Mercialys SA
PAR:MERY
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Ladies and gentlemen, good morning. Welcome to Mercialys' Full Year Results Presentation. This conference will be recorded. [Operator Instructions] Over to Mr. Vincent Ravat, CEO, for today's presentation. Over to you, sir.
Hello, everyone. Welcome to this 2020 results presentation for Mercialys. Last July, during our half year results, we announced that the health crisis was far from over. The second half of 2020 was most definitely bore witness to this and 2021 is up to a challenging start for the 25,000 points of sales that were affected by the third wave of closures. 2020 was a year of challenges for brick-and-mortar shops. And now consumption habits, which were just starting to change before the pandemic, have since changed even further. With retail at the heart of its DNA, Mercialys has now inspired -- drawn inspiration from these changes in consumption. And our real estate expertise is no longer enough. Our teams are in touch on a daily basis with visitors. They are in touch for their needs. They talk to the tenants. They know who to run to. They know how to help them out. And they know how to best perform locally. As you can see on Slide 5, our teams were able to keep on working with regards to the commerciality of our sites in spite of this unprecedented context. The vacancy rate is under control at 3.8% at the end of December, in spite of the difficult economic situation. And with regards to the collection debt not restated for provisions and arrangements and relief, sorry, it stood at 85% for all of 2020. Moreover, thanks to the disposals that were made, our LTV ratio, excluding rights, was down 140 basis points at 38.1% at the 31st of 2020. With regards to our ICR ratio, it was fivefold as opposed to 7.4 fold by the end of 2019. The decrease with regards our portfolio's value on a like-for-like basis is limited at 5.5% over 12 months for our NDV and for NAV per share with the level of EUR 18.42, down 7.9% over the same period. On Slide 6, you can see that since March 2020, 100% of our shopping centers have remained open and operational, in spite of the 2 lockdowns, [ closures ] and third wave of closures. That's one of the key strengths of our model based on an average size with regards to the surface of our stores and shopping centers and the fact that these will include a large number of food stores. So as you can see, the various health measures have, nonetheless, had an impact on our rental basis. 60% of our stores were closed during the first lock down versus 50% for the second lockdown. In between, there were a number of reopenings, but these did not concern -- were not relevant for sit-down restaurants. However, they only account for 3% of our rental basis. Right now, we're going through a third wave of constraint since the start of January, and we'll go back to these measures later on in our presentation. From an operational viewpoint, Mercialys shopping centers are based on satisfying daily needs and they kept on overperforming the industry in 2020, as you can on the graph on Slide 7. So in terms of footfall, we -- it is down 21.3% in a year, but there was an overperformance, significant one, at plus 685 bps compared with the CNCC National Reference Index. With regards to visitor flows, footfall in shopping centers, that was significantly impacted due to the 2 lockdowns. During the first lock down, on average, it was down 76% compared with the same period in 2019 versus minus 78% for the whole of France. The second lock down, footfall was down, on average, 53% compared with same period in 2019 compared with minus 57% for all of France. More broadly speaking, the in-depth analysis of shopping center footfall on the national level shows that those shopping centers located on the outskirts of provincial towns in France slightly overperformed other categories, whether it's -- whether we're talking about those shopping centers in the French region or hypercenters or those located -- those supported by transportation hubs or within city centers. There has been one key trend since the end of the first lockdown. People only go in store to buy utilitarian products and this explains in part the overperformance of Mercialys sites. So now there are fewer visitors, but more buyers proportionately. And this led to a very significant improvement in our conversion rates for these stores. On Slide 8, you can see that for 2020, yearly revenue for Mercialys stores was down 15%, which is limited. And again, overperformance quite significantly -- quite significant with regards to the CNCC index plus 1,070 bps. Due to the stark volatility of the current context, we thought that it would be making more sense if we were to deep dive into these figures on a monthly basis with regards to those months that -- during which the shops were actually open. So with regards to the average rates. Again, same limitations with regards to revenue analysis because during the fourth -- all the more during the fourth quarter of the year, some of these businesses are highly seasonal and part of that fourth quarter was when the second lockdown happened. With regards to the context for 2020 and 2021, uncertainty is a keyword. However, we've got to commercial real estate. Lease contracts in France make it possible to stabilize the situation. So on Slide 9, you will see a few key takeaways in this regard. And they go towards contributing to a long-term visibility for landlords and a balanced relationship for the tenant. So for the conventional leases, they cover 97.8% of Mercialys' rental basis. And tenants may give notice every 3 years at the end of each 3-year period. And in fact, given the level of investment that these tenants will dedicate to reorganize their stores very often, only very seldom do they give notice before the end of the first 3-year period. Very often, rents will be comprised of 2 things. First of all, the minimum and guaranteed rent; and second, a variable rent, bearing in mind that the minimum guaranteed rent accounts for 97.2% of those annual rents for Mercialys as of the 31st of December 2020. There's always an indexation clause also for all rents and commercial property. It goes hand-in-hand with goodwill. And it's protection for the tenant and for the landlord. For the tenant, because it means long-term lease, so that's a great way to build loyalty. And also for the landlord because it will be in the tenant's interest to invest in their store. And so they will want to stay there long term. Now due to the health crisis, the collection that -- the collection rate has been significantly impacted. However, the leases make it possible from legal viewpoint to recover all overdues for those leases. In 2020, there has not been -- which were signed in 2020. There has not been any major change in this respect with regards to the 2020 accounts. Slide 10, first lockdown for March, April and start of May 2020. Mercialys had allocated a 13.5% relief -- EUR 13.5 million relief support for those stores which had to close during the period. And more than 1,400 leases were concerned. Now there were also agreements for an overall amount of EUR 9.4 million. Here's the breakdown. EUR 3 million of rent relief without arrangements, EUR 6.4 million for rent relief with arrangements. This will have an impact to our 2020 accounts at EUR 1.1 million. And the remainder, EUR 5.3 million, will be accounted for the years running from 2021 to 2026. We could have accounted for the EUR 6.4 million on a one-shot basis. However, we thought that due to the economic situation, it would make more sense for us to staggard this. And indeed, these relief measures were very costly for the real estate company and for the shareholders, but as a responsible economic player that aims to support those companies and businesses, which were more significantly impacted by the crisis, Mercialys decided to focus on stabilizing its rental flows. The remainder of EUR 13.5 million -- sorry, the remainder of EUR 4.1 million for these relief measures amount to nonfinalized -- correspond to nonfinalized negotiations. On Slide 11, you can see a detailed view of relief measures granted to tenants as part of the second lockdown in October 2020, which led to a closure of those nonessential stores. In line with the French government with regards to support measures, Mercialys offered to those stores which had to close a partial wavering of rents for the fourth quarter, EUR 6.3 million overall. No arrangements here, and it is fully taken into account in the accounts. This amount does not take into account those relief measures, which were granted to sit-down restaurants. And this is why we have a EUR 0.5 million impairment provision in relation with overdue rents, which account for 3% of the rental basis. Also, restaurants will benefit from specific support measures from the French government. So that should help to keep on pay rents. With regards to the second lockdown relief measures, they were associated with a tax credit system, which was particularly complex. And for SIICs, there are a number of limitations depending on the headcount of those companies that may benefit from these relief packages, but also there's a cap according to EU rules for support measures towards companies. Mercialys will still need to receive all the necessary proof from the tenants with regards to these relief measures. So no favorable impact was recorded as such in 2020 with regards to tax credit. Now on Slide 12, you have a detailed view of collection rates per quarter in 2020, 3 levels. First of all, growth levels, i.e., the amount that was collected compared with the rent and the charges, excluding duties, which were invoiced. Second, restated for relief already granted or to be granted. And third, restated for relief and provisions for doubtful receivables as accounted for as of the end of 2020. For the first quarter of 2020, the figures were almost normal. And for the second quarter, 63.9%. That was the gross rate. To cover the residual risk during this period, Mercialys accounted for exceptional provisions on the basis of those overdues, which were concerned. For the third quarter of 2020, the growth recovery, collection rate was acceptable at 93.4%. And for the fourth quarter, there was another lockdown in November. Also, sit-down restaurants had to close from 1 day to the next and so that rate stood at 86.2%. If we were to take into account the partial wavering of rents for that period, then that rate would stand at 94.3%. And if we are to take into account the provisions made for your usual doubtful receivables, then the risk is only residual at EUR 1.2 million. So overall, for 2020, gross collection rate stood at 85.3%. Slide 13, a detailed view of the exceptional provisions for doubtful receivables. Overdues from the second and third quarters, excluding duties to that, a EUR 24 million. Now with regards to the usual mechanism for provisions, this led -- this generated an amount of EUR 2.5 million. So exceptional provisions, thereby spend at EUR 13.2 million. Slide 14, overall view of the impacts related with the health crisis, total impact and also those impacts that only concern the accounts as of the end of 2020. Here, you will be able to see the relief measures for tenants, EUR 9.4 million, following the first lockdown; EUR 6.3 million following the second lockdown; exceptional provisions for doubtful receivables, EUR 13.7 million; plus the EUR 0.5 million for overdues for restaurants. So overall, for Mercialys, you're looking at EUR 29.4 million. So the equivalent of 1.5 months in terms of rents and charges, excluding duties. This is a direct impact that I'm referring to here. That EUR 29.4 million actually comes down to EUR 24.1 million if you take into account the relief that was granted. And it will be staggered over 2021 and 2026. Mercialys historically is a company -- real estate company that's very agile and very much business focused. So that was an asset for the company to make it as resilient as possible in its operations. Now this agility, first of all, it meant that we worked on a permanent rotation of our sites, and that was made possible thanks to the liquidity of our assets. On Slide 16, you can see the general letting developments and those areas that are the densest in terms of commercial property or not necessarily the most growth driven with regards to available revenue and income and jobs. Also, there's an under densification of retail in peri-urban areas. And in these areas where Mercialys operate, the concentration in retail is actually lower than national averages. So that means that Mercialys sites are all the more attractive. This -- and in fact, in this respect, one should also take into account the social -- the current social and demographic changes. On Slide 17, you can see that urban sprawling is more and more widespread. Also now, people are more looking to move to less dense areas and also population aging is to be taken into account. And most often, that means that these people will want to live on the outskirts of average-size cities. So city centers, well, there is less and less population density and now more and more people live on the outskirts, meaning that more than 80% of French people now use their car on a daily basis. If we are to project ourselves into the post-COVID world, we estimate that intercommunal centers will be the most resilient. By 2025, intercommunal centers, small and average size, will experience the most significant growth, respectively, plus 1.8% and plus 0.7% per year. Mercialys' current portfolio focuses on 74% of these types of assets, specifically. In parallel, over the same period, super regional and regional centers will -- should have -- should lead to sales that are overall comprised between minus 0.1% and plus 0.5%. And with regards to city center stores, they should decrease by 2.5% in terms of value. So there is a potential of growth for those areas where Mercialys' pipeline focuses, as you can see on Slide 19. At end of December 2020, the company's project portfolio stood at EUR 407 million by 2027, with a target average yield rate of 7.1%, 32 sites overall in this portfolio, over 51 shopping centers. And here, you have both commercial services, so relettings, extensions, retail parks, also leisure projects and tertiary projects, accommodation, health co-working mainly. We also have a partnership covenant, thereby allowing it to have preferred access to Casino projects. And on the 31st of December 2020, there was no extension of this contract. So we terminated them. Given the economic context and its uncertainty, we will remain prudent in 2021 with regards to investment. And for 2020, they just amounted to EUR 3 million, thereby attesting to our business model's frugality. We will keep a very close eye on all acquisition potential opportunities outside of our current scope in a context where a number of players might be looking to dispose of their assets at attractive prices. In any case, we will only mobilize our resources where and only where we think that we will be able to be one step ahead of the market in terms of consumption habits. So our capital allocation criteria will depend on a number of fundamentals as illustrated on Slide 20. First of all, frugality and efficiency with regards to brick-and-mortar shops. And here, CapEx will be key. With regards to geographic areas, we will be targeting, as always, those areas that are less densely equipped. And we will keep on adapting our mix by making sure that we're able to identify those products, which will experience a decrease in growth in the future. And also, we will keep on being as close to the field as possible and having an omni-channel policy. We believe that we need to be agile and pragmatic, today more than ever, bearing in mind that the maturity levels are very heterogeneous, indeed. Now we've got logistics and omnichannel. The health crisis led to a number of changes. These were already a reality beforehand, but they have accelerated. For example, online, click and collect, as you can see on Slide 21, it has significantly increased. With regards to distribution channels, there are very different expectations. And now consumers are more and more interested in local production and local shops. They are also on the lookout for further diversification with regards to shopping center uses, and they're looking for seamless and continuous purchase journeys, both online and offline. Mercialys has already started to respond to all of these needs and new trends. In 2020, in particular, we significantly accelerated first and last-mile logistics. Élizabeth will give you further details in this regard.
So in view of changing consumption habits and the cost development for our online platform for e-commerce, it is important to quantify the structure -- the cost structure and to have an ability to meet the cost effectiveness of such players to position ourselves on -- in the view of such changing business model. As you can see on Slide 22, the [ cost of sold product ] and the administrative marketing costs are leading to an operating margin estimated between 15% and 25%. Associated fees for IT information systems, payment and current support represent additional estimated cost between 7% and 11%. We issued a logistics to remain at the heart of cost effectiveness and accounts to 12% to 20%. The residual balance can vary for loss potential between 15% and a profit of 5%. The logistic issue is a variable cost and that has an impact on the profitability of retailers and Mercialys is convinced that we need to have a shipping scheme for physical stores. On this basis, as of 2018, the end of that year, we started a delivery service for retailers. Given the crisis, health crisis, the closing down of stores as well as the permission for click-and-collect measures, this has been -- this has helped accelerate the adoption of this solution. And we have implemented Ocitô, which is due to supporting retailers in an unavoidable digital transformation, offering a seamless client experience, both at a store level and the digital level. And also, we wanted to create a cost-effective service that remains sustainable. Mercialys teams have deployed significant energy to develop this service and has been in close contact with retailers who have been impacted by this crisis. To date, 26 commercial centers have been equipped and the scheme of integration from 200 retailers. The turnover content they generated shows a weekly growth of close to 20% since early September. And the total investment represents EUR 1.2 million since 2019. For bidding click and collect imposed by the French government for retailers in closed shopping centers as of 1st of February 2020 is having an impact on this momentum. However, the movement launched by Mercialys in this strategy will bring together stronger physical stores and satisfaction related to new consumption trends, which will continue to develop in strengthening the appeal of sites in -- that are held by Mercialys and will be at the heart of this co-working project we are developing -- that we have been developing since 2019. As you can see, the spaces that have been opened are in Grenoble and Angers, which 60 co-working offices. And the occupation rate is between 80% and 100%. The investment is in moderate, less than EUR 500,000 per site. Over 13,000 square meters of additional developments are being studied on 16 sites of our portfolio. The [ quoted ] figures are not to replace office spaces, they will just be a market power in the retail and local communities. And in Mercialys, we also seek to be located and have its commercial center located in catchment areas. Now Mercialys has a goal to redact its portfolio strategy as part of these changing consumer habits. And whether it is for -- to ensure that half of retailers and to accelerate changes in consumer behaviors to deliver these activities, we'll be focusing on health, co-working, real estate projects, restructuring products, digital platforms, et cetera. And the company will lead an asset rotation program. In this difficult context, which have been coming with especially unfavorable financial conditions, Mercialys managed to dispose of assets in advantageous conditions and has managed to carry on with its investments in the medium term. In these total assets, including well and food stores -- wells and food stores rather, confirmed that lifestyle of such assets are most initial release assets since they were acquired starting '14 and '15, given the deadlines or delays either for these projects to be [ outside ] in downtown areas. They will not be able to be implemented on the monitory sites, but the disposal price allows the study -- the company rather to not lose upside values where they acquired 3 centers to relaunch itself, 2 of which were already at proprietary sites and some 40% in places with Amundi and using SCI AMR. We preserved strong balance sheet and remained prudent given the current economic context to ensure that we contribute to good visibility in other values and LTV ratio. Now the health crisis should not -- let's forget the challenge in the medium and long term of the CSR objective at Mercialys. Mercialys has achieved in 2020 its 5-year plan, which was based on 10 work sites. And Mercialys has illustrated a reduction of 19% of its energy consumption by square meter versus in 2015. And this [ strategy ] is accomplished. The new 10-year policy plan will be launched, as described on Slide 27. This policy has been determined on the basis of less [indiscernible] in previous years. But also a very wide range in cost option of stakeholders at Mercialys. Some of you took part in it. This new CFR [ cleaner ] policy is made up of 4 commitments: carbon neutrality as it is reason to use of natural resources, including working on artificial land development in a controlled fashion, promoting with possible retailing activities within physical stores and a responsible retail offer. Third commitment. Ensuring that a real estate company is a partner in land development and to ensure health quality and safety and trying to be a network that works on asset commitment and showing values at health quality and safety. We also have an action plan which quantified objective risks. Now let's look at the financial performance of Mercialys in 2020. [indiscernible] you'll see the details of the organic growth in invoiced rents for this fiscal year. And we have heard an organic growth of plus 3% on average for 2016 -- for 2020. And we have seen a drop in -- 7-point decrease, rather, which was very [ low ] in consequence of this health situation. Now there are some important elements in these changes in contraction. First, a positive effect in the indexation, plus 1.6 points. Also for negative impacts, including the drop in the casual retail contribution,due to restricted hours, minus 0.8 points. Also a reduction in variable rents due to restricted hours, minus 0.9 points. Action led on the portfolio and -- which had a negative impact of minus 1.3 points. And the impact of accounting the -- the accounting impact rather of rent relief given to these retailers to the tune of minus 5.5 points. In Slide 30, you can see the financial vacancy rate, which increases from 2.5% at the end of December 2019 to 2.8% at the end of December 2020. This change results in part from the integration of our portfolio, service portfolio of shopping centers of Dijon Chenôve acquired at the end of 2020 from Amundi, with a goal to relaunching this asset. Despite economic and health crisis, which was unprecedented, Mercialys' assets are of great quality and its approach supports retailers, and therefore, enable them to not serve notices at an increasing or undue level. 57 retailers served notice at the end of December 2020 versus 41 at the end of December 2019, for a total of 2,138 leases at the end of 2020. Also, Mercialys is truly diversified and this has enabled us to see a limited exposure to [indiscernible] facilities and judicial liquidation in certain retailers. We also see a reversal level of plus 5%, speaking -- we speak to the quality of retail spaces that are offered by Mercialys. Slide 31. We did sign in 2020 a new -- an agreement for new and refurbished and connected devices stores and retailers called Hubside Store, which specialized on devices. These sites will be located in Nîmes, Mandelieu, Saint-Étienne and Besançon and will replace all the textile retailers contributing to a reduction in rental exposure in this business sector. This initiative will also allow us to address consumers' increasing interest in high-tech products that are more affordable and responsible and help Mercialys amidst changing consumer trends. In the same vein, we carried out a rotation of some of its loss, which were previously textile stores. And we found an agreement with Body Minute in Clermont-Ferrand and also signed Muy Mucho in Toulouse to strengthen our household equipment offer, and with La Chaise Longue in Lanester strengthening its culture and gift dimension activity, and therefore, offering a differentiating retail strategy. You can see on Slide 32 the changes in 2020 in a detailed fashion in invoiced rent, a drop of 8.4%, going from EUR 188.8 million to EUR 172.9 million. This results mainly from the drop of 10 points in the organic scope, which we have detailed and [indiscernible]. Disposals and acquisitions of assets represented a net impact of minus EUR 2.4 million, that is 1.3%. And the disposals turn out in 2019 had an impact on the fiscal year. And the operation cadence in 2020 had only a negligible impact. Also, including -- there were other effects, including strategic vacancy due to restructuring programs. We patented to EUR 300,000 or minus 22%. The lease rights and the specialization indemnities procedure amounted to EUR 900,000 against EUR 1.1 million in 31st December 2019. After taking to consideration the spread and the firm lease terms using leases based on IFRS standards, the lease rights recorded in 2020 were EUR 2.5 million against EUR 2 million in 2019. Rental revenues were EUR 175.4 million on December 31, 2020, a decrease of 8.6% relative to end of '19. Now let's look at the FFO changes. You'll see a decrease of EUR 16.4 million of rental revenues. Rental changes are a strong progression. EUR 15.4 million is exceptional provisions, mainly at EUR 13.7 million, which is booked earlier. We've also seen an increase in financial charges to the tune of EUR 2.2 million, reflecting 2 impacts. On the one hand, the impact on quarter #1 of 2020 for the retention of the bond issue to the tune of EUR 480 million with a coupon of 4.125% end of March 2019. Also, the redemption operation carried out in July 2020 with the bond issue of EUR 300 million and the partial redemption between EUR 181 million of the bond issue with a maturity of 2023, the plus EUR 5.1 million of variation for the provisions and is due to a base effect since it was recorded in 2019 with specific provisions amounting to EUR 2.1 million relative to a dispute on a Réunion Island site as well as the recording of research spend for a total of EUR 2.3 million initially benefited from a reduction in tax expenses to the tune of EUR 1.3 million. Finally, the minority -- the contribution of minority shareholders and interest -- noncontrolling interest other, dropped by minus EUR 0.9 million reflecting both the scope of SCI Rennes-Anglet, which [indiscernible] its assets, rather, in May 2019, as well as helped in the relief efforts given to tenants by -- of the SCI AMR. Now the financial structure remains under control in an adverse context. The LTV, excluding transfer taxes, is at 38.1% end of December 2020, against 39.5% end of December 2019 and 41.1% at the end of June 2020. The indebtment efforts have been clearly shown here. And despite this negative impact of net redemption, which is lower than a normalized or standardized year. The net debt ratio on EBITDA goes from 8.4 at the end of 2019 to 9.1 at the end of 2020, a decrease of EUR 184 million of the net debt over 12 months compensated by the contracting EBITDA. The debt -- now to look at the financial profile [indiscernible] the net debt end of December 2020, which includes bonds for another EUR 1.3 billion and EUR 333 million of commercial paper. The cash flow is EUR 465 million end of 2020 against EUR 72 million at the end of December 2019 using the asset of EUR 450 million related to disposed -- net disposed assets during December 2020. Beyond the cash flow, the liquidity scheme integrates undrawn financial lines for EUR 405 million. The short-term debt representing commercial papers are, therefore, largely covered until the next deadline of bond issues at -- in 2023 -- maturity of 2023. The cost of the drawn debt at the end of December 2020 is at the level, a weak level, 1.4%, almost unchanged relative to 2019. Now I'd like to speak about bond issue and which is especially high with a coupon of 4.625% and does not reflect the BBB notation of the company but a stronger risk diversion on commercial real estate and a weak bond liquidity on the secondary market, with a weak spread, which was strongly staggered since March 2020 and not standardized since. This refinancing effort was a solid operation. And this operating margin gave us the ability to look at asset disposal in a weak piece of mind. This issuance has also helped extend the maturity of debt -- bond debt. The global maturity of the drawn debt is at 3.5 years at the end of 2020. As I said, on Slide 36, the -- it is disposed assets which have contributed to preserving a strong balance sheet in a context which was a very unfavorable, collection -- for collections and finances. Now we have 2 aspects, cash net of EUR 150 million under valuation. Now we'll also look at disposal to reach 100% between an institutional investor with Monoprix in Asnières for EUR 30.8 million. Also, the sale to SCI AMR, that's another point, and initially held at 39.9% and 64% of the remaining assets held by Amundi Immobilier, the 3 sites of Monoprix located in Chaville, Puteaux and Marcq-en-Barœuland 2 hypermarkets located in Besançon and Gassin. Also, Mercialys acquired at -- with the SCI AMR sites 3 new shopping centers in Montauban and Valence 2. Now we've had a capital increase that is not proportional to the SCI AMR carried out by associate and a dilution eventually resulted. Why did we acquire these 3 new shopping centers? We consider that the balance sheet of Mercialys around the moderate investment on restructuring operations are relaunch operations. And the disposals led to capital gains of EUR 47.5 million in consolidated accounts. Now if we look at the value of our portfolio by [ 37 ], it is at EUR 3.066 million (sic) [ EUR 3.066 billion ], excluding transfer taxes, at 7.5% over 6 months and 10.3% over 12 months. On a like-for-like basis, the value is down more than 2.2% over 6 months and 5.5% over 12 months. Over the year, the changes in the value, like-for-like, is as follows: rent effect, 0.09%; a yield effect, minus 6.6%; and other elements 0.2%. This brings us [indiscernible] to the NDV changes, which is as follows: keeping in mind that Mercialys balance sheet does not carry any goodwill, the NDV is EUR 18.42 per share, a drop of 7.4% over 6 months and 7.9% over 12 months. The main changes are the dividend payment of 2019 for minus EUR 0.48 per share and funds from operation for EUR 1.04 per share. The change in fair value of fixed rate for minus EUR 1.93 per share, including a yield effect of minus EUR 2.31 per share. Now we've seen a spread between the current value of the debt at fixed rate and this shows a market value that is below its normal value. This differential is no longer used at the end of December 2020. Slide 40 now. The beginning with 2021 remains strongly impacted by the health situation. And this has a strong impact on shopping centers managed by Mercialys, given the new decision by travel authorities. On the one hand, there's been new measures taken throughout France, metropolitan France, including a curfew at 6 p.m., and this has had a strong impact on footfall. On the other hand, on the 31st of January 2021, the prime minister ordered the closure of all non-food commercial services of over 20,000 square meters of leasable surface area, as well as non-food stores in commercial centers and shopping centers with a service area above 20,000 square meters. [indiscernible] was also constrained now by these measures. Over 54% of our rental base is now impacted. [indiscernible] the current closures and part of our sites. And Mr. Bruno Le Maire, Minister of the Economy, said in February 2021 the rents will be covered. To date, we do not know under what terms will be for these rent coverages. Given these circumstances, which integrate negative effect of the house prices on the economy in 2020 as well as the lack of visibility, and at this point, the Board of Directors will propose the general assembly April 2021 the payment of the dividend of EUR 0.43 per share for 2020. And this amount corresponds to the distribution requirement of the recurring tax income based on the statute of the SIIC. Now this dividend does not include distribution based on 70% of exemption profit for 2020 from the disposal of properties. And this proposal will represent a yield of 6% on the closing rate at the end 2020 and 41% of the FFO, consolidated FFO. It is important to desire to protect liquidity of Mercialys, but we believe that if the health [indiscernible] should improve during this year, the Board of Directors could decide on a distribution on the second semester of an interim dividend and would correspond to the capital gains of disposals made in 2020. To conclude, the vaccination campaign against COVID-19 has launched, and nevertheless, many unknown remain on the scope of the economics covering 2021. Now perhaps as promised, last June, the president of the republic has not yet arrived as we run to relief for retailers and in large promised by the Minister of Economy and Finances also overdue, all forecasters insist on the understandable fragility of their work, which is consequently called into action by the unpredictable evolution of the health situation. Nevertheless, all agree that the 2 keys to an economic freedom will be vaccination and savings. To sustain vaccination campaign is on the alternative to health measures such as curfews or lockdowns. The challenging beginnings of the French campaign are not promising in this respect. The other unknown is in the behavior of households with regards to the EUR 130 billion of savings accumulated last year and the additional EUR 70 billion this year. This would constitute a significant growth reserve. Return to activity pre-crisis activity levels is unlikely to be immediate. According to INSEE, the French economy will turn midyear at 97% of its fourth quarter 2019 level when the OSCE and its rated publications of September 2020 predicted that activity would still be at 1.4% lower at the end of the year compared with 2 years earlier. We can now move on to the Q&A.
[Operator Instructions] Mr. Florent Laroche-Joubert will ask the first question.
Three questions. Number one, dividend policy. You've decided to issue dividend corresponding to the minimum required. Why did you decide to be so cautious, instead of issuing a dividend, which might be more in line with the lower marked [ 70% ] of your FFO? And for those shareholders that might be concerned, would you have any idea with regards to the percentage of shareholders who might opt for that payment option?second question now. Regarding 2021, number of bankruptcies in 2020 were to be deployed. So in 2020 -- sorry, in 2021, are you a little bit more confident? And are there ongoing discussions with French states with regards to overdue rents?Number three, the bond issue for March 2023. What's your view with regards to the reimbursement of this bond issue now that you have an acceptable cash level?
Thank you for these questions. First of all, with regards to dividend. Indeed, we are in line with the SIIC minimum level required. However, capital gains will need to be reallocated by the end of 2022. So they are deferred in terms of payment. And you're quite right in highlighting that we are cautious. Why? Well, that is because more than 65% of our rental basis is closed. No reopening date for the moment. So in this context of uncertainty, we are faced with a 64% collection rate for the first quarter. Obviously, it's much lower than the usual levels. However, we think that they will improve in the future because some stores have decided to opt for a monthly arrangement, but they need to also -- we also need to pay close attention to our -- to the cash at hand in this uncertain situation. With regards to the dividends, as part of the general assembly, the question will be out. But I cannot give any indication with regards to the percentage of investors that might want to opt to this. In our best case scenarios, we would have never imagined that the government would be in a position to take into consideration the shopping centers to compensate for the deficiencies in their vaccination campaign. Unfortunately, the situation is what it is, and that's why we had to, frankly, review our forecast. Now you referred to bankruptcies, potential bankruptcies in 2021. So in 2020, the government relief funds were quite massive, and they led to, first of all, state guaranteed loans, which will need to be reimbursed at one stage or another. So that will mean that these companies will have to bear that weight as well. And also, there are partial unemployment measures that were implemented in France quite extensively compared with other European countries, but that will only be the case in the short term. And once all these measures are lifted, so they will be lifted gradually, well, that means challenging times ahead for stores. But it's very hard for the moment to give exact figures regarding now, regarding ongoing discussions with the CNCC and the state authorities. Well, there are ongoing discussions and a number of promises were made by both of the Prime Minister and the Minister of Economy and Finance. A number of announcements as well were made in the press by themselves.For the moment, however, not much -- there have not really been any concrete actions taken, even the tax credit system that was decided for the second lockdown has not been taken into account from a tax viewpoint with regards to the current tax doctrine. So we're not sure yet what's going to happen there. Now with regards to the -- as was the case at the end of 2019, a number of these bonds are held by French insurers. So they only very seldom participate in takeovers. However, with -- in 2020, we -- a bond over EUR 180 million. So by the end of that bond maturity, we'll keep on doing so. And as was the case for the 2019 bond issues, we will be -- we will stand ready to refinance it, and that will be a great way to secure the company now. One note that was quite promising. Spreads are positively evolving. And before we move on to another question over the phone, maybe we can take a couple of questions that were posted on the chat. There was one question on refinancing, which Élizabeth just addressed. And now there's another question with regards to the deployment of existing capital and possible acquisitions. Mercialys will pursue its asset -- active asset rotation policy. In a -- and we will not sell if we are not offered the type of value that we have appraised in our accounts. These new disposals might be a way, as we said, to take advantage of new opportunities on the market, and we've already started to work on this. Another question on the rollout of our Ocitô platform. The Ocitô platform is active across 26 sites. Retailers are slowly but surely making it their own. However, due to the third wave of closures, it's quite hard to operate a click platform when the retailers -- when these stores are actually closed. However, what we can say so far is that following the initial shock of the first lockdown, retailers are now starting to organize themselves, and they understand that it really makes sense for them to offer that kind of platform. And so there's been an exponential increase boom in the subscription rates, so that will pave the way for our omnichannel policy in the future. Another question with regards to the EUR 4.1 million that will be processed with regards to the nonfinalized agreements following the first lockdown. Well, this EUR 4.1 million, as detailed in the presentation, correspond to the nonfinalized agreement for the EUR 13.5 million relief package as part of the first lockdown should we grant a relief on this basis. This relief would go towards decreasing overdues and so they would go towards decreasing provisions for doubtful receivables, which were identified to the tune of EUR 13.7 million. Do we have any other questions on the phone?
Mr. Pierre Clouard will now ask his question.
First question with regards to disposals. Food stores remain open, and with a yield of 7.3, that might mean that some investors might be interested. So what's the forecast in 2021 in this regard?Second question on the partnership covenant. Should Casino sell its residual stake in Mercialys and all hypermarkets [indiscernible] are sold, the covenant will still span over a period of 3 years? And third question on dividends. What will casino's policy be in this regard? And fourth question, if you were to implement a disposal program that's similar to 2020, would that have an impact on the 20% stake of Casino in Mercialys?
So with regards to the disposal quantum, we always said that we had a rotation policy between 60 and 100 million per year. That was our case. Notwithstanding the market. Now it's always very hard, very challenging to be confident with regards to our asset liquidity in the current campaign of closures. However, all of our assets have shown that they are resilient. They're attractive on the market. We have ongoing discussions on other -- on our other asset-type qualities. So our -- do not want to dispose of any asset under -- due to the stressful conditions. We really want to make sure that we have a favorable spread. With regards to the partnership covenant, for the moment, there has not been any extension. The latest project that was adopted with the expansion of the port as of the end of 2017. And those should not be -- according to these covenants, there should not be any new investment that might have a negative impact on any Casino assets. Now there was no exclusive clause between Casino and Mercialys. From an industrial viewpoint, that was a logical counterpart. Now no matter what the future holds with regard to hypermarkets, our casino, Mercialys will more than probably remain a co-owner for a number of sites with Casino. So there will be case-by-case discussions with regards to new reletting and new projects. With regards to the share dividends or cash dividends and the option that will be made by Casino, we have absolutely no comments to make here with regards to the decision that might be taken by the shareholder or any other shareholder for that matter with regards to a possible buyback in relation with Casino. We've always said that with regards to buybacks specifically, we would channel our -- we would be in a wait-and-see position, so the buyback was never a priority for Mercialys. And with regards to Casino and its position in the future. Obviously, we do not have any information with regards to any potential disposal. So if the 20% were to have its fines moved in the future, well, that obviously would be significant change. Do we have any other questions on the phone?
The next question comes from the line of Allison Sun from Green Street.
I just want to confirm, when you say if the 2023 bond mature, how are you going to repay that bond back? Is that you're going to borrow again from the bond market or are you going to sell some assets for the funding? That's question number one.Question number two is regarding your capital allocation. I understand you are doing some maybe disposals and also some acquisitions. But can you just let me know what's the priority for Mercialys right now? Is it deleveraging or is it finding opportunistic acquisitions?And the third question is about the tenant mix. So you said you are going to reduce your tenant exposure to textile or fashion tenants. May I know, do you have a target percentage, let's say, reduce it to 20% or 10% of total tenant mixture? And do you expect the CapEx for fitting out your shopping center will increase in the future years?
[Foreign Language] As regards the refunding of the 2023 debt bond maturity, it will be through disposals and also, well, we wait for a more profitable solution of bond redemption refinancing in a more [ solid ] context, and hopefully, we'll be able to do so with a rate that took place before 2020. In regards to our priorities for capital expenditure, last year, our priority was to strengthen the balance sheet of Mercialys to ensure that it leads to a -- what we consider to be a healthy loan-to-value ratio in a liquidity market, which is, as you know -- and we don't want to jeopardize the balance sheet positions of 2021, the covenant in the future that we can be able to reinvest. As I said, in Slide 20, there will be some criteria we'll follow, some reinvestment criteria for some assets, which we contribute to value creation because of more competitive advantages. So it will be on a case-by-case basis, and we will tap into our in-depth knowledge of retail markets in France to take those decisions. We also talk about the rolling out and re-rolling out the first and last-mile logistics, which is we extremely strongly believe in. We will accelerate it. For the moment, it is not a big generator of capital expenditure, but it doesn't mean you cannot bring about some performance. And for me, there will be some diversification on the tertiary operations front. I tend to extend at this point on the reallocation of capital expenditure. And that we hope to be able to do so to give you momentum to Mercialys, insofar, of course, as we recover a normal environmental and economic concept, which is not the case right now. Now for the last point, we don't want to spend ourselves to -- we like to anticipate. We do so in a standardized fashion, if we decide to reduce our exposure by 10% in some areas. Typically, our textile retailers exposure is weaker than that of our peers in the same business section. This is something that we had anticipated. We believe we need to continue such a reduction with a view to tracking the right balance, of course, for -- well, in the interest of our consumers. In striking this right balance, we looked at, including in our asset, a segment in the food business sector and we are looking to reach sustained end balance in sports areas, beauty and health activities. We are building to reach a level -- or rate rather of 20 to 80 because this has always been at the heart of the Mercialys strategy. Perhaps we can take another telephone.
The next question comes from the line of Pieter Runneboom from Kempen.
Got a question regarding the minus 5% like-for-like on invoiced rent. You seem to exclude the total of EUR 29 million rent lease impact. Could you detail what the like-for-like rental growth would be, taking into account these areas and negotiations?
[Foreign Language] And your question wasn't audible, but I believe your question was related to the organic growth of rent, what was the percentage taken into consideration in the organic growth and the impact of the measures I have set out. Taking into consideration the spread of EUR 6.4 million during the first lockdown, which are used as an arrangement would add to EUR 1.1 million in [indiscernible] and EUR 3.1 million without arrangements negotiated in exchange. All these are measures taken to factor the partial way. The rents does not take into consideration provisions for doubtful receivables that are in a recoverable -- perhaps another question?
Yes. A question by Mr. Florent Laroche-Joubert.
I had an additional question on the asset valuation, perhaps we can get back to this topic. We're pleasantly surprised that the reduction in the portfolio was committed in the year 2020. Perhaps you could extend on the method used by experts to determine asset valuation. To what extent is this method based on a model? To what extent is this model based on testing approaches?
So as regards to expert valuation method, for our portfolio, it was a point both for our portfolio and for other peers and players whose assets are valued in such a way. This was a regular campaign on asset-by-asset basis. Both in the first semester in the DCS, the experts had raised 1 semester of collection, given the health crisis because they had little information and a little foresight. Now in hindsight, we have overall information given the health crisis, but we take into consideration the vacancy rate, the ERVs as well that can be reviewed. So we have a methodology, which is very much cleared towards specific risks for each clinical center as is deemed relevant. And finally, what matters when it comes to [ A&Rs ] are disposal values of assets. This was the case [ introduced ], but even last year, it was done even more on the basis of expertise or appraisal values. As regards food stores, we looked at what we've sold and when we acquired as well, that must be [ strict ]. We believe that we are a mindful investor, which is an investor who works on an enlightened basis with a risk-weighting approach? In 2020, it is Mercialys that dictated the market and established a rough benchmark prices. From the moment appraisal have been carried out, we believe these appraisals are at the profit levels. And for other asset categories, we will establish transaction prices based on appraisal levels and in line with market levels. May I just specify once again the following point. We can see shareholder uncertainties on appraisal rate, but this year, we sold at least at appraisal levels or below those levels. But we've seen in previous fiscal years, for the series types of asset categories, whether they are small food stores or small shopping centers, we see that this approach can be renewed even in various types of business cycles.
Thank you. There are no questions on the line.
Very well. And we thank you very much. This concludes our conference. Thank you all.