Press release
First half 2017 results
. Gross rental income up
5.6% like-for-like[1]
. Portfolio value: €200.7m (up
1.4%)
. Good momentum in retail value-enhancement
plans
Paris, 28 July
2017: MRM (Euronext code ISIN FR0000060196), a real estate
company specialising in retail and office property, today announced
its results for the first half of 2017 ended June 30, 2017. This
publication follows the review and approval of the financial
statements[2] by MRM's
Board of Directors at its meeting of 27 July 2017.
Asset portfolio of €200.7 million
at end-June 2017
The value[3] of MRM's
portfolio was €200.7 million at 30 June 2017, an increase of
1.4% since 31 December 2016.
Portfolio value
|
30.06.2017
€m % of total |
31.12.2016
€m |
Change |
Like-for-like change[4] |
|
Retail |
157.4 |
77% |
152.8 |
+3.0% |
+3.0% |
|
Offices |
43.3 |
23% |
45.0 |
-3.8% |
-3.8% |
| Total |
200.7 |
100% |
197.8 |
+1.4% |
+1.5% |
Retail
The value of the retail property
portfolio rose by 3.0% relative to end-December 2016.
During the first half of the year,
five leases were signed representing annual rental income of
€0.5 million. In particular, MRM signed a lease with a
furniture and home decor retailer for a 3,300sqm unit at Aria Parc
in Allonnes, which will be achieved through a 2,300sqm projected
extension to a currently vacant 1,000sqm unit.
There was a contrasting change in
the rental situation depending on asset. Although five new leases
took effect, several tenants also gave notice to quit at the end of
their lease, including the retailer occupying the 2,700sqm mid-size
high street store in Reims, due to leave at end December 2017.
Annualised net rental income
therefore amounted to €7.9 million at 1 July 2017, a
slight increase of 0.2% relative to 1 January 2017. The
occupancy rate for the retail portfolio remained virtually stable
at 83% versus 84% six months earlier.
Investments made during the first
half totalled €5.4 million, including €3.6 million on
value-enhancement programs and €1.8 million for the
acquisition of the only unit not already owned by MRM at Aria Parc
in Allonnes. This acquisition, coupled with the 2,300sqm extension
project referred to above, will increase the total retail space at
Aria Parc from 9,000sqm to 12,800sqm, MRM being from now on the
sole owner of the entire park. MRM also sold one out of the
thirteen garden centres in the portfolio (for a non-material
amount).
Offices
During the first half of 2017,
there was no change in the scope of consolidation for the office
portfolio, which comprises the last two assets held for sale (Nova
in La Garenne-Colombes and Urban in Montreuil).
MRM continued the letting process
of the Nova building with a view to optimising its sale value. Two
new leases signed since 1 January 2017 have raised the
building's occupancy rate from 68% to 78%.
The 3.8% decrease in the office
portfolio value in the first half of 2017 was due to a change
in the tax rules applicable to the Nova building, leading to an
increase in the registration fees payable upon sale, which
automatically reduces its market value excluding transfer
taxes.
Rental income and current
operating income
| Consolidated revenues |
H1 2017 |
H1 2016 |
Like-for-like change |
Like-for-like change1 |
| €m |
% of total |
€m |
| Retail |
4.5 |
79% |
4.4 |
+3.5% |
+4.0% |
|
Offices |
1.1 |
21% |
2.4 |
-53.6% |
+12.6% |
| Gross rental income |
5.7 |
100% |
6.8 |
-16.8% |
+5.6% |
Consolidated revenues for the
first half of 2017 amounted to €5.7 million, a decrease
of 16.8% relative to the first half of 2016, mainly due to the
sale of office buildings completed in 2016. On a like-for-like
basis, revenues for the first six months grew by 5.6%.
Rental income from retail
properties rose by 4.0% on a like-for-like basis in the first half
of 2017. The arrival of new retailers in redevelopments completed
since mid-2016 comfortably offset the lower rents negotiated, the
strategic vacancies held under the value-enhancement programs and
the vacation of office space at Carré Vélizy[5].
Rental income from office
properties rose by 12.6% on a like-for-like basis, reflecting the
increased occupancy rate in the Nova building.
Non-recovered property expenses
totalled €2.1 million, down 9.1% relative to the first half of
2016 following the sale of office buildings completed in 2016 and
the letting of office and retail premises.
All in all, net rental income
amounted to €3.6 million compared with €4.5 million in
the first half of 2016. Taking into account a net provision
reversal of €0.5 million compared with a net provision charge
of €0.2 million in first half 2016 and other non-recurring net
operating expense of €1.1 million (including payment of
deferred registration fees on the 2007 acquisition of Urban and
eviction compensation paid to a tenant), operating income before
disposals and change in fair value came to €1.2 million in the
first half of 2017 compared with €2.7 million the previous
year.
Including investments for the
period, the change in fair value of the portfolio in the first half
of 2017 was a negative €2.7 million.
Consequently, despite an
improvement in financial expense (a €1.2 million charge versus
€1.4 million the previous year), MRM incurred a consolidated
net loss of €2.6 million in the first half of 2017.
The simplified income statement is
attached in an appendix.
Net operating cash flow[6]
€m |
H1 2017 |
H1
2016 |
| Net rental income |
3.6 |
4.5 |
| Operating
expenses |
(1.8) |
(1.8) |
| Other
operating income and expense |
(1.1) |
0.2 |
| EBITDA |
0.7 |
2.9 |
| Net cost
of debt |
(1.0) |
(1.1) |
|
Net operating cash flow |
(0.3) |
1.8 |
Net operating cash flow
EBITDA amounted to
€0.7 million in the first half of 2017 compared with
€2.9 million the previous year. The decrease was due to the
fall in net rental income plus the €1.1 million of other
non-recurring net operating expenses (as explained above).
In addition, in the first half of
the year, net operating cash flow is also affected by the
application of the IFRIC 21 accounting standard, which requires all
non-recovered annual property taxes to be recognised at
1 January.
For the full year 2017, MRM is
expecting a positive net operating cash flow.
Solid financial position
Gross debt remained stable at
end-June 2017 compared with end-December 2016, at
€96.0 million.
MRM had cash and cash equivalents
of €16.3 million at 30 June 2017, compared with
€25.0 million at 31 December 2016.
Net debt therefore amounted to
€79.7 million compared with €71.0 million at
31 December 2016. The net LTV ratio stood at 39.8% at
30 June 2017 compared with 35.9% at 31 December 2016.
EPRA NNNAV came to
€120.0 million at 30 June 2017, down from
€127.3 million at 31 December 2016. Adjusted for the
€4.8 million dividend payout[7] in respect
of 2016, EPRA NNNAV was down 2.1% due mainly to the negative change
in fair value during the period.
| Net asset value |
30.06.2017 |
31.12.2016 |
Total
€m |
Per share
€ |
Total
€m |
Per share
€ |
| EPRA NNNAV |
120.0 |
2.75 |
127.3 |
2.92 |
| Replacement NAV |
134.3 |
3.08 |
139.1 |
3.19 |
Number of shares
(adjusted for treasury stock) |
43,656,891 |
43,623,633 |
Outlook
Since June 2013, MRM has been
pursuing a strategy of gradually refocusing on retail property. Of
the nine office buildings owned at that time, seven have already
been sold for a total of €88 million (excluding transfer
taxes). Over the next few quarters, MRM intends to complete its
withdrawal from the office property market with the sale of its
remaining two assets (Nova in La Garenne-Colombes and Urban in
Montreuil).
With its solid financial
structure, MRM has set out an ambitious investment plan for
2016-2019 seeking to exploit the value-enhancement potential of its
retail assets. Two projects were completed in 2016 (Les Halles in
Amiens and Sud Canal in Saint-Quentin-en-Yvelines). Two more
completions are scheduled for 2017: the new retail space in the
mixed Carré Vélizy asset in Vélizy-Villacoublay and phase I of the
redevelopment of Passage de la Réunion in Mulhouse. During the
first half of 2017, MRM has also committed its share of
refurbishment works in the Ecole-Valentin shopping centre in
Besançon (which is co-owned). MRM will launch the Aria Parc program
in Allonnes during the second half of the year.
Of the €35 million total
projected investment amount at 30 June 2017 (i.e. 22% of the
portfolio value at that date), the investment budget committed
since the beginning of 2016 is expected to reach €13 million
by the end of 2017. The commitments scheduled for 2018 include the
Ecole-Valentin shopping centre extension, phase II of the
redevelopment of Le Passage de la Réunion, and Galerie du Palais in
Tours.
MRM is expecting positive net
operating cash flow for the full year 2017 and plans to pursue its
active shareholder remuneration policy.
Calendar
Revenues for the third quarter of
2017 are due out on 9 November 2017 before market opening.
About MRM
MRM is a listed real estate
company with a portfolio worth €200.7 million (excluding transfer
taxes) as at end of June 2017, comprising retail properties (78%)
and offices (22%). Since 29 May 2013, SCOR SE has been MRM's
main shareholder, holding a 59.9% stake. MRM is listed in
compartment C of NYSE Euronext Paris (ISIN: FR0000060196 -
Bloomberg code: MRM:FP - Reuters code: MRM.PA). MRM opted for
SIIC status on 1 January 2008.
For more
information:
MRM
5, avenue Kléber
75795 Paris Cedex 16
France
T +33 (0)1 58 44 70 00
relation_finances@mrminvest.com |
Isabelle Laurent, DDB
Financial
T +33 (0)1 53 32 61 51
M +33 (0)6 42 37 54 17
isabelle.laurent@ddbfinancial.fr |
Website: www.mrminvest.com
Appendix 1: Income
statement
Simplified IFRS income statement
(€m) |
H1 2017 |
H1 2016 |
| Net rental income |
3.6 |
4.5 |
| Operating
expenses |
(1.8) |
(1.8) |
| Provisions
net of reversals |
0.5 |
(0.2) |
| Other
operating income and expense |
(1.1) |
0.2 |
| Operating income before disposals and change in fair value
of properties |
1.2 |
2.7 |
| Net
gains/(losses) on disposals of assets |
0.0 |
0.0 |
| Change in
fair value of properties |
(2.7) |
0.3 |
| Operating income |
(1.5) |
3.0 |
| Net cost of
debt |
(1.0) |
(1.1) |
| Other
financial income and expense |
(0.2) |
(0.3) |
| Net income before tax |
(2.6) |
1.6 |
| Income
tax |
0.0 |
0.0 |
| Consolidated net income |
(2.6) |
1.6 |
Appendix 2: Quarterly rental
income
Consolidated
revenues
(€m) |
Q2 2017 |
Q2
2016 |
Change |
Like-for-like
change1 |
| Retail |
2.3 |
2.2 |
+3.6% |
+4.6% |
| Offices |
0.5 |
1.2 |
-56.4% |
+4.7% |
| Total gross rental income |
2.8 |
3.4 |
-18.0% |
+4.6% |
Appendix 3: Balance sheet
Simplified IFRS balance
sheet
(€m) |
30.06.2017 |
31.12.2016 |
|
| Investment
properties |
156.9 |
152.8 |
|
| Assets held
for sale |
43.8 |
45.0 |
|
| Current
receivables/assets |
9.3 |
9.0 |
|
| Cash and
cash equivalents |
16.3 |
25.0 |
|
| Total assets |
226.3 |
231.8 |
|
|
Equity |
120.0 |
127.4 |
|
| Financial
debt |
96.0 |
96.0 |
|
| Other debt
and liabilities |
10.3 |
8.4 |
|
| Total equity and liabilities |
226.3 |
231.8 |
|
[1] Revenues
are calculated on a like-for-like basis by deducting the rental
income generated by acquired assets from the revenues reported for
the current year and deducting the rental income generated from
assets sold from the revenues reported for the previous year.
[2] The
financial statements have been subject to a limited review by the
statutory auditors. The auditors' report on the financial
information for the first half of 2017 has been issued without
observation or reservation.
[3] Value
excluding transfer taxes based on valuations at 30 June 2017 issued
by JLL, including assets held for sale, which are recorded in the
financial statements in accordance with IFRS 5.
[4] Change
adjusted for disposals carried out since 1 January 2017.
[5] Carré
Vélizy is a mixed retail and office property, held in the retail
portfolio.
[6] Net
operating cash flow = consolidated net income before tax adjusted
for non-cash items
[7] Dividends
and premiums.
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information contained therein.
Source: MRM via Globenewswire
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