Mercialys achieved its targets for 2012

  Mercialys achieved its targets for 2012

  *Robust organic growth in invoiced rents: +4.3%
  *Growth in restated funds from operations (FFO)^1 per share of +9.9%, ahead
    of target
  *Launch of the “Foncière Commerçante”^2 business model: 8 pilot sites
    launched in 2012 and a further 9 sites to be rolled out in 2013
  *Refocusing of the portfolio on properties presenting a size and
    positioning that fits in with the “Foncière Commerçante” model: Euro 472
    million of assets sold or subject to a firm offer^3
  *Normalization of the balance sheet structure: Euro 1.25 billion of
    financings taken out and first exceptional distribution of Euro 1 billion
    paid in 2012
  *Changes to corporate governance with greater independence
  *Payment of a recurring dividend for 2012 of Euro 0.91 per share and
    proposal of a second exceptional distribution ^ upon completion of the
    2012/2013 first-half assets disposal program

  Appointment of Mr. Lahlou Khelifi as Chief Executive Officer of Mercialys
              (see press release published by the Company today)

  Mr. Eric Le Gentil, independent Board Director, appointed Chairman of the
                                    Board

Business Wire

PARIS -- February 13, 2013

Regulatory News:

Solid 2012 results,once again demonstrating the resilience of Mercialys’s
(Paris:MERY) business model

  *Further robust growth in invoiced rents of +4.3%, as a result of measures
    to increase average rental values of properties in the portfolio and
    develop specialty leasing activities. Rental income remained more or less
    stable at Euro 160.4 million, despite asset sales.
  *Funds from operations (FFO^4) of Euro 108.7 million, equal to Euro 1.18
    per share, down -22.9%^5 due to the implementation of the new financial
    structure.
  *Restated Funds from operations (restated FFO) of Euro 92.0 million, equal
    to Euro 1.0 per share, an increase of +9.9%^5.

^1 Net income, Group share before depreciation, capital gains on asset sales
and additional tax contribution of 3% adjusted for rental income from assets
sold in 2011 and 2012 and based on a like-for-like financial structure -
Excluding margin on Pessac extension (net of tax) and exceptional costs
relating to the restructuring of the financial and shareholding structure

^2 Think and act as a retailer

^3 Price including transfer taxes and estimated earnout payments of Euro 17
million on vacant lots

^4 Net income, Group share, before depreciation, capital gains on asset sales
and additional tax contribution of 3%

^5 Calculated on the basis of the weighted average number of shares as at
December 31, fully diluted

Significant steps forward in the various stages of implementation of the new
“Foncière Commerçante” strategy

  *Creation of a dedicated team and legal structure: Agence d’ici has been
    formed, comprising around 30 employees.
  *Development of a range of around 50 services targeted at retailers.
  *First tests have been successfully performed in summer 2012 and confirmed
    the advantages of this approach for both retailers and Mercialys.
  *Pilot projects were launched at 8 sites in autumn 2012 and will be
    followed by a further 9 roll-outs in 2013.

Very solid progress made in refocusing the portfolio around properties best
suited to the “Foncière Commerçante” strategy: Euro 472 million of assets sold
or subject to a firm offer

  *47 assets sold or subject to a firm offer representing a total of Euro 472
    million including transfer taxes at an average capitalization rate of
    6.2%, for a price above the appraisal value. The total net capital gain
    from these asset sales is estimated at Euro 132 million.
  *Asset sales carried out in 2012 represents Euro 232 million, including
    transfer taxes, with a capital gain of Euro 61.7 million.
  *At the end of these asset sales, Mercialys’s portfolio should be made up
    of 90 assets with 60 shopping centers, including large shopping centers in
    a proportion of 73%.

Net asset value^6 increased by +3.0% over 12 months

  *The value of Mercialys’s portfolio stands at Euro 2,561.1 million
    including transfer taxes, a fall of -3.0% over 12 months, mainly as a
    result of asset sales carried out in 2012. On a like-for-like basis,
    Mercialys’s portfolio increased in value by +2.4% over 12 months, boosted
    by organic growth in rental income.

  *The average appraisal yield was 5.85% as at December 31, 2012, compared
    with 5.8% as at December 31, 2011.
  *NAV including transfer taxes equals Euro 18.94 per share, an increase of
    +3.0% over 12 months, on NAV adjusted for the exceptional distribution of
    Euro 10.87 per share paid in the first half of 2012.

A very active year on an operational level

  *A continuing brisk rate of lettings in 2012, with 274 leases signed
  *A further robust rate of completions of “Esprit Voisin” development
    programs in 2012: 8 “Esprit Voisin” development projects completed over
    the year.
  *Satisfactory management indicators: the recurring vacancy rate and
    recovery rate remained stable over six months at 2.4% and 97.7%
    respectively.
  *In a difficult economic climate, sales figures for retailers in
    Mercialys’s shopping centers held up well during 2012, with growth of
    +1.5% in 2012 relative to 2011.

Balance sheet structure normalized, in line with that of the leading real
estate companies and protecting Mercialys’s solid and cautious business model

  *Financings of Euro 1.25 billion were taken out during the first half of
    the year, of which Euro 1 billion had been drawn as at December 31, 2012.
  *The average cost of debt in 2012 was 3.7%.
  *The LTV ratio was 33.3%^7 as at December 31, 2012.

Dividend

On the basis of the progress made and results reported by Mercialys for 2012,
Mercialys’s Board of Directors will propose to the Annual General Meeting:

  *a recurring dividend of Euro 0.91 per share (including the  interim
    dividend of Euro 0.25 per share already paid in October 2012), ie a yield
    of 5.6%^8;
  *a second exceptional distribution upon completion of the 2012/2013
    first-half assets disposal program

^6 Replacement NAV (including transfer taxes)

^7 Before second exceptional distribution

^8 Calculated on the basis of the share price at market close on February 13,
2013, ie Euro 16.20 per share

Those distributions should be paid on June 28, 2013 subject to the approval of
the Annual General Meeting to be held on June 21, 2013.

Based on the success of this first development phase, Mercialys has already
paid out in the first-half of 2012 an initial exceptional distribution of Euro
1 billion, equal to Euro 10.87 per share.

A new management (see press release published by the Company today)

At its meeting of February 13, 2013, the Board of Directors appointed:

  *Eric Le Gentil, independent Board Director, as Chairman of the Board of
    Directors;
  *Lahlou Khelifi as Chief Executive Officer of Mercialys.

Shift in corporate governance towards greater independence, with Casino
remaining a key partner

  *Casino holds a 40.17% stake and now has a minority position on the Board
    of Directors, comprising six independent directors compared with four
    Casino representatives.
  *The seat of Chairman of the Board of Directors and those of the chairmen
    of the Company’s technical committees are now held by independent
    directors.

Outlook

Lahlou Khelifi will be supported by Mercialys’s existing team in pursuing the
Company’s strategy of:

  *Refocusing on a portfolio of assets presenting potential and fitting in
    with the “Foncière Commerçante” strategy in order to enhance value
    creation (extracting organic growth, creating value by means of “Esprit
    Voisin” development projects, arbitrage of mature assets, roll-out of the
    “Foncière Commerçante” concept)
  *Developing asset management for third parties by capitalizing on its major
    areas of expertise: Mercialys acts as an operator (asset management,
    letting and commercial development) for funds in which it holds a minority
    stake and thereby benefits from additional profitable sources of revenues
  *Enhancing the offering of its shopping centers by developing selective
    retail activities.

In 2013, management will continue to focus on growth and profitability:

  *Continuing robust organic growth with the target of like-for-like growth
    in rental income of at least +1.5% above indexation
  *An ongoing solid operating performance, with an EBITDA/rental revenues
    ratio that should remain above 84%.

Performance enhanced by continuing value creation as a result of completions
of “Esprit Voisin” development projects, the roll-out of the “Foncière
Commerçante” concept at 17 shopping centers and the development of management
activities for third parties.

Due to their impact on net rental income, asset sales carried out in 2012 and
the first half of 2013 should have a negative effect on the change in Funds
From Operations (FFO) in 2013 comprised between -15% and -20%, depending on
the effective dates of disposal. Adjusted FFO will increase as a result of
value creation on the portfolio of core assets.

2012 RESULTS*
                                                         
                          December 31,   December    % change    % change
(In thousands of euros)  2011          31, 2012             
                                                     2012/2011   like-for-like
                                                            
Invoiced rents            153,385        152,537     -0.6%       +4.3%
Rental revenues           161,005        160,419     -0.4%
Net rental income         151,735        151,651     -0.1%
                                                         
                                                                 
Net operating             -13,360        -14,766
expenses^9
Income from partnership
with Union                2,950          10,290
Investment^10
Other current operating   37             -5,357
income and expenses
Net financial items       788            -29,364
Tax^11                    -1,298         -3,722
Minority interests        -39            -42
Funds from operations     140,814        108,690     -22.8%
(FFO)
Depreciation              -23,981        -26,242
Income and expenses       30,559         61,658
relating to asset sales
Depreciation and
capital gains             -9             -10
attributable to
minorities
Additional tax            -              -689
contribution of 3%
Net income, Group share  147,382       143,408    -2.7%      
Restated funds from       83,684         92,044      +10.0%
operations (FFO)^12
                                                         
Per share data (euros
per share)
Diluted EPS               1.60           1.56        -2.7%
Diluted total cash flow   1.56           1.15        -25.9%
Diluted funds from        1.53           1.18        -22.9%
operations (FFO)
Diluted restated funds   0.91          1.00       +9.9%      
from operations (FFO)

                                                       
Valuation of properties
                                                       %
                                December               change
                    December    31, 2011   December              % change
                  31, 2011             31, 2012   over 12 
                                Pro                    months    Like-for-like
                                forma^13               (pro
                                                       forma)
Total portfolio
value incl.
transfer taxes     2,639.9    2,639.9   2,561.1    -3.0%    +2.4%
(in millions of
euros)
Net asset value
(in euros per
share)              29.25       18.40      18.94       +3.0%

(Replacement NAV)
Net asset value
(in euros per
share)             27.72      16.87     17.47      +3.6%    

(Liquidation NAV)

*Audit procedures have been conducted by the statutory auditors. Finalization
of the statutory auditors' report on the consolidated financial statements is
in progress.

^9 Net of fees charged

^10 For 2011: arrangement fees. For 2012: margin relating to the development
of the Bordeaux-Pessac extension.

^11 Excluding additional tax contribution of 3%

^12 Net income, Group share before depreciation, capital gains on asset sales
and additional tax contribution of 3% adjusted for assets sold in 2011 and
2012 and based on a like-for-like financial structure - Excluding margin on
Pessac extension (net of tax) and exceptional costs relating to the
restructuring of the financial and shareholding structure

^13 NAV adjusted for exceptional payout of Euro 10.87 per share paid in the
first half of 2012

                                     * *

                                      *

       This press release is available on the website www.mercialys.com

Next events and publications:

  *February 14, 2013 (9.30 am) Analysts’ meeting

About Mercialys

Mercialys is one of France's leading real estate companies, solely active in
retail property. Rental revenue in 2012 came to Euro 160.4 million and net
income, Group share, to Euro 143.4 million.

It owned retail properties at December 31, 2012 representing an estimated
value of Euro 2.6 billion (including transfer taxes). Mercialys has benefited
from "SIIC" tax status (REIT) since November 1, 2005 and has been listed on
compartment A of Euronext Paris, symbol MERY, since its initial public
offering on October 12, 2005. The number of outstanding shares was 92,022,826
as of December 31, 2012. The number of outstanding shares was also 92,022,826
as of December 31, 2011.

CAUTIONARY STATEMENT

This press release contains forward-looking statements about future events,
trends, projects or targets.

These forward-looking statements are subject to identified and unidentified
risks and uncertainties that could cause actual results to differ materially
from the results anticipated in the forward-looking statements. Please refer
to the Mercialys shelf registration document available at www.mercialys.com
for the year to December 31, 2011 for more details regarding certain factors,
risks and uncertainties that could affect Mercialys's business.

Mercialys makes no undertaking in any form to publish updates or adjustments
to these forward-looking statements, nor to report new information, new future
events or any other circumstance that might cause these statements to be
revised.

                          APPENDIX TO PRESS RELEASE

  *Business review
  *Financial report

       *Financial statements
       *Main highlights
       *Review of activity in 2012 and lease portfolio structure
       *Review of consolidated results
       *Subsequent events
       *Outlook
       *Review of the results of the parent company, Mercialys SA

1. Business review

(Financial statements for the year ended December 31, 2012)

A very active year in 2012, once again demonstrating the solidity and
resilience of Mercialys’s business model

In a bleak macroeconomic climate, sales figures for shopping center retailers
held up well during 2012. Within the sector, neighborhood shopping centers -
the segment in which Mercialys has the strongest presence - escaped
particularly unscathed, with retailers’ sales rising by +1.2%^14 in 2012
relative to 2011. Mercialys outperformed the index with sales growth for
retailers at its large shopping centers of +1.5% in 2012 relative to 2011.

2012 rental revenues were supported by organic growth and completions of
“Esprit Voisin” development projects.

Organic growth in invoiced rents remained robust in 2012 at +4.3% thanks to
ongoing efforts to optimize the value of leases in the portfolio, primarily by
means of renewals, relets and temporary lets.

Furthermore, Mercialys’s key management indicators show that the economic
climate had a limited impact on its tenants, highlighting the resilience of
its portfolio.

The Company’s activity was also driven by completions of “Esprit Voisin”
development projects. Following the 18 projects already completed in 2010 and
2011, a further 8 projects were completed in the course of 2012, representing
117 new shops and a rental value of Euro 8.2 million^15 over the full year,
with 68,000 m² of newly created, redeveloped and/or renovated space (GLA).

Funds from operations per share (FFO^16) adjusted for the effects relating to
i/ asset sales carried out in 2011 and 2012; ii/ the property development
margin (net of tax), and iii/based on a like-for-like financial structure,
increased by +9.9%, well ahead of target. In February 2012, Mercialys’s
management team set itself the target of growth in adjusted FFO per share for
2012 of +6% to 8% relative to 2011. This figure was revised upwards in July
2012 on the basis of a target of growth in adjusted FFO per share in 2012 of
over +8% relative to 2011.

A major year in terms of strategy, with the launch of a new phase centered
around the “Foncière Commerçante”^17 concept

On February 9, 2012, on the presentation of its 2011 results, Mercialys
announced the launch of a new strategic plan centered around the “Foncière
Commerçante” concept (“Think and act as a retailer”), in keeping with the
positioning developed over the last six years.

For Mercialys, this means going beyond the status of mere lessor to establish
that of a multi-channel hyperlocal “retailer” able to offer its tenants
powerful marketing tools, targeted in order to make its shopping centers more
attractive and stimulate demand. This entails working alongside retailers and
independent sellers in integrating them into the local community in order to
boost their retail success.

We also want to enhance our offering by improving our shopping centers in
order to meet customers’ unsatisfied expectations, mainly by forming
partnerships, and making “Esprit Voisin” a unique concept.

Thus, a new Company named Agence d’ici has been formed: it comprises a team of
around 30 employees dedicated to this new strategic axis that is in charge of
coordinating the “Foncière Commerçante” development.

The first “Foncière Commerçante” pilot projects were launched at eight
shopping centers during the second half of the year, with a range of 50
services offered to retailers. This will be followed by a further nine
shopping centers in 2013.

This new strategic phase involves refocusing the portfolio on properties
presenting a scale and positioning in line with the “Foncière Commerçante”
strategy. In 2012, 47 properties were sold or subject to a firm purchase
offer, representing a total of Euro 472 million including transfer taxes^18.

This process of refocusing the portfolio, coupled with the implementation of
the “Esprit Voisin” program, has significantly transformed Mercialys’s
property portfolio and helped to boost its momentum. The average size of
properties has increased at the same time as the number of properties has
decreased.

^14 CNCC index - Neighborhood shopping centers, all retailers - Cumulative to
end-December 2012

^15 Including annualized rental income of Euro 2.5 million relating to the
Pessac extension sold on an off-plan basis to the OPCI fund created in
partnership with Union Investment

^16 Net income, Group share excluding depreciation, capital gains on asset
sales and additional tax contribution of 3% per share (weighted fully
diluted).

^17 Think and act as a retailer

^18 See detail of disposals in section 2.4.7 – Including estimated earnout
payments of Euro 17 million on vacant lots

The implementation of this business strategy is accompanied by a normalization
of Mercialys’s financial structure, with the taking out of debt of more than
Euro 1 billion in 2012, including a Euro 650 million bond, a Euro 350 million
bank loan and undrawn back-up credit lines of Euro 250 million. This new
financial structure will help to optimize the rate of return offered thanks to
a reasonable leverage effect. As at December 31, 2012, Mercialys’s LTV
ratio^19 was 33.3%.

As announced on February 9, 2012, Mercialys wanted to mark the successful
completion of its first development phase with a distribution of Euro 1
billion - in addition to the 2011 final dividend – in the first half of 2012,
equal to an exceptional distribution of Euro 10.87 per share, mainly including
a reimbursement of contribution premium.

A second exceptional distribution is due to be paid^20 upon completion of the
assets disposal program conducted in 2012 and 2013 first-half.

Lastly, 2012 was a year of major changes in the Company’s corporate
governance, with the aim of accompanying changes in Mercialys’s shareholding
structure, with Casino now holding 40.2% of voting rights. Two new independent
directors have been appointed to the Board of Directors that now comprises 6
independent board directors and 4 board directors representing Casino Group.

Performance is based on a highly resilient business model, underpinned by both
the fundamentals of the retail property sector and Mercialys’s own strengths

The shopping center sector has an extremely dynamic and resilient performance
profile.

It is intrinsically correlated with trends in the retail industry and
therefore offers a dual advantage for Mercialys:

> exceptionally good visibility in terms of cash flow, with a solid base of
index-linked rents, very low vacancy rates due to the practice of leasehold
rights - a peculiarity of the French retail system which requires an outgoing
tenant to find a replacement;

> an ongoing ability to create value by working on a center’s merchandising
and events planning, negotiating lease renewals and relets, and pursuing a
policy of renovating and redeveloping centers to make them more competitive.

Against this backdrop, Mercialys has created a flexible organizational
structure by combining and developing specialized skills in value-creating
functions. Its links with a major company also enables Mercialys to pool its
back-office functions with Casino Group.

Mercialys also presents its own strengths, based on dynamic development and
tight control of risk:

> Mercialys is a pure play operator specializing in retail properties located
solely in France.

> Mercialys benefits from a favorable outlook in terms of organic growth
thanks to significant potential to increase rent levels on its rental
portfolio.

> Mercialys’s shopping centers enjoy a strong position, benefiting from both
consumer appeal for local sites and a strong local footing, as well as a
favorable geographical position in France, with centers located in the
fastest-growing regions (Rhône-Alpes, Provence-Alpes-Côte d’Azur, Atlantic
Arc).

> Mercialys has a team of specialists in the transformation of shopping
centers, focusing on growth and rates of return, centered around a structural
and innovative concept: the “Esprit Voisin” concept.

> Since 2006, Mercialys has been working on the development of a highly
ambitious program, unique in scale and offering considerable value creation:
the “Esprit Voisin” program. Redevelopment and extension works carried out
within the framework of the program take place at existing sites, thereby
significantly limiting the risks taken by Mercialys and its retail tenants.
These risks are even more limited by the fact that works only begin once new
developments have been at least 60% pre-let.

> Mercialys benefits from secure access to acquisitions. The Partnership
Agreement with the Casino Group resigned in 2012 and extended to end-2015
allows Mercialys to have prior access to projects developed by Casino at
attractive rates relative to market prices. Casino’s large pipeline means that
Mercialys can remain selective about investment opportunities arising on the
market.

^19 Loan To Value: net debt/market value of assets excluding transfer taxes

^20 Second distribution to be submitted to the Annual General Meeting for
approval on June 21, 2013

A pivotal year for Mercialys, laying the foundations for its future business
model

Mercialys intends to continue with the successful strategy it has pursued for
more than six years. 2006 to 2011 were the years of the launch and take-off of
the roll-out of the “Esprit Voisin” program, a real driver for value creation
for Mercialys’s portfolio. This roll-out has been based on the “Esprit Voisin”
concept, the trademark created by Mercialys and reflected in all aspects of
value creation. This unique architectural, marketing and retailer approach
aims primarily to adapt the design of shopping centers and the retailer mix to
customers’ expectations, and more generally to anticipate changes in market
conditions in order to react effectively to our competitors.

Since the end of 2010, this strategy has been accompanied by an arbitrage
policy concerning mature assets, which has enabled Mercialys to refocus its
portfolio on assets presenting reversionary potential and with a strong
presence in their catchment area.

By capitalizing on the positioning developed over the last six years,
Mercialys intends to continue with its transformation into a “Foncière
Commerçante”, founded on our unique approach based on the “Esprit Voisin”
brand, a reinforced partnership with our retailers and the development of new
retail offerings, all for the benefit of our customers and our retailers. This
transformation involves refocusing the portfolio on the most solid properties
that offer the best fit with the “Foncière Commerçante” concept.

The aim is also to form partnerships allowing for the development of
activities for third parties - such as asset management, letting and advisory
services - and developing selective retail activities to strengthen the
offering at our shopping centers by providing an additional source of
revenues.

2. Financial report

Mercialys Group is hereafter referred to as Mercialys or the Company.

The consolidated financial statements of the Mercialys Group to December 31
have been prepared in accordance with the standards and interpretations
published by International Accounting Standards Board (IASB) as approved by
European Union and as applicable at the balance sheet date.

Accounting policies have been applied consistently in all the periods shown in
the consolidated financial statements.

2.1. Financial statements

Audit procedures have been conducted by the statutory auditors.

Finalization of the statutory auditors' report on the consolidated financial
statements is in progress.

2.1.1. Consolidated income statement

(in thousands of euros)                       12/2010   12/2011   12/2012
Rental revenues                               149,506   161,005   160,419
Non-recovered property taxes                  (205)     -         (42)
Non-recovered service charges                  (3,746)    (3,578)    (3,868)
Property operating expenses                   (5,227)   (5,692)   (4,858)
Net rental income                             140,328   151,735   151,651
Management, administrative and other           2,837      6,214      3,689
activities income
Property development margin                                          10,290
Other expenses                                 (6,669)    (6,883)    (8,242)
Staff costs                                    (8,798)    (9,796)    (9,657)
Depreciation and amortization                  (25,528)   (23,981)   (26,241)
Provisions for liabilities and charges         39         55         (557)
Other operating income                         122,127    121,359    196,236
Other operating expenses                      (90,754)  (90,763)  (139,935)
Operating profit                              133,582   147,941   177,234
Revenues from cash and cash equivalents        370        519        432
Cost of gross debt                             (242)      (324)      (28,229)
Income from net cash (Cost of net debt)        128        195        (27,797)
Other financial income                         6          620        938
Other financial expenses                      (48)      (27)      (2,505)
Net financial income (expense)                86        788       (29,364)
Tax                                           29        (1,298)   (4,411)
Consolidated net income                        133,697    147,430    143,459
Attributable to minority interests             157        48         52
Attributable to Group equity holders           133,540    147,382    143,408
Earnings per share (in euros) ^(1)
Earnings per share attributable to Group       1.46       1.60       1.56
equity holders (in euros)
Diluted earnings per share attributable to    1.45      1.60      1.56
Group equity holders (in euros)

(1) Based on the weighted average number of outstanding shares over the period
adjusted for treasury shares:

> Weighted average number of shares (non-diluted) in 2012 = 91,884,812 shares

> Weighted average number of shares (fully diluted) in 2012 = 91,953,712
shares

2.1.2. Consolidated balance sheet

Assets

                                                               
(in thousands of euros)                     12/2010    12/2011    12/2012
Intangible assets                           21         104        646
Property, plant and equipment other than     714         628         572
investment property
Investment property                          1,604,279   1,624,811   1,414,013
Non-current financial assets                 11,738      13,602      18,978
Non-current financial assets (hedging        -           -           8,036
instruments)
Deferred tax assets                         222        100        151
Total non-current assets                    1,616,974  1,639,245  1,442,396
Inventories                                  -           9,002       -
Trade receivables                            16,381      16,328      20,157
Other receivables                            24,488      34,971      25,872
Casino SA current account                    68,209      44,358      -
Current financial assets (hedging            -           -           3,800
instruments)
Cash and cash equivalents (1)                9,156       3,143       206,690
Investment property held for sale                     8,937      143,012
Current assets                              118,234    116,739    399,531
TOTAL ASSETS                                1,735,208  1,755,984  1,841,928

Equity and liabilities

                                                               
(in thousands of euros)                     12/2010    12/2011    12/2012
Share capital                               92,001     92,023     92,023
Reserves related to share capital (2)        1,424,363   1,424,004   482,857
Consolidated reserves                        43,390      65,573      42,167
Net income, Group share                      133,540     147,382     143,408
Interim dividend payments                   (45,915)   (49,593)   (22,958)
Shareholders’ equity, Group share           1,647,379  1,679,389  737,497
Minority interests                          727        492        442
Total shareholders’ equity                  1,648,106  1,679,881  737,939
Non-current provisions                       209         228         243
Non-current financial liabilities (3)        9,619       6,870       1,003,045
Deposits and guarantees                      23,108      23,669      23,565
Non-current tax liabilities and deferred    223        520        860
tax liabilities
Non-current liabilities                     33,159     31,286     1,027,713
Trade payables                               9,171       8,168       16,182
Current financial liabilities (4)            2,833       4,729       24,204
Short-term provisions                        891         569         1,316
Other current liabilities                    40,418      30,286      32,057
Current tax liabilities                     631        1,066      2,517
Current liabilities                         53,944     44,818     76,276
TOTAL EQUITY AND LIABILITIES                1,735,208  1,755,984  1,841,928

(1) The increase in cash and cash equivalents relates primarily to sums
received on asset sales carried out in 2012.

(2) The decline in reserves related to share capital stems from the
exceptional distribution of around Euro 1 billion in the first half of 2012.

(3) The increase in non-current financial liabilities stems from the taking
out of a loan (drawn) of Euro 1 billion in 2012.

(4) The increase in current financial liabilities as at December 31, 2012
stems mainly from capitalized interest in respect of the Company bond.

2.1.3. Consolidated cash flow statement

                                                             
(in thousands of euros)                   12/2010    12/2011    12/2012
Net income attributable to the Group      133,540    147,382    143,408
Net income attributable to minority       157        48         52
interests
Net income from consolidated companies    133,697    147,430    143,459
Depreciation, amortization, impairment
allowances and provisions net of           25,343      23,648      28,453
reversals
Unrealized losses/gains relating to                                (338)
changes in fair value
Income and charges relating to stock       701         425         205
options and similar
Other income and charges (1)              5,706      3,896      (4,151)
Depreciation, amortization, impairment    31,750     27,968     24,170
allowances and other non-cash items
Income from asset sales                   (32,556)   (32,455)   (61,624)
Cash flow                                 132,890    142,943    106,005
Cost of net debt (excluding changes in     (128)       (195)       26,669
fair value and depreciation)
Tax charge (including deferred tax)       (29)       1,298      4,411
Cash flow before cost of net debt and     132,734    144,047    137,085
tax
Tax payments                               (90)        (760)       (2,504)
Change in working capital requirement
relating to operations excluding           (17,227)    (18,633)    26,833
deposits and guarantees (2)
Change in deposits and guarantees         1,775      561        (104)
Net cash flow from operating activities   117,192    125,214    161,310
Cash payments on acquisition of
investment property and other fixed        (125,352)   (143,967)   (77,809)
assets
Cash payments on acquisition of            (10)        (4,094)     (4,443)
non-current financial assets
Cash receipts on disposal of investment    112,569     110,252     190,557
property and other fixed assets
Cash receipts on disposal of non-current   5           5
financial assets
Impact of changes in the scope of
consolidation with change of ownership    (4,433)    -          (52)
(3)
Net cash flow from investing activities   (17,220)   (37,804)   108,253
Dividend payments to shareholders          (51,380)    (69,827)    (1,060,386)
Interim dividend payments                  (45,915)    (49,593)    (22,958)
Dividend payments to minority interests    (37)        (282)       (50)
Capital increase or decrease (parent       217         356
company) (4)
Other transactions with minority           1           -           -
shareholders
Changes in treasury shares                 3,165       2,731       (2,999)
Increase in borrowings and financial       4,401       -           993,035
liabilities
Decrease in borrowings and financial       (2,054)     (2,233)     (9,722)
liabilities
Net cost of debt                          128        195        (7,387)
Net cash flow from financing activities   (91,474)   (118,653)  (110,467)
Change in cash position                   8,498      (31,243)   159,096
Opening cash position                      67,858      76,356      45,113
Closing cash position                      76,356      45,113      204,210
of which Casino SA current account         68,209      44,358      -
of which Cash and cash equivalents         9,156       3,143       206,690
of which Bank facilities                   (1,009)     (2,388)     (2,480)
                                                                   
(1) Other income and charges comprise
primarily:
Lease rights received and spread out       +5,278      +2,600      (4,229)
over the term of the lease
Discounting adjustments to construction    (831)       (605)       (483)
leases
(2) The change in working capital
requirement breaks down as follows:
Trade receivables                          (10,338)    (144)       (2,481)
Trade payables                             (169)       (1,005)     774
Other receivables and payables             (6,720)     (8,711)     13,298
Inventories on property developments                   (8,774)     9,002
Property development liabilities                                   7,240
                                           (17,227)    (18,633)    27,833

(3) Repayment of capital to minority shareholders of SCI Bourg en Bresse
Kennedy and SCI Toulon Bon Rencontre following their liquidation amounts to
Euro 52 thousand. At the start of 2010, the Group proceeded with the payment
of GM Geispolsheim shares acquired at the end of 2009 in the amount of Euro
4,433 thousand.

(4) In 2011, Mercialys carried out a Euro 356 thousand capital increase within
the framework of the exercising of options by Group employees in relation to
stock option plans. Additional charges relating to contributions in kind and
dividend payments in shares in 2009 were paid in the first half of 2010 in the
amount of Euro 440 thousand. At the end of 2010, Mercialys carried out a Euro
657 thousand capital increase within the framework of the exercising of
options by Group employees in relation to stock option plans.

2.2. Main highlights of 2012

Announcement and implementation of a new strategic plan

On February 9, 2012, on the presentation of its 2011 results, Mercialys
announced the launch of a new strategic plan centered around the “Foncière
Commerçante” concept (“Think and act as a retailer”), in keeping with the
positioning developed over the last six years.

This new phase involves refocusing the portfolio on properties presenting a
scale and positioning in line with the “Foncière Commerçante” strategy. The
first “Foncière Commerçante” pilot projects were therefore launched at eight
shopping centers during the second half of the year, with a range of 50
services offered to retailers. This will be followed by a further nine
shopping centers in 2013.

At the same time, Euro 472 million of asset sales have been carried out or are
subject, to date, to a firm offer, thereby contributing to the refocusing of
the portfolio on assets that fit in - in terms of size and maturity - with the
roll-out of the “Foncière Commerçante” strategy.

The implementation of this business strategy is accompanied by a normalization
of Mercialys’s financial structure, with debt of Euro 1 billion.

Financing of Euro 1.25 billion

During 2012, Mercialys took out total financing of Euro 1.25 billion,
comprising:

> three-year bank facilities of Euro 550 million^21 consisting of:

- a Euro 350 million bank loan subject to interest at 3-month Euribor + 225bp

- a Euro 200 million bank revolving credit facility (not drawn as at December
31, 2012)

> a seven-year Euro 650 million bond^22 with a fixed interest rate of 4.125%:

> cash advances from Casino up to a threshold of Euro 50 million (not drawn as
at December 31, 2012).

The duration of this financing line is aligned with that of the new
Partnership Agreement negotiated between the parties, i.e. expiring on
December 31, 2015.

> A program of Euro 500 million of commercial papers was also implemented in
the second half of 2012 (not drawn as at December 31, 2012).

The average maturity of debts drawn as at December 31, 2012 was 4.8 years or
5.5 years based on a proforma structure as at December 31, 2012, which
includes partial repayment of bank loans in the amount of Euro 200 million
after the program of asset sales.

In addition, Mercialys introduced an interest rate hedging policy in October
2012 by means of a swap agreement in order to enable the Company to spread out
its interest rate risk exposure over time.

The actual average cost of debt in 2012 was 3.7%.

At December 31, 2012, the Company had a LTV (Loan To Value = net debt/market
value excluding transfer taxes) ratio of 33.3%.

As a reminder, Standard & Poor’s published the Company’s first rating on March
8, 2012: BBB with a stable outlook.

Exceptional payout of Euro 1 billion to shareholders

As announced on February 9, 2012, Mercialys wanted to mark the successful
completion of its first development phase with a distribution of Euro 1
billion - in addition to the 2011 final dividend – in the first half of 2012,
equal to an exceptional distribution of Euro 10.87 per share, mainly including
a reimbursement of contribution premium.

^21 Maturing on February 23, 2015

^22 Maturing on March 26, 2019

Adaptation of corporate governance to reflect the change in Mercialys’s
shareholding structure

As a result of the change in its shareholding structure, Mercialys has adapted
its corporate governance^23 according to the commitments made when announcing
its results and new strategic plan on February 9, 2012:

> two new independent directors have been appointed to the Board of Directors.
Since June 6, 2012, independent directors have therefore made up the majority
of Mercialys’s Board of Directors;

> a new Partnership Agreement with Casino has been signed. This new agreement
maintains the major balances of the original agreement.

^23 See the press release of June 25, 2012 for more details

2.3. Review of activity in 2012 and lease portfolio structure

2.3.1 Main management indicators

  *Following a record year in 2011, reletting and renewal activity remained
    robust in 2012, with 209 leases signed (compared with 255 in 2011), with
    an increase of +23% in the annualized rental base for lease renewals and
    +49%^24 for relets.

With the creation of a dedicated team in 20120, the Specialty Leasing business
- covering short-term leases - also continued to perform well, with rental
income up +9.1%. Rental income of Euro 4.3 million was recognized in 2012
(compared with Euro 3.9 million in 2011 and Euro 3.4 million in 2010), equal
to 2.8% of invoiced rents in 2012.

At the end of 2012, Mercialys had a high level of expired leases, allowing it
to continue with its efforts to create value from the portfolio over the next
few years.

Lease expiry                Guaranteed minimum   Share of leases
schedule                 rent (in millions   expiring/Guaranteed minimum
                            of euros)            rent
Expired at    444 leases  23.1                16.2%
12/12/31
2013           167 leases   6.0                  4.2%
2014           112 leases   5.3                  3.7%
2015           173 leases   8.6                  6.0%
2016           206 leases   11.8                 8.3%
2017           148 leases   7.6                  5.3%
2018           200 leases   13.7                 9.6%
2019           149 leases   8.3                  5.8%
2020           316 leases   27.8                 19.5%
2021           269 leases   17.0                 11.9%
2022           182 leases   11.9                 8.3%
Beyond        40 leases   1.6                 1.1%
Total         2,406       142.7               100%
               leases

The significant stock of expired leases is due to ongoing negotiations,
disputes (some negotiations result in a hearing by a rents tribunal), lease
renewal refusals with payment of eviction compensation, global negotiations by
retailers, tactical delays etc.

  *The recovery rate over 12 months at end-December 2012 remained very
    satisfactory at 97.7% (compared with 97.8% at June 30, 2012 and 98.3% at
    December 31, 2011).
  *The number of tenants in liquidation remained stable and low.
  *The current vacancy rate – which excludes “strategic” vacancies designed
    to facilitate redevelopment plans scheduled under the “Esprit Voisin”
    program – remained at a low level. It was 2.4% as at December 31, 2012,
    stable relative to June 30, 2012.

The total vacancy rate^25 was 3.0% as at December 31, 2012, up relative to
June 30, 2012 (2.7%) due to the new strategic vacancy arising within the
framework of “Esprit Voisin” development projects.

  *The occupancy cost ratio^26 for tenants stood at 9.9% (compared with 9.7%
    as at June 30, 2012) at large shopping centers, an increase of +0.2 point
    compared with June 30, 2012, mainly as a result of new leases included in
    the scope of consolidation with a higher average occupancy cost ratio.

This ratio is still relatively low compared with that of Mercialys's peers.
This reflects both the reasonable level of real estate costs in retailers’
operating accounts and the potential for increasing rent levels upon lease
renewal or redevelopment of the premises.

  *The average gross rental value of Mercialys’s portfolio increased by Euro
    17 per m² over 12 months to Euro 230 per m² as at December 31, 2012, as a
    result of asset sales and acquisitions over the period.

^24 Vacant at last known rent

^25 [Rental value of vacant units/(annualized guaranteed minimum rent on
occupied units + rental value of vacant units)] in accordance with the EPRA
calculation method

^26 Ratio between rent and service charges paid by a retailer and retail sales
(rent + charges including tax)/tenant's retail sales gross of tax

The increase in rents on a like-for-like basis amounted to +Euro 6 per m², the
average gross rental value for sold assets was Euro 152 per m² (shopping
centers sold comprised a significant proportion of mid-size stores) and the
average gross rental value for Esprit Voisin lettings included in the
portfolio was Euro 337 per m² for shops.

The average gross rental value of Mercialys's portfolio is still well below
the IPD benchmark average rental value of Euro 310 per m² for shopping centers
as at December 31, 2011.

  *Rents received by Mercialys come from a very wide range of retailers. With
    the exception of Cafétérias Casino (6%), Casino (12%), Feu Vert (3%) and
    H&M (3%), no tenant represents more than 2% of total revenue. The
    weighting of Casino in total rents stood at 17.7% as at December 31, 2012,
    down -1.0 points relative to December 31, 2011 (18.7%), mainly due to the
    disposal in 2012 of restaurants - in the form of standalone lots or
    included in shopping centers sold - that were let to Casino Group brands.

The table below shows a breakdown of rents between national and local brands
on an annualized basis:

                                     GMR*+ annual
                                     variable          12/31/2012   12/31/2011
                       Number of  12/31/2012                  
                         leases                        %            %
                                     (in millions of
                                     euros)
National brands^27      1,474      90.6             63%         61%
Local brands             779         26.9              19%          21%
Cafeterias Casino /
Self-service             68          8.8               6%           7%
restaurants
Other Casino Group       85          16.5              12%          12%
brands
Total                   2,406      142.7            100%        100%

* GMR = Guaranteed minimum rent

The breakdown of Mercialys's rental income by business sector also remained
highly diversified.

The breakdown as at December 31, 2012 was different from that of December 31,
2011, particularly in personal items (+2.1 points), food/restaurants (-1.0
point) and household equipment (-0.9 point), as a result of the combined
effect of asset sales carried out in 2012, including in particular Casino
cafeterias, and completions in 2012 of “Esprit Voisin” development projects,
which had a significant impact on the rental mix by business sector.

Breakdown of rental income by business sector % of    12/31/2012  12/31/2011
rental income
Personal items                                        34.7%       32.6%
Food and catering                                      12.1%        13.2%
Household equipment                                    8.9%         9.8%
Beauty and health                                      13.2%        13.1%
Culture, gifts and leisure                             15.0%        14.9%
Services                                               4.2%         4.6%
Large food stores                                      11.8%        11.8%
Total                                                 100.0%      100.0%

The structure of rental revenues as at December 31, 2012 confirmed the
dominant share, in terms of rent, of leases with a variable component:

                          Number of   In millions of   12/31/2012   12/31/2011
                        leases     euros                      
                                                       %            %
Leases with variable     1,374      93.2            65%         64%
component
- of which guaranteed                 91.5             64%          63%
minimum rent
- of which variable                   1.7              1%           1%
rent
Leases without variable   1,032       49.5             35%          36%
component
Total                    2,406      142.7           100%        100%

The proportion of leases with a variable component has increased steadily
mainly as a result of the inclusion of new leases in the portfolio with a
variable rent component.

^27 Includes rents from hypermarkets acquired as part of the contribution of
assets in the first half of 2009 to be converted into small stores (Casino
rental guarantee until the end of redevelopment works)

2.4. Review of consolidated results

2.4.1 Invoiced rents, rental revenues and net rental income

Rental revenues mainly comprise rents billed by the Company plus a smaller
element of lease rights and despecialization indemnities paid by tenants and
spread out over the firm period of the lease (usually 36 months).

Invoiced rents amounted to Euro 152.5 million in 2012, down -0.6%
year-on-year.

(in thousands of euros)                           2012     2011     2010
Invoiced rents                                    152,537  153,385  144,695
Lease rights                                       7,881     7,621     4,811
Rental revenues                                    160,419   161,005   149,506
Non-recovered service charges and property taxes   -3,910    -3,578    -3,951
Property operating expenses                        -4,858    -5,692    -5,227
Net rental income                                 151,651  151,735  140,328

The year was characterized by:

- robust organic growth in invoiced rents: +4.3 points (including
indexation^28: +2.0 points), i.e. Euro +6.6 million;

- the impact of the completion of "Esprit Voisin" development projects and
acquisitions carried out in 2011 and 2012: impact of +3.9 points on growth in
invoiced rents, or Euro +5.9 million;

- the effect of asset sales carried out at the end of 2011^29 and in 2012^30 ,
reducing our rental base by -7.6 points,

or Euro -11.6 million.

The development of invoiced rents over the year was also influenced by
non-recurring items, mainly relating to base effects (positive non-recurring
items recognized in 2011) and the strategic vacancy relating to current
redevelopment programs, with a negative impact on growth in invoiced rents in
2012 (-1.2 point).

Rental revenues on a cumulative basis to December 31, 2012, remained more or
less stable relative to 2011 (-0.4%) at Euro 160.4 million. This includes the
impact over the full year of asset sales carried out.

Lease rights and despecialization indemnities received to December 31, 2012^31
amounted to Euro 4.9 million compared with Euro 10.2 million in 2011, broken
down as follows:

  *Euro 3.0 million in lease rights and despecialization indemnities relating
    to ordinary reletting business (compared with Euro 4.8 million in 2011);
  *Euro 1.9 million in lease rights relating primarily to the letting of
    extensions and redevelopments completed in 2012 – chiefly Quimper, Fréjus,
    Istres – compared with Euro 5.4 million in 2011. 2011 benefited from the
    completion of major extension projects (Geispolsheim, Ajaccio, Marseille
    La Valentine, Annemasse, Auxerre and Villefranche), resulting in an
    exceptional amount of lease rights received.

After the impact of deferrals required under IFRS, lease rights recognized in
2012 increased by +3.4% to Euro 7.9 million - compared with Euro 7.6 million
in 2011 - as a result of significant lease rights received in both 2011 and
2010.

Net rental income

Net rental income consists of rental revenues less costs directly allocated to
real estate assets. These costs include property taxes and service charges
that are not rebilled to tenants, together with property operating expenses,
which mainly comprise fees paid to the property manager that are not rebilled
and various charges relating directly to the operation of sites.

^28 In 2012, for the majority of leases, rents were indexed either to the
change in the construction cost index (CCI) or to the change in the retail
rent index (ILC) between the second quarter of 2010 and the second quarter of
2011 (respectively +5.01% and +2.56%).

^29 See press release on 2011 results published on January 16, 2012

^30 See press release on 2012 results published on January 14, 2013

^31 Lease rights received as cash after the impact of deferrals required under
IFRS (deferring of lease rights over the firm period of the lease)

Net rental income in 2012 remained stable relative to 2011 at Euro 151.7
million, compared with a reduction of -0.6% in gross invoiced rents. This
represents improvement in the gross rental income/net rental income conversion
rate. This is thanks to a variety of factors relating primarily to the greater
intrinsic quality of our portfolio thanks to the dynamic asset arbitrage
policy introduced in 2010.

Costs included in the calculation of net rental income came to Euro 8.8
million in 2012 compared with Euro 9.3 million in 2011, a significant
reduction of -5.4%.

2.4.2 Management revenues, operating costs and operating income

Management, administrative and other activities income

Management, administrative and other activities income comprises primarily
fees charged in respect of services provided by certain Mercialys staff -
whether within the framework of advisory services provided by the dedicated
“Esprit Voisin” team, which works on a cross-functional basis for Mercialys
and the Casino Group, or within the framework of shopping center management
services provided by teams - as well as letting fees and advisory and asset
management fees relating to specific transactions for third parties.

Fees charged in 2012 came to Euro 3.7 million compared with Euro 6.2 million
in 2011.

As a reminder, 2011 benefited from non-recurring income of Euro 2.8 million
relating to advisory fees received within the framework of the creation of a
fund investing in mature retail properties with Union Investment (Euro 2.0
million) and advisory, asset management and letting fees within the framework
of services provided for third-party companies (Euro 0.8 million).

Property development margin

In 2011, Mercialys and Union Investment - a fund manager highly active in the
real estate market - created an OPCI fund designed to invest in mature retail
properties. The fund is 80%-owned by Union Investment and 20% by Mercialys.
Mercialys operates the fund and is in charge of asset management and of
premises relets.

In 2011, the fund acquired its first asset in Bordeaux-Pessac. Mercialys has
developed an extension to the shopping mall under the “Esprit Voisin” concept
comprising 30 new stores, which was delivered to the fund in late November
2012.

A margin of Euro 10.3 million before tax was recognized on this transaction in
Mercialys’s 2012 consolidated financial statements. Mercialys may receive an
additional earnout payment after the letting of the vacant lots. In return,
the OPCI fund has received a rental guarantee from Mercialys for a period of
up to three years.

As at December 31, 2012, the fund owned the entire 20,300 m² Pessac shopping
center, representing a market value including transfer taxes of Euro 84.7
million.

Other expenses

Other expenses mainly comprise structural costs. Structural costs include
primarily investor relations costs, directors’ fees, corporate communication
costs, marketing surveys costs, fees paid to the Casino Group for services
covered by the Services Agreement (accounting, financial management, human
resources, management, IT), professional fees (Statutory Auditors, consulting,
research) and real estate asset appraisal fees.

These costs came to Euro 8.2 million in 2012 compared with Euro 6.9 million in
2011, an increase of Euro 1.4 million, mainly as a result of:

  *a base effect, with 2011 having benefited from non-recurring income
    relating to the reversal of a provision for overhead fees that was no
    longer needed in the amount of Euro 0.8 million;
  *the impact of the increase in tax on business added-value (CVAE)
    recognized in relation to the “tapered” inclusion of real estate companies
    in the new tax, replacing the old “taxe professionnelle” business tax,
    generating an additional cost of Euro 0.7 million in 2012 versus 2011.

Other expenses in 2012 also include costs of Euro 0.6 million relating to the
launch of the “Foncière Commerçante” strategy.

Excluding these items, other expenses decreased by -10.4% in 2012 relative to
2011 (Euro -0.8 million).

Staff costs

Staff costs include all costs relating to Mercialys’s executive and management
teams, which consisted of a total of 72 permanent employees at December 31,
2012 (compared with 70 at December 31, 2011).

Staff costs amounted to Euro 9.7 million in 2012 compared with Euro 9.8
million in 2011, a fall of -1.4% relating to staff arrivals and departures
over the period.

A portion of staff costs are charged back to the Casino Group as part of the
advisory services provided by the team dedicated to the "Esprit Voisin"
program, which works on a cross-functional basis for Mercialys and the Casino
Group, or as part of the shopping center management services provided by
Mercialys’s teams (see paragraph above concerning management, administrative
and other activities income).

Depreciation, amortization and provisions

Depreciation and amortization totaled Euro 26.8 million in 2012 compared with
Euro 23.9 million in 2011. This increase was mainly due to acquisitions of
properties in 2011 and 2012.

Other operating income and expenses

Other operating income and expenses include primarily:

  *as income, the amount of asset sales and other income relating to asset
    sales;
  *as expenses, the consolidated net book value of assets sold and other
    expenses relating to assets sales, as well as costs relating to undrawn
    debt within the framework of the implementation of Mercialys’s new
    financial structure.

Other operating income came to Euro 196.2 million in 2012 compared with Euro
121.4 million in 2011. This sharp increase relates primarily to:

  *asset sales carried out in 2012: Euro 193.7 million of income recognized
    (excluding the Pessac extension sold on an off-plan basis) compared with
    Euro 120.4 million in 2011;
  *reversals of commitments given within the framework of asset sales carried
    out in 2010 and 2011 that now have no object, representing a total of Euro
    1.7 million.

Other operating expenses totaled Euro 139.9 million in 2012 compared with Euro
90.8 million in 2011, also up significantly mainly as a result of:

  *the net book value of the portfolio of assets sold in 2012 and costs
    associated with asset sales: Euro 133.4 million compared with Euro 89.8
    million in 2011;
  *the recognition of costs relating to undrawn borrowings within the
    framework of the implementation of Mercialys’s new financial structure,
    amounting to Euro 4.9 million.

On this basis, the net capital gain for 2012 relating to asset sales amounted
to Euro 61.7 million - for Euro 194 million of confirmed asset sales excluding
the Pessac extension, sold on an off-plan basis - compared with a net capital
gain of Euro 30.6 million in 2011 (Euro 120 million of assets sold in 2011).

Operating income

As a result of the above, operating income came to Euro 177.2 million in 2012
compared with Euro 147.9 million in 2011, an increase of +19.8%.

The ratio of EBITDA^32 and other operating income and expenses ^ to rental
revenues increased significantly over 12 months, at 92.1% at December 31, 2012
compared with 87.7% at December 31, 2011, mainly as a result of the positive
impact of the development margin recognized in 2012. By eliminating
non-recurring effects (non-recurring fees charged in 2011 and development
margin relating to the Pessac extension recognized in 2012), the ratio would
be 85.7% at December 31, 2012 (compared with 85.9% at December 31, 2011).

^32 Earnings Before Interest, Tax, Depreciation and Amortization

2.4.3 Net financial items and tax

Net financial items

Net financial items include:

- as expenses: primarily financial expenses relating to the implementation of
the Company’s new financial net of income from the implementation of the
associated interest rate hedging policy (see section 2.4.6.1, Debt)

This is in addition to financial expenses relating to finance leases,
representing Euro 0.5 million outstanding at December 31, 2012 (Port Toga
site) and financial interest relating to the loan taken out by SCI
Geispolsheim to finance extension works on the site equal to Mercialys's stake
in SCI Geispolsheim (50%).

Note that the finance lease for the Tours La Riche site was subject to the
exercising of an option during the second half of 2012. Furthermore, within
the framework of the sale of the Geispolsheim site, the loan taken out by SCI
Geispolsheim was repaid in advance during the second half of 2012.

- as income: mainly interest income on cash generated in the course of
operations and deposits from tenants, as well as dividends from equity
investments.

At December 31, 2012, Mercialys had a positive cash position of Euro 204.2
million compared with Euro 45.1 million at December 31, 2011. Its cash
position increased mainly as a result of asset sales carried out.

After deducting financial liabilities, the Company had a negative net cash
position of Euro -808.7 million at December 31, 2012, compared with a positive
net cash position of Euro 35.9 million at December 31, 2011, as a result of
financings of Euro 1.250 billion taken out in 2012, of which Euro 1.0 billion
had been drawn as at December 31, 2012.

The implementation of this new financial structure had a significant impact on
net financial items in 2012, showing financial expenses of Euro 30.7 million
compared with Euro 0.3 million in 2011, broken down as follows:

                                                                     
(in millions of euros)                                           2011  2012
Cost of debt of Euro 1bn taken out in H1 2012
                                                                 -     -28.0
(bank loans and bonds)
Other costs (fees for undrawn loans)                              -      -2.5
Cost of debt already existing at end-2011 (finance lease and     -0.3  -0.2
SCI Geispolsheim loan)
Financial expenses                                               -0.3  -30.7

The actual average cost of debt in 2012 was 3.7%.

Meanwhile, financial income came to Euro 1.4 million in 2012 compared with
Euro 1.1 million in 2011. Financial income was favorably impacted in 2012 by
higher dividends received from equity investments held than in 2011, and
income from the investment of cash generated primarily from asset sales.

As a result, net financial items were negative at Euro 29.4 million in 2012
compared with a positive amount of Euro 0.8 million in 2011.

Tax

The tax regime for French “SIIC” (REIT) companies exempts them from paying tax
on their income from real estate activities provided that at least 85% of net
income from rental activities and 50% of gains on the disposal of real estate
assets are distributed to shareholders.

The tax charge recorded in the income statement corresponds to taxation of the
development margin generated on the Bordeaux-Pessac extension project,
invoiced fees and financial income on cash holdings less a share of the
company's central costs allocated to its taxable income. This is in addition
to deferred tax.

The tax charge for 2012 came to Euro 4.4 million compared with Euro 1.3
million in 2011. This significant increase relates mainly to the recognition
of tax relating to the development margin recognized in 2012 within the
framework of the development of the Bordeaux-Pessac extension.

Funds from operations (FFO)

Funds from operations, which correspond to net income adjusted for
depreciation, capital gains on asset sales and associated costs, as well as
the additional contribution to tax of 3%, totaled Euro 108.7 million -
compared with Euro 140.8 million in 2011 - down -22.8%, mainly as a result of
the implementation of the new financial structure.

On the basis of the weighted average number of shares (fully diluted) as at
December 31, funds from operations amounted to Euro 1.18 per share as at
December 31, 2012, compared with Euro 1.53 per share as at December 31, 2011,
representing a fall in funds from operations on a fully diluted per-share
basis of -22.9%.

Adjusted for the effects relating to i/ asset sales carried out in 2011 and
2012; ii/ the property development margin (net of tax), and iii/based on a
like-for-like financial structure, adjusted funds from operations came to Euro
92.0 million in 2012 compared with Euro 83.7 million in 2011, an increase of
+10.0%.

On the basis of the weighted average number of shares (fully diluted) as at
December 31, adjusted funds from operations (FFO) amounted to Euro 1.0 per
share as at December 31, 2012, compared with Euro 0.91 per share as at
December 31, 2011, representing an increase in adjusted funds from operations
(fully diluted) of +9.9%.

This is well above the target of +8% set by management on July 23, 2012, which
had been revised upwards. In February 2012, Mercialys’s management team stated
that it had set itself the target of growth in adjusted FFO per share for 2012
of +6-8% relative to 2011.

(in millions of euros)                12/31/2011  12/31/2012  2012 vs. 2011
                                                                 (%)
Reported FFO                          140.8       108.7       -22.8%
Adjustment for net rental income      (7,4)                  
from assets sold in 2011
Adjustment for net rental income       (9,8)        (7,3)
from assets sold in 2012
Adjustment for comparable financial    (39,9)       (10,3)
structure
Adjustment for exceptional costs
relating to adoption of the new                     5,4
financial and shareholding structure
Adjustment for Bordeaux-Pessac        -           (4,4)       
margin (net of tax)
Adjusted FFO                          83.7        92.0        +10.0%
Per share (euro/share fully diluted)  0.91        1.0         +9.9%

2.4.4 Cash flow

Cash flow is calculated by adding back depreciation, amortization and
impairment charges and other non-cash items to net income. Income and expenses
not representative of cash flow and net capital gains are not included in the
calculation of cash flow.

Cash flow fell sharply by -25.8% to Euro 106.0 million in 2012, compared with
Euro 142.9 million in 2011, due to the impact of the implementation of the new
financing structure.

Cash flow per share came to Euro 1.15 in 2012, based on the weighted average
number of shares outstanding on a fully diluted basis, compared with Euro 1.56
per share in 2011, ie a decrease of -25.9%.

2.4.5 Number of shares outstanding

                                                          
              2008        2009        2010        2011        2012
Number of
shares                                                        
outstanding
- At January    75,149,959   75,149,959   91,968,488   92,000,788   92,022,826
1
- At December   75,149,959   91,968,468   92,000,788   92,022,826   92,022,826
31
Average
number of      75,149,959  85,483,530  91,968,488  92,011,241  92,022,826
shares
outstanding
Average
number of      75,073,134  85,360,007  91,744,726  91,865,647  91,884,812
shares
(basic)
Average
number of      75,111,591  85,420,434  91,824,913  91,892,112  91,953,712
shares
(diluted)

2.4.6 Balance sheet structure

2.4.6.1 Debt

Cash and cash equivalents totaled Euro 204.2 million as at December 31, 2012,
compared with Euro 45.1 million as at December 31, 2011. This increase relates
mainly to asset sales carried out in 2012.

After deducting financial liabilities, the Company had a negative net cash
position of Euro -808.7 million at December 31, 2012, compared with a positive
net cash position of Euro 35.9 million at December 31, 2011, as a result of
debts taken out during 2012.

As of December 31, 2012, the amount of Mercialys drawn debt was Euro 1,0
billion comprising:

- a Euro 350 million bank loan with a maturity of 3 years (implemented in
February 23, 2012) subject to interest at 3-month Euribor + 225bp;

- a Euro 650 million bond with a maturity of 7 years subject to a fixed
interest rate of 4.125%:

On March 16, 2012, Mercialys successfully issued its first bond for an amount
of Euro 650 million (compared with an initial target of Euro 500 million). The
bond issue was oversubscribed (8 times) by a diversified base of European
investors. With this bond issue, Mercialys benefits from long-term financial
resources at an attractive cost.

In addition, Mercialys implemented financial resources that will be used to
finance ordinary business activities and the cash requirements of Mercialys
and its subsidiaries, and to ensure a comfortable level of liquidity:

- a Euro 200 million bank revolving credit facility with a maturity of 3 years
(implemented in February 23, 2012) subject to interest at 3-month Euribor +
225bp if it is drawn. A fee for non-use is payable if it is not drawn.

- cash advances from Casino up to a threshold of Euro 50 million subject to an
interest rate comprised between 70 and 120 points above Euribor. The duration
of this financing line is aligned with that of the new Partnership Agreement
negotiated between the parties, i.e. expiring on December 31, 2015.

- a program of Euro 500 million of commercial papers was also implemented in
the second half of 2012.

None of these financial resources was drawn as of December 31, 2012.

The average maturity of debts drawn as at December 31, 2012 was 4.8 years or
5.5 years based on a proforma structure as at December 31, 2012, which
includes partial repayment of bank loans in the amount of Euro 200 million
after the program of asset sales.

In addition, Mercialys introduced an interest rate hedging policy in October
2012 by means of a swap agreement in order to enable the Company to spread out
its interest rate risk exposure over time.

The actual average cost of debt in 2012 was 3.7%.

At December 31, 2012, the loan to value ratio (net financial debt / assets
appraisal value excluding transfer taxes) stood at 33.3%, well below the
contractual covenant of less than 50%:

                                                              
                                        12/31/2012  06/30/2012  12/31/2011
Net debt (in millions of euros)          808.7       972.6       -35.9
Appraisal value excluding transfer       2,425.7     2,571.6     2,499.5
taxes (in millions of euros)
Loan To Value (LTV)                      33.3%       37.8%       -1.4%

Meanwhile, the interest cost ratio (ratio of EBITDA to cost of net debt) was
5.3, well above the contractual covenant ICR of over 2:

                                                    
                              12/31/2012  06/30/2012  12/31/2011
EBITDA (in millions of euros)  147.7       75.9        
Cost of net debt               27.8        9.7         
Interest Cost Ratio (ICR)      5.3         7.8         N/A

The two other contractual covenants are also respected:

  *the appraisal value excluding transfer taxes as of December 31, 2012
    amounts Euro 2.4 billion (above the contractual covenant that sets an
    appraisal value excluding transfer taxes > Euro 1bn)
  *secured debt / appraisal value excluding transfer taxes < 20%. Non
    significant as of December 31, 2012.

2.4.6.2 Change in shareholders’ equity

Consolidated shareholders' equity was Euro 737.9 million at December 31, 2012
compared with Euro 1,679.9 million at December 31, 2011. The main changes in
this item during the year were:

- Payment of an exceptional distribution of Euro 10.87 per share: Euro -998.8
million;

- Payment of the final dividend in respect of the 2011 financial year of Euro
0.67 per share: Euro -61.6 million;

- Payment of an interim dividend in respect of the 2012 financial year of Euro
0.25 per share: Euro -23.0 million;

- Net income for 2012: Euro +143.5 million;

- Trading in own shares: Euro -2.6 million.

2.4.6.3 Dividends

As announced on February 9, 2012, on the occasion of the Company’s 2011
results presentation, Mercialys marked the successful completion of its first
development phase with an exceptional distribution to shareholders - approved
by the general shareholders’ meeting of April 13, 2012 - of around Euro 1
billion, which was paid in cash in addition to the 2011 final dividend in the
first half of 2012. This represents a total payment of Euro 11.54 per share,
broken down as follows:

- an exceptional distribution of Euro 10.87 per share including a
reimbursement of contribution premium (Euro 10.24 per share ^ 33);

- a final dividend in respect of 2011 of Euro 0.67 per share.^34

A total of Euro 1,060.4 million was paid out in the first half of 2012: Euro
998.8 million in respect of the exceptional distribution and Euro 61.6 million
in respect of the final dividend for 2011.

The dividend paid in respect of 2011 amounted to Euro 1.21 per share including
an interim dividend of Euro 0.54 per share, paid on September 29, 2011.

At its meeting of July 23, 2012, the Board of Directors decided to pay an
interim dividend for the 2012 financial year of Euro 0.25 per share, paid on
October 15, 2012, representing a total interim dividend payout of Euro 23.0
million, paid entirely in cash.

In accordance with SIIC tax rules, the minimum distribution requirement in
2012 is Euro 111.7 million.

On the basis of the progress made and results reported by Mercialys for 2012,
Mercialys’s Board of Directors will propose to the Annual General Meeting:

  *a recurring dividend of Euro 0.91 per share (including the interim
    dividend of Euro 0.25 per share already paid in October 2012),
    representing a yield of 5.6% compared to the closing share price on
    February 12, 2013 (Euro 16.20 per share)
  *a second exceptional distribution upon completion of the 2012/2013
    first-half assets disposal program.

Those distributions should be paid on June 28, 2013 subject to the approval of
the Annual General Meeting to be held on June 21, 2013.

2.4.7 Changes in the scope of consolidation and valuation of the asset
portfolio

Completions under the “Esprit Voisin” program

The “Esprit Voisin” program concerns the expansion and redevelopment of
Mercialys's shopping center portfolio. It is about putting the Company’s
shopping centers in harmony with the spirit of the Group and its culture of
proximity by developing the “Esprit Voisin” theme, seizing all opportunities
for architectural value creation (renovations, redevelopment, extensions).

The project entered its active phase in 2008 with the completion of the first
developments.

^33 Of the final installment of Euro 0.63 per share, Euro 0.0396 per share was
eligible for the 40% allowance mentioned in the French General Tax code.

^34 2011 dividend = Euro 1.21 per share including an interim dividend of Euro
0.54 per share paid in September 2011, i.e. a final dividend for 2011 of Euro
0.67 per share (including Euro 0.0049 per share eligible for the 40% allowance
mentioned in the French General Tax code) paid in 2012 first half.

The “Esprit Voisin” program took a major step in the first half of 2009 with
Mercialys's acquisition from Casino of a portfolio of 25 “Esprit Voisin”
projects for close to Euro 334 million. These development projects - acquired
on an off-plan basis - constitute redevelopments and/or extensions to be
completed gradually.

In 2010 and 2011, the “Esprit Voisin” program entered an intensive phase with
18 completions over two years (7 in 2010 and 11 in 2011).

The implementation of “Esprit Voisin” development projects continued in at a
solid pace in 2012, with 8 development projects completed:

  *The Fréjus, Rodez, Montauban and Istres sites benefited from renovation
    works and the extension of their shopping malls, enhancing the commercial
    strength of the sites.
  *At Agen Boé and Narbonne, new shops were developed on space acquired from
    the adjoining hypermarket. As a result, the Narbonne shopping center was
    able to include an H&M store.
  *The Quimper site was enhanced with the inclusion of new shops thanks to
    the redevelopment of the shell of a former Castorama store.
  *Lastly, in November 2012, Mercialys completed the extension of the
    Bordeaux-Pessac shopping mall.

As a reminder, in 2011, Mercialys and Union Investment - a fund manager highly
active in the real estate market - created an OPCI fund designed to invest in
mature retail properties. The fund is 80%-owned by Union Investment and 20% by
Mercialys. Mercialys operates the fund and is in charge of asset management
and reletting. In 2011, the fund acquired its first asset in Bordeaux-Pessac,
comprising a shopping mall and a retail park. The extension developed by
Mercialys under the “Esprit Voisin” concept was sold to the fund on an
off-plan basis.

A total of 117 new stores were opened in 2012, representing a rental value of
Euro 8.2 million over the full year (including Euro 2.5 million relating to
the Bordeaux-Pessac extension) and 68,000 m² of newly created, redeveloped
and/or renovated space (GLA).

In addition, the Fontaine-les-Dijon site was reinforced with the completion by
Casino development teams of a retail park opened opposite our shopping center.

At the same time, 7 shopping centers were renovated under the “Esprit Voisin”
concept in 2012.

Asset sales

The policy of refocusing the portfolio on assets in keeping with the new
“Foncière Commerçante” strategy was actively launched in 2012.

A total of 47 assets have been sold or are subject to a firm offer
representing a total of Euro 472 million^35 worth of assets (including
transfer taxes) and an average capitalization rate of 6.2%, ie sale value
above the appraisal values. The resulting total capital gains are estimated to
Euro 132 million including Euro 62 million of capital gains already recorded
as of December 31, 2012.

Mercialys thus sold assets worth Euro 232 million (including transfer taxes)
in 2012. This concerned 21 assets: 14 neighborhood shopping centers, 1
extension sold on an off-plan basis (Bordeaux-Pessac) and 6 standalone lots
(service malls, restaurants, offices). In addition to these asset sales, Euro
240 million of firm purchase offers and earnout payments were signed:

  *Mercialys accepted firm purchase offers concerning 22 assets: Dijon
    Chenôve, Brive town center, Auxerre, Annecy Arcal’Oz and 18 additional
    standalone assets;
  *Mercialys launched a partnership with Amundi Real Estate concerning the
    sale of 4 shopping centers: Valence 2, Angoulême Champniers, Paris St
    Didier and Montauban;
  *Mercialys signed an agreement with partner Union Investment concerning the
    receipt of an earnout payment relating to the development of the Pessac
    extension after letting the remaining residual lots.

In total, asset sales confirmed or subject to a firm offer concern 22 shopping
centers (Angoulême, Annecy Arcal’Oz, Auxerre, Avignon Cap Sud, Brive town
center, Dijon Chenove, Geispolsheim, Larmor, Les Sables d’Olonne, Limoges,
Lons le Saunier, Montpellier Gange, Montauban, Paris St Didier, St André de
Cubzac, St Etienne La Ricamarie, Torcy Monchanin, Toulouse Basso Combo, Troyes
Barberey, Valence2, Villenave d’Ornon and Villefranche), 1 extension sold on
an off-plan basis (Bordeaux-Pessac) and 24 standalone lots (service malls,
restaurants, offices). Gross rental income from these properties excluding the
Bordeaux-Pessac extension amounts to Euro 25.8 million over the full year.

^35 Including estimated earnout payments of Euro 17 million on vacant lots

Appraisal valuations and changes in the scope of consolidation

At December 31, 2012, Atis Real, Catella, Galtier and Icade updated their
valuation of Mercialys's portfolio:

  *BNP Real Estate Valuation conducted the appraisal of hypermarkets, i.e. 78
    sites as at December 31, 2012, by visiting 7 of the sites during the
    second half of 2012, and on the basis of an update of the appraisals
    conducted at June 30, 2012, for the other sites. 13 site visits were
    carried out during the first half of 2012.
  *Catella conducted the appraisal of supermarkets, i.e. 11 sites as at
    December 31, 2012, based an update of the appraisals conducted at June 30,
    2012.
  *Galtier conducted the appraisal of Mercialys’s other assets, i.e. 14 sites
    as at December 31, 2012, by visiting 4 sites during the second half of
    2012, and on the basis of an update of the appraisals conducted at June
    30, 2012, for the other sites.
  *Icade conducted the appraisal of the Caserne de Bonne shopping center in
    Grenoble, as well as the appraisal of a site in the Paris region, on the
    basis of an update of the appraisals conducted at June 30, 2012.

Sites acquired during 2012 were valued as follows as at December 31, 2012:

  *“Esprit Voisin” extensions acquired were valued by means of inclusion in
    the overall valuation of the site.
  *The mid-size store acquired from a third party at the existing Angers
    Espace Anjou shopping center was valued at its purchase price.

On this basis, the portfolio was valued at Euro 2,561.1 million including
transfer taxes at December 31, 2012, compared with Euro 2,639.9 million at
December 31, 2011.

The value of the portfolio therefore decreased by -3.0% over 12 months but
increased by +2.4% on a like-for-like basis^36.

The average appraisal yield was 5.85% at December 31, 2012, compared with 5.8%
as at June 30, 2012 and December 31, 2011.

The Euro 79 million reduction in the market value of the portfolio in 2012
therefore stemmed from:

  *an increase in rents on a like-for-like basis: Euro +103 million;
  *changes in the scope of consolidation (acquisitions net of asset sales):
    Euro -138 million;
  *a slight increase in the average capitalization rate: Euro -44 million.

                   Average              Average              Average
                 capitalization      capitalization      capitalization
                   rate** 12/31/2012    rate** 06/30/2012    rate** 12/31/2011
Large regional    5.6%                5.4%                5.4%
shopping centers
Neighborhood       6.5%                 6.5%                 6.5%
shopping centers
Total portfolio*  5.85%               5.8%                5.8%

(*) Including other assets (large food stores, large specialty stores,
independent cafeterias and other standalone assets)

(**) Including extensions in progress acquired in 2009

The following table gives the breakdown of market value and gross leasable
area (GLA) by type of asset at December 31, 2012, as well as corresponding
appraised rents:

               Number of    Appraisal value   Gross leasable
              assets at                    area            Appraised net
               12/31/2012   at 12/31/2012                      rental income
                            inc. TT           at 12/31/2012
                            (in                                (in
Type of                  millions  (%)   (m²)     (%)   millions  (%)
property                    of                                 of
                            euros)                             euros)
Large
regional       31           1,868.3   73%    413,900  64%    103.9     69%
shopping
centers
Neighborhood
shopping       39           635.6      25%    189,200   29%    41.2       28%
centers
Sub-total
shopping      70          2,503.8   98%   603,100  93%   145.1     97%
centers
Other^(1)      35           57.3       2%     44,700    7%     4.7        3%
Total         105         2,561.1   100%  647,800  100%  149.8     100%

(1) Large food stores, large specialty stores, independent cafeterias, other
(service outlets, convenience stores)

NB: Large food stores: gross leasable area of over 750 m2

Large specialty stores: gross leasable area of over 750 m²

^36 Sites on a like-for-like GLA basis

2.4.8 Net asset value calculation

Net asset value (NAV) is defined as consolidated shareholders' equity plus any
unrealized capital gains or losses on the asset portfolio and any deferred
expenses or income.

NAV is calculated in two ways: excluding transfer taxes (liquidation NAV) or
including transfer taxes (replacement NAV).

NAV (in millions of      12/31/2012  06/30/2012  Pro forma      12/31/2011
euros)                                              12/31/2011^37
Consolidated              737.9        663.7        681.1           1,679.9
shareholders’ equity
Add back deferred         8.6          9.4          13.0            13.0
income and charges
Unrealized gains on       996.4        1,077.6      998.7           998.7
assets
Updated market value      2,561.1      2,716.4      2,639.9         2,639.9
(incl. transfer taxes)
Consolidated net book     -1,564.8     -1,638.9     -1,641.2        -1,641.2
value
Replacement NAV          1,742.9     1,750.7     1,692.8        2,691.6
Per share (in euros)     18.94       19.02       18.40          29.25
Transfer taxes            -135.4       -144.8       -140.4          -140.4
Updated market value     2,425.7     2,571.6     2,499.5        2,499.5
(excl. transfer taxes)
Liquidation NAV          1,607.5     1,605.9     1,552.4        2,551.2
Per share (in euros)     17.47       17.45       16.87          27.72

The fall in replacement NAV between December 31, 2011 and December 31, 2012 is
due to the payment of an exceptional dividend to shareholders of around Euro 1
billion in the first half of 2012, equal to Euro 10.87 per share.

Adjusted for this exceptional payout, replacement NAV per share increased by
+3.0% between December 31, 2011 and December 31, 2012 (liquidation NAV:
+3.6%).

2.5 Subsequent events

Firm offers to purchase assets were signed after the balance sheet date. These
offers concern 6 assets (Angoulême, Paris St Didier, Montauban, Valence 2,
Auxerre and Annecy Arcal’Oz) and represent a total of Euro 166 million
including transfer taxes.

Besides, at its meeting of February 13, 2013, the Board of Directors
appointed^38:

  *Eric Le Gentil, independent Board Director, as Chairman of the Board of
    Directors;
  *Lahlou Khelifi as Chief Executive Officer of Mercialys;
  *Vincent Rebillard as Chief Operating Officer of Mercialys.

2.6 Outlook

2.6.1 Investment outlook

“Esprit Voisin” program

The new strategic plan announced by Mercialys on February 9, 2012 is based
primarily on continuing completions of “Esprit Voisin” development projects,
including the launch of a number of extensions, redevelopment and renovation
projects.

With the new Partnership Agreement with Casino approved by Mercialys’s Board
of Directors on June 22, 2012, Mercialys has a secure pipeline that will
enable it to fuel growth over the next few years.

Euro 100-180 million per year should be invested by Mercialys.

^37 2011 NAV adjusted for exceptional distribution of Euro 10.87 per share
paid in the first half of 2012

^38 See press release published by the Company on February 13, 2013

New Partnership Agreement

On June 22, 2012, Mercialys’s Board of Directors approved a new Partnership
Agreement maintaining the major balances of the original agreement^39. The
fundamental principle of the Partnership Agreement, under which Casino
develops and manages a pipeline of development projects that are acquired by
Mercialys to fuel its growth, has been kept in the new Partnership Agreement
under the same financial terms.

Under the terms of the new agreement, Mercialys has a pipeline secured by a
reciprocal early-stage commitment.

In the previous agreement, Mercialys benefited from an option to buy non-food
retail property development projects developed by the Casino Group in France
once authorizations had been definitively obtained.

> Within the framework of the new agreement, Casino and Mercialys have made a
reciprocal commitment at an early stage concerning a pipeline of projects
offering sufficient visibility.

Casino is the developer: at this stage, 23 projects are to be developed
representing an amount of around Euro 250 million.

Other projects will be added at a later date depending on how far advanced
they are.

> Casino will only begin works once the order has been reiterated by Mercialys
after definitive authorization is obtained and at least 60% of developments
have been pre-let (as a percentage of projected rents - leases signed).

> Mercialys benefits from an exclusivity clause in relation to the Casino
pipeline, giving it right of first refusal on projects developed by Casino. In
return, Mercialys will not be able to develop a new shopping center competing
with a Casino or affiliated hypermarket without Casino’s agreement.

> The duration of the partnership has been extended by one year. While the
previous agreement expired on December 31, 2014, the new agreement will expire
on December 31, 2015, with the possibility of talks between the parties in
2014 concerning extending it beyond this date. The new agreement will continue
to have effect beyond this date for any projects “validated” within the
meaning of the agreement before December 31, 2015.

> As before, the acquisition price of the projects developed by Casino will be
determined on the basis of a capitalization rate defined according to a matrix
updated twice a year depending on changes in appraisal rates of Mercialys’s
portfolio, and projected rents for the project. As before, the acquisition
price will be paid by Mercialys on effective completion of the site.

> The principle of upside/downside being split 50/50 is maintained to take
account of the effective conditions under which the properties will be let.
Therefore, if there is a positive or negative difference (upside or downside)
between effective rents resulting from letting and expected rents at the
outset, the price will be adjusted upwards or downwards by 50% of the
difference observed.

At its meeting of January 28, 2013, the Board of Directors approved the
capitalization rates for the first half of 2013 in accordance with the
partnership agreement between Mercialys and Casino. These capitalization rates
remain unchanged relative to the second half of 2012.

Applicable capitalization rates for the reiterations signed by Mercialys in
the first half of 2013 will therefore be as follows:

                                                                 
TYPE OF PROPERTY  Shopping centers         Retail parks             City
                                                                       center
                              Corsica and               Corsica and
                 Mainland  overseas      Mainland  overseas      
                   France     depts &        France     depts &
                              territories               territories
Large regional
shopping centers  6.3%      6.9%          6.9%      7.3%          6.0%
(over 20,000 m²)
Neighborhood
shopping centers  6.8%      7.3%          7.3%      7.7%          6.4%
(from 5,000 to
20,000 m²)
Other properties
(less than 5,000  7.3%      7.7%          7.7%      8.4%          6.9%
m²)

^39 See press release published by the Company on June 26, 2012

Program of asset sales

The roll-out of the Esprit Voisin program has been accompanied since 2010 by a
policy of asset rotation. In 2010 and 2011, a total of 61 assets were sold
representing an amount of Euro 242 million (including transfer taxes).

As announced on February 9, 2012, the refocusing of the portfolio on assets
that fit in with the “Foncière Commerçante” concept in terms of their maturity
or size resulted in the launch of an exceptional program of asset sales in
2012: 47 assets have been sold or are subject to a firm offer representing
Euro 472 million ^ 40 worth of assets (including transfer taxes).

Mercialys should then continue to rotate 3-5% of the value of its assets each
year. This process of asset rotation will help to increase the intrinsic
quality of the portfolio by keeping assets presenting potential for value
creation and refocusing the portfolio on assets that fit in with the “Foncière
Commerçante” strategy.

The following table gives the breakdown of Mercialys’s proforma retail estate
portfolio in terms of market value, gross leasable area (GLA) and appraised
net rental income by type of asset after the disposal of the assets subject to
a firm offer:

                            Appraisal value
              Number of                    Gross leasable  Appraised net
               properties   at 12/31/2012     area             rental income
                            inc. tt
                            (in                                (in
Type of                  millions  (%)   (m²)     (%)   millions  (%)
property                    of                                 of
                            euros)                             euros)
Large
regional       24           1,685.9   73%    352,900  62%    92.4      69%
shopping
centers
Neighborhood
shopping       36           582.1      25%    182,500   32%    38.3       28%
centers
Sub-total
shopping      60          2,268.0   98%   535,400  94%   130.7     97%
centers
Other^(1)      30           52.8       2%     33,600    6%     4.4        3%
Total         90          2,320.8   100%  569,000  100%  135.1     100%

(1) Large food stores, large specialty stores, independent cafeterias, other
(service malls, convenience stores)

NB: Large food stores: gross leasable area of over 750 m2

Large specialty stores: gross leasable area of over 750 m²

2.6.2 Business outlook

2012 was a pivotal year for Mercialys, which is laying the foundations for its
future business model:

  *The Company is refocusing its portfolio on the most solid properties that
    offer the best fit with the “Foncière Commerçante” concept;
  *It is continuing to create value by means of organic growth (extracting
    reversionary potential) and the development of “Esprit Voisin” projects,
    helping to increase the critical mass of shopping centers by implementing
    targeted and intensive asset management;
  *It launched the first pilot “Foncière Commerçante” projects at eight
    shopping centers in 2012, to be followed by a further nine shopping
    centers in 2013;
  *It is forming partnerships allowing for the development of activities for
    third parties (asset management, letting and advisory services);
  *It is optimizing the rate of return offered by the implementation of a
    reasonable leverage effect with debt of Euro 1 billion;
  *It is developing selective retail activities alone or in partnership,
    helping to enhance the offering at shopping centers by providing an
    additional source of revenues.

In the long term, Mercialys’s growth drivers should be centered around three
main areas:

  *its core business of real estate Company, with the aim of creating value
    from its portfolio by extracting reversionary potential and from “Esprit
    Voisin” development projects;
  *the development of partnerships by acquiring minority stakes in funds
    investing in mature assets. Mercialys will operate the funds, which will
    enable it to benefit from additional revenues and optimize the return on
    capital invested, improved by fees received and the leverage effect
    implemented in the funds, in addition to that of Mercialys itself;

^40 Including estimated earnout payments of Euro 17 million on vacant lots

  *“Foncière Commerçante” investments: this concerns capitalizing on
    Mercialys’s hyperlocal positioning in order to work with tenants in
    developing their business and enhancing the offering of our shopping
    centers by developing new commercial activities on a proprietary basis or
    with a partner.

2013 will be a year of:

  *continuing robust organic growth: management is aiming for organic growth
    in invoiced rents of 1.5 points on top of indexation in 2013;
  *continuing operational performance: the ratio of EBITDA/Rental revenues
    should remain above 84% in 2013;
  *start of works on an unprecedented number of “Esprit Voisin” development
    projects in 2013, due to be completed in 2014 and 2015. Four completions
    are planned for 2013. The Company expects to invest around Euro 80 million
    in 2013.
  *The development of management activities for third parties, which should
    generate asset management fees representing a minimum of 0.25% of GAV
    (market value) of assets under management and letting fees.
  *The roll-out of the “Foncière Commerçante” concept: 17 shopping centers
    are due to be rolled out in late 2013.

Mercialys’s 2013 results will also be characterized to a large extent by the
refocusing of assets carried out in 2012 and early 2013, which will lead to a
reduction in net rental income and Funds From Operations (FFO) that should
decrease by -15% to 20% in 2013 compared with 2012 according to the effective
schedule of assets sales. The adjusted FFO will increase thanks to value
creation from the core portfolio.

2.7 Review of the results of the parent Company, Mercialys SA

(in millions of euros)  2012*  2011*
                              
Rental revenues          136.8   137.5
Net income              129.1  141.9

(*) Statutory financial statements

2.7.1 Activity

Mercialys SA, the parent company of the Mercialys Group, is a real estate
company that has opted for the Sociétés d’Investissements Immobiliers Cotées
(SIIC - Real Estate Investment Trust) tax regime. It owns 100 of the 105
retail properties owned by the Mercialys Group and holdings in:

- the Company’s real estate subsidiaries (owning five retail properties:
Brest, Caserne de Bonne, Istres, Narbonne, Pau Lons and five extensions on
existing sites: Annecy, Castres, Lons, Le Puy, Ste Marie and Fréjus);

- two management companies: Mercialys Gestion and Corin Asset Management;

- one company acquired within the framework of the contribution of assets in
the first half of 2009, concerning an asset under development at an existing
site;

- one company in charge of developing a shopping center extension;

- an OPCI fund created in 2011.

Mercialys SA’s revenues consist primarily of rental revenues and, to a
marginal extent, interest earned on the Company’s cash.

2.7.2 Review of the financial statements

In 2012, Mercialys SA generated Euro 136.8 million in rental revenues and Euro
129.1 million in net income.

As the Company owns almost all the retail assets owned by the Mercialys Group
as a whole, information about the main events affecting the Company’s activity
in 2012 can be found in the business review section of the management report
on the consolidated financial statements for the Mercialys Group.

The notes to the financial statements set out the significant accounting
policies used by the Company and provide disclosures on the main balance sheet
and income statement items and their change over the year.

Total assets at December 31, 2012 amounted to Euro 1,812.0 million, including:

  *net fixed assets of Euro 1,436.2 million; and
  *net cash of Euro 205.2 million.

The company’s shareholders’ equity amounts to Euro 680.9 million.

The main changes in this item during the year were:

- Payment of an exceptional dividend of Euro 10.87 per share: Euro -998.8
million;

- Payment of the final dividend in respect of the 2011 financial year of Euro
0.67 per share: Euro -61.6 million;

- Payment of an interim dividend in respect of the 2012 financial year of Euro
0.25 per share: Euro -23.0 million;

- Net income for 2012: Euro +129.1 million;

The table below gives a breakdown of current trade payables, in thousands of
euros, established in accordance with the provisions of article L.441-6-1 of
the French Code de Commerce:

                        1 to 30   31 to 60   61 to 90   over 91
                        days      days       days       days
At 12/31/2012          before                                Due  Total
                        payment   before     before     before
                        date      payment    payment    payment
                                  date       date       date
Trade accounts                                                          10,877
payable and accruals
Trade payables          4,865     1,658      -          -         565   7,089
Accruals                                                                3,789
Total trade payables
and accruals on                                                         4,145
assets
Trade payables on       350       19         -          -         328   698
assets
Accruals                                                                3,447

The breakdown of current trade payables at end-2011 is available in the
Group’s 2011 shelf-registration document.

Contact:

Analyst/investor relations:
Marie-Flore Bachelier, + 33(0)1 53 65 64 44
or
Press relations:
Image7:
Isabelle de Segonzac, + 33(0)1 53 70 74 85
isegonzac@image7.fr