MRM - 2018 Registration document

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Risk factors

Risks related to the business environment

In addition, at the end of a lease period there is always the possibility that the Company might have to deal with different market conditions, unfavourable for lessors.

In fact, the current economic climate could result in leases not being renewed or premises being vacated early due to tenants getting into difficulties, in addition to problems associated with re-letting certain premises.

Dependence on main tenants – counterparty risk

The top ten tenants in the property asset portfolio As of 1 January 2019, the top tenant in the property asset portfolio, henceforth comprising only retail properties, accounted for 5.0% of rents in the retail property portfolio. The top five tenants accounted for 20.4% of rents in the property portfolio. The top ten tenants accounted for 30.5% of rents in the retail property portfolio (compared with 29.1% as of 1 January 2018).

All of the Group’s revenue is generated by letting out property assets to third parties. It follows from this that any default on rent payments can affect the Company’s earnings. Certain tenants account for a significant proportion of the Company’s annual invoiced rents. The contractually legitimate termination of one or several leases could have an impact on the level of rents received by the Company, and on its profitability. However, the main tenants are bound by firm leases that can run for three to twelve years with expiration dates stated in Section 1.4.5 of this Registration Document. Clauses in such leases can provide for termination indemnities.

Risks related to the Company’s disposal of certain property assets

In view of the continued economic downturn, or operational and financial risks, the Company may not be able to sell part of its property assets under satisfactory terms.

The Company may, within the context of its active property- asset management strategy, end up selling certain assets primarily to release fresh funds to finance other projects.

Risks related to late completion or non-completion of planned investments

In its strategy of enhancing the value of its property portfolio, and in making its properties more attractive and valuable, the Company must make the necessary investments for refurbishing and restructuring existing sites. In view of the sluggish nature of the current economic climate, the Company is focusing on its existing assets and is continuing its selective investment policy. Delays or non-

completion of certain planned investments, or completion at higher costs than planned – due not only to the expense of conducting prior studies, but also to administrative, technical or marketing hurdles – may slow down the pace of the Company’s development strategy, delay the letting out of the property and have a negative impact on its business and earnings.

M.R.M. 2018 REGISTRATION DOCUMENT

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