Press release
2017 full-year results
-
Gross rental income
up[1] 3.2%
-
Portfolio value[2]: €199.6m
(+0.9%)
-
Solid progress in the
investment plan dedicated to retail properties
-
Proposed payout[3] of €0.11
per share, in line with last year
Paris, 23
February 2018: MRM (Euronext code ISIN FR0000060196), a real
estate investment company specialising in retail property,
announced today its results for the financial year ended 31
December 2017. This publication follows the review and approval of
the audited financial statements[4] by MRM's
Board of Directors at its meeting of 22 February 2018.
Portfolio of €199.6 million
at 31 December 2017
The value2 of MRM's
portfolio was €199.6 million at 31 December 2017, up 0.9% relative
to 31 December 2016.
Portfolio value
|
31.12.2017
€m % of total |
31.12.2016
€m |
Change |
Like-for-like change[5] |
|
Retail |
159.0 |
80% |
152.8 |
+4.0% |
+4.1% |
|
Offices |
40.6 |
20% |
45.0 |
-9.8% |
-9.8% |
| Total |
199.6 |
100% |
197.8 |
+0.9% |
+0.9% |
Retail
MRM reminds that the retail
portfolio is undergoing a significant value-enhancement plan that
involves seven out of the nine existing properties owned by
MRM.
The launch of the various
value-enhancement programs has been phased since 2016, with the
last one due to be completed in 2019. Consequently, new leases
related to these programs will be coming into effect until that
date.
In 2017, the value of the retail
portfolio increased by 4.0% relative to 31 December 2016.
Investment amounted to €8.0 million, split between €6.2 million
spent on value-enhancement programs and €1.8 million to buy the
only retail unit not yet owned by MRM at Aria Parc in Allonnes. MRM
also sold one of the 13 garden centres in the portfolio for an
immaterial amount.
Eleven leases were signed during
2017 representing an annual rental income of €0.8 million. In
particular, MRM signed a lease for household equipment retailer
Maison Dépôt regarding a 3,300 sqm unit, as part of the projected
2,300 sqm extension of the Aria Parc shopping centre in
Allonnes.
The change in the rental situation
was contrasting depending on the property. MRM benefited in 2017
from nine leases coming into effect, but at the same time several
retailers experiencing difficulties on a national level gave notice
to quit. This concerns specifically three mid-size stores: 2,800
sqm in the centre of Reims vacated by Go Sport, 1,275 sqm at Les
Halles du Beffroi in Amiens vacated by La Grande Récré and 1,900
sqm at Aria Parc in Allonnes vacated by Tati. To date, the mid-size
store in Amiens has already been relet with a lease that will come
into effect at the end of the first quarter of 2018. The reletting
of the other two mid-size stores is currently in progress.
Net annualised rental
income[6] stood at
€7.4 million at 1 January 2018, down 6.1% relative to
1 January 2017, and the occupancy rate for the retail
portfolio was 76% compared with 84% one year earlier.
Offices
There is no change of scope of the
office portfolio over the year. It comprises two remaining
properties (Nova in La Garenne-Colombes and Urban in Montreuil),
for which the selling process is underway.
Progress has been made in the
rental situation with a further increase in the occupancy rate at
Nova. Three new leases have been signed since January 2017,
increasing the occupancy rate of the building from 68% to 81% at
present.
The 9.8% fall in the value of the
office portfolio in 2017 follows administrative difficulties and
the change in the transfer tax regime applicable to Nova, resulting
in higher taxes payable at the time of sale of the building and
mechanically resulting in a lower value excluding transfer
taxes.
Rental income and net profit or
loss
| Consolidated revenues |
2017 |
2016 |
Change (reported) |
Like-for-like change1 |
| €m |
% of total |
€m |
| Retail |
9.0 |
80% |
8.9 |
+1.4% |
+0.9% |
|
Offices |
2.2 |
20% |
4.1 |
-46.8% |
+13.8% |
| Gross rental income |
11.2 |
100% |
13.0 |
-13.8% |
+3.2% |
|
Non-recovered property expenses |
(3.4) |
|
(3.5) |
-3.5% |
|
| Net rental income |
7.8 |
|
9.5 |
-17.7% |
|
Gross rental income totalled €11.2
million in 2017, down 13.8% compared with 2016. This fall was due
to the three sales of office buildings carried out in 2016 and, to
a lesser extent, the sale of a garden centre in the first half of
2017. On a like-for-like basis, i.e. adjusted for the impact of
these asset sales and the acquisition of a unit occupied by
Basic-Fit at Aria Parc, annual gross rental income increased by
3.2%.
Retail gross rental income rose by
1.4% like-for-like. The arrival of new tenants at premises
redeveloped since mid-2016 more than made up for rent reductions
granted and premises being left strategically vacant within the
framework of value-enhancement programs, as well as the freeing up
of office space within the Carré Vélizy mixed-use
property[7].
Regarding office buildings, gross
rental income rose by 13.8% like-for-like, reflecting the improved
occupancy rate at Nova.
Overall, and taking account of
non-recovered property expenses of €3.4 million, net rental income
totalled €7.8 million compared with €9.5 million in 2016.
Operating expenses came to €2.8
million, down 14.1% year-on-year. Taking account of a net provision
reversal of €0.3 million (compared with a net charge of €0.8
million a year earlier) and other non-recurring net operating
expenses[8] of €1.4
million (compared with other net operating income of €0.6 million a
year earlier), operating income before disposals and change in fair
value was €4.0 million in 2017 compared with €6.1 million in
2016.
Taking account of the amount of
investments made during the period, MRM recorded a negative change
of €6.4 million in the fair value of the portfolio in 2017,
compared with a positive change of €4.3 million in 2016.
As a result, despite improvement
in financial result - representing a net expense of €2.1 million in
2017 compared with €2.4 million in 2016 - MRM sustained a
consolidated net loss of €4.6 million in 2017 compared with a
consolidated net profit of €5.1 million in 2016.
The simplified income statement is
provided in appendices.
Net operating cash flow
Net operating cash flow[9]
€m |
2017 |
2016 |
| Net rental income |
7.8 |
9.5 |
| Operating
expenses |
(2.8) |
(3.2) |
| Other
operating income and expense |
(1.4) |
0.6 |
| EBITDA |
3.6 |
6.9 |
| Net cost
of debt |
(1.9) |
(1.9) |
| Net operating cash flow |
1.7 |
4.9 |
EBITDA came to €3.6 million in
2017. This fall was due to both the reduction in net rental income
and non-recurring net other operating expenses (see explanation
above). Taking account of a slight reduction in the cost of debt
compared with 2016, MRM generated a positive net operating cash
flow of €1.7 million in 2017.
Adjusted for non-recurring items,
net operating cash flow came to €3.1 million in 2017 compared with
€4.3 million in 2016.
Sound financial position
Gross debt decreased slightly from
€96.0 million at 31 December 2016 to €95.3 million at 31 December
2017.
Taking into account, in
particular, investments for €8.0 million and 2016 dividend for €4.8
million paid in 2017, MRM had cash and cash equivalents of €13.3
million at 31 December 2017 compared with €25.0 million at 31
December 2016.
Net debt therefore stood at €81.9
million at 31 December 2017 compared with €71.0 million at 31
December 2016. The LTV ratio was 41.0% compared with 35.9% a year
earlier.
In October 2017, MRM took out a
new €15.2 million bank loan maturing at the end of October 2022.
This loan allowed MRM to refinance a €14.8 million credit facility
secured against a retail property that matured in December 2017.
MRM's bank debt has therefore been significantly rescheduled, with
over 90% now having a maturity of four years or more. In addition,
the €22.0 million loan granted by SCOR, secured against the Nova
building and due to mature in January 2018 has been extended by one
year.
As a result in particular of the
dividend paid in respect of the 2016 financial year (€4.8 million),
net operating cash flow generated during the year (€1.7 million)
and the negative change in the fair value of properties (€6.4
million), EPRA NNNAV was €118.0 million, down relative to 31
December 2016 (€127.3 million). Adjusted for the
dividend[10] paid in
respect of the 2016 financial year, NNNAV fell by 3.7%.
Net asset value |
31.12.2017 |
31.12.2016 |
total
€m |
per share
€ |
total
€m |
per share
€ |
| EPRA NNNAV |
118.0 |
2.70 |
127.3 |
2.92 |
| Replacement NAV |
133.2 |
3.05 |
139.1 |
3.19 |
| Number of shares (adjusted for
treasury stock) |
43,632,801 |
43,623,633 |
Proposed payout
MRM's Board of Directors has
decided to propose the payment of premiums of €0.11 per share in
respect of the 2017 financial year, identical to the amount paid
out in respect of the previous year. This will be subject to
approval at the general shareholders' meeting of
31 May 2018. The intended ex-dividend date will be
6 June 2018 and payment will be made on 8 June 2018.
Outlook
Since June 2013, MRM has been
pursuing a strategy of gradually refocusing its activities on
retail property. Out of the nine office buildings held by MRM at
this time, seven have already been sold for a total of €88 million
excluding transfer taxes. MRM intends to complete its withdrawal
from the office property segment in 2018 with the sale of the last
two properties still in its portfolio.
MRM is continuing to roll out its
investment plan dedicated to its retail portfolio. The plan
concerns seven properties, with the creation of 6,900 sqm of new
space. Three projects have already been completed: the renovation
and upgrading of Les Halles du Beffroi in Amiens, the partial
redevelopment and renovation of the Sud Canal shopping centre in
Saint-Quentin-en-Yvelines, and the extension of retail space at the
Carré Vélizy mixed-use complex in Vélizy-Villacoublay.
Out of a total estimated amount of
€35.0 million at 31 December 2017, investments committed in 2016-17
represent a total of €13.6 million. MRM is preparing - barring
unforeseen circumstances - to commit the remaining €21.4 million in
2018, concerning in particular the extension/redevelopment of the
shopping gallery at the Valentin shopping centre in Besançon. This
project - the largest in the plan - will begin in the second
quarter of 2018 and is due to be completed in the second half of
2019. In addition, the value-enhancement plan for Aria Parc in
Allonnes will continue. This aims in particular at creating a
mid-size store for retailer Maison Dépôt, a new anchor for the
site. Two other smaller programs are still to be completed: the
refurbishment of La Galerie du Palais in Tours and the
redevelopment of the ground floor of Le Passage de la Réunion in
Mulhouse.
Considering the additional areas
yet to be built[11] and
assuming a 95% occupancy rate of the portfolio, MRM targets a
minimum €10 million annualised net rental income6 post
completion of value-enhancement programs (excluding acquisitions or
disposals), scheduled by the end of 2019, compared with €7.4
million at 1 January 2018.
Calendar
Revenues for the first quarter of
2018 are due on 4 May 2018 before market opening. The general
shareholders' meeting to approve the financial statements for 2017
will be held on 31 May 2018.
About MRM
MRM is a listed real estate
investment company that owns and manages a portfolio in France
consisting primarily of retail properties across several regions of
France. Its majority shareholder is SCOR SE, which owns 59.9% of
share capital. MRM is listed in Compartment C of 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 |
2017 |
2016 |
| Net rental income |
7.8 |
9.5 |
| Operating
expenses |
(2.8) |
(3.2) |
| Provisions
net of reversals |
0.3 |
(0.8) |
| Other
operating income and expense |
(1.4) |
0.6 |
| Operating income before disposals and change in fair
value |
4.0 |
6.1 |
| Net
gains/(losses) on disposal of assets |
(0.0) |
(2.8) |
| Change in
fair value of properties |
(6.4) |
4.3 |
| Operating income |
(2.5) |
7.5 |
| Net cost of
debt |
(1.9) |
(1.9) |
| Other
financial income and expense |
(0.2) |
(0.5) |
| Net income before tax |
(4.6) |
5.1 |
| Tax |
0.0 |
0.0 |
| Consolidated net income |
(4.6) |
5.1 |
Appendix 2: Quarterly rental
income
Consolidated revenues
€m |
Q4 2017 |
Q4
2016 |
Change |
Like-for-like
change1 |
| Retail |
2.22 |
2.31 |
-3.6% |
-4.6% |
| Offices |
0.53 |
0.74 |
-29.0% |
+26.7% |
| Total gross rental income |
2.75 |
3.05 |
-9.8% |
+0.2% |
Appendix 3: Balance sheet
Simplified IFRS balance sheet
€m |
31.12.2017 |
31.12.2016 |
| Investment
properties |
158.5 |
152.8 |
| Assets held
for sale |
41.1 |
45.0 |
| Current
receivables/assets |
7.0 |
8.9 |
| Cash and
cash equivalents |
13.3 |
25.0 |
| Total assets |
219.9 |
231.8 |
|
Equity |
118.0 |
127.4 |
| Financial
debt |
95.3 |
96.0 |
| Other debt
and liabilities |
6.6 |
8.3 |
| Total equity and liabilities |
219.9 |
231.8 |
[1]
Like-for-like. 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] Value
excluding transfer taxes based on valuations issued on 31 December
2017 by JLL, including assets held for sale, which are recognised
in accordance with IFRS 5.
[3] Proposed
payout of premiums subject to approval by shareholders at the
Annual General Meeting to be held on 31 May 2018.
[4] Audit
procedures have been performed and audit reports for MRM SA's
financial statements and the Group's consolidated financial
statements are currently being issued.
[5] Change in
portfolio adjusted for asset sales carried out since 1 January
2017.
[6] Excluding
taxes, rent-free periods and support measures for lessees
[7] Carré
Vélizy is a mixed-use retail and office complex included in the
retail portfolio.
[8] Including
the payment of deferred transfer taxes relating to the acquisition
of Urban in 2007 and eviction compensation to tenants.
[9] Net
operating cash flow = consolidated net income before tax adjusted
for non-cash items.
[10] Payout of
dividends and premiums.
[11] 4,900 sqm
to be built in the Valentin shopping centre and Aria Parc.
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information contained therein.
Source: MRM via Globenewswire
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