Mercialys: Activity at end-September 2016

Outperformance confirmed for Mercialys’ innovative proximity-based real estate model in a challenging economic environment

Very robust organic growth of +3.0% in invoiced rents excluding indexation

Rental revenues up +12.3% to Euro 139.0 million at end-September

2016 funds from operations (FFO) growth target revised upwards, with +3% to +4% growth now expected

PARIS--()--Regulatory News:

Eric Le Gentil, Mercialys' (Paris:MERY) Chairman and CEO, commented: “The economic environment remained challenging in the third quarter, marked by the repercussions of the terrorist attacks in Nice, as well as adverse weather conditions. Nevertheless, Mercialys' shopping centers have continued to outperform in terms of both footfall and retailer sales, reflecting the relevance of our proximity-based model over the long term. Confirming this, organic growth remained strong at the end of September, enabling us to revise our FFO growth target for 2016 up from +2% initially to between +3% and +4% growth."

I. Change in rental revenues

Organic growth in invoiced rents remained high through to end-September 2016

Invoiced rents at September 30, 2016 came in +13.2% higher than September 30, 2015, with +3.0% growth on a comparable basis excluding the impact of a slightly negative level of indexation.

Rental revenues came to Euro 139.0 million at September 30, 2016, up +12.3% from the end of September 2015.

(In thousands of euros)  

Year to end-

September 2015

 

Year to end-

September 2016

  Change (%)  

Like-for-like

change (%)

Invoiced rents   121,394   137,384   +13.2%   +2.9%
Lease rights 2,377 1,615
             
Rental revenues   123,771   138,999   +12.3%
 

The change in invoiced rents primarily reflects the following factors:

- Very robust organic growth in invoiced rents: +2.9 points,
- Acquisitions in 2015 and 2016: +13.3 points,
- Impact of assets sold in 2016: -0.6 point,
- Other effects, primarily including strategic vacancies on current redevelopment programs: -2.4 points.

Like-for-like, invoiced rents are up +2.9%, including:

+2.4% for actions carried out on the portfolio, particularly renewals and relettings,
+0.6% for the development of the Casual Leasing business, with its rental income up +18.3% over the period to Euro 5.0 million,
-0.1% for indexation.

Lease rights and despecialization indemnities received over the period1 came to Euro 0.7 million, compared with Euro 0.9 million at end-September 2015. After factoring in the deferrals required under IFRS, lease rights at September 30, 2016 represent Euro 1.6 million, compared with Euro 2.4 million at September 30, 2015.

II. Mercialys shopping centers continue to deliver outperformance for retailers compared with national averages

Mercialys' shopping centers have continued to perform well compared with the national averages, in terms of both footfall and retailer sales growth.

  • For the year to end-August 2016, the sales figures for retailers in Mercialys centers2 are up +1.0%, compared with a -1.0% contraction for the shopping center market (CNCC3).
  • Footfall in Mercialys’ shopping centers has continued to progress, up +1.0% for the year to end-September 2016, while the market’s overall footfall (CNCC4) is down -1.5% for the period.

2016 has seen very strong levels of lettings, reflecting the success of Mercialys’ innovative proximity-based real estate model.

In the third quarter for instance, the retailers Terranova, Calliope and Les Petites Bombes (Angers), Pull & Bear (Nîmes), Swarovski (Annemasse) and Bistrot Bocaux (Paris Saint-Didier)all successfully opened new stores. Alongside this, Mercialys’ teams put in place new leases in the third quarter with mid-size stores and a very diverse selection of retailers, further strengthening the merchandise mix at six sites: FNAC (Saint-Etienne Monthieu), Go Sport – Courir, Bonobo and Du Bruit Dans La Cuisine (Nîmes), Vibs (Fréjus), Morgan (Quimper), Kaporal (Niort), Scottage (Le Puy).

III. Dividend

As announced with the 2016 half-year earnings, Mercialys' Board of Directors has decided to pay out an interim dividend of Euro 0.43 per share, which will be released for payment on October 13, 2016.

Over the full year in 2016, Mercialys will have paid out Euro 1.0 for its shareholders.

For the whole year, Mercialys will pay out a dividend ranging from 85% to 95% of 2016 FFO.

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1 Lease rights received as cash before the impact of deferrals required under IFRS (deferral of lease rights over the firm period of leases)
2 Mercialys’ large centers and main market-leading local-format centers based on a constant surface area. The Quimper site, which is undergoing extensive work, has been withdrawn from the panel at end-September 2016
3 CNCC index – all centers, comparable scope – year to end-August 2016
4 CNCC index – all centers, comparable scope – year to end-August 2016

IV. Full-year FFO target revised upwards

Considering the success achieved by Mercialys at end-September, the target of +2% FFO growth for 2016 versus 2015 is being revised upwards. This indicator is now expected to progress between +3% and +4% for the year in 2016.

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This press release is available on www.mercialys.com

About Mercialys

Mercialys is one of France's leading real estate companies, focused exclusively on retail property. At June 30, 2016, Mercialys had a portfolio of 2,240 leases, representing a rental value of Euro 176.8 million on an annualized basis.

At June 30, 2016, it owned properties with an estimated value of Euro 3.7 billion (including transfer taxes). Mercialys has had “SIIC” real estate investment trust (REIT) tax status since November 1, 2005 and has been listed on Euronext Paris Compartment A (ticker: MERY) since its initial public offering on October 12, 2005. At June 30, 2016, there were 92,049,169 shares outstanding.

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 the Mercialys shelf registration document available at www.mercialys.com for the year ended December 31, 2015 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.

MERCIALYS RENTAL REVENUES
                   
    YEAR TO DATE       PER QUARTER
    Mar 31, 2014   Jun 30, 2014   Sep 30, 2014   Dec 31, 2014       Q1   Q2   Q3   Q4
 
Invoiced rents 36,031 76,005 111,469 148,755 36,031 39,975 35,464 37,286
Lease rights 1,073 2,125 2,991 4,031 1,073 1,053 866 1,040
Rental revenues 37,104 78,131 114,460 152,787 37,104 41,027 36,329 38,236
 
Change in invoiced rents -4.6% 3.9% 3.3% 4.1% -4.6% 12.8% 2.1% 6.5%
Change in rental revenues -6.2% 1.9% 1.5% 2.6% -6.2% 10.5% 0.8% 5.7%
                                     
    Mar 31, 2015   Jun 30, 2015   Sep 30, 2015   Dec 31, 2015       Q1   Q2   Q3   Q4
 
Invoiced rents 38,713 80,558 121,394 165,958 38,713 41,845 40,836 44,564
Lease rights 880 1,698 2,377 2,998 880 818 679 621
Rental revenues 39,593 82,256 123,771 168,956 39,593 42,663 41,515 45,185
 
Change in invoiced rents 7.4% 6.0% 8.9% 11.6% 7.4% 4.7% 15.1% 19.5%
Change in rental revenues 6.7% 5.3% 8.1% 10.6% 6.7% 4.0% 14.3% 18.2%
                                     
    Mar 31, 2016   Jun 30, 2016   Sep 30, 2016   Dec 31, 2016       Q1   Q2   Q3   Q4
 
Invoiced rents 44,992 91,869 137,384 44,992 46,877 45,515
Lease rights 559 1,155 1,615 559 596 460
Rental revenues 45,551 93,025 138,999 45,551 47,474 45,974
 
Change in invoiced rents 16.2% 14.0% 13.2% 16.2% 12.0% 11.5%
Change in rental revenues 15.0% 13.1% 12.3% 15.0% 11.3% 10.7%
 

Contacts

Analysts / investors:
Elizabeth Blaise
Tel: +33(0)1 53 65 64 44
or
Press:
Communications
Tel: +33(0)1 53 70 23 34

Contacts

Analysts / investors:
Elizabeth Blaise
Tel: +33(0)1 53 65 64 44
or
Press:
Communications
Tel: +33(0)1 53 70 23 34