MRM - 2018 Registration document

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Information on M.R.M.’s activities

Presentation of the Company

Presentation of the Company

1.4

The market data presented in this section were taken from reports published by CBRE and Cushman & Wakefield.

Further details on the M.R.M. group are given in paragraph 1.3 of the management report in Section 3.6 of this Registration Document.

1.4.1 General presentation of the activity

The purpose of M.R.M. as a real estate company is the acquisition, holding, value-enhancement, rental and arbitrage of property assets. The Group’s portfolio consists of stabilised properties and properties with value-enhancement opportunities. Growth lies in increasing rental revenues through improving the occupancy rate of properties and reducing property expenses, enhancing property value and in combining internal development with growth via acquisitions. The Group operates on the retail property market which has its own characteristics. These businesses require in-depth knowledge of the investing and rental markets, of laws and regulations, and of the competitive environment. Retail properties Retail property is a highly specific market segment subject to a particular economic and regulatory sector. The trends in this market are expanded upon in Section 1.4.2 “The real estate market in 2018 and the retail segment”. The development of retail and distribution can be observed in the endurance of suburban retail parks and the refurbishment of existing town- centre facilities. In addition, the size and demography of the French market foster the development of chains by domestic and international retailers. Furthermore, e-commerce is also developing strongly and represents a significant distribution channel in certain consumer sectors (travel ticketing, electronic and cultural goods, etc.). The food trade continues to play an important role in French retailing given the behavioural patterns of French consumers in this sector. These retailers are now operating in most large cities in France, and are beginning to penetrate deeper into the territory by opening outlets in smaller catchment areas, although continuing to scrutinise entry conditions, given the difficult economic environment.

The balance of power between tenants and lessors is determined by the strength of the retail property and business, which belongs to the tenants and therefore strongly influences their attachment to the premises, and by the regulation of available supply of premises, which is determined by the authorisation required prior to opening any mid-size or mass retail outlet, governed by urban planning laws. These changes are being followed closely by players in this market. As a consequence, investments made in commercial property are subject to a lesser extent to the vacancy constraints known in other property sectors. Due to the volatility of the once-customary construction cost index (ICC), a new index was set up and made mandatory, namely the retail rents index (ILC) incorporating certain retail activity indicators by volume to weight the ICC. The competitive environment in which the Company operates includes a certain number of French and international listed real estate companies specialising in retail property, such as Unibail-Rodamco-Westfield, Klépierre, Mercialys and Altaréa, as well as many other operators such as the property arms of mass retailers and asset managers, small and medium- sized specialised real estate companies, investment funds, and other dedicated vehicles. Policy of enhancing asset value and refocusing on retail properties At the outset, the Group had a mixed portfolio of office and retail property assets with potential for improving rental yields and as such enhancing value. In 2013, the Group announced its intention to refocus its business on retail properties and to gradually dispose of its office properties. M.R.M.’s portfolio refocusing is now complete with the sale of the Group’s last two office buildings: Nova, located in La Garenne-Colombes, in May 2018, and Urban, located in Montreuil, in January 2019.

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M.R.M. 2018 REGISTRATION DOCUMENT