Organic rental income growth of
+4.6%
2024 objectives confirmed
Regulatory News:
Vincent Ravat, Mercialys’ (Paris:MERY) Chief Executive Officer:
“Mercialys continued building on its very robust business trends
during the first quarter of 2024, with organic growth of +4.6%. The
economic environment is stabilizing, with inflation easing and
household consumption picking up strength. Alongside this, the
Casino group’s divestment of the business operations of
hypermarkets owned by Mercialys is expected to further strengthen
the appeal of the Company’s sites, while improving its rental risk
profile. Mercialys is therefore able to confirm its objectives for
2024, with net recurrent earnings per share growth of at least +2%
and a dividend payout ratio to range from 75% to 95% of 2024 net
recurrent earnings”.
I. Very robust organic growth in invoiced
rents of +4.6%
During the first quarter of 2024, Mercialys recorded +4.6%
organic growth. Invoiced rents came to Euro 45.5
million, up +4.5% from the first quarter of 2023, reflecting a
virtually neutral scope effect for the quarter.
(In thousands of euros)
At March 31, 2023
At March 31, 2024
Change
Current basis (%)
Change
Like-for-like basis
(%)
Invoiced rents
43,501
45,463
+4.5%
+4.6%
Lease rights
132
82
-37.9%
Rental revenues
43,633
45,545
+4.4%
The change in invoiced rents reflects the following factors:
At March 31, 2023
At March 31, 2024
Indexation
+3.6 pp
+€1.5m
+4.6 pp
+€2.0m
Contribution by Casual Leasing
-1.1 pp
-€0.5m
+0.3 pp
+€0.1m
Contribution by variable rents
+0.8 pp
+€0.3m
+0.7 pp
+€0.3m
Actions carried out on the portfolio
-1.2 pp
-€0.5m
-0.7 pp
-€0.3m
Accounting impact of “Covid-19 rent
relief”
granted to retailers
+0.9 pp
+€0.4m
-0.3 pp
-€0.1m
Growth (like-for-like)
+3.0 pp
+€1.3m
+4.6 pp
+€2.0m
Asset acquisition and sales
-2.7 pp
-€1.2m
0.0 pp
€0.0m
Other effects
-0.2 pp
-€0.1m
0.0 pp
€0.0m
Growth (current basis)
+0.2 pp
+€0.1m
+4.5 pp
+€2.0m
Invoiced rents benefited from positive indexation of
+4.6% for the first quarter of 2024, factoring in the French
commercial rent index (ILC) figures published in 2023 and
specifically those for the second and third quarters (+6.60% and
+5.97% respectively), which represent nearly 70% of the indexation
for 2024.
The contributions from Casual Leasing and variable
rents are up +0.3% and +0.7% respectively for the quarter,
reflecting a positive underlying trend for the various sites and
the good level of activity for retailers.
The actions carried out on the portfolio are down
-0.7%. The Company’s commitment to ensuring the continued
sustainability of rents for its retailers, at a time when
indexation remains high, while price effects seem to be stabilizing
in terms of retailers’ activity, is reflected in a moderation of
reversion levels. Mercialys is limiting the volatility of the
vacancy rate and ensuring the sustainability of tenants within a
partnership-based approach.
During the first quarter, Mercialys maintained a positive trend
for renewals and relettings, illustrated in particular by the deals
signed with Sephora in Nîmes, Intersport in Marseille and Besançon,
as well as the homeware retailer Kraft in Quimper.
After factoring in the deferrals applicable under IFRS, lease
rights and despecialization indemnities received over the period
came to less than Euro 0.1 million for the first quarter of
2024.
In view of these elements, rental revenues totaled Euro 45.5
million in the first quarter, up by nearly Euro +2 million (+4.4%)
compared with the corresponding quarter in 2023.
II. Retailer sales growth of +3.3%
Footfall in Mercialys’ shopping centers is up +2.9% at end-March
2024, compared with +2.1% for the Quantaflow national index,
outperforming the national benchmark index by +80bp, which reflects
the attractive positioning of the Company’s centers.
The takeover of the business operations of a large part of the
hypermarkets, as presented below, is expected to drive an upturn in
footfall at these stores, helping improve the perception of the
shopping centers among visitors and retailers. These expectations
are illustrated by the change in footfall at the Besançon
hypermarket, whose operations were taken over by Intermarché in
October 2023, where the strong increase in footfall following the
banner transfer (+24.9% in November and +37.5% in December 2023)
continued during the first quarter of 2024, with +37.1% growth.
This positive trend for the sites is also reflected in the sales
recorded by tenant retailers, up +3.3% at end-March 2024. This
sales growth came to +2.3% at end-February 2024, while the national
panel (FACT) recorded +1.6% growth over the same period,
representing +70bp outperformance for the Company’s sites.
The monthly sales figures reported by Mercialys’ retailers for
March show very robust growth of +6,1%, perfectly aligned with the
information published by Procos on April 8. The latter shows a
+6.1% increase in activity levels for retailers in March, following
-1.5% in January and +0.8% in February. This upturn needs to be
confirmed, but several indicators are moving in the right
direction, such as the slowdown in inflation and the increase in
purchasing power, which are expected to positively impact household
consumption over the coming months.
Moreover, following the agreements signed by the Casino group
with Intermarché, Auchan Retail and Carrefour, the retailers in the
hypermarkets owned by Mercialys will change based on the following
schedule:
- Annemasse, Clermont-Ferrand, Fréjus,
Gassin, Istres, Lanester, Marseille, Narbonne and Quimper : April
30, 2024; - Aix, Angers, and Nîmes: May 31, 2024; - Le Puy: date
not yet confirmed.
The Besançon hypermarket already switched to the Intermarché
banner in October 2023.
Mercialys’ economic rental exposure to food retail, on a pro
forma basis at December 31, 2023, would be as follows:
- Auchan: 4.1% - Intermarché: 5.2% -
Carrefour: 2.0% - Monoprix: 1.5% - Aldi: 0.2% - Lidl: 0.1% -
Casino: 4.7%
The residual exposure to Casino (Géant banner) corresponds to
the five hypermarkets or supermarkets located in Corsica (3.6% of
rental exposure) and the hypermarkets in Brest (0.6%) and Niort
(0.5%). These sites were not included in the overall transactions
and will be subject to individual discussions with food operators.
The Casino group has not indicated any plans to close stores to
date.
Note that pending the potential divestment of business
operations at these stores, Casino will continue to hold the
leases. The leases for the portfolio in Corsica have an end date of
June 2030, with a 3-year break option in June 2027, which would
transfer the business operations to the landlord if it was
exercised. The leases for the Brest and Niort hypermarkets have an
end date of June 2027, with the 3-year option from June 2024 not
exercised.
To date, the Casino group is paying its rents in accordance with
its contractual commitments.
III. Proposed dividend of Euro 0.99 per
share
As announced on February 14 with the 2023 full-year earnings
release, Mercialys’ Board of Directors will submit a proposal at
the General Meeting on April 25, 2024 for a dividend of Euro 0.99
per share for 2023, up +3.1% compared with the dividend for
2022.
The proposed dividend corresponds to 85% of 2023 recurrent
earnings and offers a particularly attractive yield of 5.8% on the
NDV of Euro 17.1 per share at end-2023 and 9.9% on the year’s
closing share price.
This proposed dividend is based primarily on the distribution
requirement with the SIIC tax status concerning exempt profits
from:
- property rental or sub-letting operations (including dividends
paid by the subsidiaries subject to the SIIC system), i.e. Euro
0.86 per share;
- the distribution of exempt income recorded on the Company’s
balance sheet for Euro 0.13 per share.
The ex-dividend date would be April 29, 2024, with the dividend
to be paid on May 2, 2024.
MERCIALYS RENTAL
REVENUES
2023
Mar 31, 2023
Jun 30, 2023
Sep 30, 2023
Dec 31, 2023
Q1
Q2
Q3
Q4
Invoiced rents
43,501
87,910
132,183
177,495
43,501
44,408
44,272
45,312
Lease rights
132
254
395
515
132
122
141
119
Rental revenues
43,633
88,164
132,578
178,010
43,633
44,531
44,413
45,431
Change in invoiced rents
+0.2%
+2.1%
+2.4%
+2.8%
+0.2%
+4.1%
+3.1%
+4.0%
Change in rental revenues
+0.1%
+2.0%
+2.3%
+2.7%
+0.1%
+3.9%
+3.0%
+3.9%
2024
Mar 31, 2024
Jun 30, 2024
Sep 30, 2024
Dec 31, 2024
Q1
Q2
Q3
Q4
Invoiced rents
45,463
45,463
Lease rights
82
82
Rental revenues
45,545
45,545
Change in invoiced rents
+4.5%
+4.5%
Change in rental revenues
+4.4%
+4.4%
Appendix 1 - List of hypermarkets owned by
Mercialys
SITES
Current food operator
Future food
Scheduled transfer
date
operator
ANNEMASE
Casino Hyperfrais
Intermarché
Apr 30, 2024
AIX-EN-PROVENCE
Casino Hyperfrais
Auchan
May 31, 2024
AJACCIO
Géant Casino
Géant Casino
Not yet sold
ANGERS
Casino Hyperfrais
Auchan
May 31, 2024
BESANCON
Intermarché
Intermarché
Oct 15, 2023
BREST
Casino Hyperfrais
Casino Hyperfrais
Not yet sold
CHAVILLE
Monoprix
Monoprix
Not concerned
CLERMONT FERRAND
Casino Hyperfrais
Intermarché
Apr 30, 2024
CORTE
Casino Supermarché
Casino Supermarché
Not yet sold
FREJUS
Casino Hyperfrais
Auchan
Apr 30, 2024
FURIANI
Géant Casino
Géant Casino
Not yet sold
GASSIN
Casino Hyperfrais
Auchan
Apr 30, 2024
GRENOBLE
Monoprix
Monoprix
Not concerned
ISTRES
Casino Hyperfrais
Auchan
Apr 30, 2024
LANESTER
Casino Hyperfrais
Carrefour
Apr 30, 2024
LE PUY
Intermarché
Carrefour
Date not confirmed
MARCQ-EN-BAROEUL
Monoprix
Monoprix
Not concerned
MARSEILLE-PDC
Casino Hyperfrais
Intermarché
Apr 30, 2024
NARBONNE
Casino Supermarché
Auchan
Apr 30, 2024
NIMES CAP COSTIERES
Casino Hyperfrais
Auchan
May 31, 2024
NIORT
Casino Hyperfrais
Casino Hyperfrais
Not yet sold
PORTO-VECCHIO
Géant Casino
Géant Casino
Not yet sold
PUTEAUX
Monoprix
Monoprix
Not concerned
QUIMPER
Casino Hyperfrais
Intermarché
Apr 30, 2024
TOGA
Géant Casino
Géant Casino
Not yet sold
Source: transfer notification letter received
Appendix 2 - List of hypermarkets not owned
that anchor Mercialys shopping centers
SITES
Current food operator
Future food
Scheduled transfer
date
operator
AGEN
Casino Hyperfrais
Intermarché
Apr 30, 2024
ALBERTVILLE
Intermarché
Intermarché
Oct 15, 2023
ANGOULEME
Casino Hyperfrais
Auchan
Apr 30, 2024
ANNECY
Casino Hyperfrais
Auchan
Apr 30, 2024
ARLES
Casino Hyperfrais
Auchan
Apr 30, 2024
AURILLAC
Casino Hyperfrais
Casino Hyperfrais
Not yet sold
BRIVE
Casino Hyperfrais
Casino Hyperfrais
Not yet sold
CARCASSONNE
Casino Hyperfrais
Auchan
May 31, 2024
CHARTRES
Casino Hyperfrais
Intermarché
Apr 30, 2024
DIJON
Casino Hyperfrais
Casino Hyperfrais
Not yet sold
LE PORT
Carrefour
Carrefour
Not concerned
MANDELIEU
Casino Hyperfrais
Auchan
Apr 30, 2024
MARSEILLE-LA VALENTINE
Casino Hyperfrais
Auchan
Apr 30, 2024
MILLAU
Intermarché
Intermarché
Oct 15, 2023
MONTARGIS
Casino Hyperfrais
Carrefour
Date not confirmed
MONTAUBAN
Super U
Super U
Not concerned
MONTPELLIER
Casino Hyperfrais
Intermarché
Date not confirmed
MORLAIX
Casino Hyperfrais
Carrefour
Apr 30, 2024
PARIS MASSENA
Casino Supermarché
Intermarché
Apr 30, 2024
PARIS ST DIDIER
Casino Supermarché
Auchan
Jul 1, 2024
RENNES
Super U
Super U
Not concerned
RODEZ
Super U
Super U
Not concerned
SAINT BENOIT
Carrefour
Carrefour
Not concerned
SAINT PIERRE
Carrefour
Carrefour
Not concerned
SAINTE MARIE
Intermarché
Intermarché
Not concerned
SAINT-ETIENNE
Casino Hyperfrais
Auchan
Apr 30, 2024
TOULOUSE
Casino Hyperfrais
Auchan
Apr 30, 2024
TOURS
Intermarché
Intermarché
Oct 15, 2023
VALENCE
Casino Supermarché
Intermarché
Date not confirmed
Source: newspaper articles
* * *
This press release is available on
www.mercialys.com.
About Mercialys Mercialys is one of France’s leading real
estate companies. It is specialized in the holding, management and
transformation of retail spaces, anticipating consumer trends, on
its own behalf and for third parties. At December 31, 2023,
Mercialys had a real estate portfolio valued at Euro 2.9 billion
(including transfer taxes). Its portfolio of 2,038 leases
represents an annualized rental base of Euro 175.5 million.
Mercialys has been listed on the stock market since October 12,
2005 (ticker: MERY) and has “SIIC” real estate investment trust
(REIT) tax status. Part of the SBF 120 and Euronext Paris
Compartment B, it had 93,886,501 shares outstanding at December 31,
2023.
IMPORTANT INFORMATION This press release contains certain
forward-looking statements regarding future events, trends,
projects or targets. These forward-looking statements are subject
to identified and unidentified risks and uncertainties that could
cause actual results to differ materially from the results
anticipated in the forward-looking statements. Please refer to
Mercialys’ Universal Registration Document available at
www.mercialys.com for the year ended December 31, 2023 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240418681552/en/
Analyst and investor Olivier Pouteau Tel: +33 (0)6 30 13
27 31 Email: opouteau@mercialys.com
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