MRM_REGISTRATION_DOCUMENT_2017

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Risks Factors

Risks related to the business environment

Assessing the value of the property portfolio depends on a number of factors, mainly involving the balance between market supply and demand, interest rates, the global economic climate and applicable regulations, which can vary significantly, with a direct impact on the valuation of the Company’s property assets and, as an indirect consequence, on the various loan to value (LTV) ratios used as indicators of the Group’s debt and liquidity risk. The appraised value of the Group’s properties and their final value on disposal may not be identical. In addition, such valuations are based on a number of assumptions which may not prove to be correct. Because M.R.M.’s property assets are booked at market value by outside appraisers, the value thereof can be affected by variations in the bases used in the valuation methods (property market trends, mainly in terms of received rents, changing interest rates especially with regard to discount and capitalisation rates employed).

In addition, the valuation of the Company’s property assets, when published, corresponds to an appraisal carried out by the property appraisers at a precise moment in time. Given the gap between the moment when the appraisal valuations are carried out and the moment when this information is made public, the valuation of the Company’s property assets could have changed by the time that the information is published. At 31 December 2017, on a like-for-like basis (i.e. after restatement for asset disposals carried out in 2017), it is noted that, in terms of asset valuations, calculated on the basis of appraisal value excluding transfer taxes, by the appraiser, Jones Lang LaSalle, had the following impacts the Company:

31/12/2016 restated (1)

Portfolio value excluding transfer taxes (in millions of euros)

31/12/2017

Change

% change

Retail properties Office properties

159.0

152.7

+6.3

+4.1% -9.8% +0.9%

40.6

45.0

-4.4

M.R.M. ASSET PORTFOLIO

199.6

197.7

+1.9

(1) Restated for disposals carried out in 2017.

A sensitivity study simulating a change in capitalisation rates as of 31 December 2017 showed that a 50 basis-point increase in these rates would reduce the asset portfolio value by €13,070 thousand (-8.2%), whereas a 50 basis-point reduction would increase it by €15,650 thousand (9.9%).

In 2017, the following was noted: • An increase in the value of retail assets, reflecting the progress of asset valuation plans based on their stage of development; • A decline in the value of office property assets.

Economic risk

Since the Group’s real estate portfolio is made up of retail assets and office properties located in France, changes in the main French macroeconomic indicators are likely to affect M.R.M.’s business, its rental revenues, the value of its property portfolio, as well as its policy relating to investment in and development of new properties, and consequently its growth prospects. Consequently, changes in the economic environment in which the Company operates, such as economic growth rates, interest rates rental indices could significantly affect its business and development, and thus its growth prospects.

• A prolonged economic slowdown at the national or international level and/or in the property market could continue to entail: (i) Weaker demand for renting the Group’s property assets leading to increased risk of vacancy if a tenant leaves as well as a longer time required to let its properties that are currently partly or wholly vacant, which would have an adverse impact on a) the value of the Company’s property portfolio and b) its operating income (no rental revenues and property expenses not recovered for those properties);

M.R.M. 2017 REGISTRATION DOCUMENT

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