MRM - 2018 Registration document

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General information on the issuer and its capital

Consolidated financial statements for the financial year ended 31 December 2018

Statement of consolidated financial position – Liabilities as of 31/12/2017

Offices

Retail

Head office

Total

(in thousands of euros)

Non-current bank debts

- -

71,141

- - - -

71,141

2,244

2,244

Current bank debts

Loan granted by SCOR SE

21,889

-

21,889

Debts payable against non-current assets

766

1,099

1,865

Note 8

Exposure to risk and hedging strategy

8.1 Foreign exchange risk At the date of this document, M.R.M. engages in no business which could expose it to any foreign exchange risks. 8.2 Interest rate risk As of 31 December 2018, 85% of the Company’s bank loans were contracted at fixed rates. In addition, the Group has an interest-rate cap in place to reduce the interest rate risk on its variable-rate debt. As such, as of 31 December 2018, 70% of the variable-rate bank debt was hedged by way of an interest rate cap (based on the 3-month Euribor at a strike rate of 1.25%). A 100 basis point increase in interest rates would have a €99 thousand impact on the Group’s financial expenses. 8.3 Liquidity risk The Company’s level of leverage could affect its capacity to take out further loans. The Group’s liquidity policy is to ensure that the total amount of rents is at all times higher than its working capital requirements to cover operating expenses, interest and repayment of its entire existing debt and the leverage it seeks to implement its investment programme. Certain loan agreements entered into or that may be entered into by the Group or its subsidiaries contain or may in the future contain standard early repayment clauses and covenants. These covenants define the thresholds to be respected for a number of ratios, in particular the LTV (loan to value) ratio, defined as the ratio of the amount of the loan to the market value of the property financed, the interest coverage rate (ICR), representing the coverage rate of interest expenses by rents,

and the debt service coverage ratio (DSCR), representing the coverage rate of debt repayments and interest expenses by rents. The covenants relating to LTV ratios set maximum thresholds of between 47.3% and 65%. Covenants relating to ICR and DSCR ratios set minimum thresholds of between 130% and 300%. It is at the level of Group subsidiaries, which own the property assets financed, that the covenants are tested. As of 31 December 2018, the Group complied with all commitments in respect of the LTV, ICR and DSCR covenants agreed with its banking partners. 8.4 Credit risk Credit risk represents the risk of financial losses for the Group should a customer or counterparty to a financial instrument fail to meet their contractual obligations. For the Group, this risk comes from its trade receivables. The Group’s counterparties to its financial assets are lending institutions with the highest ratings. For the record, the financial assets are limited to derivatives (interest rate cap). The Company has drawn up a credit policy to limit its exposure. As a rule, solvency checks are conducted on potential customers to ensure their creditworthiness meets the Group’s risk requirements. Certain tenants account for a significant proportion of the Company’s annual invoiced rents. The termination of one or several leases could have an impact on the level of rents received by the Company, and on its profitability. Nonetheless, the principal leases were signed recently and some tenants are bound by firm leases that can run from between three and nine years.

M.R.M. 2018 REGISTRATION DOCUMENT

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