Ladies and gentlemen, hello and welcome to the Mercialys 2023 full-year results presentation presented by Mr. Vincent Ravat and Ms. Elizabeth Blaise. For your information, this conference is being recorded, and for the duration of the call, your lines will be in listen-only. However, you will have the opportunity to ask questions at the end of the presentation. This can be done by pressing *1 on your telephone keypad to register your participation at any time. If at any point you require assistance, please press *0 and you will be connected to an operator. I will now hand you over to your host, Mr. Vincent Ravat, to begin today's conference.
Welcome to this presentation of Mercialys' 2023 results and earnings, another year of excellent performance for the company despite a contrasting macroeconomic environment.
While France has been confronted with an economic crisis due to inflation, the country has not entered either a de-consumption era. France remains a major market for many retailers. Gone are the times of retail bashing. Now is rather a time for accelerating the transformation of retail and its physical outlets to make them even more attractive. This is nothing new for specialist operators such as ourselves, but rather an extension of our proven strategy. For several years now, we've been multiplying projects designed to adapt our assets to the needs of our customers. We're opening them up to new uses. We reduce the space devoted to hypermarkets to better redevelop them. We're varying the offer and optimizing our rental income. Also, we are restructuring and redeveloping our sites to turn them into real living spaces.
In this way, our ability to evolve in line with our customers' expectations continues to bear fruit, underpinning our robust operating and financial results. Let us now move on straight to slide 5, where you will see a quick summary before we go into further detail throughout the next 60 minutes. Despite the restructuring of the Casino Group, whose hypermarkets, as you know, historically anchor most of our sites, the work of our teams on the adjoining shopping centers has helped to boost sales for retailers, whose revenue even rose by 2.2% between 2023 and 2022. Thanks to the sustained efforts of our teams, our current vacancy rate has fallen to 2.9%, its 2022 level despite the many difficulties encountered by retailers last year. Organic growth in invoice trends of +4.1% fully contributed to the growth of our net recurring earnings, which amounted to EUR 109 million for this financial year.
This represents an increase of €1.17 per share, or +3.3% year-on-year. This is above the target of at least +2%. For the record, given that the 2022 basis of comparison included items linked to the health crisis on a basis adjusted and restated for these exceptional impacts, the NRE for 2023 is up by 11% year-on-year. Despite the general decline in asset value in 2023, the company's growth potential remains intact in a context of stabilizing interest rates. We are therefore confidently envisioning this potential while maintaining our sound financial structure. So, our debt-to-equity ratio, LTV excluding transfer duties, stood at a controlled 38.9% at December 31st, with an ICR of 5.1 times.
On these solid foundations, as indicated in slide 6, Mercialys' board of directors will propose to the annual general meeting of the 25th of April in 2024 the payout of a dividend of €0.99 per share compared with a dividend of €0.96 for 2022. This would correspond to 85% of the 2023 NRE for a yield of 5.8% on the NDV net asset value and a yield of 9.9% on last year's closing price. If this payout is approved, Mercialys will total €2.87 in dividend payout over the last three years. Mercialys will thus have provided its shareholders with an average dividend yield of 10.1% over this period. This is a figure I wanted to particularly highlight.
Not only does Mercialys continue to fully play its role as a listed real estate investment company, or SIIC, but the commercial real estate segment in which we operate offers solid underlyings and better return prospects than many other asset classes, sometimes paradoxically more weakened by the health crisis. The proposed dividend that I just mentioned for 2023 would be in line with our payout obligations under our SIIC status and would come from EUR 0.86 per share for property leasing transactions and EUR 0.13 per share from the payout of tax-exempt income recorded in the company's balance sheet. The coupon will be detached on the 29th of April 2024, and the dividend will be paid on the 2nd of May 2024. Sustainability performance is, of course, part and parcel of our long-term value creation strategy.
As illustrated in slide 7, in 2023, Mercialys achieved major milestones in its 10-year CSR roadmap called 4 Fair Impacts for 2030. In addition to the progress made in terms of human resources and local commitment, our objectives to improve the environmental footprint of our assets are very much on the right track. For example, we have reduced our greenhouse gas emissions per square meter by 24% compared with 2020 and by 35% compared with 2017, our benchmark year on that journey. Two-thirds of the waste from our shopping centers is now recycled. 100% of our strategic assets are now BREEAM In-Use certified. Nearly 60% of our major sites have multifunctional spaces, and 75.9% of our shopping centers are equipped with charging stations for e-cars.
We're convinced that the ongoing greening of our property holdings will turn into an opportunity both for us as owners and our customers, the operating retailers. Our CSR strategy also covers the ethical management of the company. This dimension is illustrated in slide 8 by Mercialys' excellent performance in terms of gender equality, as measured by the index of the French Ministry of Labour and Employment, which ranks second amongst the SBF 120 companies for the second year running. The company's proactive approach to CSR has also been praised by the major non-financial rating agencies, as you can see on this table right here. In 2023, Mercialys thus retained its second place in its category in the GRESB ranking with a high score of 89 out of 100. We've also been recognized as a regional and industry top ESG performer for the third year running by Sustainalytics.
Finally, in February 2024, Mercialys appeared on the Carbon Disclosure Project's Climate A-list for the sixth year running. As a result, Mercialys is approaching 2024 with significant strengths, as we have seen. What is more in the coming weeks? Our rental risk profile will irrevocably pivot with the upcoming of a retailer overhaul due to Casino no longer operating hypermarkets, and Elizabeth will address this subject in more detail later. While we remain focused, as we've always been, on the balance of the lessor tenant relationship through measured average effort rates, our solid financial fundamentals and the visibility offered by indexation enable us to set ourselves the following targets for 2024. First, growth in recurring earnings per share of at least +2% compared with 2023, and a dividend ranging from 75%-95% of the 2024 NRE.
The change in the lower end of the bracket to 75% of the NRE for the year compared with 85% previously may give us additional room for maneuver to finance investments in 2024. Indeed, the planets have never been so aligned to redevelop our sites and, more broadly, retail parks. In fact, the opportunities associated with the change of food retailers combined with a regulatory context of zero net artificialization, as well as pressing social issues of localized housing shortages and climate challenges, mean that as a specialist operator, we are therefore keen to seize the many opportunities that already exist to make the most of existing land reserves and artificial areas in need of redeveloping. This payout range will contribute to a return on the share that will remain particularly attractive in 2024 with financing potential fueling a return for shareholders in the medium term.
Hello, everyone. To begin with the analysis of business in 2023 on slide 11, allow me to focus on Casino's major announcement of a far-reaching financial and operational restructuring. Mercialys was not involved in the financial restructuring or in the conciliation procedure. However, Mercialys is primarily concerned by the sale by the Casino Group of its hypermarket goodwill. Agreements have been officially signed between Casino, Intermarché, and Auchan. Carrefour has also announced that it had entered into exclusive negotiations with Intermarché with a view to taking over 31 sale outlets. Corsica has reportedly been excluded from Casino's discussions to date. Therefore, according to press reports and subjective annual distribution of the various stores, Intermarché would represent 5.2% of the rental base, Auchan 4.1%, and Carrefour 2%.
This is an economic exposure profile, i.e., excluding BNPP's 49% minority stake in the two companies operated with Mercialys and including Mercialys' 25% stake in a joint venture with Amundi. In the appendix, you will find details of the retailers that would be present in Mercialys' portfolio, whether they are our tenants or only anchored on our sites. As a result of this profound reorganization of the retail sector, Mercialys, whose food business was represented exclusively by the Casino Group, will become the only European retail property to partner all the major French food retailers. This realignment will modify and considerably improve the company's risk profile. It will make it possible to replace single exposure to one struggling retailer with multi-tenant exposure to retailers that have solid foundations and robust commercial performance levels.
These operating disposals by Casino demonstrate the attractiveness of the locations where Mercialys is positioned and, more fundamentally, the value of existing capacity in a food retailing model that remains the rule in France. This is illustrated in slide 12 with a few figures demonstrating the central role of hypermarkets in the consumer circuit. According to Kantar, hypermarkets account for 45% of the spending of 25.7 million households in France. Of every EUR 100 spent on fast-moving consumer goods, almost 40% is spent in hypermarkets, particularly via promotional offers. Mercialys reasserts its strategic belief in maintaining significant exposure of its rental income to food retailing, an asset class offering a base of recurring and indexed cash flows and which contributes to a retail mix driven by affordable everyday products.
As you can see on the left, this retail mix goes beyond food to address the sustainability of end consumer spending and is focused on satisfying the essential needs of as many people as possible at affordable prices. Mercialys' tenants' offer is highly concentrated on the essential needs that resist well in a backdrop of consumers forced to make certain decisions. Food retailing and catering, which represent almost 30% of the rental base, also the everyday sectors of beauty and health, sport, leisure, and services, which account for 34% of rents, while discretionary spending concentrated on personal household goods represents 36.6% of rents. Against this backdrop, slide 13 shows that shopping centers performed well in terms of footfall. Total footfall at Mercialys' sites in 2023 was down 3.9% compared with 2022, against a national quantum flow index up by 1.9%.
But in fact, there's a significant gap between footfall at Mercialys' shopping centers, which rose by 1.4%, and the performance of the hypermarkets anchoring these sites, which declined by 8.7%. This stark decorrelation is a solid illustration of customers' distinct shopping itineraries, with shopping centers benefiting from their own non-food appeal. This 50 BP performance gap between the national index and Mercialys' malls narrowed throughout the year from 80 BP at end September to 140 BP at end June. The opening under the Intermarché brand from the 15th of October 2023 of 2 hypermarkets formerly operated by Casino and owned by Mercialys in Le Puy with a 51% stake and Besançon with a 25% stake has been very positively welcomed by customers. As you can see on the right, footfall at the Besançon hypermarket in November and December rose by 24.9% and 37.5% respectively.
The same trend, excluding hypermarkets, can be seen in the sale of Mercialys' non-food tenants, which are up by 2.2% in 2023, as illustrated in slide 14, compared with a national panel FACT of shopping centers up by 3.3%. The national panel performed better because some of its major shopping centers bounced back harder once the vaccination health pass mandate was lifted for restaurants at the end of Q1 2022. Mercialys' relative performance has thus improved compared with the national benchmark, since the change in sales was -130 BP in favor of FACT in the first half year of 2023 but +10 BP in favor of Mercialys' centers in the second half year of 2023.
At the same time, while the environment remained difficult for certain categories of retailers, particularly in the ready-to-wear sector, resulting in a wave of court-ordered liquidations and receiverships, while in value terms overall, the various consumer segments performed well over the 2019-2023 period, most probably due to the effects of inflation in 2023. Although the economic environment was challenging and the retail sector was affected by the suspension of special support schemes following the end of the health crisis, Mercialys' teams were very active in their letting efforts throughout the year, as can be seen in slide 15. This letting momentum is driven by a desire to move our merchandising mix towards brands that are recognized, affordable, and essential for customers.
You can see here that the merchant mix over the 2018-2023 period has enabled Mercialys to increase its exposure very significantly to the health and beauty segments but also to culture, sports, and gifts, and more moderately to restaurants, home furnishings, and services. At the same time, Mercialys has largely deexposed itself to ready-to-wear but also food retailing, a move aimed at limiting its historical exposure to the Casino tenant and balancing the mix. On page 16, you can see further details on our letting strategy with examples of key shopping centers. In the Angers Espace Anjou shopping center, for example, lettings have been signed with popular retailers such as Rituals, Darty, Intimissimi, Waffle Factory , and Amorino. The already low vacancy rate of 1.8% at end of 2022 was further reduced to 1.6% at end of 2023.
At the Nîmes Cap Costières shopping center, listings have been signed with Adidas, Project X Paris , Adopt, Rituals, Bouygues Telecom, or La Fabrique à Cookies. Here again, our low financial vacancy rate of 1.5% at the end of 2022 was further reduced to 0.7% at the end of 2023. These two examples show that sustained efforts are needed to maintain the assets' leadership in their catchment areas. Slide 17 shows examples of sites that have experienced difficulties in previous years and for which efforts are paying off, i.e., by substantially dropping vacancy rates, you immediately improve the quality of the market mix, which then leads on to enhanced visitor numbers and improves your capacity to further drive up your occupancy rates.
In this respect, you have the example of the Toulouse Fenouillet site, where the 5.4% vacancy rate remains relatively high given our usual ratios, but which benefited from a very powerful letting wave in 2023 with the signing of 14 listings, which include Wistiti, Media Clinic, Krys Audition , Afflelou, Boutique du Coiffeur, and discount fashion chain Naumy. The Annecy Saint-Julien shopping center illustrates the kind of momentum that has already borne fruit in terms of the vacancy rate, which has fallen to 3.6%, benefiting from the signing in 2023 of leading national retailers such as New Yorker and Normal. These performances illustrate Mercialys' ability to relet sites following retailer failures, to broaden the range of offers for consumers beyond clothing, and to contribute to reinforcing the letting ability of its sites.
If we look at the occupancy level across the portfolio in slide 18, we can see that the current financial vacancy rate, excluding Strategic Vacancy to facilitate the implementation of extension and restructuring plans, stood at 2.9% at the end of 2023. This represents a significant improvement on the peak of 3.3% as of the end of June 2023, returning to the December 2022 level. This stability in current financial vacancy is particularly satisfactory given the large number of brands, mainly in the ready-to-wear sector, in receivership and court-ordered liquidations in 2023, as well as the health and also as the health crisis receded and government support measures came to an end. The overall leasing momentum was driven by the signing of 150 lease renewals or relets during the year, with a marked acceleration in the fourth quarter.
This reversion rate associated with the negotiations was stable at plus 0.1%, in line with the high indexation of plus 3.7% for the year. Mercialys' sales momentum has also gone hand in hand with a sharp improvement in its risk profile, or at least in its perceived risk profile. In slide 19, in addition to what I said about the changing landscape of food retailing, you can see Mercialys' rental exposure to this segment. The chart on the left shows the exposure at the end of 2023, the main tenant being largely the Casino Group, with the Géant and Monoprix retailers in mainland France and in Corsica that are already multi-anchored through Intermarché, Aldi, and Lidl. On the basis of publicly available information, rental exposure would correspond to the graph on the right-hand side of the slide.
Casino would remain via the Corsican hypermarkets and the stores announced as not taken over to date, i.e., with Aubagne and Niort and one Monoprix in Grenoble. Auchan would account for around a third of the property company's exposure to this segment, followed by Intermarché at just over 25% and Carrefour at around 11%. Residual exposure to Casino-operated hypermarkets may change as a result of the restructuring process and discussions with other operators. Mercialys will benefit from a highly optimized spread of its rental risk with financially solid operators. The restructuring potential of these hypermarkets and the associated value creation could also be boosted, as I'll be mentioning shortly. Slide 20: Accessibility is a decisive factor in Mercialys' offer, first and foremost to its tenants. Through their local leadership, our assets support the sales of our retailers.
In this way, Mercialys' business model is instrumental to the economic health of retailers, which also helps to control the vacancy rate, as I just mentioned. Reasonable rates and service charges, combined with the ability to generate sustained sales, mean that the cost-to-income ratio remains stable at 10.7% in 2023. Reflecting changes in the market mix, this rate is slightly lower than that observed in 2022, despite the effects of indexation and energy-related expenses. You can also see from the graph on the right that the collection rate in 2023 is largely normalized, and to date, the Casino Group has been paying rent in line with its contractual commitments. With regards to shopping center operating costs, in slide 21, Mercialys is working hard to keep operating costs low.
This work is based both on an asset base with relatively simple technical characteristics, with few vertical links, no expensive architectural features, and few silo parking facilities, and on strict management of the costs associated with these facilities. As a result, the level of charges paid by our tenants amounted to EUR 48 per sq m, excluding property tax in 2023 for an average rent of EUR 244 per sq m. A major factor in 2023 was the sharp rise in energy prices, like gas and electricity, which account for around 21% of expenses. Mercialys has limited the impact of its tenants, in particular through energy-saving measures that have led to a 22.5% reduction in surface energy intensity.
Based on what Elizabeth just said about her operational activity, if we look now to slide 23, we look at evolution of rental revenue increased 2.8 points over 2023 to EUR 177.5 million.
This change is the result of organic growth, rental revenue up 4.1 points, and that increase is due to the result of combined positive effects from indexation 3.7% and variable rents 1.1 points. So that's a sign of the good activity coming from tenant brands on our real estate portfolio. This was also supported by the accounting impact from rent reductions granted to tenants in the context of the health crisis, to the tune of 0.4 points. At the same time, organic growth was tempered by actions carried out on the portfolio, especially so down 0.8 points, and a contribution from casual leasing down slightly 0.3 points due to the impact of a drop in traffic flows in Casino Group hypermarkets, as just explained. In 2023, scope effects weighed on rents by EUR 2 million and is mainly related to disposals carried out in April and December 2022.
After taking into account the staggered leases provided for in IFRS, lease rights booked in 2023 amounted to EUR 0.5 million compared to EUR 0.7 million in 2022. Overall, rental income is up to EUR 178 million as of 31st of December 2023. That's up 2.7% compared to the end of 2022. Let's now move on to analysis of the evolution of net recurring earnings, slide 24. We can see an increase of EUR 4.7 million in rental revenue that I just talked about. Net rent amounted to EUR 170.9 million, which is up 3% compared to end of 2022. EBITDA amounted to EUR 149.4 million, up 3.6% compared to 2022. It benefited from rental growth, and it was also buoyed by strict control of structural costs. EBITDA margin thus increased to 83.9% at a particularly high level. So it's a strong indicator of how Mercialys' operational management is efficient.
Financial expenses are almost stable compared to 2022. Share of net income of associates decreased by EUR 100,000, and non-controlling interest decreased by EUR 800,000. All in all, net recurring earnings amounted to EUR 109 million, up 3.3% compared to 2022. Net recurring earnings per share, EUR 1.17 per share, also up 3.3%. Now, adjusting for the base effect in 2022 for exceptional items relating to aftermath from the health crisis, the increase in net income was up 11% year-on-year. Let's now turn to change in value of assets excluding transfer rights, slide 25. You can see the drops like-for-like basis, -3.7% over six months and -7% over 12 months.
In light of this variation, we note that there's a triple combination of average annual rent, EUR 244 per square meter, low vacancy across our portfolio, and positive indexation, which all combine to support rental values retained by the appraisers, with a positive growth of +6.1% over the year. On the other hand, 2023 is a year that was marked by a rising interest rate environment and by an overall increase in risk premium for real estate as a general rule. More specifically, for Mercialys, appraisers judged there was a higher risk on the longevity of rental income from Casino Group, and that is prior to completion of the ongoing restructuring of the Casino Group. The negative forecast results in a very negative effect of -13% year-on-year.
So in light of all of the factors that I've just mentioned, as we can see on slide 26, our average yield rate on appraisals shows a decompression of 86 basis points between December 2022 and 2023. So that decompression of the appraisal rate hits a high average rate of 6.61%. We actually have to go back to 2006 to find similar expertise appraisal rates of 6.3%. However, during the period of more than 15 years, we have profoundly changed the structure of our asset portfolio through massive and, above all, selective refocusing of our assets by reducing the number of sites from 157 to 48 and reducing the average unit value from EUR 80.1 million in 2006 to EUR 60 million at the end of 2023. As a result of being more focused and more robust, our portfolio now has an all-time average return to high levels.
The spread of its average yield with a 10-year OAT bond as of 31st of December 2023, it now sits at 400 basis points. That's 170 basis points higher than what it was in 2006. This takes us now to slide 27, evolution of EPRA NDV per share, so net asset value, which stands at EUR 17.1 per share, down significantly 9.1% over 6 months, 18.4% over 12 months. There are 2 main impacts for the significant change of EUR 3.84 per share. First, a change in unrealized capital gain or loss of -2.04 EUR. In particular, the interest rate effect that I just discussed for -4.07 EUR. That's partially offset by a positive rent effect of +1.9 EUR. In addition to that, the change in fair value of fixed-rate debt for -1.53 EUR and a derivative effect of -0.49 EUR.
So the latest change is exactly in opposite direction as the one we just experienced over the past year, and it is predominantly due to the fair value of our bond debt. Finally, the overall variation is, of course, linked to the impact of dividend payments of EUR -0.96 and to that of recurring net income for a positive effect of EUR +1.17. Moving now on to drawn debt, slide 28. So that's at EUR 1.192 billion at the end of December 2023. There are three bond issues and one private placement for a residual nominal amount of EUR 1.15 billion. Average maturity of drawn debt was at 3.8 years as of December 31st, 2023. That's compared to 4.5 years in 2022. Aside from the EUR 42 million of commercial debt, the Mercialys has no debt maturing before February 26th. It also has undrawn credit lines of EUR 385 million.
Now, that's stable compared to the end of December 2022. 90% of that was subject to maturity extension in 2023, and as such, maturities of all credit lines now sit between 2026 and 2029. It's worth bearing in mind that by the end of 2023, 100% of undrawn credit lines contain ESG criteria. At the same time, cash position sat at EUR 118 million end of 2023. Overall, slide 29, real average cost of drawn debt for 2023 stands at 2.3%, which is only slightly up from the 2.0% at the end of 2022. Now, this change is mainly due to the introduction of fixing instruments and the extension of variabilisation products, which contributed to the strengthening of our debt coverage and our hedging position. So as you can see, that Mercialys has significantly strengthened its fixed-rate debt coverage ratio, which stood at 96% for 2023.
Implementation of hedging instruments on residual debt will make it possible to achieve 100% coverage of fixed-rate debt and 96% coverage by 2025. In the medium term, real average cost of drawn debt should gradually move towards the average cost of bond debt, which is to say 2.6%. Moving now to slide 30, we can see our financial structure remained very healthy in very good position, with an LTV ratio excluding transfer duties at 38.9%, 38.6% as of June 30th, and 35.3% as of December 31st of 2022. The LTV including transfer duties stood at 36.4% end of year, and that remains well below bank covenant levels of 55%, which has an impact on 92% of undrawn lines.
ICR ratio stood at 5.1 times as of 31st of December 2023 and 5.9 as of 31st of December 2022, and that is well above minimum levels of at least two times set by bank covenants. As for net debt to EBITDA ratio, it remains one of the best in the industry at 7.1 times. In its latest review on October 20th, 2023, S&P reiterated our triple B rating, maintaining a stable outlook. With its particularly strong balance sheet, Mercialys, therefore, has room to maneuver to accelerate growth through its full range of projects. Elizabeth is now going to discuss them. Now, before looking at our outlooks, I would just like to go back over some of our fundamentals. The real estate company that we are, we've been pursuing an innovative approach for many years. We have innovated in terms of real estate.
We've industrialised casual leasing, whose contribution is close to EUR 10 million each year over the past few years and has still room for growth. We also have multi-use with development of our coworking spaces. These two business lines are managed by the property company itself as property. Now, innovation is also in terms of marketing, physical and digital marketing, which translates into a base of more than one million customers in our loyalty program. So this means that we can now collect data on purchases made in nearly all of our stores. And this is essential that they talk about this because they are going to be more and more involved in our business practices in the past, in the future, by having a more global vision of purchasing paths and therefore of the mixes of brands most used by our different customer segments.
That means that we will be able to refine merchant mix, identify second-degree locomotives, as we call them, that we can really highlight, and therefore we can allow our tenants to benefit from marketing campaigns that target customers that like going to complementary brands. Therefore, Mercialys also offers its tenants a proprietary e-commerce platform for its main sites, therefore increasing potential customer bases. So it's based on solid foundations that Mercialys has been able to develop its ambition. Slide 33 shows what our model is like. It has protected its balance sheet over the past few years in the face of disruption and uncertainty, caused first and foremost by the health crisis and then by the steep increase in interest rates.
As Vincent just said, Mercialys is going to continue to play its full role as a listed real estate company and therefore to aim for a regular distribution profile for its shareholders. Our financial profile remains very balanced despite impact and fall in values brought on by rising interest rates and perception of risk from Casino. That said, we still have room for investment, which will feed into our distributive capacity in the midterm. Now, whether we're talking about bolt-on acquisitions or projects, it will be about whether we can strengthen the leadership of assets held by Mercialys and by fueling potential for rent inflows by diversifying their use. We'll also be able to deploy reconfiguration of certain assets and continue to improve customer experience through projects focused on food, drinks, and leisure. And this is why we bought a stake in Depur Group in 2021.
We're also looking at target asset acquisitions for core businesses, retail, or related diversification. So this investment, it will have to meet strict criteria in terms of rental exposure. It will have to include resilient sectors such as food. But again, it will also take into geographic location criteria. These acquisitions could be made either on our own or in partnership, and it could be via new avenues such as what we're doing with Immo Mousquetaires. Finally, Mercialys will take part in calls for projects for developing new land, again, on its own partnership. In addition to crystallizing development margins, we will also aim to maintain a commercial real estate we've already developed.
Now, again, last year had economic and interest rate environments that brought on a high degree of selectivity in our projects and acquisitions, which we must maintain because there's a demanding criterion of a return to 250 basis points above cost of refinancing. Now, in terms of Immo Mousquetaires, just quickly on slide 34, Mercialys took a 30% stake in the portfolio management company December 2023. The acquisition of the remaining 70% is planned for 2025, obviously the price being dependent on the interim performance. Immo Mousquetaires manages an OPCI for a portfolio of 33 retail areas in France, representing a value of more than EUR 650 million and rental inflows of approximately EUR 40 million. So it will benefit from revenue generated by SGP, which is expected to increase with the creation of new funds, but also from developments that can be carried out on assets already held.
This in a regulatory context that's very strict when it comes to having man-made environments. This transaction will allow our real estate company to benefit from increased visibility vis-a-vis tenant brands, given that Mercialys and the fund have already shared, due to the nature of their assets, a common merchant base. Finally, Mercialys will be able to invest directly into new funds created by the SGP, thus positioning itself in portfolios or assets that its balance sheet would not allow to consider for direct acquisition. Slide 35, you have the details of projects already determined and likely to be deployed in the midterm for EUR 429 million. Mercialys' development continues to focus on the retail sector.
We now have expertise, which means that we can take part in calls for tenders for mixed-use development projects organized by either municipalities, cities, local authorities wishing to reposition certain neighborhoods or on real estate development with solid growth margins. Slide 36, you can see our pipeline of projects for more than 48 shopping centers owned by Mercialys. You have both commercial space projects, restructuring extensions, retail estates, restaurant areas, leisure projects, or tertiary activity projects, including housing, health, and coworking spaces. The potential for reconfiguring these sites means that we can maintain our attractiveness beyond just local shops and therefore sustain their power in their catchment areas and therefore bolster their cash flow profile in the long term. The rising cost of credit and cost of construction means that projects will have to be very selective.
It also should be noted that about 30% of investment projects relate to catering or food, leisure, and tertiary activities, which just illustrates how diversification into projects related to retail shops is where we want to head. Few examples. Grenoble, we have the Caserne de Bonne. So on slide 37, this project will be a huge refurbishment or reconfiguration of the site in the city center of Grenoble with delivery set for 2025. It will involve restructuring 3,000 square meters of gallery space, two-thirds of which will be turned into three medium-sized areas and one-third for a food hall-type area, which is particularly suited to the area where the shopping mall is located. And it is also a perfect opportunity for some remarkable architectural features. Another example on Réunion Island, with an extension of the Sainte-Marie Duparc shopping center for 2026, 11,000 square meters on land owned by Mercialys.
This is a leading asset in the north of the island. It will be consolidated in terms of new shops, but also in terms of catering offers, which is again highlighted by the shopping mall's location. It will also provide leisure activities, a medical center, and coworking space. So multi-use with additional flows, but working again with the regular footfall from the shopping spaces. In terms of marketing, brands that are not currently present on the island will be able to leverage this to hit the ground running. Slide 39, another example. This is a three-hectare land reserve, which is owned by Mercialys, and it will add into what we already have on the east of the island. So this will involve 13,000 square meters, which will add into the offer already on site, again, without hitting capacity levels in the catchment area.
Again, multi-use space, 10,000 square meters of shops with additional catering or food offers, sport areas, medical center, and coworking spaces. I would just like to finish by talking about development opportunities on this slide. So this is to talk about what we can do with the real estate that we have by combining hypermarket services with its shopping galleries and working with operators to refurbish them and change them. Takeover of hypermarkets owned by Mercialys will mean that we can relaunch the operations of new brands that would like to reduce surface area by focusing largely on the food offer. In the new areas that will be open, we'll be able to look into medium-sized stores that are complementary with those businesses already located in hypermarkets. So we can have a positive flip around in the long term.
So we have a possibility to refurbish or change the use of about 90,000 sq m, and we can hit a current average surface area of 12,000 sq m of hypermarkets owned by Mercialys, which could be optimized to approximately 9,000 sq m. At the same time, we'll be able to leverage opportunities coming from changing the formats of hypermarkets to work on attractiveness of shopping galleries in terms of comfort services and renovations. So that's it for our presentation. Now, over to questions.
Thank you very much. If you would like to ask a question or have any comments, please press star one on your phone keypad. Make sure that your microphone is turned on when asking your question. The first question comes from Bruno Duclos from Invest Securities. Over to you.
Thank you for the presentation.
I have a question about your new dividend policy, which was a bit surprising. So you have investments planned for the near future. So are we going to see a drop in dividends in 2024?
Well, not an automatic drop, no. For some years now, we have hit 85%-95% of our recurrent profits put into dividends. So currently, we're at 85%. So this is talking about the NRE. So it's regularly high with a stock yield which has been slightly dropping over the past few years. But again, because we are hitting the bottom end of the threshold, the upper end of the threshold is 95%. So that means that we are quite balanced between additional investments that we want to plan.
For example, when you have an opportunity that we want to seize, as I just spoke about when talking about renovations of the shopping malls and shifting some of those spaces into food and leisure activities. So because of our policy, we can actually put more of the we can still pay out dividends by staying in that threshold that I spoke about. But we can still stay within that threshold while maintaining a satisfactory yield and still investing. Again, the yield asset we're talking about so we're talking about the yield asset or the current share price and taking that into account. So we want to still maintain room for maneuvering so that we can invest in additional investments if we want to.
Another question, if I may, about reversion. Because especially if we are seeing increased rents, really, what are you looking at for 2024?
Is it going to be positive given that your tenants' own turnover is hard-hit given inflation?
Well, we feel that we have a positive future for our rental base. Now, obviously, the future is going to depend on the level of effort that our tenants can actually put in. There is an underlying growth effect, obviously. We think that a high reversion rate, given the current climate which is still high in 2024, we feel it's more a sign of actually weakness in the future, not a sign of strength. But that said, we have been able to work with our rent changes and ensure that we can have longstanding tenants. We actually have a vacancy rate which is dropping. We see that as a positive sign for the future.
Now, what may have been a sign in the past is now actually a sign of potential value creation in the future. Now, just quickly, this is one of the factors of our organic growth. Now, if you look at organic growth for Mercialys, be it this year for 2023 or even in the 4-5 years in the past, I would dare say that it is quite a positive sign, especially when comparing to some of our peers in France. So that just goes to show that we have a solid balance of our organic growth levers.
One final about your capitalization rate for your initial yield. Is it possible to have just a very general estimation of Casino's rental real estate for 2023?
Well, I think if we take back to June last year, the Casino risk really came through from appraisals in the first half of last year. There was a 60 basis point delta on that portfolio. Now, we hope that with the shop space transfers, the risk that was seen by appraisals on the specific hypermarket portfolio should drop. So yes, there is that additional risk premium, if you want to call it that, which would actually deflate over the recent past.
Sorry, I missed that. How many basis points?
We're talking about an additional risk premium of 60 basis points.
So 60 basis points on valuation of Casino-related assets. That's not on the entire portfolio. That's what you're talking about?
Yes, we're talking about the hypermarket portfolio.
Before moving on to the next question, just a quick reminder.
If you would like to ask a question, please press star one on your keypad. The next question is from Benoit Faure-Jarrosson in Invest Securities. Over to you. Yes, Benoit Faure-Jarrosson.
I have a question about assets that have not been bought out. So here, I'm talking about the ones on the mainland in France and the one in Corsica. So there were two that were not bought out, and yet they're running at a loss. So what's your scenario there? Because if no French company is willing to buy them out, are they going to close up shop? And for Corsica, what is your take on the duty to divest that part of your real estate portfolio? And what is the burden of rent coming from these sites on your overall financials? What is their share of your overall financials?
Okay, so to quickly answer your question about Corsica, the information that we have is that it is a subsidiary that is profitable for Casino. And the Casino Group has decided to sell off that business but to separate it out from the rest of the businesses on French mainland. Obviously, they want to get the most value out of it by splitting up that divestment decision. So our take is that to split that divestment, that should come through in the next few weeks. But we don't have any more details on it than that. As for some sites not being bought out, well, there may be other phenomena to take into account than the ones you were talking about because there is the issue of geographical coverage from our competitors. Some of them already have specific locations for specific brands.
Now, the Casino Group, they chose to look at the bids from two key operators, from Intermarché and Leclerc, with a separate process for Carrefour. Now, that said, there aren't really signs or shows of interest from other operators for the time being. Now, obviously, we've looked at all scenarios for all sites covered by our real estate portfolio, or at least all sites that are owned by Mercialys or not. And we've been looking at some alternatives. But then, for the time being, that is not really in our hands because there are some lease agreements where we remain owners of the actual businesses. Some places, we're just owners of the building. So for the time being, we haven't been able to activate our alternatives.
The only thing we can really do is to continue taking in rent from Casino's from those specific sites, as we have done over the past few years. Now, also, what we need to bear in mind in terms of associated risk is that risk is going to be there when you have sites that are performing poorly, and especially when you have a food vendor or a groceries vendor performing poorly. But the Casino Group was performing quite poorly in its hypermarkets, yet all of the gallery businesses were doing quite okay. So as a whole, it's doing okay. I think that's why you need to think about the difference between the future of hypermarkets and the hypermarket spaces and the future of our business and the future of our sites.
I think they don't necessarily go hand in hand because there is risk on one side, especially from the point of food vendors, but not necessarily from our side.
Concretely, for both of these sites, let's imagine that no company takes over that hypermarket. Technically, does that mean that that hypermarket might be restructured?
Well, that's always an option that we've thought about and that we can actually work on. And indeed, we were the first real estate operator, so pioneer on the topic, by restructuring hypermarkets to downsize them as early as 2015. So that's something that we can do. We have the know-how, and we can also tap into the full potential of such opportunities. I'm not really sure what will happen with regards to this example in particular.
It's still in the hands of the Casino Group, and the Casino Group is still paying its rent on time.
Thank you very much.
And a similar comment on the dividends .
Stability, visibility is a priority for any real estate company. So you cannot just refer to the stock exchange to justify for a dividend reduction. Well, if I may delve into further detail, that bracket of 85%-95% is well above what's happening with our competitors. We have very comparable peers which actually have a 75% bracket. And if we enlarge that bracket, that will not necessarily lead to reduction in the payout. That has not been the decision of the board. I believe that's not the sign that we've been setting out with regards to the payout, which will be up for approval at the AGM. So don't envision the worst. Rather focus on the best.
That's to come. The average yield is exceptional, 10.1% for the past 3 years. That's the kind of track record you should forecast in the future in spite of a downward trend. That's a way of normalizing that bracket. Perhaps that's something we should have done when we were just out of the COVID crisis. That would have allowed us to avoid these kinds of questions, and you would have had a very different vision of that 85% bracket. Moreover, please remember that you need to look at things from a much wider standpoint. If we were to dedicate our investment in any other way, we would not be able to develop and redevelop our assets. For the past 10 years, we've asked for these dividends to be more or less to be more or less forecastable.
We would rather hear you say that you'll have an EUR 0.08 dividend for the next 10 years rather than change that each and every single year. Well, you probably know the European market better than me, but I don't believe that there are not so many real estate listed companies that offer that kind of payout. And with regards to payout visibility, I believe that we've done our share of that work with a very regular 85%-95% bracket that we've announced for the past 8 years, I believe. And the effective dividend payouts, I believe, were rather upward except for COVID due to the overall situation. So I do not think that there was any bad surprises with regards to the Mercialys dividend payout in the past few years. We're not saying that the dividend will actually decrease.
We're just saying that we need to protect our capacity in the future due to the necessary investment that will be coming up our way. We have limited our investment in the past few years, and the company's goal is to, again, strike that balance in terms of the immediate dividend payout to feed into our medium-term track record and also to make sure that we still have the capacity to distribute these payouts in the medium term. And even if we were to have that 85 bracket, given the NAV, among others, we would be at a yield of 8.5% on average. Now, you may not understand what I'm saying, but what I really wanted to highlight was the extent to which it is important for you to announce results that can be seen in the long term. We really need that long-term vision.
It's always been the case, and that's really been very negative in terms of your financial communications. Okay, so minimum rate 75%, so an average yield of 8.5% as of closing of 2023. That's a minimum required. I don't believe that that would be less clear or less specific than what our peers do, but perhaps we can discuss this into further detail during our next conversations on this matter.
Thank you.
Thank you very much. There isn't any question left. Moving on to our English speakers if they have any question.
Thank you. We'll now take our next questions from Inna Maslova from Degroof Petercam . Time is open. Please go ahead.
Hi. Good morning. Thank you very much for taking my questions, and thank you for the presentation. Just one follow-up regarding the transfer of the hypermarket, supermarket to Casino.
Do you anticipate any transfer costs related to assets and also in terms of any rent?
[Foreign Language]
All right. So I suggest we close this presentation, and we'll see you in six months' time.
Thank you for participating in today's conference. You may now hang up. The conference organizers will remain online and await further instructions.