MRM_REGISTRATION_DOCUMENT_2017

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Information on M.R.M.’s activities

Business overview

involving tenants traditionally active in the boutique format. Rental expenses are a key element of negotiations, so it is important to work on optimising costs while maintaining the quality of services. Lastly, image has become a key component of asset enhancement. This requires qualitative, complete and balanced merchandising. Architecture remains a very significant element of differentiation for this unenclosed retail segment. […] Despite the €2.4 billion invested in retail assets, the second half of 2017 did not offset the decline in volumes recorded during the first half of the year. Nevertheless the year ended with a total volume of €3.6 billion invested in retail property, below the three previous years but above the 2008-2013 period and the average for the past decade (+2%). This slowing in business corresponds to a market adjustment after the exceptionally high volumes recorded in 2014 and 2015. The convergence between sellers’ and buyers’ expectations is sometimes difficult to obtain at a time when core opportunities are rare. Moreover, the market is now mainly fed by the natural rotation of assets held by investment funds and the deliveries of new assets by developers. In a sector undergoing transformation where performance is constrained by consumption uncertainties, secondary asset transactions are more complicated to formalise due to a level of risk that is harder to manage. […] In line with the trends observed until Q3, the market was mainly fed by small volumes (less than €50 million) with disposals increasing by 25% between 2016 and 2017. This was not the case for retail assets over €50 million, where the number of disposals clearly fell this year. In 2014 and 2015 there were still around 15 asset disposals of over €100 million but only nine in 2016 and seven in 2017. […] The share of portfolios doubled from 2016, going from 10% to 20% of total investments in retail property. Investments in retail property amounted to over €700 million, mostly in city centre retail properties and retail parks. Investment market A change of speed

Players and yields Investment funds confirmed their dominance in commercial asset acquisitions with a market share of 73% in 2017, its highest level since 2011. Acquisitions (€2.6 billion) fell by 1% year-on-year, although this was lower than for the previous period. Their position came at the expense of property companies which finalised most of their arbitrages and reduced their acquisitions with only €250 million invested in 2017. Insurance companies also considerably slowed the pace of their acquisitions from €650 million in 2016 to only €150 million in 2017, or a market share of 4%. This took them back to their 2006-2007 investment levels. French investors remained very active in the domestic market, both in terms of acquisitions (65% of total investments) and disposals (60%). This trend contrasts with the figures for the last two years, and especially 2016, where the breakdown of acquisitions was almost balanced between national and international investors. International investors mainly comprised European funds which accounted for 31% of investments and 30% of sales in the retail sector. By asset type, European funds remained very active in city centre retail property (39%); they also gained ground in the shopping centre segment (45%) with acquisitions by Stam Europe and Deka. In retail parks, French investors were the most active with 22% of their investments in this asset category. Middle-Eastern investors mostly refrained from acquisitions and disposals during the year, both in retail property and other asset classes. Prime rates remained stable at an historically low level for all retail asset categories. An upward adjustment may be observed in certain city centre high streets in Paris and the provinces. Part 2 of the national Cœur de ville (city centre) action plan got going with the government’s press release in December responding to proposals from various retail stakeholders regarding retail abandonment of city centres in France. The action plan provides for over €5 billion in financing, in partnership with the Caisse des Dépôts , for medium-sized cities to serve as regional hubs. Funding will take into account housing and retail aspects along with economic activity, transport policy and new technology. Regulatory news The national city centre action plan

M.R.M. 2017 REGISTRATION DOCUMENT

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