MRM // 2022 Universal Registration Document

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Risk factors

Main risk factors

3 VALUATION OF PROPERTY ASSETS

Description of the risk and its impacts

Risk mitigation measures

The Company’s property portfolio is appraised twice a year (on 30 June and 31 December) by an independent appraiser. The contact details of the Group’s appraiser and the methodology used in its appraisals are set out in Section 1.3.1 “Overview of the Group’s asset portfolio” of this Universal Registration Document. M.R.M. uses the fair value accounting method for its property assets in line with the option offered by IAS 40, which consists of recording investment properties at their market value and registering changes in value in the income statement. Positive or negative changes in the valuation of assets held by the various Group companies therefore have a direct impact on the Group’s income. In this respect, as of 31 December 2022, the portfolio was valued at €244.9 million. Because M.R.M.’s property assets are booked at market value by independent appraisers, the value thereof can be affected by variations in the assumptions used and bases used in the valuation methods (property market trends, mainly in terms of rental values, received rents and changing interest rates, especially with regard to the discount and capitalisation rates employed). This has an indirect consequence on the Loan-to-Value (LTV) ratio which serves as an indicator of the Group’s debt and liquidity risk. Moreover, in accordance with the SIIC ethics charter, M.R.M. changes its appraiser every five years. The diverse nature of M.R.M.’s assets means that there may be a limited number of market benchmarks, leading to wider margins of discretion for appraisers. Therefore, a newly appointed appraiser may make a different assessment of the intrinsic value of the sites. A sensitivity study as of 31 December 2022 showed that a 50-basis-point increase in the capitalisation rate would reduce the asset portfolio value by €6.1 million, or 3.8% (excluding the Flins and Ollioules shopping centres acquired in 2022), whereas a 50-basis-point reduction would increase it by €7.0 million, or 4.4%.

M.R.M. closely monitors transactions on the property market. The sensitivity of the value of the property portfolio is updated every six months, based on a 25- and 50-basis point reduction and increase of the capitalisation rate. Therefore, the potential risk of a downgrading of appraisal values due to adverse underlying assumptions is monitored on a regular basis. M.R.M. always uses reputable appraisal firms whose working methods are in line with the French property valuation Charter. The valuation of M.R.M.’s asset portfolio is currently entrusted to the appraiser BNP Paribas Real Estate Valuation. Moreover, appraiser rotations are staggered and applied in a sensible manner. Therefore, appraisers of property assets which are being restructured or subject to a value enhancement programme will not be changed until the programme is complete. Finally, M.R.M. endeavours to support its appraisers, so that they have the best possible knowledge and understanding of the sites assigned to them and of the issues involved.

M.R.M. 2022 UNIVERSAL REGISTRATION DOCUMENT

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