fees charged for services provided by
certain Mercialys teams – in connection with advisory services
provided by the asset management team, or shopping center
management services provided by the teams on site – as well as
letting, asset management and advisory fees relating to
partnerships formed.
Fees charged in 2023 totaled Euro 3.1 million, compared with
Euro 2.8 million for 2022.
No property development margin was recorded in 2023.
No other current income was recorded in 2023 (Euro 0.4
million in 2022). This included the dividends received from the
OPCI fund UIR2, 80%-owned by Union Invest and 20% by Mercialys. The
asset held by the OPCI fund was sold during the first half of
2022.
Other current expenses mainly comprise overheads.
Overheads primarily include financial communications costs,
remuneration paid to members of the Board of Directors, corporate
communications costs, shopping center communications costs,
marketing research costs, professional fees (statutory auditors,
consulting, research) and real estate portfolio appraisal
costs.
For 2023, these expenses totaled Euro 4.4 million, compared
with Euro 6.3 million in 2022. This change takes into account the
increase in certain operating costs, largely offset by the
Company’s committed efforts to moderating operating costs in an
inflationary context.
Personnel expenses came to Euro 20.2 million in 2023,
higher than 2022 (Euro 18.7 million). This change factors in the
impact of pay rises in an inflationary context and the integration
of new staff recruited in 2022 and 2023 in connection with the
rental management and technical and administrative management
activities being brought back in-house (as of January 1, 2023), as
well as the profit-sharing agreement set up during the second half
of the year, which represented a provision of Euro 1.4 million.
A portion of the personnel expenses may be charged back as
fees, in connection with advisory services provided by the asset
management team or shopping center management services provided by
Mercialys’ teams on site (see paragraph above concerning
management, administrative and other activities income).
As a result, EBITDA25 came to Euro 149.4 million in 2023,
compared with Euro 144.2 million in 2022. The EBITDA margin was
83.9% (vs. 83.2% at December 31, 2022).
5.3. Net financial items
The net financial items taken into account to calculate
net recurrent earnings came to Euro 29.6 million at December 31,
2023, compared with Euro 29.7 million at December 31, 2022.
This amount does not take into account non-recurring items, such
as hedging ineffectiveness, the banking default risk, bond
redemption premiums and costs, proceeds from unwinding hedging
products and exceptional amortization.
In 2023, the increase in financial expenses linked primarily to
the fixed/floating rate products extinguished was offset by an
increase in financial income from the cash invested.
In connection with the debt restructuring carried out during the
first quarter of 2022, premiums and additional amortization were
recorded in the accounts at end-June 2022 as a result of the two
bond redemptions. These impacts are presented in the detailed
breakdown of net financial items below:
(In thousands of euros)
Dec 31, 2022
Dec 31, 2023
Change (%)
Income from cash and cash equivalents
(a)
246
3,185
na
Cost of debt taken out (b)
-29,926
-34,730
+16.0%
Impact of hedging instruments (c)
9,456
2,359
-75.1%
Cost of property finance leases (d)
0
0
na
Gross finance costs excluding exceptional
items
-20,471
-32,370
+58.1%
Exceptional amortization of costs relating
to the early repayment of financial debt (e)
-4,282
0
na
Gross finance costs (f) =
(b)+(c)+(d)+(e)
-24,753
-32,370
+30.8%
Net finance costs (g) = (a)+(f)
26
-24,507
-29,186
+19.1%
Cost of revolving credit facility and
bilateral loans (undrawn) (h)
-2,987
-2,572
-13.9%
Other financial expenses (i)
-327
-436
+33.3%
Other financial expenses excluding
exceptional items (j) = (h)+(i)
-3,314
-3,008
-9.2%
Costs on redemption operations and
restructuring of debt and hedging instruments (k)
-29,578
-8,900
-69.9%
Other financial expenses (l) =
(j)+(k)
-32,892
-11,908
-63.8%
Total financial expenses (m) =
(f)+(l)
-57,645
-44,279
-23.2%
Income from associates
232
773
na
Other financial income
1,086
0
na
Other financial income (n)
1,318
773
-41.3%
TOTAL FINANCIAL INCOME (o) =
(a)+(n)
1,564
3,958
+153.1%
Net financial items = (m)+(o)
-56,083
-40,321
-28.1%
5.4. Net recurrent earnings and net income attributable to
owners of the parent
5.4.1. Net recurrent earnings
(In thousands of euros)
Dec 31, 2022
Dec 31, 2023
Change (%)
EBITDA
144,229
149,400
+3.6%
Net financial income (excluding
non-recurring items 27)
-29,659
-29,593
-0.2%
Reversals of / (Allowances for)
provisions
-2,527
-4,774
+88.9%
Other operating income and expenses
(excluding capital gains or losses on
disposals and impairment)
624
2,179
na
Tax expense
-463
-634
+36.9%
Share of net income from associates and
joint ventures
(excluding capital gains or losses,
amortization and impairment)
3,680
3,574
-2.9%
Non-controlling interests
(excluding capital gains or losses,
amortization and impairment)
-10,360
-11,191
+8.0%
Net recurrent earnings
105,524
108,961
+3.3%
Net recurrent earnings per
share28
1.13
1.17
+3.3%
Other operating income and expenses (excluding capital
gains or losses on disposals and impairment) came to
Euro +2.2 million (Euro +0.6 million at end-2022), primarily
reflecting the impact of net reversals of provisions. Specifically,
a Euro 2.1 million provision for a dispute concerning a site on
Reunion Island, relating to an issue with the road network, was
reversed at the end of June 2023.
The tax regime for French real estate investment trusts (SIIC)
exempts them from paying tax on their income from real estate
activities, provided that at least 95% of income from rental
activities and 70% of gains on the disposal of real estate assets
are distributed to shareholders. The tax expenses recorded by
Mercialys therefore concern the corporate value-added tax (CVAE),
corporate income tax on activities that do not fall under the SIIC
regime and deferred taxes.
2023 recorded a tax expense taken into account to
calculate net recurrent earnings of Euro -0.6 million, primarily
comprising the CVAE corporate value-added tax. At end-2022, the tax
expense was Euro -0.5 million.
The share of net income from associates and joint ventures
(excluding capital gains or losses, amortization and
impairment) came to Euro 3.6 million at December 31, 2023,
compared with Euro 3.7 million at December 31, 2022. The companies
consolidated under the equity method in Mercialys’ consolidated
financial statements are SCI AMR (created in partnership with
Amundi Immobilier in 2013 and in which Mercialys has a 25% stake),
SNC Aix2 (in which Mercialys acquired a 50% stake in December 2013,
with Altarea Cogedim owning the other 50%), Corin Asset Management
SAS (in which Mercialys has a 40% stake), SAS Saint-Denis Genin (in
which Mercialys has a 30% stake), DEPUR Expériences (in which
Mercialys has a 22.9% stake) and Imocom Partners (in which
Mercialys has a 30% stake).
Non-controlling interests (excluding capital gains
or losses, amortization and impairment) came to Euro -11.2 million
at December 31, 2023, compared with Euro -10.4 million at December
31, 2022. They are linked to the 49% stake held by BNP Paribas REIM
France in the companies Hyperthetis Participations and Immosiris.
As Mercialys retains exclusive control, these subsidiaries are
fully consolidated.
In view of these items, net recurrent earnings 29 came to
Euro 109.0 million (compared with Euro 105.5 million for 2022), up
+3.3%. Considering the average number of shares (basic) at
end-December, net recurrent earnings represent Euro 1.17 per share
at December 31, 2023, compared with Euro 1.13 per share at December
31, 2022, up +3.3%.
As indicated above, the basis for comparison at December 31,
2022 benefited from Euro +7.8 million of net income for various
impacts relating to the health crisis, compared with Euro +0.4
million of net income in the accounts at end-December 2023. Net
recurrent earnings restated for these non-recurring items would be
up +11.0%.
5.4.2. Net income attributable to owners of the
parent
(In thousands of euros)
Dec 31, 2022
Dec 31, 2023
Change %
Net recurrent earnings
105,524
108,961
+3.3%
Depreciation and amortization
-37,729
-38,540
+2.1%
Other operating income and expenses
1,630
-22,447
na
Hedging ineffectiveness, banking default
risk and net impact of bond redemptions and hedging operations
-26,671
-10,589
-60.3%
Share of net income from associates, joint
ventures and non-controlling interests (amortization, impairment
and capital gains or losses)
339
15,987
na
Net income attributable to owners of
the parent
43,094
53,373
+23.9%
Depreciation and amortization came to Euro -38.5 million
in 2023, up +2.1% from 2022.
Other operating income and expenses not included in net
recurrent earnings correspond notably to the net amount of capital
gains or losses on property disposals and provisions for the
impairment of assets.
Other operating income came to Euro 7.2 million at December 31,
2023, compared with Euro 87.7 million at December 31, 2022. This
amount mainly includes:
- income from the sale of geographically dispersed sites (Euro
3.9 million);
- income relating to adjustments for previous sales (Euro 3.2
million).
Other operating expenses totaled Euro -29.6 million at December
31, 2023, compared with Euro -86.1 million at December 31, 2022.
They correspond primarily to:
- the net book value of the assets sold (Euro -2.4 million);
- expenses relating to adjustments for previous sales (Euro -3.2
million);
- costs relating to acquisitions (Euro -0.8 million);
- provisions recorded for the impairment of investment
properties (Euro -23.2 million).
The amount of net capital gains recorded in the consolidated
financial statements at December 31 came to Euro 1.5 million (vs.
Euro 8.3 million for 2022).
Net income attributable to owners of the parent, as
defined by IFRS, came to Euro 53.4 million for 2023, compared with
Euro 43.1 million for 2022.
5.5. Financial structure
5.5.1. Debt cost and structure
At December 31, 2023, Mercialys’ drawn debt totaled Euro
1,192 million, with the following breakdown:
- a bond issue for a nominal amount of Euro 300 million, with a
fixed coupon of 1.80%, maturing in February 2026;
- a bond issue for an outstanding nominal amount of Euro 200
million, with a fixed coupon of 4.625%, maturing in July 2027;
- a private bond placement for a nominal amount of Euro 150
million, with a fixed coupon of 2.00%, maturing in November
2027;
- a bond issue for a nominal amount of Euro 500 million, with a
fixed coupon of 2.50%, maturing in February 2029;
- Euro 42 million of outstanding commercial paper, with an
average rate of around 4%.
Cash and cash equivalents came to Euro 118.2 million at
December 31, 2023, compared with Euro 216.1 million at December 31,
2022. The main cash flows that impacted the change in Mercialys’
cash position over the period were as follows:
- net cash flow from operating activities during the period:
Euro +134.3 million;
- cash receipts / payments related to disposals / acquisitions
of assets completed in 2023: Euro -21.7 million;
- dividend payments to parent company shareholders and
non-controlling interests: Euro -99.3 million;
- issues and repayment of borrowings net of the change in
outstanding commercial paper: Euro -83.2 million;
- net interest paid: Euro -25.9 million.
Net financial debt came to Euro 1,063.6 million at
December 31, 2023, compared with Euro 1,040.2 million at December
31, 2022.
The real average cost of drawn debt for 2023 was 2.3%,
compared with 2.1% at end-June 2023 and 2.0% at end-2022. This
change is linked mainly to the instruments set up to fix and
extinguish the fixed/floating rate products, helping further
strengthen debt hedging. In a context of significant increases in
interest rates and rate volatility from the first half of 2022,
Mercialys further strengthened its hedging rate for its fixed-rate
debt, up to 96% for 2023. For 2024, the hedging instruments set up
on the residual debt will make it possible to reach 100% hedging
for fixed-rate debt, with the real average cost of drawn debt, on
this basis, expected to move closer to the average cost of bond
debt, i.e. 2.6%.
Debt maturity and liquidity
The average maturity of drawn debt, including commercial
paper, was 3.8 years at end-December 2023, compared with 4.2 years
at June 30, 2023 and 4.5 years at December 31, 2022.
Mercialys also has Euro 385 million of undrawn financial
resources, enabling it to benefit from a satisfactory level of
liquidity:
- a Euro 180 million revolving bank credit facility, due in June
2026. The Euribor margin is 155bp (for a BBB rating); if undrawn,
this facility is subject to payment of a non-use fee representing
40% of the margin;
- five bilateral confirmed bank facilities for a total of Euro
205 million, maturing between June 2026 and December 2028. The
Euribor margins are 155 basis points or lower (for a BBB rating) or
fixed rate; if undrawn, these facilities are subject to payment of
a non-use fee representing up to 46% of the margins;
Lastly, Mercialys has a Euro 500 million commercial paper
program, set up during the second half of 2012, with Euro 42
million used (outstanding at December 31, 2023).
Mercialys’ drawn debt maturity schedule (in millions of
euros) at December 31, 2023:
[Graphic omitted]
Mercialys’ undrawn debt maturity schedule (in millions of
euros) at December 31, 2023:
[Graphic omitted]
5.5.2. Bank covenants and credit rating
Mercialys’ financial position at December 31, 2023 met all
the various covenants included in the different credit
agreements.
The loan to value (LTV) ratio excluding transfer taxes
came to 38.9% at end-December 2023, compared with 35.3% at
end-December 2022 and 38.6% at June 30, 2023, well below the
contractual covenants. An LTV covenant of less than 55% applies to
92% of the confirmed bank lines, with an LTV covenant of less than
50% for the other 8% of these facilities.
The LTV including transfer taxes was 36.4% at end-December 2023,
compared with 33.0% at end-December 2022 and 36.1% at June 30, 2022
and 34.4% at end-December 2021.
Dec 31, 2022
Dec 31, 2023
Net financial debt (in millions of
euros)
1,040.2
1,063.6
Appraisal value excluding transfer taxes
(in millions of euros)30
2,949.6
2,737.4
Loan to value (LTV) - excluding
transfer taxes
35.3%
38.9%
Similarly, the interest coverage ratio (ICR) was 5.1x at
end-December 2023, significantly higher than the contractual
covenant (ICR > 2x), compared with 5.9x at end-December 2022 and
5.2x at end-June 2023.
Dec 31, 2022
Dec 31, 2023
EBITDA (in millions of euros)
144.2
149.4
Net finance costs (in millions of
euros)31
-24.5
-29.2
Interest coverage ratio (ICR)
5.9x
5.1x
The two other contractual covenants are also met:
- the fair value of assets excluding transfer taxes at
December 31, 2023 was Euro 2.7 billion, above the contractual
covenant minimum, which sets a fair value of investment properties
excluding transfer taxes of over Euro 1 billion;
- zero pledged debt at December 31, 2023, below the
covenant, which caps the pledged debt to fair value ratio excluding
transfer taxes at 20%.
On October 20, 2023, Standard & Poor’s confirmed its BBB
/ stable outlook rating for Mercialys.
5.6. Equity and ownership structure
Consolidated equity totaled Euro 866.1 million at
December 31, 2023, compared with Euro 930.4 million at December 31,
2022.
The main changes that affected consolidated equity during the
year were as follows:
- net income for 2023: Euro +46.7 million;
- payment of the 2022 dividend of Euro 0.96 per share and
dividends paid to non-controlling interests: Euro 99.3 million;
- change in fair value of financial assets and derivatives: Euro
-11.7 million.
The number of outstanding shares at December 31, 2023 was
93,886,501, unchanged since December 31, 2022.
2021
2022
2023
Number of shares outstanding
- At start of period
92,049,169
93,886,501
93,886,501
- At end of period
93,886,501
93,886,501
93,886,501
Average number of shares outstanding
93,179,835
93,886,501
93,886,501
Average number of shares
(basic)
92,839,729
93,384,221
93,305 357
Average number of shares
(diluted)
92,839,729
93,384,221
93,305 357
At December 31, 2023, Mercialys’ shareholding structure had the
following breakdown: treasury stock (0.65%), other shareholders
(99.35%).
Two shareholders informed the AMF that they held more than 5.0%
of the capital or voting rights. BlackRock Inc’s holding company
held 5,666,317 shares on December 2023, representing 6.0% of the
capital and voting rights. AXA IM held 4,821,145 shares on December
19, 2023, representing 5.0% of the company’s capital and voting
rights.
5.7. Dividend
Mercialys’ Board of Directors will submit a proposal at the
General Meeting on April 25, 2024 for a dividend of Euro 0.99
per share, compared with a dividend of Euro 0.96 per share for
2022. The payout corresponds to 85% of 2023 net recurrent earnings
and offers a yield of 5.8% on the NDV of Euro 17.10 per share at
end-2023 and 9.9% on the year’s closing price.
For the last three years, Mercialys will have paid out Euro 2.87
of dividends, representing 85% of its recurrent earnings and
providing an average yield of 10.1% for its shareholders over this
period.
This proposed dividend for 2023 is based on the distribution
requirement with the SIIC tax status concerning exempt profits
from:
- property rental or sub-letting operations (including dividends
paid by the subsidiaries subject to the SIIC system), i.e. Euro
0.86 per share;
- the distribution of exempt income recorded on the Company’s
balance sheet for Euro 0.13 per share.
The ex-dividend date is April 29, 2024, with the dividend to be
paid on May 2, 2024.
Changes in scope and valuation of the asset portfolio
5.8. Asset acquisitions
No significant acquisitions occurred in 2023.
5.9. Extension or redevelopment projects
The development pipeline is presented in section III,
paragraph 4 of this press release.
5.10. Asset disposals
No significant disposals occured in 2023.
5.11. Appraisal valuations and changes in scope
Mercialys’ property portfolio is appraised twice yearly by
independent experts.
At December 31, 2023, BNP Real Estate Valuation, Catella
Valuation, Cushman & Wakefield, CBRE and BPCE Expertises
Immobilières updated their valuation of Mercialys’ portfolio:
- BNP Real Estate Valuation conducted the appraisal of 17 sites
at December 31, 2023, based on an on-site inspection of 2 sites
during the second half of 2023 and an update of the June 30, 2023
appraisals for the other sites;
- Catella Valuation conducted the appraisal of 16 sites at
December 31, 2023, based on an update of the appraisals carried out
at June 30, 2023;
- Cushman & Wakefield conducted the appraisal of 9 sites at
December 31, 2023, based on an update of the appraisals carried out
at June 30, 2023. Nine on-site inspections were carried out during
the first half of 2022;
- CBRE conducted the appraisal of 1 site at December 31, 2023,
based on an update of the appraisal carried out at June 30, 2023.
One on-site inspection was carried out during the first half of
2023;
- BPCE Expertises Immobilières conducted the appraisal of 16
sites at December 31, 2023, based on an update of the appraisals
carried out at June 30, 2023.
On this basis, the portfolio value was Euro 2,872.0
million including transfer taxes at December 31, 2023, compared
with Euro 3,091.2 million at December 31, 2022. Excluding transfer
taxes, this value was Euro 2,692.3 million at end-2023, compared
with Euro 2,896.9 million at end-2022.
The portfolio value including transfer taxes is therefore down
-7.1% over 12 months (-7.0% like-for-like32) and -3.8% over six
months (-3.7% like-for-like). The change in the portfolio value
excluding transfer taxes is consistent with the same proportions
(-3.7% over six months and -7.0% over 12 months like-for-like).
The average appraisal yield rate was 6.61% at December
31, 2023, compared with 6.21% at June 30, 2023 and 5.75% at
December 31, 2022.
Type of property
Average yield rate
Dec 31, 2022
Average yield rate
Jun 30, 2023
Average
yield rate
Dec 31, 2023
Regional and large shopping centers
5.46%
5.93%
6.34%
Neighborhood shopping centers
7.36%
7.88%
8.26%
Total portfolio 33
5.75%
6.21%
6.61%
The following table presents the breakdown of Mercialys’
portfolio by fair value and gross leasable area (GLA) by type of
property at December 31, 2023, as well as the corresponding
appraised rental income:
Type of property
Number of assets
Appraisal value
(excl. transfer taxes)
Appraisal value (incl.
transfer taxes)
Gross
leasable area
Appraised potential net rental
income
Dec 31, 2023
Dec 31, 2023
Dec 31, 2023
Dec 31, 2023
(€m)
(%)
(€m)
(%)
(sq.m)
(%)
(€m)
(%)
Regional and large shopping centers
25
2,279.7
84.7%
2,430.9
84.6%
604,840
77.9%
154.0
81.1%
Neighborhood shopping centers
23
400.5
14.9%
428.1
14.9%
167,726
21.6%
35.3
18.6%
Subtotal
48
2,680.2
99.5%
2,859.0
99.5%
772,567
99.5%
189.4
99.8%
Other sites33
2
12.1
0.5%
13.0
0.5%
3,987
0.5%
0.5
0.2%
Total
50
2,692.3
100%
2,872.0
100%
776,554
100%
189.8
100%
6. Outlook
The Company’s sound financial foundations and the visibility
offered by indexation, a core pillar supporting a balanced
landlord-tenant relationship, while continuing to carefully monitor
the solvency of client retailers, enable Mercialys to set the
following objectives for 2024:
- Net recurrent earnings per share growth of at least +2.0% vs.
2023;
- Dividend to range from 75% to 95% of 2024 net recurrent
earnings.
The change in the lower range to 75% of recurrent earnings for
the year, compared with 85% previously, will make it possible to
free up additional capacity to fund investments in 2024 if
necessary.
Mercialys could capitalize on the opportunity opened up by the
changes in the hypermarkets anchoring its sites to work in
partnership with the new retailers to further strengthen the appeal
for clients (comfort, services, renovations) and establish new
mid-size stores and retailers with activities that effectively
complement those of the hypermarkets, the majority of which have
realigned around their food offering.
This payout range contributes to a yield per share that will
continue to be particularly attractive for 2024, with the financing
potential freed up in this way to support returns for shareholders
over the medium term.
7. Subsequent events
On January 24, Casino announced that it had signed agreements
with Auchan Retail and Groupement Les Mousquetaires to sell 288
stores. The sales will be completed in the second quarter of 2024,
after consulting with the relevant employee representative bodies.
The agreements plan for the stores to be transferred in three
successive waves: on April 30, 2024, May 31, 2024 and July 1,
2024.
This operation remains subject to the relevant approvals being
obtained from the competition authorities.
The Casino Group has excluded the portfolio of hypermarkets and
supermarkets in Corsica from this sale agreement.
On January 24, 2024, Carrefour also announced that it has
entered into exclusive negotiations with Groupe Intermarché to
acquire 31 stores. Under the terms of the agreement, Carrefour will
substitute Intermarché for the purchase of 26 stores from Casino,
while the remaining 5 stores will be acquired directly from
Intermarché.
On January 25, 2024, the magazine LSA published the list of the
31 points of sale, including the Lanester and Le Puy hypermarkets,
owned by Mercialys.
8. EPRA performance measurements
Mercialys applies the EPRA34 recommendations for the indicators
provided below. EPRA is the representative organization for listed
real estate companies in Europe and issues recommendations on
performance indicators to improve the comparability of financial
statements published by the various companies.
In its half-year financial report and its Universal Registration
Document, Mercialys publishes all the EPRA indicators defined by
the Best Practices Recommendations, which can be found on EPRA’s
website. The following table summarizes the EPRA indicators at
end-December 2023, end-June 2023 and end-December 2022:
Dec 31, 2022
Jun 30, 2023
Dec 31, 2023
EPRA earnings (€ per share)
1.13
0.62
1.17
EPRA NRV (€ per share)
20.54
19.03
18.25
EPRA NTA (€ per share)
18.42
16.99
16.29
EPRA NDV (€ per share)
20.94
18.80
17.10
EPRA net initial yield (%)
5.29%
5.63%
5.97%
EPRA topped-up net initial yield (%)
5.38%
5.72%
6.05%
EPRA vacancy rate (%)
4.4%
4.7%
4.4%
EPRA cost ratio - including direct vacancy
costs (%)
18.7%
19.6%
17.8%
EPRA cost ratio - excluding direct vacancy
costs (%)
16.7%
17.5%
16.1%
EPRA capital expenditure (€m)
24.0
11.7
22.5
EPRA LTV (%)
37.3%
40.6%
41.2%
EPRA LTV including transfer taxes (%)
35.0%
38.1%
38.7%
8.1. EPRA earnings and earnings per share
The following table shows the relationship between net income
attributable to owners of the parent and net recurrent earnings per
share as defined by EPRA:3
(In millions of euros)
Dec 31, 2022
Jun 30, 2023
Dec 31, 2023
Net income attributable to owners of
the parent
43.1
30.4
53.4
Share of net income from associates and
joint ventures
and non-controlling interests
(amortization, depreciation and capital
gains or losses)
-0.3
-16.8
-16.0
Hedging ineffectiveness, banking default
risk, net impact of bond redemptions and hedging operations
26.7
6.7
10.6
Other operating income and expenses
-1.6
18.2
22.4
Depreciation and amortization
37.7
18.9
38.5
EPRA earnings
105.5
57.5
109.0
Average number of shares (basic)
93,384,221
93,252,895
93,305,357
EPRA earnings per share (€)
1.13
0.62
1.17
The calculation of the net recurrent earnings reported by
Mercialys is identical to that for the EPRA earnings. There are no
adjustments to be made between these two indicators.
8.2. EPRA net asset value (NRV, NTA, NDV)
(In millions of euros)
Dec 31, 2022
EPRA NRV
EPRA NTA
EPRA NDV
IFRS equity attributable to
shareholders
725.1
725.1
725.1
Includes 35 / Excludes 36:
i) Hybrid instruments
0.0
0.0
0.0
Diluted EPRA NAV
725.1
725.1
725.1
Includes35:
ii.a) Revaluation of IP
(if IAS 40 cost option is used)
1,005.6
1,005.6
1,005.6
ii.b) Revaluation of IPUC 37 (if IAS 40
cost option is used)
0.0
0.0
0.0
ii.c) Revaluation of other non-current
investments 38
17.5
17.5
17.5
iii) Revaluation of tenant leases held as
finance leases 39
0.0
0.0
0.0
iv) Revaluation of trading properties
40
0.0
0.0
0.0
EPRA diluted NAV at fair value
1,748.2
1,748.2
1,748.2
Excludes36:
v) Deferred tax in relation to fair value
gains of IP 41
0.0
0.0
vi) Fair value of financial
instruments
-26.1
-26.1
vii) Goodwill as a result of deferred
tax
0.0
0.0
0.0
viii.a) Goodwill as per the IFRS balance
sheet
0.0
0.0
viii.b) Intangibles as per the IFRS
balance sheet
-3.4
Includes35:
ix) Fair value of fixed interest rate
debt
205.2
x) Revaluation of intangibles to fair
value
0.0
xi) Real estate transfer tax 42
194.2
0.0
NAV
1,916.4
1,718.7
1,953.4
Fully diluted number of shares at end of
period
93,286,271
93,286,271
93,286,271
NAV per share (in euros)
20.54
18.42
20.94
(In millions of euros)
Jun 30, 2023
EPRA NRV
EPRA NTA
EPRA NDV
IFRS equity attributable to
shareholders
663.2
663.2
663.2
Includes43 / Excludes44:
i) Hybrid instruments
0.0
0.0
0.0
Diluted EPRA NAV
663.2
663.2
663.2
Includes 43:
ii.a) Revaluation of IP
(if IAS 40 cost option is used)
929.0
929.0
929.0
ii.b) Revaluation of IPUC45 (if IAS 40
cost option is used)
0.0
0.0
0.0
ii.c) Revaluation of other non-current
investments 46
13.1
13.1
13.1
iii) Revaluation of tenant leases held as
finance leases 47
0.0
0.0
0.0
iv) Revaluation of trading properties
48
0.1
0.1
0.1
EPRA diluted NAV at fair value
1,605.4
1,605.4
1,605.4
Excludes 44:
v) Deferred tax in relation to fair value
gains of IP 49
0.0
0.0
vi) Fair value of financial
instruments
-19.1
-19.1
vii) Goodwill as a result of deferred
tax
0.0
0.0
0.0
viii.a) Goodwill as per the IFRS balance
sheet
0.0
0.0
viii.b) Intangibles as per the IFRS
balance sheet
-3.1
Includes 43:
ix) Fair value of fixed interest rate
debt
146.1
x) Revaluation of intangibles to fair
value
0.0
xi) Real estate transfer tax 50
187.1
0.0
NAV
1,773.4
1,583.2
1,751.5
Fully diluted number of shares at end of
period
93,178,472
93,178,472
93,178,472
NAV per share (in euros)
19.03
16.99
18.80
(In millions of euros)
Dec 31, 2023
EPRA NRV
EPRA NTA
EPRA NDV
IFRS equity attributable to
shareholders
677.2
677.2
677.2
Includes51 / Excludes52:
i) Hybrid instruments
0.0
0.0
0.0
Diluted EPRA NAV
677.2
677.2
677.2
Includes51:
ii.a) Revaluation of IP
(if IAS 40 cost option is used)
843.8
843.8
843.8
ii.b) Revaluation of IPUC 53 (if IAS 40
cost option is used)
0.0
0.0
0.0
ii.c) Revaluation of other non-current
investments 54
10.9
10.9
10.9
iii) Revaluation of tenant leases held as
finance leases 55
0.0
0.0
0.0
iv) Revaluation of trading properties
56
0.0
0.0
0.0
EPRA diluted NAV at fair value
1,532.0
1,532.0
1,532.0
Excludes52:
v) Deferred tax in relation to fair value
gains of IP 57
0.0
0.0
vi) Fair value of financial
instruments
-9.2
-9.2
vii) Goodwill as a result of deferred
tax
0.0
0.0
0.0
viii.a) Goodwill as per the IFRS balance
sheet
0.0
0.0
viii.b) Intangibles as per the IFRS
balance sheet
-3.1
Includes51:
ix) Fair value of fixed interest rate
debt
62.6
x) Revaluation of intangibles to fair
value
0.0
xi) Real estate transfer tax 58
179.7
0.0
NAV
1,702.5
1,519.7
1,594.6
Fully diluted number of shares at end of
period
93,278,112
93,278,112
93,278,112
NAV per share (in euros)
18.25
16.29
17.10
8.3. EPRA Net Initial Yield and EPRA “topped-up” Net Initial
Yield
The following table presents the transition between the yield
rate reported by Mercialys and the yield rates defined by
EPRA:
(In millions of euros)
Dec 31, 2022
Jun 30, 2023
Dec 31, 2023
Investment property – wholly owned
2,896.9
2,799.8
2,692.3
Assets under development (-)
0.0
0.0
0.0
Completed property portfolio excluding
transfer taxes
2,896.9
2,799.8
2,692.3
Transfer taxes
194.2
187.1
179.7
Completed property portfolio including
transfer taxes
3,091.2
2,987.0
2,872.0
Annualized rental revenues
170.9
175.9
178.8
Non-recoverable expenses (-)
-7.3
-7.6
-7.4
Annualized net rents
163.6
168.3
171.4
Topped-up net annualized rent
166.4
170.8
173.7
EPRA net initial yield
5.29%
5.63%
5.97%
EPRA “Topped-up” Net Initial
Yield
5.38%
5.72%
6.05%
8.4. EPRA vacancy rate
The vacancy rate is calculated based on: rental value of vacant
units / (annualized minimum guaranteed rent on occupied units +
rental value of vacant units).
The EPRA vacancy rate was 4.4% at end-December 2023, showing an
improvement compared with the end of June 2023 (4.7%) and stable
compared with the level recorded at end-December 2022. “Strategic”
vacancies following decisions to facilitate extension or
redevelopment plans represent 150bp within this vacancy rate.
(In millions of euros)
Dec 31, 2022
Jun 30, 2023
Dec 31, 2023
Rental value of vacant units
7.9
8.6
8.2
Rental value of the entire portfolio
177.3
182.8
185.5
EPRA vacancy rate
4.4%
4.7%
4.4%
8.5. EPRA cost ratios
(In millions of euros)
Dec 31, 2022
Jun 30, 2023
Dec 31, 2023
Comments
Administrative and operating expense line
per IFRS income statement
-25.0
-11.7
-24.6
Personnel expenses
and other costs
Net service charge costs / fees
-7.3
-5.1
-5.9
Property taxes and non-recovered
service charges (including vacancy costs)
Rental management fees
-3.0
1.4
3.1
Rental management fees
Other income and expenses
2.9
-2.0
-4.3
Other property operating income
and expenses excluding management fees
Share of joint venture administrative
and operating expenses
0.0
0.0
0.0
Total
-32.3
-17.3
-31.7
Adjustments to calculate the EPRA cost
ratio exclude (if included above):
- Depreciation and amortization
0.0
0.0
0.0
Depreciation and provisions for
fixed assets
- Ground rent costs
0.0
0.0
0.0
Non-group rents paid
- Service charges recovered through
comprehensive invoicing (with rent)
0.0
0.0
0.0
EPRA costs (including vacancy costs)
(A)
-32.3
-17.3
-31.7
A
Direct vacancy costs 59
3.4
1.9
3.0
EPRA costs (excluding vacancy costs)
(B)
-28.9
-15.4
-28.7
B
Gross rental revenues less ground rent
costs 60
173.3
88.2
178.0
Less costs relating to
construction leases and long-term ground leases
Less: service fee and service charge cost
components of gross rental revenues
0.0
0.0
0.0
Plus: share of joint ventures’ gross
rental revenues (less ground rent costs)
0.0
0.0
0.0
Rental revenues (C)
173.3
88.2
178.0
C
EPRA cost ratio including direct
vacancy costs
-18.7%
-19.6%
-17.8%
A / C
EPRA cost ratio excluding direct
vacancy costs
-16.7%
-17.5%
-16.1%
B / C
8.6. EPRA capital expenditure
The following table presents the property-related capital
expenditure for the period:
(In millions of euros)
Dec 31, 2022
Jun 30, 2023
Dec 31, 2023
Group (excluding joint
ventures)
Joint ventures (proportionate
share)
Group total
Group (excluding joint
ventures)
Joint ventures (proportionate
share)
Group total
Group (excluding joint
ventures)
Joint ventures (proportionate
share)
Group total
Acquisitions
9.4
0
9.4
1.1
0
1.1
2.2
0
2.2
Developments
0.4
0
0.4
0.3
0
0.3
2.1
0
2.1
Investment property
12.3
0
12.3
10.0
0
10.0
17.7
0
17.7
Incremental lettable space
5.2
0
5.2
1.2
0
1.2
4.8
0
4.8
No incremental lettable space
5.1
0
5.1
6.4
0
6.4
9.2
0
9.2
Tenant incentives
1.6
0
1.6
2.2
0
2.2
3.0
0
3.0
Other material non-allocated
types of expenditure
0.5
0
0.5
0.1
0
0.1
0.7
0
0.7
Capitalized interest (if applicable)
0.9
0
0.9
0.0
0
0.0
0.0
0
0.0
Total investment
23.0
0
23.0
11.3
0
11.3
22.0
0
22.0
Conversion from accrual to cash basis
1.0
0
1.0
0.4
0.0
0.4
0.5
0
0.5
Total CapEx on cash basis
24.0
0
24.0
11.7
0.0
11.7
22.5
0
22.5
Capital expenditure relating to investment property
includes:
- under “incremental lettable space”, primarily work relating to
the traditional project portfolio (shopping center transformations,
mixed-use urban projects);
- under “no incremental lettable space”, primarily maintenance
capex;
- under “other material non-allocated types of expenditure”,
expenditure relating to the Company’s IT, its marketing and digital
ecosystem, and its CSR approach.
8.7. EPRA LTV
The following table details the loan-to-value (LTV) ratio, as
determined by EPRA. This indicator differs from the calculation
carried out by the Company, as presented above, which also
represents the reference for the various bank covenants.
Ratio at December 31, 2022
(In millions of euros)
Group
Share of
joint-ventures
Non-controlling
interests
Total
Includes
Borrowings from financial institutions
-
40.7
0.6
41.2
Commercial paper
112.0
-
112.0
Hybrids
-
-
-
Bond loans
1,144.2
-
1,144.2
Foreign currency derivatives (futures,
swaps, options and forwards)
-21.0
-
-21.0
Net payables
-
Owner-occupied property (debt)
-
Current accounts (equity
characteristic)
-
Exclude
Cash and cash equivalents:
-216.0
-4.2
11.3
-208.9
Net debt (a)
1,019.2
36.5
11.9
1,067.6
Includes
Owner-occupied property:
-
-
-
Investment properties at fair value:
2,896.9
95.0
-173.0
2,818.9
Properties held for sale
-
Properties under development
-
-
-
Intangibles
3.4
3.4
Net receivables
18.7
-0.0
-1.6
17.1
Financial assets
26.1
-4.6
21.4
Total property value (b)
2,945.1
90.4
-174.6
2,860.8
EPRA LTV (a) / (b)
37.3%
Real estate transfer taxes (c)
194.2
6.7
-12.0
189.0
EPRA LTV including real estate transfer
taxes (a) / (b) + (c)
35.0%
Ratio at June 30, 2023
(In millions of euros)
Group
Share of
joint-ventures
Non-controlling
interests
Total
Includes
Borrowings from financial institutions
40.9
0.5
41.5
Commercial paper
52.0
52.0
Hybrids
Bond loans
1,138.3
1,138.3
Foreign currency derivatives (futures,
swaps, options and forwards)
-16.1
-16.1
Net payables
Owner-occupied property (debt)
Current accounts (equity
characteristic)
Exclude
Cash and cash equivalents:
-91.7
-4.0
7.6
-88.2
Net debt (a)
1,082.5
36.9
8.2
1,127.5
Includes
Owner-occupied property:
Investment properties at fair value:
2,799.8
90.1
-156.5
2,733.4
Properties held for sale
Properties under development
Intangibles
3.1
3.1
Net receivables
23.0
0.6
-1.4
22.2
Financial assets
23.6
-4.6
18.9
Total property value (b)
2,849.5
86.0
-157.9
2,777.6
EPRA LTV (a) / (b)
40.6%
Real estate transfer taxes (c)
187.1
6.3
-10.8
182.7
EPRA LTV including real estate transfer
taxes (a) / (b) + (c)
38.1%
Ratio at December 31, 2023
(In millions of euros)
Group
Share of
joint-ventures
Interests held
Non-controlling
interests
Total
Includes
Borrowings from financial institutions
-
40.7
-0.7
40.0
Commercial paper
42.0
-
42.0
Hybrids
-
-
-
Bond loans
1,139.8
-
1,139.8
Foreign currency derivatives (futures,
swaps, options and forwards)
-5.8
-
-5.8
Net payables
0.3
0.3
Owner-occupied property (debt)
-
Current accounts (equity
characteristic)
-
Exclude
Cash and cash equivalents:
-118.2
-4.3
12.3
-110.1
Net debt (a)
1,057.8
36.7
11.6
1,106.2
Includes
Owner-occupied property:
-
-
-
Investment properties at fair value:
2,692.3
87.1
-154.0
2,625.4
Properties held for sale
-
Properties under development
-
-
-
Intangibles
3.1
3.1
Net receivables
31.0
-
-1.3
29.7
Financial assets
23.5
-4.6
5.4
-
24.3
Total property value (b)
2,750.0
82.5
5.4
-155.3
2,682.5
EPRA LTV (a) / (b)
41.2%
Real estate transfer taxes (c)
179.7
6.2
-10.6
175.3
EPRA LTV including real estate transfer
taxes (a) / (b) + (c)
38.7%
_________________________________________________________
1 Like-for-like change 2 Subject to approval by the General
Meeting on April 25, 2024 3 Ratio between rent, charges (including
marketing funds) and invoiced work (including tax) paid by
retailers and their sales revenue (including tax), excluding large
food stores. 4 The occupancy rate, as with Mercialys’ vacancy rate,
does not include agreements relating to the Casual Leasing
business. 5 Assets enter the like-for-like scope used to calculate
organic growth after being held for 12 months 6 Calculated based on
the average undiluted number of shares (basic), i.e. 93,305,357
shares 7 Impact of hedging ineffectiveness, banking default risk,
premiums, non-recurring amortization and costs relating to bond
redemptions, proceeds and costs from unwinding hedging operations 8
Net recurrent earnings = net income attributable to owners of the
parent before amortization, gains or losses on disposals net of
associated fees, any asset impairment and other non-recurring
effects 9 Sites on a constant scope and a constant surface area
basis 10 Added to these are two geographically dispersed assets
with a total appraisal value including transfer taxes of Euro 13.0
million. 11 Difference between the net book value of assets on the
balance sheet and their appraisal value excluding transfer taxes.
12 Including impact of revaluation of assets outside of organic
scope, equity associates, maintenance capex and capital gains or
losses on asset disposals 13 This rate does not include the net
expense linked to the non-recurring bond redemption premiums, costs
and amortization, as well as the proceeds and costs from unwinding
hedging operations 14 LTV (Loan To Value): net financial debt /
(portfolio market value excluding transfer taxes + market value of
investments in associates for Euro 45.1 million in 2023 and Euro
52.7 million in 2022, since the value of the portfolio held by
associates is not included in the appraisal value). 15 ICR
(Interest Coverage Ratio): EBITDA / net finance costs 16
investments to be committed for the pipeline correspond to the
Saint-Denis mixed-use urban project, north of Paris and coworking
spaces 17 Based on the weighted average number of shares over the
period adjusted for treasury shares Undiluted weighted average
number of shares in 2023 = 93,305,357 shares Fully diluted weighted
average number of shares in 2023 = 93,305,357 shares 18 Earnings
before interest, taxes, depreciation, amortization and other
operating income and expenses 19 Net recurrent earnings = net
income attributable to owners of the parent before amortization,
gains or losses on disposals net of associated fees, any asset
impairment and other non-recurring effects 20 Calculated based on
the average undiluted number of shares (basic), i.e. 93,305,357
shares 21 The occupancy rate, as with Mercialys’ vacancy rate, does
not include agreements relating to the Casual Leasing business. 22
In accordance with the EPRA calculation method: rental value of
vacant units / (annualized minimum guaranteed rent on occupied
units + rental value of vacant units). 23 Ratio between rent,
charges (including marketing funds) and invoiced work paid by
retailers and their sales revenue (excluding large food stores):
(rent + charges + reinvoiced work including tax) / sales revenue
including tax 24 Compensation paid by a tenant to modify the
purpose of their lease and be able to perform an activity other
than that originally specified in the lease agreement. 25 Earnings
before interest, tax, depreciation and amortization 26 In
accordance with the conditions for calculation set by the covenants
for the Company’s bank lines, net finance costs do not include the
net expense linked to the non-recurring bond redemption premiums,
costs and amortization, as well as the proceeds and costs from
unwinding hedging operations 27 Impact of hedging ineffectiveness,
banking default risk, premiums, non-recurring amortization and
costs relating to bond redemptions, proceeds and costs from
unwinding hedging operations 28 Calculated based on the average
undiluted number of shares (basic), i.e. 93,305,357 shares 29 Net
recurrent earnings correspond to net income before amortization,
gains or losses on disposals net of associated fees, potential
asset impairments and other non-recurring effects 30 Including the
market value of investments in associates for Euro 51.5 million for
2023 and Euro 52.7 million for 2022, since the value of the
portfolio held by associates is not included in the appraisal value
31 In accordance with the conditions for calculation set by the
covenants for the Company’s bank lines, net finance costs do not
include the net expense linked to the non-recurring bond redemption
premiums, costs and amortization, as well as the proceeds and costs
from unwinding hedging operations 32 Sites on a constant scope and
a constant surface area basis 33 Including the 2 dispersed assets.
34 European Public Real Estate Association 35 “Include” indicates
that an asset (whether on or off-balance sheet) should be added to
shareholders’ equity, whereas a liability should be deducted 36
“Exclude” indicates that an asset (part of the balance sheet) is
reversed, whereas a liability (part of the balance sheet) is added
back 37 Difference between development property held on the balance
sheet at cost and fair value of that development property 38
Revaluation of intangibles to be presented under adjustment (x)
Revaluation of intangibles to fair value and not under this line 39
Difference between finance lease receivables held on the balance
sheet at amortized cost and the fair value of those finance lease
receivables 40 Difference between trading properties held on the
balance sheet at cost (IAS 2) and the fair value of those trading
properties 41 Deferred tax adjustments are presented on page 15 of
the EPRA Best Practices Recommendations Guidelines 42 Real estate
transfer tax adjustments are presented on page 17 of the EPRA Best
Practices Recommendations Guidelines 43 “Include” indicates that an
asset (whether on or off-balance sheet) should be added to
shareholders’ equity, whereas a liability should be deducted 44
“Exclude” indicates that an asset (part of the balance sheet) is
reversed, whereas a liability (part of the balance sheet) is added
back 45 Difference between development property held on the balance
sheet at cost and fair value of that development property 46
Revaluation of intangibles to be presented under adjustment (x)
Revaluation of intangibles to fair value and not under this line 47
Difference between finance lease receivables held on the balance
sheet at amortized cost and the fair value of those finance lease
receivables 48 Difference between trading properties held on the
balance sheet at cost (IAS 2) and the fair value of those trading
properties 49 Deferred tax adjustments are presented on page 15 of
the EPRA Best Practices Recommendations Guidelines 50 Real estate
transfer tax adjustments are presented on page 17 of the EPRA Best
Practices Recommendations Guidelines 51 “Include” indicates that an
asset (whether on or off-balance sheet) should be added to
shareholders’ equity, whereas a liability should be deducted 52
“Exclude” indicates that an asset (part of the balance sheet) is
reversed, whereas a liability (part of the balance sheet) is added
back 53 Difference between development property held on the balance
sheet at cost and fair value of that development property 54
Revaluation of intangibles to be presented under adjustment (x)
Revaluation of intangibles to fair value and not under this line 55
Difference between finance lease receivables held on the balance
sheet at amortized cost and the fair value of those finance lease
receivables 56 Difference between trading properties held on the
balance sheet at cost (IAS 2) and the fair value of those trading
properties 57 Deferred tax adjustments are presented on page 15 of
the EPRA Best Practices Recommendations Guidelines 58 Real estate
transfer tax adjustments are presented on page 17 of the EPRA Best
Practices Recommendations Guidelines 59 The EPRA cost ratio deducts
all vacancy costs for assets undergoing development / refurbishment
if they have been expensed. The costs that can be excluded are
property taxes, service charges, contributions to marketing costs,
insurance premiums, carbon tax, and any other costs directly
related to the property. 60 Gross rental revenues should be
calculated after deducting any ground rent payable. All service
charges, management fees and other income in respect of property
expenses must be added and not deducted. If the rent includes
service charges, these should be restated to exclude them. Tenant
incentives may be deducted from rental income, whereas any other
costs should be recognized in line with IFRS requirements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240214666106/en/
Analyst and investor Olivier Pouteau Tel: +33 (0)6 30 13
27 31 Email: opouteau@mercialys.com
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