2011 was an extremely successful year, characterized by excellent financial and operating results, with further robust growth in rental income and cash fl ow. Our main performance indicator of funds from operations saw growth of 10% in 2011, twice the target set at the start of 2011.
In terms of operating performance, 2011 was a record year following an already exceptional year in 2010. We signed a record number of leases and completed,
launched and carried out a record number of development projects. In 2011, we signed 402 leases, 14% more than in 2010 and much more than our natural market share, and completed 11 Esprit Voisin development projects, including symbolic sites such as Marseille La Valentine, Annemasse and Auxerre. These considérable achievements - which have been well received by customers and retailers - have enabled us to enhance the commercial power of our shopping centers significantly.
Indeed, the roll-out of the Esprit Voisin program has been accompanied since 2010 by a policy of asset rotation. The aim is to divest ourselves of non-core assets or assets that have reached maturity, and thereby refocus our portfolio on a smaller number of properties, allowing us to concentrate on our core business line of converting and enhancing the value of properties presenting potential.
In the space of two years, we have sold 61 properties to institutional buyers who favor long-term ownership and stable yields, primarily service malls, small properties and a few mature shopping centers, for a total of Euro 242 million, representing 5% of the portfolio sold each year.
This process of asset rotation has gone hand in hand with the roll-out of the Esprit Voisin program, resulting in profound changes to our asset portfolio, which currently consists of fewer shopping centers but larger sites and with greater potential.
We owe this major overhaul of the portfolio to the remarkable efforts of our staff. The quality of our achievements relates to both their level of involvement and their well-organized approach and renowned expertise in the transformation of shopping centers.
2011 crowns a positive cycle marked by six years of continuous growth since Mercialys was founded. During this period, we have implemented powerful growth drivers, starting with the Alcudia/Esprit Voisin program. This plan to transform, modernize and increase the mass appeal of our portfolio of retail properties aims to make our shopping centers more attractive and therefore enhance their performance. In six years, a total of 37 shopping centers representing 286,000 m2 have been extended, redeveloped
or renovated under the Esprit Voisin concept. And let us not forget that during these six years, Esprit Voisin was created to establish itself as our trademark, 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 reach effectively to our competitors. Synonymous with closeness in terms of location and relationships, the Esprit Voisin concept is resolutely customer-focused and this remains central to everything we do.
Thanks to the successful execution of its original strategy, Mercialys has achieved impressive growth over the last six years. Our performance has more than doubled over this period thanks to average growth of 13-14% a year and a yearly average increase of around 9% in funds from operations (FFO) per share. At the same time, the value of the portfolio has also more than doubled to Euro 2.6 billion. Mercialys wishes to mark the success of this initial expansion phase by rewarding the shareholders who have supported it since 2005 for their loyalty. Our aim is to pay an exceptional dividend of Euro 1.25 billion, which is unprecedented in the industry taking account of Mercialys's size, during 2012 on top of the final dividend for 2011.
We now have a new way of looking at our industry for the future that will underpin our "Foncière Commerçante" strategy. We want to go beyond the status of mere lessor to become a multi-channel hyperlocal "retailer" able to offer its tenants powerful marketing tools, targeted at each micro-catchment area in order to make our shopping centers more attractive and stimulate demand and sales. We also want to enhance the retail options and services offered by our shopping centers in order to meet customers' unsatisfi ed expectations through partnerships or by becoming a "retailer", if necessary, in order to make the Esprit Voisin stand out even more.
We need to manage our shopping centers as any retailer would operate by using all of the communications and development resources available to us in order to attract ever more customers through targeted initiatives tailored to the local fabric.
It requires refocusing our portfolio on a smaller number of properties benefiting from a size and positioning that allows for the development of the "Foncière Commerçante" model.
To begin with, this means selling properties that are not suited to the roll-out of this new strategy. We therefore plan to sell 60 to 70 properties, equal to a volume of around Euro 500 million during 2012.
At the same time, we plan to step up our program of completions of Esprit Voisin renovation and extension projects, with the aim of converting around 100% of the remaining portfolio between now and the end of 2014. Following 11 Esprit Voisin completions in 2011, we intend to complete a further 13 in 2012.
The new plan is accompanied by a normalisation of Mercialys's financial structure through a financing of Euro 1 billion, ie a leverage that will remain still below the sector average.
Overall, we expect this to result in a more resilient portfolio, further solid growth, regardless of the general economic climate, and higher rates of return for the investors who have placed their trust in us since 2005.
This is supported by the Casino Group, which has accompanied Mercialys's growth since it was founded in 2005 and will continue to accompany it during this latest stage of its expansion by remaining a key partner.
In 2012, we have set ourselves a target of growth in funds from operations - adjusted for the mechanical impacts relating to the issuance of debt and to the 2011 and 2012 asset disposals - comprised between 6% and 8%.
We are entering into this new stage of our development with a great deal of enthusiasm, on the strength of the experience developed over the last six years with the implementation of the Esprit Voisin concept, which has enabled us to create a unique trademark that is appreciated by retailers and customers alike, and which is envied by many. We believe that the "Foncière Commerçante" strategy will be at least as powerful and rich as the Esprit Voisin concept, which is still our core value.
*Retailer REIT / Think and act as a retailer
