Mercialys SA (MERY) Earnings Call Transcript & Summary

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 Frejus 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 Hyperthetis. 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 Hyperthetis, 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.

[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.

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.

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 Hyperthetis?

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

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.

[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.

[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.

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.