MRM_REGISTRATION_DOCUMENT_2017

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Information on M.R.M.’s activities

Business overview

Shopping centres Shopping centres: a declining new development offer

This revenue, while non-recurring, has the advantages of filling vacancies, preparing for classical lease marketing and ensuring an additional revenue reserve. In response retailers have considerably raised their financial and strategic demands. Co-tenancy clauses, while not always formalised, remain a significant element in negotiations with lessors. The search for the ideal location contributes to extending time to market, including for the best sites. Retail parks Over 470,000 sqm were opened in 2017 in prime and peripheral retail parks on around forty sites. As in 2016, new outlets dominated activity and contributed to over 90% of openings in 2017. […] The 2018 pipeline promises once again to be busy with over 750,000 sqm of peripheral properties planned for development in around 60 sites, including Les Promenades de Brétigny developed by Immochan in the southern part of Île-de- France. New outlets should once more dominate activity and account for almost 80% of planned properties, some in existing shopping centres. […] Rental enhancement drivers Stimulated by robust demand from retailers, the rental values of next-generation retail parks or first-class peripheral retail zones maintained their level across all property segments and even increased in the most sought-after locations. In secondary locations and second-class retail zones, the situation was more complicated, particularly for small properties, which are more difficult to market due to still fairly limited demand, and very large properties, for which there is a shortage of tenants with adequate capacity. Realising the potential Peripheral locations are shedding their traditional image and becoming more dynamic with the arrival of next-generation retail parks and a wider variety of tenants and activities. The merchandising mix is becoming more diversified, though lessors still have difficulties in bringing in a higher quality shopping offer in the smaller centres, which involves a paradigm shift in all marketing aspects (mid-size units/boutiques mix, segment management, etc.). A major challenge for lessors will be to maintain an attractive level of rental value while

For shopping centres, 2017 was less active than previous years. Despite the upsurge in new outlets in October and November, total deliveries in 2017 amounted to almost 280,000 sqm, or around one-quarter less than in 2016. Over the year, site extensions and reconfigurations, up since 2016, once again exceeded new developments, an indicator of the market’s maturity. New developments accounted for 46% of properties delivered in 2017 while they exceeded 80% in 2015. The Val d’Europe and Carré Sénart same-generation supraregional centres were extended in Q2 and at the end of the year respectively. These two projects contributed to Île-de-France’s increased share of new properties, going from 16% in 2016 to 22% in 2017. New developments included several major projects such as the openings of Muse in the Metz city centre in mid-November and the Atrium shopping centre in Sarrola-Carcopino in Corsica a few weeks earlier. […] Nearly 250,000 sqm should be added to the existing stock in 2018 – slightly less than in 2017 – with a return to new projects. Resistance of rental values The trends observed over the last few months seemed to confirm a solid resistance of rental values in the supraregional shopping centres, which remained refuge values for the main market retailers. While revenue was erratic, location remained essential and for the most part decisive. The trend was different in secondary locations where retailers’ strategies more or less centered on performance. For certain retail categories rental values were negotiated downwards. Medium-sized properties showed signs of vulnerability in all categories with the market more limited in this bracket. Combining occupancy, flows and revenue Faced with increased competition, lessors are implementing defensive financial and operational strategies. They are increasingly resorting to complex arrangements by offering potential tenants options such as fit-outs, pure percentage leases, fixed rates, rate exemptions and step-up leases. Another strategy used by owners is to spread out “temporary” revenue by letting kiosks or pop-ups and offer specialty leasing.

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M.R.M. 2017 REGISTRATION DOCUMENT