Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mercialys SA (MEIYF, Financial) reported a steady increase in net recurrent earnings, rising from EUR1.10 per share in 2021 to EUR1.21 in 2024.
- The company maintained a conservative loan-to-value ratio below 37%, showcasing strong financial management.
- Mercialys SA (MEIYF) plans to propose a dividend of EUR1 per share, offering a high dividend yield of 9.9% on the previous year's closing share price.
- The company's focus on suburban retail locations has proven successful, with footfall up 2.7% in 2024, outperforming the national growth rate.
- Mercialys SA (MEIYF) has diversified its tenant base, reducing reliance on any single retailer and enhancing portfolio stability.
Negative Points
- The company faces challenges from the disposal of assets in 2024, which may impact net recurrent earnings.
- Refinancing of the bond maturing in 2026 could lead to higher financial costs.
- The appraisal rate for assets remains slightly up, indicating potential pressure on asset valuations.
- The occupancy cost ratio remains unchanged at 10.8%, which could impact profitability if not managed effectively.
- The company has not yet fully realized the benefits of new operators replacing Casino in its asset valuations.
Q & A Highlights
Q: In the news, we saw that [Claire] might be interested in taking over the Casino lease at the Brest project. Does the presentation of a potential project mean these talks have ceased?
A: We are presenting a potential project because currently, Casino is our tenant and is paying its rent. We cannot remove them from their legal rights. We are working on potential outcomes, but any transfer would require antitrust authority approval, making it difficult to comment further at this stage. - Vincent Ravat, CEO
Q: Have appraisers removed the risk premium on asset yields previously applied to those led to Casino, now that other operators have taken over?
A: No, appraisers have not yet fully reflected this change in our valuations. There is typically a delay of six months to a year before such changes are reflected. - Vincent Ravat, CEO
Q: Could you explain the main assumptions behind the guidance for next year, such as indexation and cost of debt?
A: The guidance factors in the negative impact of asset sales from July last year and the refinancing of the 2026 bond. However, we expect strong indexation, with Q2 and Q3 2024 indices at 3.7% and 3%, respectively. We also anticipate benefits from the Imocom investment and potential acquisitions. - Elisabeth Blaise, CFO
Q: Could you provide more details on your acquisition pipeline and criteria? Have you identified any targets?
A: We aim to restart investments and acquisitions, focusing on assets that align with our strategic goals. We have reasonable confidence in making acquisitions this year, which is necessary to meet our earnings guidance. - Vincent Ravat, CEO
Q: What is your target for LTV considering investments, and would you consider equity raising?
A: We aim to maintain our BBB rating, allowing for EUR200 million in acquisitions without pressuring our LTV. We are flexible with acquisition instruments and would only issue capital in a non-dilutive way. - Elisabeth Blaise, CFO
Q: Why has the EPRA cost ratio deteriorated, and what do you account for in other expenses?
A: The EPRA cost ratio remains among the best in class. The slight deterioration is due to investments in marketing, site repositioning, CSR, and IT systems. We aim to maintain high levels of efficiency. - Elisabeth Blaise, CFO
Q: Is the current level of personnel expenses expected to continue, or will it increase with more investments?
A: We have consolidated our management structure and are now at a stable level for personnel costs. Apart from inflation adjustments, no significant changes are expected. - Elisabeth Blaise, CFO
Q: Could you elaborate on the lower allowance for provisions in 2024 compared to 2023?
A: The lower provisions in 2024 are not related to COVID-19 but rather reflect a quieter year in terms of litigation and other specific items. - Elisabeth Blaise, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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