MRM - 2018 Registration document

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Information on M.R.M.’s activities

Presentation of the Company

In terms of investor type, the majority was attributable to investment funds and OPCI-SCPI which accounted for over 40% of the market in 2018. However, there was a slowdown in investments from these investment vehicles: their acquisitions halved compared with 2017 with just €580 million allocated to retail. This reduction was partly due to an increase in the market share of insurance companies which accounted for 20% of investments, mainly targeting city-centre assets. Yields driven by falling revenues The decline in consumer footfall seen over the past several months for most asset types, combined with renewed concerns regarding some business models, has had a knock-on effect on retailer turnovers that had already been weakened by the economic climate over Q4. As effort rates become increasingly difficult to sustain, forecasts for income growth are lower. Although not all asset types have been affected to the same extent, an adjustment in market values has been seen as well as an increase in yields for those asset types that are most exposed to fluctuations in consumption (footfall, turnover) - primarily non-dominant “hypermarket centres” in the shopping centre category. With relatively stable rental incomes, retail parks stand out as the most resilient retail assets with less of a change in yield than for other asset types. Finally, high streets have shown a degree of resilience on the most sought- after luxury high streets in Paris. However, this asset type has shown some signs of fragility in regional markets where footfall is in decline.

High streets still the preferred target High-street retail activity remained strong in 2018. These assets retained their supremacy in the retail market and accounted for 44% of investments over the course of the year. Excluding the “Champs-Elysées” transaction (Q2 2018), enthusiasm for high-street retail has continued and is justified by this asset type’s higher degree of resilience, particularly due to the limited available properties. Paris continued to lead this segment and accounted for 45% of transactions and 60% of the investment volume. CASINO’s disposal of its MONOPRIX stores led to an unprecedented contribution from the non-specialised sector which accounted for 20% of transactions concluded in 2018 and also bolstered the proportion attributable to portfolios to 45% (24% in 2017). Conversely, there was a sharp contraction for shopping centres which only accounted for 8% of the 2018 investment volume, compared with 30% in 2017 and 70% 4 years ago. The correction seen for secondary asset values as well as a lack of available core assets contributed to making these assets less attractive to investors. International aspect Although French investors remained active in the retail market, their market share fell to just 43% of acquisitions in 2018. This marks a change in the trend seen for the last 10 years with an average of 60% of investments attributable to the domestic market. A similar configuration was last seen in 2012. As in the past, Europe was the main contributor to foreign acquisitions and accounted for over 80%, almost a quarter of which was from German funds. Trends in the brick-and-mortar retail activity continued in 2018 and even gathered pace, against a backdrop of slowing economic growth and weak consumer growth (SAD index of arbitrable disposable income down 0.2%) and sustained growth in Internet sales (SAD index up 13.4%). The persistent erosion in physical retailing in certain sectors of activity, notably in the mid-range clothing segment, and growth strategies underpinned by increased brand selectivity continued to weigh on declining trends in rental values (except in the most prestigious locations) and to extend time to market.

1.4.3 The Group’s analysis of market trends

However, some sectors of activity resisted well and are even growing: organic food, catering, sport, health and well-being. Many retailers have successfully implemented omni-channel sales strategies through the use of digital tools to provide their customers a better service. These developments reinforce the need to establish a commercial positioning for each retail asset that is adapted to its catchment area and customer flow.

M.R.M. 2018 REGISTRATION DOCUMENT

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