Press release
First half 2018 results
-
Portfolio[1]
value: €162.6m after sale of the Nova office
building marking the end of refocusing on retail
properties
-
Increase in net operating cash
flow to €1.1m
-
Annualised net
rents[2]: €8.3m, up 12%
-
Launch of 2 shopping centre
extension projects
-
Confirmation of
target[3] of annualised net rents over €10m post completion of the
value-enhancement plan, scheduled for late 2019
Paris,
27 July 2018: MRM (Euronext code ISIN FR0000060196), a
real estate company specialising in retail property, today
announced its half-year results as of June 30, 2018. This
publication follows the review and approval of the half-year
financial statements[4] by MRM's
Board of Directors at its meeting of 26 July 2018.
Asset management and letting
activity in the 1st half of the year
Sale of the Nova
office building
On 15 May 2018, MRM sold the Nova
office building in La Garenne-Colombes on the outskirts of La
Défense for €38 million (excluding transfer taxes). Representing a
total floor area of 10,600 sqm, this multi-tenant building was sold
with an occupancy rate of 81%.
This sale of MRM's last office
building in operation marks the end of the process initiated in
2013 of gradually refocusing its real estate investment business on
the ownership and management of retail properties. This brings the
total proceeds of office property sales carried out by MRM since
this date to €126 million (excluding transfer taxes).
Following this asset sale, the
Office category within MRM's property portfolio now comprises only
Urban, a vacant building due to be sold as it stands.
Solid progress in
letting operations during the 1st half of the
year
Regarding letting activity during
the first half of the year, nine leases (new leases or renewals)
were signed, representing an annual rent of €0.8 million.
Ten leases came into effect during
the same period, corresponding in particular to the reletting of a
several mid-size units: Le Grand Bazar took over the 2,800 sqm
high-street unit in Reims, Basic-Fit opened a 1,275 sqm store at
Les Halles du Beffroi in Amiens, and retailers V&B and MaxiZoo
now occupy 1,400 sqm within Aria Parc in Allonnes. These leases
took effect on a staggered basis between February and the end of
June 2018.
Good progress of letting activity
in the first half of the year resulted in a sharp increase in the
occupancy rate to 83% at 1 July 2018 compared with 76% at 1 January
2018. As a result, annualised net rents2 rose by 12%
to €8.3 million at 1 July 2018 compared with €7.4 million at 1
January 2018.
Asset portfolio of
€162.6 million at end-June 2018
The value of MRM's portfolio was €162.6 million at 30 June 2018,
down 18.5% compared with €199.6 million at 31 December 2017. This
fall is due to the sale of the Nova building in May 2018. On a
like-for-like basis[5], the value
of the portfolio rose by 0.2%, reflecting the slight increase in
value of retail properties.
The value of retail properties, which was €159.5 million at 30 June
2018, rose by 0.4% compared with €159.0 million at end-December
2017. On a like-for-like basis, i.e. adjusted for the sale of the
freehold of a garden centre during the period, this represents an
increase of 0.5%.
Investments over the first half of
the year totalled €5.5 million, corresponding to the launch of the
two largest projects still to be committed. This concerns:
-
The partial redevelopment and 2,600 sqm
extension of the Valentin shopping centre near Besançon, due to be
completed at the end of 2019;
-
The 2,300 sqm extension programme at Aria Parc
in Allonnes to create a mid-size store to be taken up by Maison
Dépôt at the end of 2018.
Rental income and net
income
Consolidated revenues
€m |
H1 2018 |
H1 2017 |
Change (reported) |
Change
like-for-like[6] |
| €m |
€m |
| Retail |
4.3 |
4.5 |
-5.9% |
-6.9% |
|
Offices |
0.8 |
1.1 |
-30.4% |
+2.5% |
| Gross rental income |
5.1 |
5.7 |
-10.8% |
-5.6% |
|
Non-recovered property expenses |
(1.8) |
(2.1) |
-12.7% |
|
| Net rental income |
3.2 |
3.6 |
-9.7% |
|
Gross rental income for the first
half of the year totalled €5.1 million, down 10.8% relative to the
first half of 2017, mainly due to the sale of the Nova building
during the period (15 May 2018) and the temporary drop in the
retail occupancy rate. On a like-for-like basis, gross rental
income fell by 5.6%.
Gross rental income from retail
properties came to €4.3 million in the first half of 2018. This
5.9% fall relative to the year-earlier period was due to:
. The negative
effect of the vacating of three mid-size units representing a total
of 6,000 sqm (termination notices received in 2017 for the Reims
property, Aria Parc in Allonnes and Les Halles du Beffroi in
Amiens). Leases were signed during the first half of the year for
two of these units , but because of the date they take effect, the
impact on rental income for the period was only partial;
. The positive impact
of leases corresponding in particular to the 1,050 sqm of retail
space created within Carré Vélizy (taking effect in the second half
of 2017) and the 1,000 sqm units let to Freeness since end-2017 by
Freeness at Le Passage de la Réunion in Mulhouse;
. Rent paid by
the tenant of the 1,500 sqm unit acquired in June 2017 within Aria
Parc. Not taking account of this acquisition, revenues for the
retail property portfolio fell by 6.9% like-for-like compared with
the first half of 2017.
Office rental income reflects
rents received from tenants of the Nova building until 15 May 2018,
when the property was sold.
Non-recovered property expenses
decreased further in the first half of 2018, benefiting from the
lower vacancy rate for retail properties, cost-cutting efforts and
the higher occupancy rate for Nova.
Net rental income came to €3.2
million compared with €3.6 million in the first half of 2017.
Operating expenses fell sharply,
mainly thanks to the end of the CBRE Global Investors contract in
the third quarter of 2017, down 18.6% at €1.4 million. While MRM
benefited from net reversals of provisions of €0.5 million in the
first half of 2017, provisions net of reversals totalled €0.4
million in the first half of 2018.
Meanwhile, other operating income
and expense increased from -€1.1 million[7] to +€0.2
million. As a result, operating income before asset sales and
change in fair value increased to €1.6 million compared with €1.2
million a year earlier.
Including investments for the
period and taking account of the higher yield applied by expert
appraisers at the end of the first half of the year, MRM recorded a
negative change in the fair value of its portfolio of €5.2
million.
Consequently, despite an 11.9%
reduction in cost of net debt, MRM posted a consolidated net loss
of €4.9 million for the first half of 2018, compared with a loss of
€2.6 million in the first half of 2017.
The simplified income statement is
attached in an appendix.
Increase in net operating cash
flow
Net operating cash flow [8]
€m
|
H1 2018 |
H1
2017 |
| Net rental income |
3.2 |
3.6 |
| Operating
expenses |
(1.4) |
(1.8) |
| Other
operating income and expense |
0.2 |
(1.1) |
| EBITDA |
2.0 |
0.7 |
| Net cost
of debt |
(0.8) |
(1.0) |
| Net operating cash flow |
1.1 |
(0.3) |
EBITDA rose from €0.7 million in
the first half of 2017 to €2.0 million in the first half of 2018
despite the decline in net rental income. This improvement was
thanks to lower operating expenses and the recognition of a net
amount of €0.2 million in other operating income, compared with a
net amount of €1.1 million in other operating expenses7
that affected the financial statements for the first half of
2017.
Net cost of debt decreased to €0.8
million from €1.0 million in the first half of 2017.
Consequently, net operating cash
flow was €1.1 million compared with -€0.3 million in the first half
of 2017. Adjusted for non-recurring items, net operating cash flow
was also up at €1.0 million in the first half of 2018 compared
with €0.8 million in the first half of 2017.
Solid financial position
Gross financial debt decreased
from €95.3 million at 31 December 2017 to €72.3 million at 30 June
2018. This significant reduction was due to the repayment of the
€22.0 million loan from SCOR following the sale of the Nova
building.
Consequently, and taking account
of the refinancing operations carried out by MRM in the fourth
quarter of 2017, no significant loan repayments are due before the
end of 2021.
At the end of June 2018, MRM had
cash and cash equivalents of €18.5 million compared with €13.3
million at 31 December 2017.
Net debt therefore stood at €53.8
million at 30 June 2018 compared with €81.9 million at
31 December 2017. The net LTV ratio was 33.1% compared with
41.0% six months earlier.
As a result in particular of the
dividend[9] paid in
respect of 2017 (€4.8 million), net operating cash flow generated
during the year (€1.1 million) and the change in the fair value of
properties (-€5.2 million), EPRA NNNAV was €108.2 million, down
8.3% relative to 31 December 2017 (€118.0 million). Adjusted
for the dividend payout in respect of 2017, EPRA NNNAV fell by
4.4%
Net asset value |
30.06.2018 |
31.12.2017 |
Total
€m |
Per share
€ |
Total
€m |
Per share
€ |
| EPRA NNNAV |
108.2 |
2.48 |
118.0 |
2.70 |
| Replacement NAV |
119.4 |
2.74 |
133.2 |
3.05 |
Number of shares
(adjusted for treasury stock) |
43,617,801 |
43,632,801 |
Outlook
MRM is continuing to carry on the
investment plan dedicated to its retail portfolio. This plan, which
concerns seven of the nine retail properties in the portfolio,
includes a total of 6,900 sqm of additional space, of which
2,000 sqm has already been completed.
Three programmes have already been
completed: the refurbishment 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.
During the first half of the year,
MRM committed a total of €20.4 million in investment corresponding
primarily to extension projects at the Valentin shopping centre and
Aria Parc in Allonnes, which will result in the creation of a total
of 4,900 sqm of additional space, representing a 6% increase in the
total space at end-June 2018 of the retail property portfolio
(84,000 sqm). MRM also launched the more modest renovation
project at La Galerie du Palais in Tours. At end-June 2018, a total
of €34 million was committed in respect of the value-enhancement
plan, while the total investment budget is still estimated at €35
million over the 2016-2019 period.
Taking account rents on additional
space and assuming a retail portfolio occupancy rate of 95%, MRM
confirms its target of total annualised net rents2 of over
€10 million at the end of the value-enhancement plan, scheduled for
late 2019 (excluding acquisitions or asset sales).
Calendar
Revenues for the third quarter of
2018 are due out on 9 November 2018 before market opening.
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 |
H1 2018 |
H1 2017 |
| Net rental income |
3.2 |
3.6 |
| Operating
expenses |
(1.4) |
(1.8) |
| Provisions
net of reversals |
(0.4) |
0.5 |
| Other
operating income and expense |
0.2 |
(1.1) |
Operating income before disposals and
change in fair value of properties |
1.6 |
1.2 |
| Net
gains/(losses) on disposals of assets |
(0.1) |
0.0 |
| Change in
fair value of properties |
(5.2) |
(2.7) |
| Operating income |
(3.8) |
(1.5) |
| Net cost of
debt |
(0.8) |
(1.0) |
| Other
financial income and expense |
(0.3) |
(0.2) |
| Net income before tax |
(4.9) |
(2.6) |
| Income
tax |
0.0 |
0.0 |
| Consolidated net income |
(4.9) |
(2.6) |
Appendix 2: 2018
second-quarter revenues
Consolidated
€m |
Q2 2018 |
Q2
2017 |
Change |
Like-for-like change8 |
| Retail |
2.14 |
2.25 |
-5.1% |
-6.1% |
| Offices |
0.26 |
0.53 |
-51.6% |
0.0% |
| Total gross rental income |
2.40 |
2.79 |
-14.0% |
-5.5% |
Appendix 3: Balance sheet
Simplified IFRS balance sheet
€m |
30.06.2018 |
31.12.2017 |
| Investment
properties |
159.3 |
158.5 |
| Assets held
for sale |
3.3 |
41.1 |
| Current
receivables/assets |
7.5 |
7.0 |
| Cash and
cash equivalents |
18.5 |
13.3 |
| Total Assets |
188.6 |
219.9 |
|
Equity |
108.2 |
118.0 |
| Financial
debt |
72.3 |
95.3 |
| Other debt
and liabilities |
8.1 |
6.6 |
| Total Equity and liabilities |
188.6 |
219.9 |
[1] Value
excluding transfer taxes based on valuations issued on 30 June 2018
by JLL, including assets held for sale, which are recognised in
accordance with IFRS 5.
[2] 12-month
projection of guaranteed minimum rent in place, excluding taxes,
rent-free periods and support measures for lessees.
[3] Taking
account of space currently being created and assuming a retail
portfolio occupancy rate of 95%.
[4] The
financial statements have been subject to a limited review by the
statutory auditors. The statutory auditors' report on financial
information for the first half of 2018 has been issued without any
observations or reservations.
[5] Change in
portfolio adjusted for asset sales carried out since 1 January
2018.
[6] 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.
[7] Including
the payment of deferred registration fees relating to the
acquisition of Urban in 2007 and eviction compensation paid to a
tenant.
[8] Net
operating cash flow = consolidated net income before tax adjusted
for non-cash items.
[9]
Distribution of premiums.
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information contained therein.
Source: MRM via Globenewswire
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