MRM_REGISTRATION_DOCUMENT_2017

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Information on M.R.M.’s activities

Business overview

Business overview

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 Business overview

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 and office property markets, each with their own characteristics. These businesses require in-depth knowledge of investing and rental activities, of laws and regulations, and the competitive environment. Retail properties Retail property is a highly specific market segment subject to a particular economic and regulatory sector. Developments in this market are described in paragraph 1.4.2 “The real estate market in 2017, 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. 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, 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. Office properties In the office property segment, demand is concentrated in Paris and the suburbs, and to a lesser extent in large cities in the French provinces. Developments in this market are described in section 1.4.2 “The real estate market in 2017, the office segment”. Upon investing, the key indicators include the volume of property exchanged and variances in capitalisation rates used to value the properties. Vacancy rate and changing rental values are two key criteria for the rental market. Although the investment and rental markets have differences, they do have some determining factors in common.

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M.R.M. 2017 REGISTRATION DOCUMENT