- In a particularly challenging environment, Mercialys once again
showed the resilience of its business model and is reporting
results that are in line with its full-year objectives.
- Household consumption remained positive during the first half
of the year (+0.2%) despite the gradual phasing out of the
government measures to support purchasing power and a certain
number of adverse events which weighed on retail trends in France
(demonstrations against the proposed pension reforms, temporary
blockade of certain fuel depots, inflation peak, particularly for
food products, riots, deferral of the summer sales period).
- Retailer sales for the first half of the year came to
+3.5% compared with the first half of 2022. Shopping center
footfall is up +2.3% from end-June 2022. These optimized
trips by consumers are reflected in a regular increase in the
average basket (+5.8% per year on average between 2018 and
2022).
- The average occupancy cost ratio for tenant retailers
was 10.9% for the first half of 2023, down slightly from the end of
2022 (11.1%) factoring in the change in the retail mix. This level
illustrates the sustainability of rents for retailers and the
attractive positioning of Mercialys’ sites despite an indexation
effect of +3.8% and a rental reversion rate of +1.1%.
- The increase in the current financial vacancy
rate remained effectively under control, up from 2.9% at
end-2022 to 3.3% at end-June 2023, linked primarily to the retailer
Camaïeu going into liquidation. To date, nearly 60% of the rents
corresponding to this brand have been relet. Excluding the impact
linked to Camaïeu, the current financial vacancy rate would be
virtually stable for the first half of the year.
- Invoiced rents are up +2.1%, with +4.2%
like-for-like.
- Recurrent earnings (FFO) at end-June 2023 are stable
compared with the first half of 2022 at Euro 57.5 million. The
basis for comparison at June 30, 2022 incorporated various elements
relating to the health crisis representing Euro +5.7 million of net
income. FFO at end-June 2023 includes a non-significant amount of
net income in relation to this for Euro +0.4 million. On a basis
restated for the non-recurring impacts linked to the health crisis,
with these impacts to fade in 2023, FFO at end-June 2023 shows
an increase of +10.3%.
- The increase in appraisal yield rates to 6.21% (vs. 5.75% at
end-December 2022) resulted in a contraction in the portfolio value
to Euro 2,987 billion including transfer taxes, down -3.4%
like-for-like versus December 31, 2022. The average appraisal yield
rate shows a significant spread of nearly 330bp above the risk-free
rate (10-year OAT) at end-June.
- The LTV ratio came to 36.1%, reflecting a solid balance
sheet structure and enabling the Company to capitalize on
opportunities for growth.
- 2023 objectives: Following the solid performance levels
achieved over the first half of the year, Mercialys is able to
confirm its objectives for recurrent earnings (FFO) per share
growth of at least +2.0% versus 2022 and a dividend ranging from
85% to 95% of 2023 FFO.
Regulatory News:
Mercialys (Paris:MERY):
June 30, 2022
June 30, 2023
Change (%)
Organic growth in invoiced rents including
indexation
+5.3%
+4.2%
-
EBITDA (€m)
75.3
72.3
-3.9%
EBITDA margin
87.0%
82.0%
-
Recurrent earnings, FFO (€m)
57.5
57.5
+0.0%
ICR (EBITDA / net finance costs)
6.1x
5.2x
-
LTV (excluding transfer taxes)
36.6%
38.6%
-
LTV (including transfer taxes)
34.3%
36.1%
-
Portfolio value including transfer taxes
(€m)
3,122.8
2,987.0
-4.2% 1
EPRA NRV (€/share)
20.35
19.03
-6.5%
EPRA NDV (€/share)
19.65
18.80
-4.3%
I. Solid results, built around a resilient
asset portfolio
The first half of 2023 was widely marked by various elements
linked to the macroeconomic environment. Inflation began to cool in
May (+5.1%) and June (+4.5%), down from a high of +6.3% in
February2. However, food inflation continues to be high (+13.7% at
end-June), weighing on household purchasing power in the short term
and indirectly affecting their plans to make purchases. According
to an Odoxa survey from April 2023, the index for confidence in the
future is down to an all-time low, reflected in consumers making
tradeoffs at the expense of discretionary spending, as well as
switches within categories to cheaper products.
In this environment, Mercialys’ positioning is even more
relevant, built around the accessibility of its offering, with a
retail mix that is designed to satisfy consumers’ day-to-day
needs.
These changes can be seen in retail trends in France during the
first half of the year, particularly with contrasting changes in
household consumption (-0.8% in March and April and +0.5% in May)
according to INSEE. Nevertheless, it is expected to remain stable
over the full year in 2023 according to Banque de France.
Specifically, French households are benefiting from resources
derived from the surplus savings built up during the health crisis
in 2020-2021 and are not being affected by the increase in interest
rates in terms of their mortgages as the vast majority are based on
fixed rates.
In this context, shopping center footfall levels and retailer
sales3 performed well, highlighting the resilience of Mercialys’
model focused on satisfying essential needs at affordable prices
for as many people as possible.
Total footfall across Mercialys’ sites for the first half of
2023 is down -2.0% versus the same period in 2022, compared with a
+3.7% increase for the Quantaflow national index. This performance
masks a significant differential between the footfall in Mercialys’
shopping centers, which recorded growth of +2.3%, and the
performance by the hypermarkets anchoring these sites, where
footfall contracted sharply by -8.9%. This marked decorrelation
illustrates clients’ different retail journeys, with the centers
benefiting from their specific attractive features (diverse
selection of retailers, number, price positioning, etc.).
The robust trend - excluding hypermarkets - is also reflected in
the sales recorded by tenant retailers, up +3.5% for the
first half of 2023. At end-May 2023, retailer sales growth came to
+3.4%, while the national panel (FACT) increased by +5.2%.
The differential in favor of the national panel is linked
primarily to a stronger upturn, within the national panel, for
large shopping centers, which had been affected by the requirement
for vaccine passes in restaurants through to the end of the first
quarter of 2022.
Over the last five years, the average basket for clients across
Mercialys’ scope increased by nearly +25% (+5.8% per year on
average), illustrating the attractive retail mix offered on the one
hand and, on the other hand, the more efficient shopping trips
made, which are prepared beforehand, and lastly, following a more
recent development, the impact of inflation.
Based on these resilient foundations, which highlight the deep
anchoring of physical retail in day-to-day life for French
consumers, Mercialys achieved solid results.
The occupancy cost ratio4 remained at a very sustainable
level of 10.9% at end-June 2023, compared with 10.7% at June 30,
2022 and 11.1% at December 31, 2022. The slight drop in this
indicator compared with end-2022 factors in the change in the
retail mix, reflecting the Company’s rental policy aimed at
maintaining its sites’ leading positions through an adapted
offering, while ensuring the continued accessibility and
sustainability of rents.
The current financial vacancy rate5 - which excludes
“strategic” vacancies following decisions to facilitate the
deployment of extension and redevelopment plans – was 3.3% for the
first half of 2023, up from the 2.9% recorded at end-June 2022 and
December 31, 2022 in line with the expectations published in
February 2023, after the retailer Camaïeu went into liquidation.
This retailer represented 0.9% of Mercialys rental base. At
end-June, seven stores had been relet, representing more than 45%
of the rents concerned, alongside outline agreements signed on two
stores (i.e. 15% of the rents). Positive reversion of +9% was
achieved on this combined scope. Excluding the vacancies linked to
Camaïeu, with their impact representing 30bp, the current financial
vacancy rate would be virtually stable at end-June 2023.
The robust letting performance is illustrated by the 65 leases
signed for renewals or relettings during the first half of 2023.
The reversion rate associated with these negotiations was
+1.1%.
Mercialys’ strategy to further strengthen the affordable retail
mix for visitors was illustrated for instance by the leases signed
during the first half of the year with Rituals (health/beauty) in
the Brest, Nîmes and Angers shopping centers, as well as Primaprix
(clearance) at Paris Massena, Comptoir de Mathilde (delicatessen)
in Quimper and Annecy, Darty in Angers and several local retailers
in Nîmes and Montpellier.
Invoiced rents came to Euro 87.9 million, up +2.1% on a
current basis and +4.2% like-for-like. These changes reflect the
following elements:
Year to end-June 2022
Year to end-June 2023
Indexation
+1.9 pp
+€1.6m
+3.8 pp
+€3.2m
Contribution by Casual Leasing
+1.6 pp
+€1.3m
-0.2 pp
-€0.2m
Contribution by variable rents
+0.1 pp
+€0.1m
+1.7 pp
+€1.4m
Actions carried out on the portfolio
+0.3 pp
+€0.2m
-1.5 pp
-€1.3m
Accounting impact of “Covid-19 rent
relief” granted to retailers
+1.4 pp
+€1.1m
+0.5 pp
+€0.4m
Like-for-like growth
+5.3 pp
+€4.4m
+4.2 pp
+€3.6m
Asset acquisition and sales
-2.0 pp
-€1.6m
-2.0 pp
-€1.7m
Other effects
-0.1 pp
-€0.1m
-0.1 pp
-€0.1m
Growth (current basis)
+3.2 pp
+€2.7m
+2.1 pp
+€1.8m
Organic growth6 in rental income for the first half of
2023 came to +4.2%, including an indexation effect of +3.8%.
Faced with the context of persistent inflation, the capping of
indexation for SMEs set by a law adopted in August 2022 was
extended through to March 31, 2024 by a new law introduced in June
2023. This measure is expected to concern around 25% of Mercialys’
rental base. Taking into account the requests from the tenants
concerned, the impact of this cap reduced the indexation effect
published by around -10bp for the first half of 2023.
The actions carried out on the portfolio had a Euro -1.3 million
impact on organic growth, linked in particular to the impact of
financial vacancies. However, the good performance levels achieved
with lettings are expected to support organic growth over the
medium term. Similarly, the contribution by variable rents is up
Euro +1.4 million, contributing +1.7 points to organic growth over
the period, which also reflects the good level of business for
tenants.
The scope effects had a Euro -1.7 million impact on first-half
rental income, linked primarily to the impact of 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 totaled Euro 88.2 million, up +2.0% from
the first half of 2022, reflecting the growth in invoiced
rents.
Net rental income is down -2.9% to Euro 82.6 million. The
first half of 2022 benefited from Euro +5.7 million of net income
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 +6.6 million and,
alongside this, a Euro -0.8 million expense resulting from rent
relief. However, at end-June 2023, the impact relating to this
exceptional situation was very limited, representing Euro +0.4
million, split between a Euro -0.4 million expense relating to
relief on the rent billed and a reversal of provisions relating to
the arrears resulting directly from the health crisis for Euro +0.8
million. Excluding these non-recurring items intended to spread the
impacts associated with the health crisis, net rental income would
be up +3.6%.
Factoring in this high base effect, EBITDA totaled Euro
72.3 million, down -3.9% compared with June 30, 2022. The EBITDA
margin represents 82.0% (vs. 83.2% at December 31, 2022 and 87.0%
at June 30, 2022).
The net financial expenses used to calculate recurrent
earnings (FFO)7 came to Euro -13.7 million at June 30, 2023,
compared with Euro -14.2 million at end-June 2022, benefiting from
the financial restructuring operations carried out during the first
quarter of 2022. Alongside this, the real average cost of drawn
debt increased slightly compared with end-June 2022 (1.7%) and
end-December 2022 (2.0%) to 2.1%. This change is linked mainly to
the fixed/floating rate products extinguished, helping further
strengthen debt hedging, up from 87% at end-June 2022 to 96%.
Other operating income and expenses (excluding capital
gains on disposals and impairment) represent Euro 3.4 million of
income (versus Euro 0.8 million of net income for the first half of
2022), linked primarily to the impact of the 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.
Taxes represented a Euro -0.3 million expense at end-June
2023, stable compared with the first half of 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, amortization and impairment)
came to Euro 1.8 million at June 30, 2023, also stable compared
with June 30, 2022.
Non-controlling interests (excluding capital gains,
amortization and impairment) came to Euro -5.4 million at June 30,
2023, in line with the first half of 2022.
In view of these elements, recurrent earnings (FFO7) are
stable compared with June 30, 2022 at Euro 57.5 million, with Euro
0.62 per share8, up +0.3%. As indicated above, the basis for
comparison at June 30, 2022 benefited from Euro +5.7 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-June
2023. FFO restated for these non-recurring items would be up
+10.3%.
(In thousands of euros)
June 30, 2022
June 30, 2023
Change (%)
Invoiced rents
86,087
87,910
+2.1%
Lease rights and despecialization
indemnities
364
254
-30.1%
Rental revenues
86,450
88,164
+2.0%
Non-recovered building service charges and
property taxes and other net property operating expenses
(1,441)
(5,599)
-
Net rental income
85,009
82,564
-2.9%
Management, administrative and other
activities income
1,208
1,412
+17.0%
Other income and expenses
(1,620)
(1,904)
+17.5%
Personnel expenses
(9,346)
(9,789)
+4.7%
EBITDA
75,251
72,284
-3.9%
EBITDA margin (% of rental revenues)
87.0%
82.0%
-
Net financial items (excluding
non-recurring items 9)
(14,162)
(13,698)
-3.3%
Reversals of / (Allowances for)
provisions
(522)
(658)
+25.9%
Other operating income and expenses
(excluding capital gains on disposals and
impairment)
766
3,396
-
Tax expense
(339)
(265)
-21.9%
Share of net income from associates and
joint ventures (excluding capital gains, amortization and
impairment)
1,836
1,799
-2.0%
Non-controlling interests
(excluding capital gains, amortization and
impairment)
(5,367)
(5,404)
+0.7%
Recurrent earnings (FFO)
57,461
57,453
+0.0%
Recurrent earnings (FFO) per share8 (in
euros)
0.61
0.62
+0.3%
II. Food anchoring to diversify the rental
risk represents a strong conviction for Mercialys
Mercialys’ portfolio has been structured around recurrent
consumption, for which the essential features of the products
offered and their accessibility are decisive factors. Food retail,
through the ownership of hypermarkets that are, to date, operated
exclusively by the Casino group, which represents 21.4% of
Mercialys’ rental base, is perfectly aligned with this
approach.
Mercialys’ rental exposure to large food stores is split
between:
- five food stores (including one Monoprix store) operated by
Casino and fully owned by Mercialys - five food stores operated by
Casino and 60% owned by Mercialys - 10 food stores operated by
Casino and 51% owned by Mercialys
Taking into account the share of rental income depending on how
assets are held through these various entities, and reintegrating a
25% share of rental income for the five food stores (three Monoprix
stores and two Géant Casino hypermarkets) held by SCI AMR (in which
Amundi has a 75% stake), Mercialys’ economic exposure to rent from
retailers operated by the Casino Group comes to 18.3%.
Exposure to large food stores represents a strong conviction at
the heart of Mercialys’ retail mix strategy. The recurrence of
visits to hypermarkets and this activity’s essential positioning in
the day-to-day lives of households are important factors for
ensuring the sustainability of the rents associated with this type
of real estate. This conviction is one of the reasons why Mercialys
stands out in the retail property company landscape in Europe. In
addition, consumption habits have changed, moving towards an
increased specialization of retailers, often making hypermarkets’
non-food lines less relevant. The spaces are becoming too big,
opening up opportunities for restructuring operations to benefit
the shopping centers by creating new spaces for stores or mid-size
units and further strengthening the sites’ leading positions. This
transformation and reletting work is one of the Company’s
longstanding areas of expertise and offers potential for positive
reversion over time. As the current average size of the
hypermarkets owned by Mercialys is over 12,000 sq.m, their
restructuring to move towards a more optimized size of 9,000 sq.m
would result in the transformation of around 90,000 sq.m of
shopping center space.
At the same time, Mercialys is gradually, but regularly, scaling
back its exposure to Casino as its primary tenant, thanks in
particular to the asset rotations carried out since 2018,
illustrated most recently by the sale of two Géant Casino stores in
April 2022 (see section I of this press release).
On May 26, 2023, the Casino group announced that it was opening
conciliation proceedings with its financial creditors. Mercialys is
not in any way concerned by these proceedings and confirms that, to
date, the Casino group is paying its rents in accordance with its
contractual commitments.
On May 26, 2023, Casino also announced that it had signed a
memorandum of understanding with Groupement Les Mousquetaires to
extend their partnerships and optimize their respective networks.
This agreement provides for Casino to sell Groupement Les
Mousquetaires (Intermarché banner) a number of sales outlets from
the Casino France scope. The list of Géant stores to be transferred
to Intermarché over the next three years, resulting in a change of
retailer, has been published in the press. The Mercialys sites
concerned by this takeover are as follows: Vals-près-le-Puy,
Tours-La Riche, Besançon, Albertville, Montpellier, Millau and
Valence. Mercialys owns 51% of the Le Puy hypermarket (BNP Real
Estate has a 49% stake) and 25% of the Besançon hypermarket (75%
owned by Amundi). These banner transfers will contribute to the
diversification of both Mercialys’ rental base and the food
anchoring of sites within its portfolio.
III. Capacity to position itself on
operations for growth
One of the major operational challenges for Mercialys, in an
uncertain consumption environment, is to develop the attractiveness
of its sites with a view to extracting their value and facilitating
their rotation over time.
Mercialys did not carry out any sales operations during the
first half of 2023. Building on its very solid financial structure,
the Company will maintain its highly opportunistic approach to
potential sales, which would primarily concern assets that have
reached their maturity or would help reduce the rental portfolio’s
exposure to the Casino group.
Mercialys also has headroom in place enabling it to position
itself on new investments. These investments may concern the Euro
471 million pipeline of projects already identified (see below), as
well as acquisitions of assets or developments incorporating
property development margins. 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
mixed-use operations. The increase in borrowing rates implies a
highly selective approach for projects or acquisitions, 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 such as
food) and geographic location.
To further strengthen its expertise relating to consumer trends,
Mercialys took part in the round of fundraising carried out by the
DEPUR group in July 2023, which is specialized in the design and
execution of major Food & Beverage & Entertainment
(F&B&E) projects. Mercialys acquired a major stake through
this round of fundraising, alongside Bouygues Immobilier and the
BPI’s tourism/leisure fund, and will become a leading shareholder
in the DEPUR group, with just below 23% of its capital for an
investment of €1.1m. DEPUR’s approach involves structuring in one
place a range of food and beverage and entertainment services
combined with a customer experience that extends well beyond
culinary know-how.
Thanks to the funds raised with this operation, DEPUR will have
resources 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.
(In millions of euros)
Total investment
Investment still to be
committed
Completion date
COMMITTED PROJECTS10
20.2
18.8
2023 / 2026
Tertiary activities
20.2
18.8
2023 / 2026
CONTROLLED PROJECTS
148.4
143.3
2024 / 2025
Retail
129.9
125.0
2024 / 2025
Dining and leisure
3.5
3.4
2025
Tertiary activities
15.0
14.9
2024 / 2025
IDENTIFIED PROJECTS
302.1
301.9
2024 / 2028
Retail
172.3
172.2
2024 / 2028
Dining and leisure
100.9
100.9
2026 / 2028
Tertiary activities
28.9
28.9
2025 / 2027
TOTAL PROJECTS
470.6
464.1
2023 / 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
Around 35% of the investment projects concern dining, leisure
and tertiary activities, illustrating the diversification around
projects connected to the retail sector.
IV. Portfolio and financial
structure
The EPRA Net Disposal Value (NDV) shows a limited contraction
of -4.3% over 12 months, reflecting the impact of the interest rate
environment on the portfolio’s value.
Mercialys’ portfolio value came to Euro 2,987.0 million
including transfer taxes, down -3.4% over six months and -4.4% over
12 months. Like-for-like11, it is down -3.4% over six months and
-4.2% over 12 months. Excluding transfer taxes, the portfolio value
came to Euro 2,799.8 million, down -3.4% over six months and -4.5%
over 12 months. Like-for-like 11, it is down -3.4% over six months
and -4.3% over 12 months.
At end-June 2023, Mercialys’ portfolio mainly comprised 48
shopping centers12, with an average size of 16,100 sq.m and average
value of Euro 61.9 million.
The economic and financial assumptions retained by the
appraisers have not fundamentally changed from one half-year period
to another with regard to the long-term growth rate for rents or
the ratio for rents per square meter. However, the appraisers have
incorporated the impact of the increase in interest rates into
their appraisal rate, or have adjusted the risk premiums in order
to take into account a risk that is considered to be higher for the
rental income linked to the Casino group.
After taking into account these factors, the average
appraisal yield rate was 6.21% at June 30, 2023, up +46bp from
end-December 2022 (5.75%) and +50bp versus June 30, 2022 (5.71%),
and shows a positive yield spread of nearly 330bp compared with the
risk-free rate (10-year OAT) at end-June.
Looking beyond the changes resulting from the interest rate
context, the changes in the regulations include various elements
supporting the value of retail real estate in France. The French
“Climate and Resilience” Act, which was adopted in 2021 and
includes the target for “net zero artificialization”, is expected
to make the construction of new capacity considerably less frequent
from 2023.
The EPRA net asset value indicators are as follows:
EPRA NRV
EPRA NTA
EPRA NDV
Jun 30, 2022
Dec 31, 2022
Jun 30, 2023
Jun 30, 2022
Dec 31, 2022
Jun 30, 2023
Jun 30, 2022
Dec 31, 2022
Jun 30, 2023
€/share
20.35
20.54
19.03
18.24
18.42
16.99
19.65
20.94
18.80
Change over 6 months
-0.8%
+0.9%
-7.4%
-0.8%
+1.0%
-7.8%
+11.6%
+6.6%
-10.2%
Change over 12 months
+0.2%
+0.1%
-6.5%
-0.1%
+0.2%
-6.9%
+14.4%
+19.0%
-4.3%
The EPRA Net Disposal Value (NDV) came to Euro 1,751.5
million at end-June 2023 vs. Euro 1,834.6 million at end-June 2022.
Per share, it represents Euro 18.80 13, down -10.2% over six months
and -4.3% over 12 months. This indicator was positively impacted
during the second half of 2022 by the change in the fair value of
fixed-rate debt.
The Euro -2.14 per share change14 for the first half of this
year takes into account the following impacts:
- Dividend payment: Euro -0.96; - Recurrent earnings (FFO): Euro
+0.62 15; - Change in unrealized capital gains (i.e. difference
between the net book value of assets on the balance sheet and their
appraisal value excluding transfer taxes): Euro -0.89, including a
yield effect for Euro -2.30, a rent effect for Euro +1.24 and other
effects16 for Euro +0.16; - Change in fair value of fixed-rate
debt: Euro -0.63; - Change in fair value of derivatives and other
items: Euro -0.27.
Alongside this, Mercialys continues to benefit from a
particularly solid financial profile, with a loan to value (LTV)
ratio of 36.1% for the first half of 2023 and an ICR of
5.2x.
The real average cost of drawn debt 17 for the first half
of 2023 came to 2.1%, virtually stable compared with the 2.0%
recorded for the full year in 2022. In a context of significant
increases in interest rates from the first half of 2022, Mercialys
has further strengthened its hedging rate for its fixed-rate
debt, up to 96% for 2023 and 100% for 2024, compared with 87%
at end-June 2022. The fixing instruments set up and the
fixed/floating rate financial instruments extinguished will result
in an increase in the average cost of drawn debt, which will be
close to the average cost of bond debt (i.e. 2.6%) by the end of
2023.
Mercialys continues to benefit from a very healthy financial
structure, with an LTV ratio excluding transfer taxes18 of
38.6% at June 30, 2023 (compared with 35.3% at December 31, 2022
and 36.6% at June 30, 2022) and an LTV ratio including transfer
taxes of 36.1% on the same date (versus 33.0% at December 31,
2022 and 34.3% at June 30, 2022).
The ICR was 5.2x 19 at June 30, 2023, compared with 5.9x
at December 31, 2022 and 6.1x at June 30, 2022, significantly
higher than the minimum level of at least 2x set by the bank
covenants.
The Company’s debt refinancing operations carried out during the
first quarter of 2022 enabled Mercialys to record a satisfactory
maturity of 4.2 years at end-June 2023, with no bond issues due to
mature before February 2026.
Mercialys also has Euro 385 million of undrawn financing
resources, stable compared with end-December 2022, with the
maturity of 69% of them extended during the first half of 2023. The
average maturity of undrawn bank resources came to 3.0 years at
end-June 2023, representing an optimization of +0.9 years. In
addition, at end-June 2023, 100% of the undrawn bank lines included
ESG criteria, compared with just over 53% at end-2022.
Mercialys’ financial rating of BBB / outlook stable was
confirmed by Standard & Poor’s on February 24, 2023.
V. Outlook for 2023 confirmed
Considering the satisfactory performance levels achieved over
the first half of the year, Mercialys is able to confirm its
objectives for 2023:
- Growth in recurrent earnings (FFO) per share to reach at least
+2.0% vs. 2022;
- Dividend to range from 85% to 95% of 2023 FFO.
* * *
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 / Presentations and Investor Days
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 June 30, 2023, Mercialys
had a real estate portfolio valued at Euro 3.0 billion (including
transfer taxes). Its portfolio of 2,054 leases represents an
annualized rental base of Euro 172.8 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 June 30, 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.
APPENDIX TO THE PRESS RELEASE FINANCIAL
STATEMENTS
Consolidated income statement
(In thousands of euros)
Jun 30, 2022
Jun 30, 2023
Rental revenues
86,450
88,164
Service charges and property tax
(29,765)
(33,471)
Charges and taxes billed to tenants
25,389
28,418
Net property operating expenses
2,935
(546)
Net rental income
85,009
82,564
Management, administrative and other
activities income
1,208
1,412
Other income
424
0
Other expenses
(2,044)
(1,904)
Personnel expenses
(9,346)
(9,789)
Depreciation and amortization
(18,622)
(18,926)
Reversals of / (Allowances for)
provisions
(522)
(658)
Other operating income
74,212
5,399
Other operating expenses
(73,878)
(20,219)
Operating income
56,440
37,879
Income from cash and cash equivalents
19
1,296
Gross finance costs
(38,644)
(17,846)
(Expenses) / Income from net financial
debt
(38,625)
(16,550)
Other financial income
132
382
Other financial expenses
(1,628)
(4,252)
Net financial items
(40,121)
(20,420)
Tax expense
(339)
(196)
Share of net income from associates and
joint ventures
1,185
1,040
Consolidated net income
17,165
18,304
Attributable to non-controlling
interests
4,570
(12,137)
Attributable to owners of the
parent
12,595
30,441
Earnings per
share 20
Net income attributable to owners
of the parent (in euros)
0.13
0.33
Diluted net income attributable
to owners of the parent (in euros)
0.13
0.33
Consolidated statement of financial position
ASSETS (in thousands of euros)
Jun 30, 2023
Dec 31, 2022
Intangible assets
3,102
3,381
Property, plant and equipment other than
investment property
4,265
4,743
Investment property
1,880,215
1,907,148
Right-of-use assets
11,297
10,184
Investments in associates
35,268
35,203
Other non-current assets
46,964
50,219
Deferred tax assets
1,571
1,601
Non-current assets
1,982,683
2,012,478
Trade receivables
27,850
28,557
Other current assets
29,397
31,854
Cash and cash equivalents
91,724
216,085
Investment property held for sale
2,636
0
Current assets
151,606
276,496
Total assets
2,134,289
2,288,974
EQUITY AND LIABILITIES (in thousands of
euros)
Jun 30, 2023
Dec 31, 2022
Share capital
93,887
93,887
Additional paid-in capital, treasury
shares and other reserves
569,333
631,246
Equity attributable to owners of the
parent
663,219
725,132
Non-controlling interests
184,332
205,294
Shareholders’ equity
847,551
930,426
Non-current provisions
1,381
1,225
Non-current financial liabilities
1,130,373
1,131,974
Deposits and guarantees
24,513
23,622
Non-current lease liabilities
10,486
9,409
Other non-current liabilities
4,103
2,377
Non-current liabilities
1,170,856
1,168,607
Trade payables
16,327
13,910
Current financial liabilities
60,968
126,353
Current lease liabilities
1,221
1,084
Current provisions
10,467
13,279
Other current liabilities
26,899
35,237
Current tax liabilities
0
78
Current liabilities
115,882
189,941
Total equity and liabilities
2,134,289
2,288,974
1 Like-for-like change 2 INSEE 3 Mercialys’ large centers and
main convenience shopping centers based on a constant surface area,
representing over 80% of the value of the Company’s shopping
centers. 4 Ratio between rent, charges (included marketing funds)
and invoiced work (including tax) paid by retailers and their sales
revenue (including tax), excluding large food stores 5 The
occupancy rate, as with Mercialys vacancy rate, does not include
agreements relating to the Casual Leasing business. 6 Assets enter
the like-for-like scope used to calculate organic growth after
being held for 12 months 7 FFO: Funds From Operations = 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 8 Calculated based on the average
undiluted number of shares (basic), i.e. 93,252,895 shares 9 Impact
of hedging ineffectiveness, banking default risk, prices,
non-recurring amortization and costs relating to bond redemptions,
proceeds and costs from unwinding hedging operations 10 The
investments to be committed for the pipeline correspond to the
Saint-Denis mixed-use urban project, north of Paris, with an
expected IRR of over 8%, as well as coworking spaces 11 Sites on a
constant scope and a constant surface area basis 12 Added to these
are three geographically dispersed assets with a total appraisal
value including transfer taxes of Euro 15.0 million. 13 Calculation
based on the diluted number of shares at the end of the period, in
accordance with the EPRA methodology regarding the NDV 14
Calculation based on the diluted number of shares at the end of the
period 15 Calculation based on the diluted number of shares at the
end of the period, as this concerns the impact of FFO on the change
in NDV per share 16 Including impact of revaluation of assets
outside of organic scope, equity associates, maintenance capex and
capital gains on asset disposals 17 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 18 LTV (Loan To Value): Net financial
debt / (market value of the portfolio excluding transfer taxes +
market value of investments in associates for Euro 48.3 million at
June 30, 2023 and Euro 56.5 million at June 30, 2022, since the
value of the portfolio held by associates is not included in the
appraisal value) 19 ICR (Interest Coverage Ratio): EBITDA / net
finance costs 20 Based on the weighted average number of shares
over the period adjusted for treasury shares: - Undiluted weighted
average number of shares for the first half of 2023 = 93,252,895
shares - Fully diluted weighted average number of shares for the
first half of 2023 = 93,252,895 shares
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230726783823/en/
Analysts / investors / media contact: Olivier Pouteau
Tel: +33 (0)6 30 13 27 31 Email: opouteau@mercialys.com
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