Regulatory News:
Mercialys (Paris:MERY):
- Solid balance sheet and limited contraction in values.
The loan to value ratio (LTV) is 38.3% excluding transfer taxes,
and 36.0% including transfer taxes. The portfolio value is Euro
3,186 million including transfer taxes, down -2.2% over six months.
The average appraisal yield rate came to 5.74% vs. 5.72% at
end-December 2020. The EPRA NDV is down -6.8% over six months to
Euro 17.17 per share, reflecting the adjustment of the portfolio
value, the impact of the fair value recognition of fixed-rate debt,
and the increase in the number of shares outstanding following the
partial payment of the dividend in shares
- Business close to 2019 levels and positive trend for
retailer sales. Footfall levels for Mercialys centers, between
the reopening of stores on May 19 and June 30, 2021, reached 91% of
the pre-crisis activity level from 2019. Retailer sales for May
came in +8.4% higher than 2020, while June’s figures are up +5.6%,
confirming the continued appeal of physical retail. Retailers are
returning to robust development trends based on limited rent
adjustments
- The rollout of the government support measures in the second
half of 2021 is expected to normalize the rent collection
levels. The gross collection rate1 for 2020 increased by Euro
7.0 million during the first half of 2021 to reach 88.3%, of which
Euro 4.1 million for the 2nd and 3rd quarters of 2020. The rate for
the first half of 2021 is 75.0%, negatively affected by the
government-ordered closures and the timeframes for the French
government to put in place the retailer support measures that it
has committed to following the compulsory closures linked to the
third lockdown. However, the French government has made a public
commitment to put in place support packages, in addition to the
solidarity fund, that will notably enable retailers that were
ordered to close to honor their rent payments. As a result, no
receivables were written off for the first half of 2021
- Funds from operations (FFO) at end-June 2021 reflect the
impacts of the health crisis, the refinancing operation carried out
in July 2020 and the asset sales completed in December 2020.
Invoiced rents are down -4.0% like-for-like to Euro 83.4 million,
including the impact of the relief granted to tenants for the 2020
closures and the impact of the government-ordered closures on
business in 2021. Funds from operations are down -11.6% to Euro
55.7 million, including the full-year impact of the July 2020
refinancing and the asset sales finalized in December 2020
- 2021 objectives: excluding the impacts of a further
deterioration in the health situation, including the potential
impacts of the measures relating to the “health pass” (reduced
footfall, further weakening of retailers, likely drop in variable
rents and the contribution from Casual Leasing, and increase in
additional operating expenses), Mercialys expects its funds from
operations (FFO) per share to be at least stable in 2021 compared
with 2020
Jun 30, 2020
Jun 30, 2021
Change %
Organic growth in invoiced rents including
indexation and Covid-19 impacts
-0.8%
-4.0%
-
Spread between the year-on-year change in
footfall2
for Mercialys centers vs. the CNCC index3
(year to end-June)
+640bp
+60bp
-
Year-on-year change in sales2 for
Mercialys retailers (month of June)
+0.6%
+5.6%
-
Funds from operations, FFO (€m)
63.0
55.7
-11.6%
ICR (EBITDA / net finance costs)
10.6x
5.6x
-
LTV (excluding transfer taxes)
41.1%
38.3%
-
LTV (including transfer taxes)
38.6%
36.0%
-
Portfolio value including transfer taxes
(€m)
3,522.6
3,185.6
-9.6%
EPRA NDV (€ per share)
19.90
17.17
-13.7%
I. Shopping centers significantly impacted
by measures to tackle the health crisis during the first half of
2021, but operations have bounced back strongly since
reopening
The first half of 2021 continued to be widely marked by the
effects of the health crisis linked to Covid-19, impacting the
activity of Mercialys’ shopping centers due to the measures set out
by the public authorities as part of efforts to tackle the
epidemic.
These measures were stricter for the shopping centers than those
in force during the first lockdown in 2020.
On the one hand, due to the very long period of
government-ordered closures affecting the centers, from January 31
to May 19, 2021, i.e. 3.5 months (compared with less than two
months during the first half of 2020). This closure period was
preceded by curfews, which had already had a major impact on store
footfall levels from January 2, 2021.
On the other hand, due to its scale, with stronger restrictions
than in 2020 concerning the scope of stores authorized to open and
the gradual ban on click and collect activities between January 31
and May 19, 2021. Only 36% of Mercialys’ rental base was able to
continue trading during the strict lockdown period in 2021 (i.e.
from April 3 to May 19), compared with 40% and 50% respectively
during the first and second lockdowns in 2020.
On May 19, 2021, the French government authorized the reopening
of “non-essential” stores. Mercialys’ shopping centers were able to
once again welcome members of the public across their entire retail
space (excluding indoor sit-down dining), in accordance with strict
health protocols and restrictions on minimum space ratios. Indoor
restaurants have been able to reopen since June 9, 2021, subject to
various health measures and minimum space ratios. These
restrictions on minimum space ratios were lifted on June 30, 2021
for venues open to the public, and France has not been subject to
any curfew measures since June 20, 2021.
As in 2020, a significant upturn was seen when “non-essential”
stores reopened, reflecting French consumers’ strong expectations
for a return to physical consumption at sites offering, through
this relationship’s inherent human contact, a wide selection of
products that are available immediately.
Mercialys’ very strong performance at this time also reflects
its commercial expertise, and notably illustrates its understanding
of the stakes involved with providing reassurance, visibility and a
welcoming environment for these reopening phases.
From May 19, 2021, the Company rolled out an extensive
communications plan in order to support a preferential return for
its end customers within its centers. In addition to communicating
on the high level of standards applied regarding health aspects,
Mercialys has shared a clear, identifiable message about opening
up, as well as the retail selection, the services available and the
human relationship provided by its sites.
Supporting this dynamic approach, the Company has also rolled
out a major operation through Prim’Prim’, its proprietary and 100%
digital loyalty program. Built around a drive-to-store approach
from May 19 to June 22, 2021, and a stronger volume of loyalty
cashbacks, adapted vouchers and a retailer challenge, this
operation has directly benefited the transformation rate and sales
for the 920 retailers in the 24 centers that are part of the
loyalty program. Mercialys has observed that, on average, more than
Euro 8 of sales are generated for each euro of vouchers spent at
its centers. The digitalization of the loyalty program also enables
the Company to collect and analyze transaction details, with Euro
2.5 million of sales generated for its retailers by Prim’Prim’
customers through this operation. Combined with the ramping up of
recruitment for loyalty program members during this period (+30%
more qualified contacts recorded since reopening), it is further
strengthening the increasingly fine-grained understanding of end
customers’ specific needs and habits, supporting the performance of
both Mercialys and its tenants.
II. The accounts at end-June 2021 reflect
the impact of the support measures for 2020 and the closures in
2021
Impacts of the support measures granted to tenants for the
two lockdowns from 2020 on the accounts at end-June 2021
The continued health crisis linked to Covid-19 in 2021 impacted
the operational indicators for the first half of 2021, as detailed
in Point III of this press release.
The retailer support measures put in place by Mercialys in
connection with the two lockdown phases in 2020 also had impacts on
the accounts at June 30, 2021.
On the one hand, Mercialys had set a maximum support budget of
Euro 13.5 million to help its tenants faced with the
economic impacts of the first lockdown in 2020 (March 15 -
May 11). Euro 9.4 million had been agreed by end-2020, with the
remaining Euro 4.1 million corresponding to negotiations that had
not been completed by the end of the year. The accounts at end-June
2021 reflect the progress made with these negotiations as
follows:
- Euro 1.7 million of new relief
granted and to be awarded, with 100% recognized in the accounts at
June 30, 2021 under invoiced rents. As these relief measures relate
to doubtful receivables covered by provisions in Mercialys’
accounts at end-December 2020, they have resulted in reversals of
provisions for doubtful receivables for the corresponding amounts.
As a result, these rent relief measures are neutral in terms of the
Company’s results. The balance of the Euro 13.5 million support
budget for the first lockdown, representing Euro 2.4 million, will
be subject to the same treatment if negotiations with the remaining
retailers are finalized;
- Euro 0.7 million impact for items
being spread in the accounts, recognized under invoiced rents, in
connection with the negotiations completed in 2020. For reference,
Euro 6.4 million of negotiations from 2020 were spread in the
accounts over the remaining term of the leases, with Euro 1.1
million already recognized in the accounts at end-December 2020.
The recognition of the remaining Euro 4.5 million will be spread
over the second half of 2021 and then 2022 to 2026, with Euro 0.7
million, Euro 1.4 million, Euro 1.3 million, Euro 0.6 million, Euro
0.3 million and Euro 0.1 million respectively.
On the other hand, negotiations have continued moving forward
with retailers in connection with the second lockdown in
2020 (October 30 - November 28):
- In line with the French government’s
recommendations, Mercialys had offered to waive part of their 2020
fourth-quarter rent for the retailers affected by the second
lockdown in 2020. The impact of this measure was estimated at
Euro 6.3 million and recognized in full in the accounts at
end-December 2020 under invoiced rents as provisions for relief to
be granted. During the first half of 2021, the negotiations with
retailers resulted in an effective amount of relief granted or to
be awarded of Euro 5.4 million, lower than initially estimated by
Mercialys. The reversal of provisions for relief to be granted
therefore led to Euro 0.9 million of net income under
invoiced rents at end-June 2021 for the section of these provisions
that were no longer applicable;
- As it was not in a position to quantify the
specific support measures for sit-down restaurants, Mercialys’
end-December 2020 accounts also included Euro 0.5 million of
provisions for the impairment of doubtful receivables associated
with this segment’s arrears for the month of November 2020. The
total amount of support granted within this framework during the
first half of 2021 came to Euro 0.4 million, once again resulting
in net income for the amount of the Euro 0.2 million
differential that was no longer applicable, when reversing the
provisions for the impairment of doubtful receivables;
- Lastly, a tax credit mechanism was
introduced by the French government in 2020 for the relief granted
by landlords in connection with the second lockdown, with various
restrictions for each type of tenant and requirements for tenants
to provide specific information. Mercialys had not recognized any
impact for this mechanism in its accounts at December 31, 2020. In
view of the aforementioned support measures put in place during the
first half of 2021 for the second lockdown in 2020, the Company
recorded Euro 0.5 million of income reflecting this tax
credit under net rental income in its accounts at June 30, 2021.
Further income is expected to be recorded over the coming months as
applications are received from tenants and rent relief is
awarded.
As the effects of the health crisis spread to 2021, they
are reflected in a slowdown in the normalization of the collection
rate for FY 2020. For reference, the residual risk concerning the
previous year was covered in the accounts at December 31, 2020 with
Euro 13.2 million of exceptional provisions recorded for arrears
relating to rent and charges from the second and third quarters of
2020 (therefore including the
Euro 4.1 million balance from the support budget not yet awarded
at the time in connection with the first lockdown).
During the first half of 2021, Mercialys continued moving
forward with negotiations with its retailers and its collection
actions for rent and charges billed in 2020, with retailers paying
Euro 4.1 million of rent and charges from the second and
third quarters of 2020. The resolution of these arrears made it
possible to generate income linked to the reversal of provisions
for the impairment of doubtful receivables concerning the Euro 13.2
million of exceptional provisions recorded at end-December 2020,
with Euro 3.7 million in the accounts at end-June 2021. This
amount is in addition to the accounting impacts mentioned
previously, reducing the remaining amount of the exceptional
provisions to Euro 7.8 million in the accounts at end-June
2021.
The collection rate for 2020 is broken down for each quarter in
the following table. It is presented based on the full amount of
rent and charges excluding tax billed to tenants (“gross” rate),
while also taking into account the amounts of rent relief already
granted or still to be awarded to retailers, in addition to
provisions for the impairment of doubtful receivables.
Gross collection rate
Collection rate including the
rent relief already granted or still to be awarded
Collection rate including the
rent relief already granted or still to be awarded and the
provisions for impairment of doubtful receivables
At Dec 31, 2020
At Jun 30, 2021
At Jun 30, 2021
At Jun 30, 2021
1st quarter of 2020
97.4%
97.8%
97.8%
99.0%
2nd quarter of 2020
63.9%
69.4%
84.0%
100.0%
3rd quarter of 2020
93.4%
95.5%
95.5%
100.0%
4th quarter of 2020
86.2%
90.1%
97.5%
98.9%
2020 full year
85.3%
88.3%
94.2%
99.5%
Since June 30, 2021, the closing date for these half-year
accounts, an additional Euro 0.6 million of rent and charges have
been collected, taking the total gross collection rate for 2020 up
to 88.6%.
No arrangements for landlords to provide rent relief in
connection with the government-ordered closures in 2021, as the
French government has made a commitment to support retailers to
cover their rent and charges
As mentioned above, the shopping center sector in France has
been significantly affected, since January 2021, by the government
measures relating to the health crisis. Meanwhile, the French
government has made a commitment to put in place support packages,
in addition to the solidarity fund and the mechanism covering fixed
costs, which should notably enable tenants that were ordered to
close to honor their rent payments. However, there have been delays
with rolling out these support measures, impacting the collection
rates for rent and charges for the first half of 2021. Considering
the public commitments made by the French government, Mercialys has
not determined any additional support measures relating to the
government-ordered closures for the first half of 2021.
The collection rate for the first half of 2021 is presented in
detail for each quarter in the following table. As Mercialys has
not granted any rent relief to its tenants for this period, this
represents a “gross” collection rate, as defined previously.
Gross collection rate
Residual arrears for rent and
charges excluding tax (€m)
At Jun 30, 2021
At Jun 30, 2021
1st quarter of 2021
81.0%
10.3
2nd quarter of 2021
68.6%
16.3
1st half of 2021
75.0%
26.6
Since June 30, 2021, the closing date for these half-year
accounts, an additional Euro 2.3 million of rent and charges have
been collected, taking the total collection rate for the first half
of 2021 up to 76.9%.
The overall impacts of the health crisis presented above can be
broken down as follows:
Impacts
Corresponding 2020
lockdown
Profit and loss
heading
Jun 30, 2020
Dec 31, 2020
Jun 30, 2021
Amount before potential
deferral (€m)
Treatment in profit and loss
(€m)
Amount before potential
deferral (€m)
Treatment in profit and loss
(€m)
Amount before potential
deferral (€m)
Treatment in profit and loss
(€m)
Negotiations finalized
1st
Invoiced rents / Provisions for
relief to be granted
-4.7
-1.2
-9.4
-4.1
-1.7
-2.4(1)
Negotiations finalized associated
with the documentation to be received from tenants
2nd
Invoiced rents / Provisions for
relief to be granted
na
na
-6.3
-6.3
+0.5
+0.5(2)
Subtotal
-4.7
-1.2
-15.7
-10.4
-1.2
-2.0
Arrears relating to the 2nd and
3rd quarters of 2020
1st
Provisions for doubtful
receivables
0.0
0.0
-13.2
-13.2
+5.4
+5.4(3)
Arrears for November 2020
relating to sit-down restaurants
2nd
Provisions for doubtful
receivables
na
na
-0.5
-0.5
+0.5
+0.5(4)
Subtotal
0.0
0.0
-13.7
-13.7
+5.9
+5.9
Tax credit
2nd
Net rental income
2nd lockdown not yet occurred
Positive impact not determined on
the reporting date
+0.5
+0.5(5)
TOTAL
-4.7
-1.2
-29.4
-24.1
+5.2
+4.5
(1) Euro -2.4 million comprising Euro -1.7
million for new relief granted for the first lockdown from 2020,
with 100% recognized in the accounts at June 30, 2021 and Euro -0.7
million for amounts spread in the accounts for the 2020
negotiations relating to the same lockdown; (2) Euro +0.5 million
comprising Euro -5.4 million for relief granted for the
negotiations concerning the second lockdown, Euro +6.3 million for
the reversal of provisions for relief to be granted as a result of
this (therefore generating Euro +0.9 million of net income for the
section that was no longer applicable) and Euro -0.4 million for
the relief granted and to be awarded for the month of November 2020
for sit-down restaurants; (3) Euro +5.4 million comprising Euro
+1.7 million for the reversal of provisions for doubtful
receivables resulting from the new relief granted for the first
lockdown in 2020, and Euro +3.7 million for the reversal of
provisions for doubtful receivables relating to the additional
collection for 2020; (4) Euro +0.5 million comprising Euro +0.5
million for the reversal of provisions for doubtful receivables
relating to rent for the month of November 2020 for sit-down
restaurants (therefore generating Euro +0.2 million of net income
for the section that was no longer applicable); (5) Euro +0.5
million comprising Euro +0.5 million for the tax credit recognized
to date in connection with the documentation to be provided by
retailers that have benefited from rent relief for the second
lockdown in 2020.
III. 2021 first-half business and
results
Footfall at Mercialys’ sites4 has bounced back very
strongly since the centers reopened on May 19, 2021, highlighting
French consumers’ attachment to their retailers and more generally
the appeal of physical retail. The number of visits recorded
between May 19 and June 30, 2021 at Mercialys centers reached 91%
of the pre-crisis level from 2019. During the first half of the
year, footfall contracted by -12.2% compared with the first half of
2020, outperforming the CNCC national index by 60bp, despite this
index benefiting from a favorable base effect as very large
shopping centers were closed during the first half of 2020 until
the start of July, whereas they were able to reopen on May 19 in
2021, at the same time as the other retail formats.
As a result of the many months when stores were closed, the
assessment of the change in retail sales over the first half
of 2021 is not relevant. Nevertheless, Mercialys has observed a
very good performance by retailers in its centers since stores were
able to reopen, with May 2021 showing average growth of +8.4%
compared with May 2020, even though stores remained closed for an
additional eight days in May 2021 versus May 2020. Compared with
June 2020, retailer sales for the month of June 2021 are up +5.6%.
For reference, retailer sales following the first lockdown in 2020
were already up +0.6% in June 2020 versus June 2019.
The analysis of the occupancy cost ratio5 is subject to
the same limitations as the sales analysis due to the periods when
stores were ordered to close. For reference, this ratio showed a
very moderate level of 10.4% at December 31, 2019.
The current financial vacancy rate6 was 4.0% for the
first half of 2021, slightly higher than the 3.8% recorded at
end-2020. The tenants who left sites during the first half of 2021
account for 100bp, while more than half of the units are already at
an advanced stage for reletting. Nevertheless, these departures
impacted organic growth during the first half of 2021 and are
presented under “Actions carried out on the portfolio” in the table
on page 8.
The health crisis has occurred in a context in which the retail
industry had already been weakened by the social protest movements
and reduced consumer interest in certain retailers, particularly in
the textiles sector. While this environment has led to pressure on
Mercialys’ rents, this has remained limited in relation to the
extreme nature of the economic and social situation faced, and does
not reflect any fundamental paradigm shift in the relationship
between retailers and landlords.
Mercialys recorded limited negative reversion of -6.5% on the
leases that were subject to renewals or relettings during the first
half of 2021, with a contraction of around Euro -0.7 million in the
Euro 8.6 million rental base represented by the 149 leases signed
(equivalent to 5% of the Company’s total rental base). These
results include the specific negotiations with the retailer
Camaïeu, which is one of the few chains in Mercialys’ portfolio to
have been subject to liquidation proceedings and a takeover by a
new investor. Excluding this specific situation, the reversion
generated during the first half of 2021 came to -5.4%.
Negotiations with the retailers are continuing to move forward
with a view to securing Mercialys’ rental flows, and cover a total
of 12.4% of the rental base to date. Taking into account all of the
lease renewals and relettings since January 1, 2021 to date, as
well as the advanced negotiations (approvals), Mercialys would
record a limited adjustment of Euro -1.2 million in its total
rental base, representing -0.7%.
Since the start of the health crisis, 669 lease amendments have
been signed, covering the relief measures granted in connection
with the two lockdowns in 2020. Around 5% of them resulted in a
negative impact on headline rent, showing that the vast majority of
retailers have not opened fundamental negotiations concerning rent
levels.
Moreover, in exchange for the relief granted in connection with
the two lockdowns in 2020, Mercialys has achieved an average
extension of 8.8 months for the firm term of leases across its
portfolio, helping secure its rent profile. This initiative to
ensure the sustainability of retailers within the centers, and
therefore the corresponding rental flows, has been able to move
forward by setting up early renewals, deferring three-year breaks,
or waiving the next three-year break.
As a result of these encouraging commercial trends, whereas at
the end of 2020 the leases expired or due to expire at December 31,
2021 represented 20.9% of the Group’s rental base, they are down to
just 10.9% of the Company’s total rental base to date, taking into
account all of the leases and the negotiations at an advanced
stage.
Invoiced rents came to Euro 83.4 million, down -8.1% on a
current basis and -4.0% like-for-like. These changes reflect the
following elements:
Year to end-June 2020
Year to end-June 2021
Indexation
+1.6 pp
Euro +1.5 million
+0.3 pp
Euro +0.2 million
Contribution by Casual Leasing
-0.8 pp
Euro -0.8 million
-0.4 pp
Euro -0.4 million
Contribution by variable rents
-0.1 pp
Euro -0.1 million
-0.8 pp
Euro -0.8 million
Actions carried out on the portfolio
-0.2 pp
Euro -0.2 million
-2.3 pp
Euro -2.1 million
Accounting impact of “Covid-19 rent
relief” granted to retailers for the 2020 lockdowns
-1.3 pp
Euro -1.2 million
-0.8 pp
Euro -0.7 million
Like-for-like growth
-0.8 pp
Euro -0.8 million
-4.0 pp
Euro -3.7 million
Asset acquisitions and sales
-2.3 pp
Euro -2.2 million
-4.0 pp
Euro -3.6 million
Other effects
-0.2 pp
Euro -0.2 million
-0.1 pp
Euro 0.0 million
Growth on a current basis
-3.3 pp
Euro -3.1 million
-8.1 pp
Euro -7.3 million
Rental revenues came to Euro 84.7 million, down -8.0%
from the first half of 2020, reflecting the contraction in invoiced
rents and the slight drop in lease rights and despecialization
indemnities.
Net rental income is down -1.9% to Euro 84.0 million.
This includes Euro +0.9 million and Euro +0.2 million of net income
linked to the reversal of provisions that were no longer applicable
following the negotiations completed in connection with the second
2020 lockdown, as well as Euro +0.5 million of income linked to the
tax credit recognized to date for these same negotiations. Further
income relating to the tax credit is expected to be recorded over
the coming months as applications are received from tenants and
rent relief is awarded.
EBITDA totaled Euro 76.3 million, down -2.3% compared
with June 30, 2020. The EBITDA margin came to 90.1% (vs. 74.8% at
December 31, 2020 and 84.9% at June 30, 2020).
The net financial expenses used to calculate FFO7
represent Euro 16.1 million, versus Euro 10.1 million at end-June
2020, reflecting the full-year impact of the bond issue carried out
in July 2020. This same impact is reflected in the real average
cost of drawn debt of 1.9%, compared with the 1.4% recorded for
the full year in 2020.
Other operating income and expenses (excluding capital gains
on disposals and impairments) came to Euro -0.2 million and
primarily include the impact of the ramping up of activities for
Ocitô and Cap Cowork.
Tax represents a Euro 0.4 million expense at end-June
2021 (Euro 1.2 million for the first half of 2020). This amount
corresponds primarily to a CVAE corporate value-added tax
expense.
The share of net income from equity associates and joint
ventures (excluding capital gains, amortization and
impairments) came to Euro 1.7 million at June 30, 2021,
compared with Euro 1.4 million at June 30, 2020. The change in this
share over the period reflects the assets sold and acquired by SCI
AMR at end-December 2020, and the dilution of Mercialys’ interest
in this company (from 39.9% to 25.0%), as well as the impact of
rent relief granted by associates in connection with the health
crisis.
Non-controlling interests (excluding capital gains,
amortization and impairments) came to Euro 5.3 million at June
30, 2021, virtually stable compared with the first half of 2020
(Euro 5.2 million).
Funds from operations (FFO7) are down -11.6% from June
30, 2020 to Euro 55.7 million, with Euro 0.60 per share8.
(In thousands of euros)
Jun 30, 2020
Jun 30, 2021
Change (%)
Invoiced rents
90,732
83,419
-8.1%
Lease rights and despecialization
indemnities
1,271
1,246
-2.0%
Rental revenues
92,003
84,665
-8.0%
Non-recovered service charges and property
tax and other net property expenses
(6,378)
(699)9
-89.0%
Net rental income
85,626
83,966
-1.9%
Management, administrative and other
activities income
1,698
1,292
-23.9%
Other income and expenses
(2,384)
(2,042)
-14.4%
Personnel expenses
(6,860)
(6,900)
+0.6%
EBITDA
78,079
76,317
-2.3%
EBITDA margin (% of rental revenues)
84.9%
90.1%
-
Net financial income (excluding
non-recurring items10)
(10,087)
(16,101)
+59.6%
Reversals of / (Allowances for)
provisions
1,272
(346)
na
Other operating income and expenses
(excluding capital gains on disposals and impairments)
(1,268)
(199)
-84.3%
Tax expenses
(1,215)
(423)
-65.2%
Share of net income from equity associates
and joint ventures (excluding capital gains, amortization and
impairments)
1,402
1,745
+24.5%
Non-controlling interests (excluding
capital gains, amortization and impairments)
(5,188)
(5,300)
+2.1%
FFO (Funds from operations)
62,993
55,694
-11.6%
FFO per share8 (Funds from operations
per share) - in euros
0.69
0.60
-12.1%
IV. Continuous improvement dynamics
supporting the digital ecosystem and site usage
Mercialys has always developed an agile approach to real estate
and retail, through its proven capacity to innovate and anticipate
trends, as well as a test and learn approach.
Ocito.net, its proprietary marketplace enabling consumers to buy
products online directly from their center’s retailers, is an
outstanding example of this approach. Launched in 2019 at a pilot
site, then extended nationwide in 2020, it has now been rolled out
across 30 centers and offers more than 40,000 products from 250
retailers.
By accelerating the diversification of the ways people consume
and proving the relevance of a unified retail vision, the health
crisis has contributed to the rapid change of scale achieved with
Ocitô. The intrinsic multimodal features of this service,
characterized by the in-store collection, drive-through, postal or
home delivery options available to end customers for their
products, have offered retailers an opportunity to adapt to a
context in which their activities have faced significant
disruption, helping them to generate sales and maintain links with
their customers.
In addition to its accelerated rollout, the gradual
strengthening of services (including express evening and weekend
deliveries), the technical and ergonomic changes made to enhance
the platform, and the various promotional and communication
operations aimed at end customers have been a valuable source of
information for Mercialys, supporting the volume of sales achieved
through the platform.
Capitalizing on this feedback, Mercialys has notably chosen to
focus its operational, human and promotional resources on the
centers with the highest volume of orders and therefore the best
potential for creating value. Moreover, the concentration of sales
on the retailers that are most involved in researching
complementary features to dovetail with their physical offering
highlights the importance of close collaboration between Mercialys
and its retailers using this service.
The Company is prioritizing close synergies with the retailers
that are most interested in Ocitô through specific support for ad
hoc requirements, such as the outlet operation carried out in June
2021, offering exclusive access through the platform to sales of
stock clearance items offered by seven stores from the Toulouse
shopping center. Generating an average spend of over Euro 30, these
fundamentally omnichannel commercial operations are proving to be
particularly relevant, supporting sales of stock that has become
counter-productive in store by occupying sales space at the expense
of new collections. This type of ad hoc campaign, aligned with the
needs of the retailers present in the centers, also helps them to
stand out within their catchment area.
This agile innovation approach is also illustrated by the
deployment of Mercialys’ multifunctionality strategy. The success
of the first two Cap Cowork spaces in particular, at the Grenoble
and Angers sites, with an average occupancy rate of 90% for their
closed offices, has provided strong insights into the coworking
market in regions where the structuring of these services is
relatively limited.
The typical Cap Cowork customer profile of professionals, very
small businesses and startups that can opt for the business address
service shows a clear preference for fixed, closed, individual
offices, rented for several months. In addition to contributing to
this service’s resilience despite the restrictive health context
over the first half of 2021, these features have been rapidly
incorporated into the projects for 2021. The solution’s
adaptability also benefits from work being carried out in just six
to eight weeks, and moderate investment levels of around Euro 0.7
million per site.
The extension of the Cap Cowork site in Angers, which opened in
July 2021, increased its total space by more than 200 sq.m. The
site can now welcome 54 customers, compared with 31 previously, and
offers considerably more individual closed office spaces than open
spaces compared with the initial design. The second project for
2021, which opened at the Toulouse shopping center, also in July,
offers 45 spaces spread over nearly 450 sq.m, with 90% closed
offices, and a large terrace with over 250 sq.m of space, further
strengthening this site’s appeal. Lastly, in the third quarter of
2021, Mercialys will inaugurate a new
Cap Cowork space in Nîmes, generating potential additional
rental income over 260 sq.m of space that was not initially
intended for letting (previous center management offices).
V. Project portfolio focused on creating
value and reconfiguring sites
In addition to the developments underway, Mercialys is looking
into a number of mixed-use reconfiguration projects for its sites,
aiming to build local service hubs that bring together diverse
sectors within which the Company has shown its expertise for
several years (coworking, healthcare centers, food courts,
last-mile logistics, leisure and education spaces, etc.). Part of a
far-reaching urban review, liaising with regional stakeholders,
these projects aim to further strengthen the sites’ anchoring
within their communities, while continuing to consolidate their
leading positions, transforming Mercialys’ centers into outstanding
living and socializing spaces.
At end-June 2021, Mercialys’ project portfolio represented Euro
474.6 million through to 2027, with Euro 32.1 million of additional
rental potential and an average target yield rate of 7.0%.
This portfolio, which concerns 31 sites out of the 51 shopping
centers and high-street assets owned by the Company, includes
retail space projects (redevelopments, extensions, retail parks),
dining and leisure projects, and tertiary activity projects
(housing, healthcare, coworking, etc.).
(In millions of euros)
Total investment
Investment still to be
committed
Target net rental
income
Target net yield on cost
(%)
Completion date
COMMITTED PROJECTS
27.0
24.9
0.811
na11
2021/2026
Dining and leisure
5.3
4.2
0.111
na11
2021/2022
Tertiary activities
21.7
20.7
0.711
na11
2021/2026
CONTROLLED PROJECTS
131.7
127.3
9.2
7.0%
2022/2024
Retail
86.9
82.7
6.1
7.0%
2022/2024
Tertiary activities
44.8
44.7
3.1
7.0%
2022/2023
IDENTIFIED PROJECTS
315.9
315.9
22.1
7.0%
2023/2027
Retail
88.5
88.5
6.2
7.0%
2023/2025
Dining and leisure
79.0
79.0
5.5
7.0%
2024
Tertiary activities
148.5
148.4
10.4
7.0%
2023/2027
TOTAL PROJECTS
474.6
468.1
32.112
7.0%12
2021/2027
- 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
VI. Portfolio and financial
structure
EPRA Net Disposal Value (NDV) down -6.8% over six months and
-13.7% over 12 months
Mercialys’ portfolio value came to Euro 3,185.6 million
including transfer taxes, down -2.2% over six months and -9.6% over
12 months. Like-for-like13, it is down -2.2% over six months and
-4.5% over 12 months.
Excluding transfer taxes, the portfolio value came to Euro
2,996.6 million, down -2.3% over six months and -9.6% over 12
months. Like-for-like13, it is down -2.3% over six months and -4.5%
over 12 months.
At end-June 2021, Mercialys’ portfolio mainly comprised 51
shopping centers and high-street sites14, with 25 large regional
shopping centers and 26 leading local retail sites (neighborhood
shopping centers and city-center assets).
The average size of the 49 shopping centers (excluding the two
high-street retail assets) was nearly 16,600 sq.m at end-June 2021,
compared with 7,400 sq.m at end-2010. Their average value was Euro
64.4 million including transfer taxes in the first half of 2021,
compared with Euro 26.9 million in 2010.
The average appraisal yield rate was 5.74% at June 30,
2021, compared with 5.72% at December 31, 2020 and 5.49% at June
30, 2020.
The EPRA net asset value indicators are as follows:
EPRA NRV
EPRA NTA
EPRA NDV
Jun 30, 2021
Dec 31, 2020
Jun 30, 2020
Jun 30, 2021
Dec 31, 2020
Jun 30, 2020
Jun 30, 2021
Dec 31, 2020
Jun 30, 2020
€/share
20.32
21.18
22.00
18.26
19.04
19.6815
17.17
18.42
19.90
-4.1% over six months
-7,6% over 12 months
-4.1% over six months
-6.8% over six months
-7.2% over 12 months
-13.7% over 12 months
The EPRA Net Disposal Value (NDV) came to Euro 1,608.1
million at end-June 2021 vs. Euro 1,823.3 million at end-June 2020.
Per share, it represents Euro 17.1716, down -6.8% over six months
and -13.7% over 12 months, with this change taking into account the
May 2021 capital increase carried out in connection with the
partial payment of the dividend in shares.
The Euro -1.25 per share change16 for the first half of this
year takes into account the following impacts:
- dividend payment: Euro -0.42; - funds from operations (FFO):
Euro +0.5917; - 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 -0.71, including a
yield effect for Euro -0.12, a rent effect for Euro -0.62 and other
effects18 for Euro +0.03; - change in fair value of fixed-rate
debt: Euro -0.49; - change in fair value of other items: Euro
+0.01; - the capital increase in connection with the option for the
2020 dividend to be paid in shares, as well as the change in
treasury shares: Euro -0.23.
Particularly solid financial structure despite the economic
and health crisis context
At end-June 2021, drawn debt represented Euro 1,449.5
million, made up of three bond issues and a private placement, with
a residual nominal amount of Euro 1,299.5 million, as well as
commercial paper, with Euro 150 million outstanding at end-June
2021.
At June 30, 2021, Mercialys had Euro 405 million of undrawn
financial resources, unchanged compared with December 31, 2020.
Mercialys also has a Euro 500 million commercial paper program,
with further issuing capacity of Euro 350 million, taking into
account the outstanding amount at June 30, 2021.
The real average cost of drawn debt for the first half of
2021 was 1.9%, up from the 2020 full-year figure of 1.4%, mainly
reflecting the impact of the bond refinancing operation carried out
in July 2020.
The average maturity of drawn debt was 3.6 years at
end-June 2021, compared with 3.5 years at end-December 2020 and 3.2
years at end-June 2020.
Mercialys has a healthy financial structure, with an LTV
ratio excluding transfer taxes19 of 38.3% at June 30, 2021
(compared with 38.1% at December 31, 2020 and 41.1% at June 30,
2020) and an LTV ratio including transfer taxes of 36.0% on
the same date (versus 35.8% at December 31, 2020 and 38.6% at June
30, 2020). The Company has maintained a very balanced financial
profile despite the effects of the economic and health crisis,
reflected in pressure on rent collection for 2020 and the first
half of 2021.
The ICR was 5.6x20 at June 30, 2021, compared with 5.0x
at December 31, 2020 and 10.6x at June 30, 2020, reflecting the
impacts of the health crisis on EBITDA and the impacts of the July
2020 bond refinancing on financial expenses.
On May 19, 2021, Standard & Poor’s confirmed its BBB /
negative outlook rating for Mercialys.
Alongside this, Mercialys has maintained a high level of
hedging for its debt, with a hedged or fixed-rate debt
position (including commercial paper) of 87% at end-June 2021,
compared with 92% at end-December 2020 and 82% at end-June
2020.
VII. 2021 outlook
The first half of 2021 was marked by a particularly long period
of government-ordered closures affecting shopping centers for more
than 3.5 months. However, the Company maintained its strong letting
trends, securing a sustained balance between providing support for
retailers, ensuring the sustainability of its rental flows and
moving forward with its collection efforts.
The context accompanying the reopening of stores since May 19,
2021 seems encouraging, and the forced savings built up by French
people during this health crisis period could be gradually freed up
to benefit consumption.
Nevertheless, there is still significant uncertainty surrounding
the coming months due to changes in the health situation, as well
as the potential enforcement of the “health pass” in shopping
centers. This decision to require visitors to show proof of full
vaccination, a negative PCR test or a recent Covid-19 infection
certificate at the entrance to sites will be entrusted by the
government from August 5, 2021 to prefects in the various French
departments, which may therefore lead to local applications of the
“health pass” on a case-by-case basis.
In this context, excluding the impacts of a further
deterioration in the health situation, including the potential
impacts of the measures relating to the “health pass” (reduced
footfall, further weakening of retailers, likely drop in variable
rents and the contribution from Casual Leasing, and increase in
additional operating expenses), Mercialys expects its funds from
operations (FFO) per share to be at least stable in 2021 compared
with 2020.
* * *
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, 2021, Mercialys
had a real estate portfolio valued at Euro 3.2 billion (including
transfer taxes). Its portfolio of 2,102 leases represents an
annualized rental base of Euro 169.8 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, 2021.
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, 2020 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, 2020
Jun 30, 2021
Rental revenues
92,003
84,665
Service charges and property tax
(30,429)
(30,148)
Service charges and tax reinvoiced to
tenants
26,953
25,929
Net property expenses
(2,901)
3,520
Net rental income
85,626
83,966
Management, administrative and other
activities income
1,698
1,292
Other income
53
221
Other expenses
(2,438)
(2,263)
Personnel expenses
(6,860)
(6,900)
Depreciation and amortization
(20,236)
(19,557)
Reversals of / (Allowances for)
provisions
1,272
(346)
Other operating income
3,541
790
Other operating expenses
(15,922)
(6,568)
Operating income
46,734
50,637
Income from cash and cash equivalents
46
162
Expenses from gross financial debt
(7,401)
(14,115)
(Expenses) / Income from net financial
debt
(7,355)
(13,953)
Other financial income
124
153
Other financial expenses
(1,463)
(1,619)
Net financial income
(8,693)
(15,419)
Tax expenses
(1,215)
(423)
Share of net income from equity associates
and joint ventures
775
1,091
Consolidated net income
37,599
35,886
attributable to non-controlling
interests
4,384
4,498
attributable to owners of the parent
33,215
31,388
Earnings per share21
Net income, attributable to owners of the
parent (in euro)
0.36
0.34
Diluted net income, attributable to owners
of the parent (in euro)
0.36
0.34
Consolidated statement of financial position
ASSETS (in thousands of euros)
Dec 31, 2020
Jun 30, 2021
Intangible assets
4,052
3,968
Property, plant and equipment other than
investment property
1,605
2,465
Investment property
2,050,907
2,031,973
Right-of-use assets
8,902
8,392
Investments in equity associates
38,918
38,412
Other non-current assets
73,865
61,796
Deferred tax assets
1,728
1,517
Non-current assets
2,179,976
2,148,523
Trade receivables
38,217
55,825
Other current assets
40,660
30,638
Cash and cash equivalents
464,611
287,958
Investment property held for sale
111
111
Current assets
543,599
374,533
Total assets
2,723,575
2,523,056
EQUITY AND LIABILITIES (in thousands of
euros)
Dec 31, 2020
Jun 30, 2021
Share capital
92,049
93,887
Additional paid-in capital, treasury
shares and other reserves
600,875
614,520
Equity, attributable to owners of the
parent
692,925
708,407
Non-controlling interests
202,193
201,266
Equity
895,118
909,673
Non-current provisions
1,207
1,224
Non-current financial liabilities
1,355,914
1,326,618
Deposits and guarantees
22,295
22,705
Non-current lease liabilities
8,655
8,071
Other non-current liabilities
15,311
10,404
Non-current liabilities
1,403,381
1,369,022
Trade payables
15,394
20,660
Current financial liabilities
348,553
166,677
Current lease liabilities
985
1,080
Current provisions
9,942
10,018
Other current liabilities
50,193
45,820
Current tax liabilities
9
106
Current liabilities
425,076
244,361
Total equity and liabilities
2,723,575
2,523,056
1 Collection rate calculated based on the full amount of rent
and charges excluding tax invoiced by Mercialys to its tenants 2
Mercialys’ large centers and main convenience shopping centers
based on a constant surface area, representing over 85% of the
value of the Company’s shopping centers 3 CNCC index - all centers,
comparable scope 4 Mercialys’ large centers and main convenience
shopping centers based on a constant surface area, representing
over 85% of the value of the Company’s shopping centers 5 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 6 The occupancy rate,
as with Mercialys’ vacancy rate, does not include agreements
relating to the Casual Leasing business 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 undiluted average number of shares (basic), i.e.
92,136,487 shares 9 Of which, allocation and reversal of provisions
for the impairment of doubtful receivables linked in particular to
the health crisis 10act of hedging ineffectiveness, banking default
risk, bond redemption price, bond redemption costs, proceeds from
unwinding swaps and exceptional amortization relating to the
partial redemption of the 2023 issue 11the 2021 pipeline, the
investments to be committed, for the dining and leisure section,
correspond to an advance for work by Mercialys at the Annecy site,
which will be reimbursed to it in full, as well as the creation of
two restaurants in the parking area at the Angers site and a food
court at the Sainte-Marie site on Reunion Island. The tertiary
activities primarily include the Saint-Denis mixed-use urban
project, north of Paris, with an expected IRR of over 8%, as well
as coworking spaces 12 Excluding the impact of mixed-use
high-street projects, which could also generate property
development margins 13 Sites on a constant scope and a constant
surface area basis 14 Added to these are four geographically
dispersed assets with a total appraisal value including transfer
taxes of Euro 10.4 million 15 Value adjusted from Euro 19.72 per
share, as published in the 2020 Half-Year Financial Report, to Euro
19.68 per share, in order to more accurately reflect the new
methodology for calculating EPRA NTA 16 Calculation based on the
diluted number of shares at the end of the period, in accordance
with the EPRA methodology regarding NDV 17 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 18 Including
impact of revaluation of assets outside of organic scope, equity
associates, maintenance capex and capital gains on asset disposals
19 LTV (Loan To Value): Net financial debt / (portfolio market
value excluding transfer taxes + market value of investments in
associates for Euro 55.9 million at June 30, 2021 and Euro 56.3
million at June 30, 2020, since the value of the portfolio held by
associates is not included in the appraisal value) 20 ICR (Interest
Coverage Ratio): EBITDA / net finance costs 21 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 2021 = 92,136,487 shares - Fully diluted weighted
average number of shares for the first half of 2021 = 92,136,487
shares
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210728005764/en/
Analysts / investors / media contact: Alexandre Leroy
Tel: +33 (0)1 82 82 75 63 Email: aleroy@mercialys.com
Grafico Azioni Mercialys (EU:MERY)
Storico
Da Mar 2024 a Apr 2024
Grafico Azioni Mercialys (EU:MERY)
Storico
Da Apr 2023 a Apr 2024
