Mercialys Aktie

Ladies and gentlemen, welcome to the Mercialys presentation regarding its 2025 full year results. It will be structured in 2 parts. First, a presentation by Mercialys' management team represented by Mr. Vincent Ravat, Group CEO. Afterwards, there will be a Q&A session during which you can oral questions through your computer or by joining the conference call.

I will now hand over to Mr. Vincent Ravat. Sir, please go ahead.

Good morning, everyone. Thank you for attending this presentation of our 2025 full year results. Our presentation today is built around 4 main messages. First of all, the momentum created by the repositioning of our portfolio. Secondly, the foundations we have put in place to gain the preference of retailers and consumers. Thirdly, the strength of our results and our financial structure. And finally, our distribution policy and our outlook for 2026.

2025 was special for us. In October, we celebrated Mercialys' 25th anniversary. 2025 also marked a change of momentum for the company. For several years now, we have been undergoing a profound transformation of our portfolio. 2025 showed that this strategic change is now well advanced and already bearing fruit.

Slide 5, we note that there is a general positive consensus about commercial real estate sector. This is especially the case for the companies with portfolio of assets in the right locations and in the right format. Three factors will support future performance for those company. First, population is still growing in the suburban areas, while administrative constraints for new supply have increased.

The second factor is a tighter consumer spending, which means that everyday low price policies are fundamental to create shoppers' preference. Thirdly, retail and commercial real estate are polarizing. So portfolio selectivity will be central to performance. In the past few years, we have shaped and we continue to shape our portfolio of assets around these conditions of success. This is why we believe we are among the companies that are well positioned for positive performance forward.

Slide 6, you can see a summary of the journey we have undertaken to do so, where we come from, where we stand and where we are aiming soon to be. Our starting point was a dispersed portfolio of hypermarket-dependent assets. Today, we are no longer exposed to any hypermarket dependence. We used to have a portfolio spread across France, often including in areas with low economic dynamism. We have actively refocused our portfolio on the most dynamic regions and metropolitan cities.

At the same time, we have strengthened the local dominance of our assets. Today, more than 85% of our assets have more than 50 shops, and this percentage increases every year. In this respect, today, 80% of our portfolio now exceeds 3 million visitors annually, and we have in sight a 95 percentage soon. Finally, within 3 years, our assets will have more than 90% of the consumers' preferred brands in their merchandising mix. Our portfolio is now made up of mostly dominant assets in their local area, no longer just convenience centers.

The strategic repositioning is directly reflected in the very positive momentum of our 2025 figures, summed up on Slide 7. This is our best overall set of results since 2019. Our EBITDA margin is gaining 40 bps at 82.4%. Our rental revenues are on the rise despite perimeter effects related to disposals in 2024. Our recurring net income grew year-on-year by a solid plus 3.9% to EUR 117.5 million. This is the second highest level of NRE since 2011. At the same time, on a like-for-like basis, the value of our portfolio increased by nearly 4% in the second half of the year to exceed now EUR 3 billion. Our LTV ratio is improving consequently by 260 bps in 6 months to 39.5%. And finally, our EPRA NTA is up 8.5% since end of June.

Slide 8, we ought to highlight that these financial performances are not temporary nor cyclical. They are here to stay. They are the results of our constructed, coherent and disciplined model. It is based on the 8 strategic pillars of our Shop Park roadmap. Let me recap them. A geographically refocused portfolio; two, assets of the right size dominant in their catchment area; three, selectivity in our assets and in their commercial offer; four, accessibility in terms of price positioning; five, industrial and rental diversification to limit rental risk; six, seven and eight, cost-efficient asset operation, full commitment to environment. As shown here, these are the pillars that will continue to support both the growth in our retailers' turnover and hence, our net rental income growth. This strategy translates into very concrete terms for our shareholders.

On Slide 9, provided that our Board proposed EUR 1 dividend per share, is approved by our general meeting to be held on April 23, for 2025, Mercialys would have delivered double-digit return to its shareholders, a total shareholder return of 18.4% and a 10.2% return on equity. Our solid model offers investors a visible recurring and distributable cash flow generation.

This value creation is accompanied by our commitment to sector-leading ISR ratings and demanding forward ESG trajectory as illustrated on Slide 10. 2025 marks 10 consecutive years of recognition at the highest ISR level for Mercialys. Operationally, we have reduced our greenhouse gas emissions by 57% since 2017, and we are now embarked on a new certified net zero trajectory covering all Scopes, 1, 2 and 3. We have equipped almost 85% of our centers with charging points. We have brought 86% of our main assets to an excellent or outstanding BREEAM In-Use rating. Last year, we have also obtained the leading score among French SBF 120 companies in terms of gender equality at 96%.

As I mentioned earlier, we are repositioned. We have a solid model, and we have momentum. All these elements allow us to set our sights on an attractive medium-term trajectory detailed Slide 11. Over the period 2026-2028, we expect a trajectory of growth of our rental revenues between plus 5% and plus 7% on a compound annual basis, of which we consider that between 0% to 1% could come from indexation, of which we consider that 1.5% to 2% could come from our organic rental growth through more reversion, more variable rent, more casual leasing and less and even further less vacancy. The rest of the growth would be contributed by new acquisitions and by our pipeline based on current planning of deliveries. This growth in top line should offset the expected increase of our financial costs.

All in all, by 2028, this would support an average net recurrent earnings growth of between plus 2% and plus 4% with a dividend policy targeting an annual payout around 80% of the NRE per share. In any circumstances, our capital allocation will continue to be extremely disciplined with a goal of a net debt over EBITDA ratio below 8x and an ICR ratio above 3.5x, both well above our bank covenants. We have seen how we have laid solid foundations to deliver a strong and steady financial performance. It is because these foundations drive retailer and consumer preferences locally that our assets can outperform.

Let's see how we do it in details in the following slides. First of all, it is important to realize that there is a high level of polarization of regional sociodemographic trends across France. Consequently, retail performances have not been equal across all regions. In the past few years, we have followed this polarization to reshape our asset portfolio. As you can see on Slide 13, we have focused our portfolio on regional capitals and the French Sunbelt. That is a focus on the areas that capture most of the demographic and economic growth in France. In a country marked by a strong polarization of territories, being positioned in the right geographic areas is a decisive advantage in securing turnover growth.

Beyond localization, we have also profoundly changed our marketing and digital approach. Our Shop Parks have become true omnichannel platforms capable of generating additional physical traffic from powerful digital levers. Our permanent active asset management is amplified by this industrialized marketing strategy. These are 3 drivers that we focus our attention on. Firstly, the retail brand's local visibility. We have reached 417 million views of our content in 2025 with a coverage of 100% of the population in our portfolio catchment areas.

Second driver, enhancing click & collect and ship from store for our retailers. For 5 years now, we have been offering local logistics solution to our retailers. We will soon reach 1 million visits for packages, pickups and drop-offs, which themselves drive 25% incremental on-site purchases. Thirdly, we develop exclusive events, either thematic or eco-responsible, that contribute directly to increased on-site traffic and conversion.

Preference from consumers also comes from supply. Today, 80% of French consumer favorite brands are present in our Shop Parks, as you can see on screen. It is an extremely strong marker of the quality and relevance of our current commercial mix. Our strategy is to further concentrate our portfolio offer on the top-of-mind brands while equally integrating e-commerce players when it reinforces the attractiveness of our sites.

Slide 16. This attractiveness is accompanied by a strong discipline on diversification of our exposure to avoid any concentration of operational risks. In 2025, we have re-tenanted 100,000 square meters of our portfolio, that is to say 14% of our total portfolio surface area. At the same time, we are steadily reducing the share of the top 10 tenants in our rent roll from 32% 5 years ago to 25% today, and then we will reduce it further. Our objective remains unchanged. No individual rental exposure above 3% in the medium term, no excessive industrial exposure to any retailer either.

Slide 17, we present another element driving our positive momentum. In a context where purchasing power remains under pressure, our everyday low-price proposition is a real economic shock absorber and a strong footfall and sales driver. It allows retailers to preserve their volumes and consumers to maintain their appetite and satisfy their appetite for acquisition of physical goods. This positioning is clearly an edge on inflation, which translates very concretely into our continuously improving collection rates, reaching 97.8% at the end of 2025.

The attractivity of our refocused portfolio is reflected in our business activity on Slide 18. In 2025, we have signed nearly 200 leases, a lot of them with new brands on our portfolio. This is an increase of 10% compared to 2025, showing the strength of the demand for our assets. These signings mainly concern segments of daily consumption, home equipment, sport, beauty and accessible catering. Primark, Aroma-zone, Mango, Adidas, Lidl, Leclerc, Grand Frais, Volfoni, Tedi, Maxi Zoo, B&M, Biotech or Normal are all leading brands in their segments signed in our portfolio in the last 12 months, with a lot of them being international leaders. All of these levers I have just described resulted in a very clear operational outperformance of our assets in 2025.

Slide 19, we can see that over 12 months, our portfolio footfall increased by plus 3.9%. This is 300 basis points above the national index. Meanwhile, retailer sales also increased by 2.6% over the same period, 280 basis points above the national index. It is worth noting as well that our outperformance in terms of sales versus the French national panel increased by a further 40 bps to 340 basis points for the month of December alone. These indicators confirm the relevance of our commercial offer and positioning. Since the beginning of 2026, the first indications are for a continuation of these positive trends.

This dynamic is reflected in our other operating indicators, Page 20. Thanks to strong letting efforts, I just described, in 2025, our current financial vacancy has dropped to an all-time low of 2% at year-end. At the same time, our retailers' occupancy cost ratio remains among the lowest in the sector at 10.9% and even lower at 10% if we include the food stores OCR. This combination creates a healthy rental tension, which constitutes a natural lever for positive reversion.

In 2025, renewals and relocation were done at a 2.2% reversion rate, up 190 basis points from their 2024 level. You will note that we do not include reletting of vacant units nor short-term contracts in the calculation of our reversion rate.

Our future growth will be sustained via not only the organic drivers that we have just seen, but also by our project pipeline, which will further strengthen our dynamic. As illustrated on Slide 21, we have a large portfolio of projects that can be adjusted, activated or deferred according to the economic context. We will remain very disciplined in our capital allocation with a strict 10% IRR hurdle rate for deployment. Part of the short- and medium-term projects have already been activated to drive our growth in the coming few years.

And we are currently deploying 3 categories of projects, strengthening, extension, new creation, which I will illustrate now individually. The first category, Page 22, are projects that reinforce existing assets to help them gain local leadership when they do not have it already. Two of these projects are underway in Brest and Niort. In Brest, the opening of the first MSUs, including Leclerc, has already generated an increase of plus 50% in footfall. We also expect positive reversion on leases for the rest of the assets as well as a revaluation to come upon completion in September 2026. This asset is becoming the leading asset in Brest metropolis.

In Niort, we are following a similar logic, accelerated execution, commercial strengthening, all with very significant expected effect on traffic of at least plus 30%. This reinforcement should also lead to a revaluation of the asset.

Secondly, in terms of the projects, beyond these reinforcement projects I just mentioned, we are also deploying extensions to create additional rent on sites that are already dominant as shown on Slide 23. Our approach is very simple. We capitalize on assets that are already leaders and we add additional attractiveness features. Two illustrations here. In Grenoble, we will create a deli-gourmet promenade and add MSUs by gaining on common areas. Our project is already 80% pre-let. Work will start soon, and we expect plus 20% additional net rent for the asset.

In Angers, we have acquired 1.6 hectares of land immediately adjacent to our leading local Shop Park. We will be filling administrative authorization in 2026 for a 15,000 square meter potential retail development. Our target is to increase our total rent on this site by 15% upon completion.

This sequenced CapEx-light developments with quick returns are best illustrated by the transformation example over time of our Toulouse Shop Park on Slide 24. This is a textbook Mercialys business case, a consistent step-by-step transformation strategy that gradually increases the retail offer, overall quality and attendance of the site.

Around 10 years ago, we owned a convenience center with an hypermarket and 24 shops with 2 million footfall. It was already not bad at the time for this type of neighborhood asset. In 10 years, we have grown this asset retail offer to 130 shops and restaurants with more than 6.6 million visitors in 2025, and footfall continued to grow by another 3% in January. Our additional ongoing new project initiatives have a clear ambition for this asset to exceed 7.5 million visits within 3 years and become the #1 asset in terms of footfall in the Toulouse metropolis area.

Finally, our third category of projects on Page 25 consists of new creation on selected geographies and secured land plots. In Saint-Andre, in the Reunion Island, we are developing a mixed-use business park on a land reserve we already own. In an area with low commercial density and favorable consumption dynamics, our project is fully authorized, already pre-let on more than 80% of its total retail GLA of 11,000 square meters. There is little complexity in the development scheme, and our approach is CapEx frugal with an expected yield on cost above 8.5%.

In Ferney-Voltaire, on a plot of land bordering Geneva, we are targeting a 17,000 square meter mixed-use development in partnership. The yield on cost is expected above 8%. Given the attractiveness and wealthiness of this cross-border area, we have already received retailers marks of interest for over 80% of the total GLA. Together with our developments, our acquisitions are part of a very disciplined investment logic, improving quality, strengthening leadership and creating value quickly.

Slide 26, we see that we invested EUR 176 million in 2025 for an average return of around 9%, with value creation already visible. NAV is up by more than 20% in the scope concern. We intend to pursue our investment campaign in 2026, which could reach up to EUR 100 million depending on our level of disposals. We already have specific acquisition targets in sight. We are giving here, on Page 26, the example of a retail park adjacent to our Toulouse asset that we are targeting in order to consolidate the local market share of the Shop Park as explained earlier.

Our post-acquisition model is also industrialized. We act on 4 levels: improving merchandising, vacancy, expenses and ancillary revenues. As you can see on Slide 27, with the case of Saint-Genis Shop Park acquired last year, we have already signed new lease with Maxi Zoo, and we have active leads with new retailers like Mango, Decathlon or Aroma-Zone. Our goals in 2026 are to: one, reduce vacancy by 50%; two, increase rent by 5%; three, reduce charges by at least 10%; and four, develop specialty leasing income by plus 10%. Overall, in the medium term, our ambition is to create additional appraisal value of plus 30% to plus 40% of the acquisition price.

Beyond our organic growth and project pipelines, we now fully hone another growth engine, the ImocomPartners asset management platform. As at beginning of 2026, the platform has 33 retail parks under management, approximately 400,000 square meters of GLA for EUR 40 million in annual net rental income. ImocomPartners provides us with a platform of expertise and asset-light growth with recurring revenues that could be comforted by operational strategies -- synergies. In the medium term, there is a strong potential of value creation with the launch of new funds and the ramp-up of assets under management, which would contribute positively to our EBITDA growth.

Slide 30. I will now move on to financial results and funding metrics. Let's start with rental revenues. Our rental revenues reached EUR 180.6 million at end 2025. On a pro forma basis, taking into account the temporary IFRS accounting impacts related to already relet spaces of Brest and Niort detailed on the bottom right of this slide, our rental revenues grew by plus 1.7% compared to 2024. This growth includes the total negative scope effects of 2024, offset by 2025 acquisitions. This highlights our organic performance.

Indeed, on a like-for-like basis, our gross rental revenues increased by plus 2.8%. It is important to note that we are talking here about gross rental revenues from indexation and leasing activity only. Our figure of plus 2.8% does not include doubtful debtors' effect nor JV marketing or other type of fees. Beyond the growth of the top line, we have embarked on a structured approach to optimize our cost base.

Slide 31. In 2025, we launched the first operational deployment of artificial intelligence in our back office with 3 very concrete objectives: automating recurring functions with low added value, optimizing commercial and rental management processes and using our data to accelerate decision-making and pro rata temporary effects. Over time, we expect associated productivity gains could contribute to plus 0.25 to plus 0.5 points of additional EBITDA margin.

If we move on to the analysis of the evolution of our net recurrent earnings on Slide 32, we see here that our EBITDA increased by EUR 1.7 million. This brings the EBITDA margin to 82.4%. Our financial expenses grew by EUR 6 million in the meantime. This change is mainly due to the increase in debt marginal cost and to our refinancing operations. The change of our other operating items amounting to, as I mentioned earlier, to plus EUR 5.1 million is mainly due to indemnities received for early lease termination. IFRS standards imposed an accounting treatment outside rental income. It is worth noting that more than 90% of the GLA concerned by these indemnities I just mentioned has already been relet. The new rents will take effect in 2026 and 2027 after store setup period, hence, our pro forma presentation 2 slides ago.

Finally, change in equity associates and non-controlling interest have been mostly impacted by the change in the consolidation method of the ImocomPartners fund management company and the impacts of change of other minority interest due to acquisitions and disposals. On the basis of these elements, our net recurring earnings stood at EUR 117.5 million for 2025. Its increase is plus 3.9% over 12 months. This represents EUR 1.26 per share, also up plus 3.9%. This performance is at the top end of the range of the guidance we revised last year.

Slide 33. Our operating performance, rent growth and net acquisitions are also reflected in the positive evolution of the valuation of our portfolio. In 2025, the value of our portfolio exceeded the EUR 3 billion mark, up 10.1% over 12 months. This increase was driven by a positive rent effect for plus 2% and a scope effect for plus 8%. Meanwhile, capitalization rates stayed stable. Our appraisal yield remained flat at 6.65%, maintaining a premium of more than 300 basis points over the risk-free rate. This leaves potential for further revaluation given the current operational strength of our asset base and the associated level of our key performance indicators.

Slide 34. This portfolio revaluation is reflected in our NAV. EPRA net tangible assets came to EUR 16.96 per share, up plus 8.5% over 6 months and plus 4.1% over 12 months. The positive change over 12 months takes into account the following impacts: the payment of EUR 1 of dividends; the net recurrent earnings growth for plus EUR 1.26; the positive change in unrealized capital gains for EUR 1.41, including a negative effect linked to the change in valuation rates and positive effect linked to rents; and fourth, other items in relation to the accounting for minus EUR 0.99, mainly in relation to amortization and depreciation. I remind you that our accounting is on the historical cost method. Regarding our EPRA NDV, it is up plus 9.5% over 6 months and plus 5.1% over a year to reach EUR 17.29 per share.

Slide 35, we highlight that our current performance and our future growth remains supported by a robust financial structure. At the end of 2025, our banking covenant LTV, excluding duties, stood at 40.4%. Note that the LTV on screen is not taking into account the financial lease associated with our Lyon acquisition. Including this financial lease, our LTV stood at 39.5%, including rights at end of December. It is down 260 basis points over 6 months. These levels are all much lower than the 55% banking covenant that applies to all our confirmed bank lines.

Our ICR ratio stood at 4.9x as of December 31, well above the minimum level set by our covenants. Both our ICR ratio and net debt over EBITDA ratio were partially impacted at end of December by the pro rata temporary effect of the acquisition of Saint-Genis in Ain, which occurred in June. We had more debt, but half the EBITDA contribution. Note also that on October 17, Standard & Poor's reiterated Mercialys' BBB stable outlook rating.

Slide 36. As you know, in June 2025, Mercialys issued a EUR 300 million bond oversubscribed 5x with a maturity of 7 years. This [ emission ] illustrated investors' confidence in the credit quality of the company. It is intended to allow the redemption of the EUR 300 million bond maturing this month and carrying a coupon of 1.8%. At the end of December 2025, the average maturity of our drawn debt was 3.5 years. We also maintained a high level of coverage of our fixed rate debt at 89%. Additionally, Mercialys also has EUR 390 million of undrawn financial resources. All of our undrawn bank resources include ESG criteria.

I hope that with these results and through this presentation, we have shown that Mercialys combines portfolio strength, high recurrent profitability, balance sheet discipline and a high growth potential.

Building on these strengths, we expect a solid 2026 performance. We are targeting an earnings per share of at least EUR 1.29 with a dividend of at least EUR 1 per share. Our underlying growth of earnings shall be supported by continued strong retail operating performance with continued footfall and retail sales growth. It will be supported by the positive impacts of our dynamic leasing, by the ramp-up of some of our projects and by positive impacts of 2025 and new 2026 acquisition and as well a continued focus -- with a continued focus on cost discipline. Our guidance also incorporates and reflects the increase I mentioned of our cost of debt and the effect of disposals associated with our permanent asset rotation policy.

Well, that is all for me for today. Thank you for listening, and we can now follow up with the Q&A session.

[Operator Instructions] The next question comes from Florent Laroche-Joubert from ODDO BHF.

I would ask maybe 1 or 2 questions. So my first question would be on your development and investment plan. So could you give us maybe more color on the CapEx you are able or you're willing to invest in the coming years or for a year? And maybe also what would be the targeted credit profile for the next year? So do you still target maybe LTV ratio below -- around 40%? And maybe also, would it be possible to have some more color on the deliveries for the pipeline that you expect?

Okay. I'll start with maybe your second question. In terms of pipeline delivery, basically, what you can expect for 2026 are the delivery of small projects that are CapEx light that we started in 2024 and 2025 and that will contribute to additional rents in our projects. I mentioned about Brest and Niort. We are talking there about building walls to separate the unit to transform it and then to create reversion on the former space. We have also other initiatives like in Grenoble that will be due a little bit later. But basically, at the moment, what we are focusing on in strengthening our portfolio, and that's the type of delivery you can expect for '26 and '27.

In terms of acquisition, I mentioned a potential about EUR 100 million. As you know, and as I mentioned, it will also depend on the amount of disposal that we will realize during the year. We are always looking at liquidity and rotation of our portfolio because this is important to support our confidence in the level of valuation of our assets and then to contribute to general liquidity of the company. So depending on these disposals, we estimate that we have firepower of around EUR 100 million for 2026.

The balance between investment, new acquisitions, disposal and CapEx is always in mind for us and adamant criteria of maintaining our BBB perspective, stable rating from S&P. There are sets of criteria that S&P shares with us that are required, and we stick by them in a very orthodox way. So don't think that we will put that in danger in any sort of way. And we feel confident that we can both invest and maintain those criteria and this balance sheet equilibrium.

Okay. So that means that you can target potential acquisition investment for EUR 100 million maybe in the next 12 months, and then we will see what you are able to do for the next years, 2027 and 2028.

Yes, plus some potential disposal if we deem them interesting at the time with, of course, the pro rata effects of any acquisitions when they occur and when we communicate on them.

Yes. But in your guidance -- there is no acquisition included in the guidance. And today, you have very advanced discussions, significant to be added maybe later in the guidance.

We always include all perimeter effects in our guidance, and these perimeter effects can be from acquisitions, from disposal, but also from variation in our P&L. And I mentioned about the financing cost increase. What we provide to the investor is something that is clear. The management of how we invest, how we sell assets, how much value we create is ours -- it's our job. What we give you is something that -- is visibility on what we will deliver in terms of net recurrent earnings per share for the year to come.

The next question comes from Valerie Jacob from Bernstein.

Just maybe a follow-up question on the previous question about your investment strategy and capital allocation. You -- in terms of how you think about your pipeline, you said you have a criteria of 10% IRR. Currently in your pipeline, do you have projects that are above this hurdle rate? And if you do, why don't you launch them? I mean, I guess my question is how you think about development versus acquisition? And maybe to finish also, how you think about share buyback in this context? I've got another question, but I'll ask the question after.

This is an interesting question. This is part of what's thrilling in our jobs, to make the right choices of capital allocation. Our belief is that any investment should provide return within a short-term period. So when we see that we can either launch or start projects with low CapEx and high yield that can be compressed in time with short-term delivery, we do it, especially if they strengthen our assets. When we see that we have very relative acquisition potential, we will go for them because they are immediately contributive, especially if we think we can improve the KPIs of those assets.

So what we have in mind is short-term delivery on capital allocation. That's the driver. Plus a level of yield that's highly relative. And it's the combination of the 2 that's important. So no investment below 8% yield on cost. But then the difference between something that's long term at 8% and something that's short term at a little bit lower yield makes a lot of difference in our choices.

Okay. And maybe -- so you didn't answer about share buyback, right? How do you think about that versus acquisition and development?

I said in many road shows in the past that I thought buying back share was less interesting than investing in our industrial know-how. Now seeing how our shares trade and have been trading over the past year, lagging with inadequation in my mind between the strength of our underlying performance and where our share stands relatively, it's true that I started to ask myself -- and this is a discussion we had with the Board of the possibility of buying back share. We have not decided to do so in this sequence of results, but this is a thinking that's clearly in our mind.

Okay. And I've got another question about your recent acquisition and Saint-Genis. You said during the presentation that the assets' valuation were up more than 20% since you bought it, over the past 6 months. So I just wanted to understand what happened? I mean, was it a lucky buy? Or did you do anything to improve the valuation of the asset over the past few months? If you could share some details.

In the last 5 years or more, we have been transforming assets that are disliked into powerhouse. The assets I'm talking about are assets somehow that have no name. They are not retail parks. They are not convenience centers. They are not hypermarket galleries. They are in between. They are dominant -- they are assets that can become dominant in their local areas. They are assets that have an amplitude of offer that's very wide. They are assets that are convenient, that are low cost. And this category that we have named Shopping Park because it bears no name really, embodied by our Shop Park brand, is a category that was overlooked and little looked by investors.

When we went for the Saint-Genis acquisition, we faced little competition in those bids. Probably I should not say that too much publicly because that could attract investors in the future. But on these categories of assets where we see a huge potential and we deliver strong performance, there are little investors showing up. And so when you have a willing seller and you have a few counterparts as buyers, you make good deals and you make -- and the yields that we reach later on reflects the stability and the low risk on the cash flows.

We have a lot of our assets that are not considered prime shopping malls only, where we had 0 vacancy in the last 10 years because they are in secondary cities in France and where the risk on the performance is limited, which should definitely be translated into the valuation yield. So yes, for the assets that we work on, there is a big discrepancy between the yield as a reflection of the transaction on the market and the yield as a reflection of the risk on operational performance and on recurrence of cash flows.

The next question comes from Amal Aboulkhouatem from Degroof Petercam.

Congratulations for this result. I have 2 questions on my side. And the first one would be on the operational performance when it comes to retail sales, but also footfall. Is there any base effect to see behind the strong results as -- 2024 was impacted by the casino transition. Could that be an explanation for your strong outperformance?

It's interesting you're asking this question because this is something I failed to mention. Actually, our footfall performance in 2025 did not include the assets where the base effect could have been extremely positive because it would have wrapped our overall performance to a level that would not have been credible. So basically -- for instance, the Brest assets indeed has a huge base effect between 2024 and 2025, but it's not included in our report of footfall growth. The footfall growth comes from the other assets where we have a basis of comparison that's equal. So it's really -- and the performance that we are publishing are really the underlying performance of our model, not related to base effects.

Okay. Second question would be, again, on the investment policy and strategy. Just -- so we see you did a very great acquisition in 2025. How do you look at the market in 2026? Do you think this is replicable, meaning that do you see still potential targets that would, let's say, tick all the boxes at still attractive prices? You mentioned the retail park adjustments to your Toulouse portfolio -- your Toulouse asset, but have you identified more potential targets at this stage?

Yes, we are clear on the targets that we would like to acquire. We have a set list that we are looking at. We still see a few potential buyers. Probably it's because all those assets -- and this is true for commercial real estate in general -- are difficult to manage. We have a specific know-how that we know how to apply on those assets that a lot of investors, especially nonspecialists, cannot replicate easily. After -- and therefore, the yields on acquisition could reflect that, meaning being quite high.

After -- the difficulty is more on the vendor side, where we see vendors hesitating because probably they see what we do and they think maybe there is a possibility. So that limits a little bit the number of assets on sales. But we are very confident that there will be -- there are opportunities currently. And also, the fact that because the yields are high, the bank having a little bit more confidence about commercial real estate tend to refinance those potential vendors who hold the assets, which flows a little bit the dynamic of rotation on the market. But there are enough products that we like on the market for us to deliver what I just presented.

And is there any like plan to look at acquisition outside of France?

We -- despite all the political and economic turmoil in France, we still like the country. It has a very stable consumption base. We think, as we mentioned, that when we are focused on the right geographies, there is still a lot of potential. So that's our main focus. We are strong in France. We know the market to -- and each millimeter square of it. And so that's where we believe we can deliver most.

Now there is always this question of diversifying of our rental base, of the fact that our share drag or comparative share drag to our performance could also be related to some defiance from investors about any companies too exposed to France. And so this is also a question that the Board and I discuss and that we look at.

The next question comes from Benjamin Legrand from Kepler.

I have actually a few questions. You're mentioning disposals, but I was just wondering what kind of assets would you be disposing? Will it be smaller noncore assets? Or would you be looking at mature assets? And then on your acquisition plan, which would be financed through disposals, would you also be looking at new equity going forward? And related to that, your guidance for 2028, I mean, the midterm, is on earnings per share, right? It's not earnings only. I mean, if you do equity raise. That would be it for me.

In terms of the disposals, what we've always said and we continue to say and think is the fact that there is no trophy asset in our portfolio. Basically, the key for a REIT like us is to have full liquidity on the whole portfolio, not liquidity on a small part and then the rest overvalued. Then there's no ability to be sold. So anything could be sold. If it's at the right price, valued properly by the market, we could consider selling it. And we've shown in the last 6 years that basically we are ready to dispose of anything if the purchase circumstances are the right ones.

So there are multiple options. We have demand on some assets. People see the job that we are doing, especially locally. We have an average asset value of around EUR 70 million, which provides us many options in terms of seller type. So anything is possible. And then obviously, depending on the amount of what we could sell, then we would look at reallocating in order to be able to deliver the guidance that you have on screen or you must have still on screen right now.

In terms of equity raise, this is something that we mentioned in road shows. We saw that what some of our peers have done. We think this is clever. It's true that our stock trades at a huge discount, which creates a hurdle rate to -- for -- to have a relative acquisition a bit more complicated. But if we estimate that there are fantastic opportunities on the market that could be relative for our shareholders, great for the company overall portfolio strength, yes, we will consider looking at the option of equity raise.

[Operator Instructions] The next question comes from Alex Kolsteren from Van Lanschot Kempen.

I think my colleagues asked most questions, but I have one remaining. In that growth outlook, what do you assume will happen with the reletting of the hypermarket maturing next year summer?

Sorry, I could not hear precisely. What you're asking is the potential reversion on the hypermarket reletting?

Yes. Is that sort of accounted for in that growth outlook, 5% to 7%?

Yes. Basically, the hypermarket transformation is part of our overall strategy. And when we cut the hypermarket size related to new units, this creates a reversion. So at the moment, it's not accounted for in the reversion that we have published or at least any of these -- none of these operations are accounted for in the numbers that -- of reversion that we have published for last year.

That's understood. But I'm more talking about the outlook for '26 to '28. And then the organic growth figure is 1.5% to 2%. So my question is, is part of that 1.5% to 2% accounted for by the reletting of hypermarket space to non-hypermarket tenants?

Yes, of course. We count on this reletting to not only contribute to our organic growth but also contribute to the strength of our retail assets. This was part of our strategy. Remember back in 2015 and '16 when we said we are buying hypermarket walls in order to be able to transform them because we see that the hypermarket is changing and the operators will have to reduce their space to concentrate on food only, and so those spaces will have to be reconfigured? It's better to be in control of that reconfiguration, as we are, because we can do what is good for us instead of suffering the potential consequences of those reconfiguration as a weakness.

[Operator Instructions]

I think there are no further questions. So I think we'll end this conference on that. Thank you all, and I wish you a very pleasant day and a very pleasant result season.

"

"

" ODDO BHF

" Banque Degroof Petercam

" Invest Securities

" Kempen NV[ id="-1" name="Operator" /> Hello, and welcome to the Mercialys 2025 Half Year Earnings Call. Today's call is being recorded. [Operator Instructions]

I will now hand you over to Vincent Ravat, CEO of the Group, to begin today's conference. Please go ahead.

Welcome, everyone, to this presentation. As some of you may know, Mercialys is about to celebrate its 20th anniversary in October. From what the company was at its inception in 2005, a lot has changed. Along those years and with a recent acceleration, we have not only refocused our portfolio towards the best location and geographies in France. We have also radically transformed our assets and their positioning.

We have also fully reshuffled our food retailer anchorage. We have also expanded our merchandising mix with the best brands and completely diversified our tenant base. We have renewed our pipeline and reactivated our external growth. And meanwhile, our shareholding structure has evolved also radically. We have become one of the only, if not the only, noncontrolled listed commercial real estate company in Europe. Along this journey, we have showed that we can weather all sorts of storms. We have also showed the extent of our know-how with choices that are proving adapted to the broad changes in consumption patterns. And all this teamwork shows in our results and perspectives as we will see today.

I propose that we move directly to Slide 4 with the main expression of our confidence in the future, the upward revision of our outlook. Our momentum is very positive this year. The good performances over the first half of the year enabled us to raise our full year guidance. We are now raising our net recurring earnings target range upwards to EUR 1.24, EUR 1.27 per share. We also confirm the initial target for a dividend of at least EUR 1 per share. The final dividend level will be proposed by Mercialys' Board of Directors next February and submitted to the following general meeting.

Our robust cash flow growth trajectory, as you can see on the slide, and financial health are a testimony of our ability to steadily return value to our shareholders as our REIT status command.

There is a general consensus nowadays on Page 5 that the outlook for the commercial real estate sector will remain positive in the medium term for the companies with the right asset location in the right format. There are 3 contributing factors that can be highlighted and that explained it. First, the population is still growing in the suburban areas, while administrative constraints for new supply have increased. Secondly, the physical retail journey continues to be very attractive for consumers with stores being considered as part of a global omnichannel journey. And thirdly, France remains critical to retailers' store network allocation with a growing number of openings. This last point is comforted by retail sales that have shown in France resilience to price deflation in the last 3 years, as we can see on the graphic on the right of the slide.

However, retail sales performances have not been equal across all regions of France. They are highly dependent on regional social demographic trends. This has led us along the years to refocus our portfolio towards the most dynamic parts of France, the region that you see on the map on the right in brown color showing the most growth in terms of demography. 20 years after the company's creation, Mercialys real estate network has been radically shaped, as I mentioned before.

And I think the 2 maps on screen really tell. From 148 small assets with an average value of EUR 6.5 million in 2005, EUR 6.5 million, we have evolved the portfolio towards 34 strategic sites with an average value of EUR 77 million. Our assets where local hypermarket outbuilding at the beginning of the company's life. They are now regional leaders in the most dynamic metropolitan areas of the country.

Along our portfolio repositioning, we have transformed our assets towards a real estate format of their own as detailed on Slide 7. Our portfolio stands in a format between what are generally known 3 distinctive categories, which are: one, the large shopping malls with their complex structures and often substantial scale, 200 stores or more. The second category are the hypermarket service center with their limited retail offers, around 20 shops on average. And the third category are the retail parks with their low CapEx, low service charges concept and open-air concept.

What would qualify best our assets as they are now would be to name them shopping parks, a contraction of shopping malls and retail parks. Indeed, our assets have a sum of specific hybrid characteristic, mixing the best of both those formats. The assets all have a large, diversified merchandising mix of an average of 50 to 150 stores, including a food anchor, just like large shopping malls. They offer free open-air parking for optimal accessibility like retail parks. Our sites are partly enclosed partly in open air, but they are also covered with heating and air condition, just like both shopping malls and retail parks together.

Finally, our assets have a simple single-level real estate structure with low operating costs like retail parks. More than 95% of Mercialys' portfolio in value sits today in that shopping park category.

The image on Slide 8 perfectly illustrates the hybrid format of shopping park that I just described with the example here of Brest and the new perspective of the asset. Our Brest asset has a large and diversified offer of more than 70 retailers. It is the #1 shopping destination in the Greater Brest metropolis. It is anchored by leading retailers and MSUs like Cultura, Sephora, Mango, among other brands. It's 1,500 open-air parking spots are easily accessible to consumer and free, of course. Its simple real estate build offers the retailers a low-cost lease structure.

Notwithstanding its low level of charges, our asset provides consumers the comfort of air condition and heated shopping conditions. And they are important in Britain when you know the weather conditions on average. It is the shopping park characteristics of this asset and its leadership status that have attracted new powerful tenants like Leclaire and Grand Frey and will continue to attract others. Additionally, to the characteristics we mentioned, we also consider that the notion of rightsized asset is crucial.

In order to understand what I mean, we have detailed on Slide 9, the results of an Ernst & Young Parthenon report dated April 2025. It shows a continued concentration of the number of retailers across all consumption segments. Among the 12,000 people surveyed nationwide in France, 212 brands only have been mentioned in total. Out of those, only 84 had a fan base larger than 5% of the surveyed group.

You can also see on the table that 16 out of the 17 consumption segments are dominated by less than 5 brands. And the adult fashion sector is the only still fragmented segment. This last point probably partly explains the undergoing shrinkage of the fashion sector. This is the reason why we at Mercialys favor rightsized assets, merchandised with those 80-something leading brands across all retail segments. Retail assets do not need to be too big to satisfy consumers' preferences.

Attracting those leading retailers is the focus of our team, and they have been increasingly successful in doing so as detailed on Slide 10. Our portfolio of tenants is matching well what the consumers' favorite retailers are. Indeed, 70% of our top 3 retailers in each consumption sector are also in the French people consumers' top 3 favorites.

On Slide 11, the merchandising mix of our shopping park in Toulouse is a perfect illustration of what I just called a rightsized diversified mix that you can encounter across our portfolio. This asset boasts 132 stores with 29 MSUs, 89 shops, 13 restaurants and a cinema. It has a 97.2% occupancy on its over 100,000 square meters of GLA. It is the #2 in terms of footfall among all malls in Greater Toulouse area, a rightsized asset in the right geography.

As we have just seen, rightsized assets with the leading retailers are key to future potential reversion. Alongside in order to protect the stability of our cash flow, we nonetheless believe in the importance of a very diversified merchandising mix. All retailers, whether they are food or nonfood retailers are exposed at a time or another to business cycle effects. And we have largely experienced that in the past with a concentration of our mix that has -- that was totally different. Therefore, we do not want to experience it again, and we have set ourselves a target that no single retailer account for more than 3% of our retail income.

You can also see on the Slide 12 that through active asset management, our top 10 tenant exposure is heading towards a level below the sector average of 18%. Diversification of the tenant mix is not only essential to protecting our top line income, it is also essential in protecting us from concentration of operational risks.

Rightsized assets in their catchment area with diversified retailers means also higher occupancy as evidenced on Slide 13. Across our 34 leading regional assets, representing over 95% of our portfolio value, our current occupancy stands at 97.8%. Our total overall current financial vacancy stands at 2.9%, its lowest level since 2019, and that is if we take all our assets in portfolio, including the 5% aside from our 34 regional leaders.

During this semester, we have also witnessed a strong increase of plus 33% in our leasing activity across the portfolio. It has been accompanied by an uptick in the reversion -- in our reversion at plus 2.6% notably above previous registered levels. And meanwhile, working on refocusing our portfolio on dynamic geographies, we have also, as you know, significantly diversified our food retailer anchoring.

In this respect, as you can see on Slide 14, we now have the most diversified food anchorage among our peers in France. All the food retailers in France are in our portfolio. The presence of multiple strong food operators across our portfolio enhances its stability and attractiveness. Our portfolio offers further opportunities of diversification through the redevelopment project that you can see on the right that we will lead in Dijon, Valence and Tours. These projects will rely on our unique ability to transform our assets.

It is perfectly illustrated on Slide 15 by 2 restructuring operation that we carried out recently. The first one resided in the subdivision of the space previously occupied by Casino, which will be replaced by Leclerc, Grand Frais and 3 midsized units. The second one is the reallocation of space previously also occupied by Casino Niort, 2 Lidl and 3 new well-known retailers, and there are more coming.

We all know now that hypermarket retailers and a lot has been commented on them, are reducing their store sizes to concentrate mostly on food product in their sales. The optimal hypermarket size is set to be around 8,000 square meters. This is at least what Auchan has confirmed and mentioned in a recent press release stated here on the left of Slide 16. I take this opportunity to add that Auchan mentioned in its results communication yesterday that there are 2 renovated hypermarkets at Fréjus and Mandelieu, 2 of our sites are up plus 28% since reopening in their new format.

That could allow for numerous merchandising opportunities for us from now until the lease terms of the hypermarket stores that we own for which you can see the schedule on the right. We have listed here the volume and types of interest received in each location. And in the context of overall low vacancy in our portfolio and the importance of tenanting our malls with the best retailers, the reduction -- the potential reduction of hypermarkets to more efficient format would definitely represent an upside for us. And we have proven with our team that we would definitely know how to seize those opportunities if and when they arise.

Our permanent active asset management is also amplified by our industrialized marketing strategies. There are 3 drivers that we focus our attention on. One is social media. We have a local brand visibility strategy. Its efficiency is driven by AI, and it enables us to reach 100% coverage of the 11.7 million consumers in the first and secondary catchment areas of our portfolio. We have reached 150 million views of our content in the first half of the year.

Second driver, enhancing click and collect and ship from store for our retailers. For 5 years now, we have been offering local logistics solutions to our retailers. And thirdly and finally, we promote responsible consumption with the rapid enrolling across our portfolio of our gift shop concept, enabling local consumers to recycle what they don't use.

On Slide 18, we see our operations show positively on the footfall and sales performances of our portfolio. On a comparable basis of number of days, our footfall is up 3.4%, outperforming the national Quantaflow Index by 240 basis points. Retailer sales saw a 1.7% growth. It is 50 bps higher than the national index that only has 5 months as we only have the report at end of May. June figures were not available at the time of this publication.

Additionally, note that the sales figures that we report are negatively impacted in the last semester by an unfavorable calendar effect in 2025. Indeed, in 2024, you had a leap year and the impact is estimated at 50 basis points over 6 months. Monthly performance differences this semester have been quite high, and they indicate a strong volatility of consumer behaviors, maybe in reaction to the general international and political instability.

On Slide 19, we show that although impacted by the diminishing effect of indexation, our organic growth trend sits at plus 2.7% for the semester, and it is close to our 10-year average. While the contribution of the action that we led on the park remains modest, it is showing a positive inflection in line with the pickup of reversion this semester. Our strong leasing activity, including the first leases with very attractive retailers such as Aroma Zone, Biotech, North Face should continue to support these positive trends. On the back of strong underlying performances. Our occupancy cost ratio came to 10.9% at end of June. It is a highly controlled level following a period of sustained indexation.

On the right of the Slide 20, we have used the comparable calculation method by mainly including the OCRs of the hypermarket that we own to compare our OCRs with that published by our peers. We can see that Mercialys tenants OCR stand at the lowest level of all at 9.5% only when recalculated this way. It leaves us ample room for reversion capture to fuel our future organic growth. On the graphic on the left, a similar comparison, but sector-wise shows the same situation with Mercialys OCRs standing way below market average in all subsegments of retail.

On a different topic, also related to growth on Slide 21. Mercialys has actively resumed its real estate investments in 2025. In the semester, they have included 2 real estate acquisitions for a combined total of EUR 174 million at an average net initial yield of close to 9%. This transaction meets the company's strict investment criteria. First, attractive buyout valuation immediately accretive. This is what we look for. Secondly, we look for assets with fundamentals aligned with Mercialys' format and geographic positioning, as I described before. And thirdly, we want value creation driver over the medium term through an active asset management of these purchases.

Our external growth strategy is clear. Any investment we make must improve our portfolio overall quality for the long term and needs to improve our overall portfolio return at the same time. This is difficult, and this is why we took time to identify the right assets fitting the bill, and we are now focused on the next ones.

On Slide 22, our Lyon acquisition in June is the perfect example of what we are looking for in terms of asset acquisitions. This is the second largest shopping center in Greater Lyon, the second largest city in France. Its catchment area is wealthy and vast with 700,000 inhabitants. With a simple structure, as you can see, it has a large parking of almost 2,000 spots on a very accessible single outdoor level.

This photo was taken early in the morning and the parking fills up quickly as you should witness if you go there. This asset is rightsized with a diversified retail mix of 100 stores that can be improved and leaves ample room to grow the rental base. It is the perfect example of what we call a shopping park. It already took its place among the top 5 assets of Mercialys, improving, therefore, our overall portfolio strength and quality.

On Slide 23, in terms of development, our approach is also very disciplined. Our investments need to be highly value creative through reinforcement of assets together with a hurdle rate of a strict minimum of 7% yield. We currently only have EUR 23 million committed to development projects with an additional EUR 60 million being under review. Part of this additional investment could be dedicated to develop 15,000 square meters of retail parks in Sant Andre. This project is already currently pre-let at 75% with over 50% leases signed today. It would yield more than 8%.

We are also considering extended our asset in Grenoble, and this project would yield more than 9%. Meanwhile, we maintain our continued asset rotation policy of being open to opportunities to sell mature assets at relative yields. Continuing to prove the liquidity of our portfolio as we have constantly done in the past 5 years is key to market confidence.

Finally, in terms of operations, on Slide 24, in March, we completed the acquisition of the remaining 70% stake in the investment management company, ImocomPartners. In addition to the fees generated by the fund already under management, ImocomPartners aims to develop new vehicles on vertical themes adapted to specific investment strategies. Mercialys could subscribe to such funds in order to benefit from additional growth drivers.

You have, and I will finish with that, on Slide 25, an illustration of a retail park managed by ImocomPartners in its EUR 650 million ImocomPark front. This is an asset class for which ImocomPartners has become a leader in France, which is really -- asset class which is really appreciated by investors for its resilience.

I now hand over to Elizabeth for a detailed look at our financials.

Hello, everyone. Let's go now through the earnings. Based on the operational activity described by Vincent, you can see on Slide 27, the evolution of invoiced rents. As already mentioned, organic growth remains on a positive trend, increasing by plus 2.7%, mainly driven by indexation, but also by a favorable momentum on casual leasing and variable rents. This impact at constant scope is offset by the prorated effect of the disposals of 4 hypermarket completed in July 2024.

In parallel, the acquisition of the Saint-Genis shopping Center in June this year has had only a limited impact on the half year. These scope effects will reverse in the second half of 2025. Other impacts such as strategy vacancy related to ongoing restructuring programs represents an effect of minus 0.8%. Lease rights amounted to EUR 0.2 million, leading to overall rental revenue standing at EUR 88.7 million as of June 30 this year, a decrease of minus 3.1%.

To improve its management and operational costs, Mercialys is investing on artificial intelligence with initiatives structured around 3 main pillars, as shown on Slide 28. First, targeted automation of recurring low value-added functions, particularly in areas such as reporting, document management or administrative support with the objective of achieving in the medium term savings equivalent to 5% of its operating expenses.

Second, the optimization of assets and commercial processes, notably through the use of AI agents for rental management and brand relations leading to productivity gains per asset, improved lead conversion rates and higher occupancy levels. Finally, the advanced management of the company's multiple data sources such as visitor flows, brand performance or the structuring of rental charges. The intelligent use of this data will enable faster decision-making, thereby reducing both vacancy risks and time to market.

As such, Mercialys is directing its IT investments towards the gradual integration of agent AI to support these developments while, of course, taking all necessary precautions in deploying these technologies.

If we move on to the analysis of the evolution of net recurring earnings on Slide 29, we see the EUR 2.8 million decrease in rental revenues that I just detailed. Net rental income amounted to EUR 83.4 million, down minus 4.6% compared to the end of June last year. This also reflects the scope effects of the disposals of the 4 hypermarket in July 2024, both through the loss of rent and the impact on rental charges as these leases, including a full reinvoicing of charges. EBITDA stands at EUR 72.7 million, down minus 4.4%, mainly reflecting the trend in net rents. The margin remains high at 82%.

It should be noted that since March 2025, investment management company, ImocomPartners, fully owned by Mercialys since that date has been fully consolidated rather than accounted for under the equity method. This notably explains the increase in personnel expenses, which is offset by higher management income. Net financial expenses optimized through cash investments and hedging instruments decreased by EUR 0.5 million or minus 3.3% over the half year.

Provision reversal and compensation related to various legal disputes and negotiations led to an overall positive impact of EUR 3.5 million. The share of net income from associates is almost stable. Minority interest fell by EUR 1.9 million over the half year due to the disposal of the 4 hypermarkets, which were 49% owned by a fund managed by BNP Paribas through the company Hyperthétis. In total, net recurring earnings amount to EUR 61.6 million, up 3.9% compared to the end of June last year and increasing by 4% on a per share basis.

If we move on to the change in the value of the portfolio shown on Slide 30, you can see that it increased by 0.3% over the half year on a transfer tax excluding basis at constant scope. The growth, including transfer taxes stands at plus 0.7%. The difference between these 2 indicators is due to an increase in transfer duty in France during the period. This positive trend as in 2024 continues to be driven by the rental dynamic.

At the same time, as shown on Slide 31, the average appraisal yield stands at 6.79% at the end of June 2025, a limited increase of 14 basis points compared to the end of last December. This evolution results from the impact within the discounted cash flow methodology of the expert's reassessment of indexation levels on discount rates. This appraisal yield provides a spread of 350 basis points with the risk-free rate as of the end of June.

We believe that Mercialys' portfolio holds revaluation potential, particularly through appraisal rates, notably thanks to the various successful investments, restructurings and relettings carried out. You can also observe in the evolution on a current perimeter basis, the effect of the acquisition of the Saint-Genis shopping center.

This brings us on Slide 32 to the evolution of the EPRA net disposal value, which stands at EUR 15.79 per share, representing a 4% decrease over 6 months and 4.5% over 12 months. The minus EUR 0.66 per share variation over 6 months is mainly due to the dividend payment compensated by the net income group share and the positive change in unrealized capital gain and losses, including the positive rent effect that I just mentioned. Finally, the change in fair value of fixed rate debt and derivatives contributed to a accumulated minus EUR 0.06 per share.

Mercialys strengthened its liquidity in the first half of the year, as shown on Slide 33. In June 2025, Mercedys carried out a 300-bond issuance with a 7-year maturity and a 4% coupon. This additional liquidity contributes to the refinancing of the bond maturing in February 2026, supports the investment policy and helps extend the average maturity of drawn debt to 4 years as of the end of June 2025. The next drawn debt maturity will not occur until November 2027, excluding EUR 42 million in commercial paper.

Mercialys also has access to undrawn financing resources totaling EUR 385 million, 65% of which have already benefited from maturity extension as of today. At the same time, the company's cash position stands at EUR 442 million at the end of June.

Finally, on Slide 34, you can see the favorable evolution of the cost of drawn debt, which stands at 1.9% at the end of June, an improvement of 30 basis points compared to the end of June last year, thanks to dynamic cash management, positive impact of the financial restructuring carried out in September 2024, which offset for this period, the impact of the bond issuance completed in June this year, again, with a 4% coupon.

Financial structure incorporates the investment recovery already undertaken. The LTV, including transfer taxes, stands at 39.6% at the end of June 2025, excluding the lease financing for Staint-Jeni, which amounts to EUR 71.4 million. When including this element, the LTV reaches 42%. Let me remind you that Mercialys debt ratio typically shows seasonality in the first half of the year due to the full payment of the dividend in May.

It's also important to note that the LTV as of end of June already includes Mercialys' commitment to acquire the remaining 49% of the company Hyperthétis, a transaction that was finalized in July for a total amount of EUR 36 million, which has already been included in the net financial debt. The ICR stands at 5.7x as of end of June, an improvement compared to the 5.5x level recorded last year.

And I'll now hand it back to Vincent for the outlook and objectives.

Thank you, Elizabeth. On Slide 36, we have summarized what we have gone through in this presentation. Here, you have all the attributes that are in place for the gradual rise of Mercialys growth trajectory. Our KPIs are well oriented.

So to conclude on Slide 37, all things remaining equal, we expect an operationally strong second half of the year. We also think that there is potential for property revaluation ahead of us, which could support further our growth. To reflect the positive note at this midyear point, as mentioned in the introduction, we are raising our guidance. I stated again, our net recurrent earnings for the full year is revised upwards to the new range of EUR 1.24 to EUR 1.27 per share. The target for the dividend is confirmed at least at EUR 1 per share.

Well, that is all for us this semester. Thank you for listening, and we can now follow up with the Q&A session.[ id="-1" name="Operator" /> [Operator Instructions] Our first question comes from Florent Laroche-Joubert from ODDO BHF.

I would have 2 questions, if I may. So my first question is on the lease expire on hypermarket. So could you maybe give us some more color on how it will work? Are you able to ask retailer to reduce the size of the hypermarket? Or is it depending on their willingness? And so without change of size, how do you assess today the reversion potential when the leases will expire? So that will be my first question.

My second question would be more on capital allocation. So you have done 2 significant acquisitions this semester. And so your LTV has increased, notably if we include the lease financing of Saint-Genis 2. So shall we expect some arbitrations in the coming months, maybe to make sure that LTV will be reduced or not?

Yes. Thank you, Florent. I will start with your second question first. We have always been quite orthodox in our balance sheet numbers. We will remain. We have a clear objective of maintaining the BBB rating in its current outlook. As Elizabeth mentioned, there is a pro rata effect on the LTV that have accumulated across the semester, especially at the end of the semester because most of the operations that we carried through were signed at the end of the semester and some in July with effect on the LTV, but they do not show in the numerator number, in the value of the denominator number, sorry, in the value of the portfolio yet.

So we expect the LTV to normalize quite substantially in the second semester and to give us some more room to maneuver if we have also a revaluation that's quite positive, and we think that there is an inflection of the value of our overall portfolio, knowing that this stands at a quite high average yield compared to the quality of the assets that I just mentioned.

Nonetheless, and this is also what I said, we are always looking at potential liquidity on our portfolio. We have a certain number of incoming calls for purchase of some assets, and we are always looking at opportunity to create a spread between the yields at which we buy and the yields at which we sell in order to rotate continuously the portfolio and create value for our shareholders. So the balance and the way we will manage our growth strategy will remain within that -- the frame that I've just described.

In terms of opportunities on hypermarket size reduction on our portfolio, which we commented in detail on the slide in this presentation. We are -- and we have been engaging with the new operators on all our sites in discussion where we are trying to assess the type of space that would be optimal for them. We have incoming interest from retailers to take over those space. It's quite recent because as you may recall, the handover of all most hypermarket operation were less than 1 year away.

So for them to be able to clearly assess the type of size that they need to keep and what they can hand over is not yet fully set. And so it's true that constant engagement and discussions that we will know more about this. And likely in February, we will have more, how to say, specific [ ideas ] and maybe we can comment more on numbers of what could be released for re-tenanting rotations.

[ id="-1" name="Operator" /> And our next question now comes from Amal Aboulkhouatem from Degroof Petercam.

I have 2 questions. The first one would be on the provision and allowance that you received from Casino. My understanding is that it's a compensation for the upcoming rent losses in the transition phase towards the new food operators. Could you give us some -- provide some color about the net impact you're expecting from this transition phase on retenant here?

Yes, we reached an agreement to retenant the 2 hypermarkets of Brest and Niort, which were the only 2 that we own that were not taken over by new operators last year. This agreement, as you have a correct understanding, it allows us not to have any rupture in our cash flows before the new operators settle in. Because of accounting measure, it is taken below the EBITDA and not at the rental level. But again, it's to not have -- it's a good deal that we've reached together with Casino, again, not to have any rupture in cash flow, all the while allowing Mercialys to fully retenant the space and restructure them with which we hope to have positive impact also going forward on the valuations of these assets with the new anchors.

Okay. Very clear. And my second question would be on the investment opportunities. When I hear you, we feel that you could be actively looking at more investment opportunities. How do you see the market evolving? And do you see sufficient perhaps interesting assets coming to the market?

The difficulty, as I described, is our level of demand. We not only want to find assets for acquisition that would enhance our portfolio average value, which means that needs to be stronger or as strong as what we have in the first quartile of our portfolio. And at the same time, we want those acquisitions to be relative, which means paid at a high yield. Obviously, there are not thousands of opportunities these ways. There are many assets that can be sold for distressed yields, but that do not match our criteria of quality.

What we think is that the market will remain as it is, which means with a quite certain number of assets on the market that we would probably not look at because they do not correspond to what we buy. And then necessity of working on OTC to find deals on assets that we have specifically targeted and trying to find agreement with potential vendors.

[ id="-1" name="Operator" /> And from Invest, we now have Benoit Faure with our next question.

My question is what would be the potential -- the reversionary potential on Saint-Genis-Laval first? And my second question is what is the debt in Hyperthétis?

To answer your second question, there is no debt in Hyperthétis.

And regarding the potential of reversion, in Saint-Genis, there is definitely a potential of revaluation first because of the price we paid compared to the quality of assets. Just a visit, if you come around in Lyon would just tell you that. In terms of reversion, we are -- our teams have been assessing potential of retenanting in order to enhance value. There are also a number of units that were in between tenants and not properly leased or leased to tenants that were here since a very long time and not fitting the bill in terms of what we consider as leading retailers.

So yes, indeed, there is potential inversion. We don't give specific numbers for specific assets, but that's part of the criteria of our investment strategy as well. There needs to be value creation, and we have assessed that there is some in this asset.

But your opinion is that the average potential is positive, not negative.

Yes, yes, obviously. Yes, yes, yes, which means if your question is that do you think that there will be an accumulation of both revaluation of value because of the price you paid plus potential reversion on the merchandising mix? And the answer is yes.

[ id="-1" name="Operator" /> [Operator Instructions] And we now move on to Alex Kolsteren from Kempen.

A few questions at this point. First, on the Brest and Niort. So you successfully relet that space. But I was wondering if you could give a ballpark figure on the CapEx required to get it up to speed for the new tenants. And then I saw a EUR 3.5 million provision release in H1. And I was wondering what those provisions were taken for, why they were released now? And then finally, on the footfall and the retail sales figures that includes or excludes the nonoperational hypermarket assets in the numbers you report?

So I will start with your last question first. This includes everything, which means it's the same perimeter of footfall reporting as the -- and sales reporting as the last one you had before. We have not excluded any assets. And as you may have read, it covers above 80% of our portfolio value, which was the same number before. I think it stands even higher, 85% because there are a few assets where we do not have a precise reporting. So no change of perimeter for the footfall and including everything.

In terms of CapEx for the Niort and for the Brest retenanting. We have a couple of millions to invest in limited number, but it's the size of the lots are big that are just limited to enclosing and separating the volume into several units. There are no CapEx provided by Mercialys for the store setting up, which is fully covered by the new tenants.

And regarding the impact on the EUR 3.5 million, as I mentioned earlier, it's provision, reversal and compensation. So for various legal disputes and negotiation. You know that we regularly manage some litigations or agreements with different third parties. So we had some good news on some litigations, some provisions to take and the impact of the agreement with -- on Brest and Niort that I mentioned earlier with Amal's question.

One quick follow-up question on the last point. Was this already part of your guidance at the beginning of the year, this provision release?

Yes, it was. On the agreement, yes, it was part of the outlook.

[ id="-1" name="Operator" /> [Operator Instructions] We're just receiving a follow-up question from Alex Kolsteren.

Maybe one more then on my side on the Saint-Genis acquisition. So there is a financial lease component in the structure. In the news, we've seen the yield quoted at 7.5%, 8% more or less. What's the impact of the lease payment on, let's say, true yield for this acquisition? Is that -- some figure you can provide?

There is no -- the impact on the yield on cost takes into account the impact of financing.

The 7.5%, 8%.

Well, the overall cost of the financing.

There is no leverage calculation, if that's your point on the yield related to the specific financing on the assets. So the yield you're mentioning is calculated as if we had acquired with normal corporate debt without the specific lease.

All right. Because in my understanding, the financial lease runs through your financial expense and not in your net yield calculations, but the 8% or 7.5% is including that effect.

It's not in our reporting, which means we -- the calculation on the yield that you had on the 2 acquisitions is a calculation that does not take into account any leverage -- additional leverage effect.

[ id="-1" name="Operator" /> And as there are currently no further questions in the queue, I would now like to hand the call back to you, Mr. Ravat, for any additional or closing remarks.

Thank you all. Thank you for your questions. Thank you for listening. And I wish you a lovely summer everywhere you go. Bye-bye.

Thank you. Goodbye.