Press release
2018 full-year results
-
Refocusing on retail properties
complete
-
Portfolio value: €164.7m, up
1.5% like-for-like
-
Increase in net operating cash
flow to €2.4m
-
Annualised net rents from
retail properties up 11% at €8.2m
-
Solid progress in the
investment plan
-
Sound financial
situation
-
Proposed payout[1] of €0.11
per share
Paris,
22 February 2019: MRM (Euronext code ISIN FR0000060196), a
real estate investment company specialising in retail property,
today announced its results for the financial year ended
31 December 2018. This publication follows the review and
approval of the audited financial statements[2] by
MRM's Board of Directors at its meeting of 21 February
2019.
Asset management and rental
activity during the year
Sale of the Nova
office building
On 15 May 2018, MRM sold
Nova, the last office building in operation. Located in La
Garenne-Colombes, on the outskirts of La Défense, this
10,600 sqm multi-tenant building was sold for €38 million
(excluding transfer taxes) with an occupancy rate of 81%. Following
this asset sale, as at 31 December 2018, MRM's office property
portfolio comprised only Urban, a vacant building under sale
agreement (since sold, see "Subsequent events").
Dynamic
management of retail assets
Letting activity was very robust
in 2018: 26 contracts (new leases or renewals) were signed,
representing annual rental income of €1.7 million. Of these
leases, 10 concern the Valentin shopping centre, for which
redevelopment /extension works are in progress.
During the period, a number of
attractive new retailers opened their doors to the public at MRM's
shopping centres. These include in particular Basic-Fit, LDLC.com, Le Grand
Bazar, Maxizoo, Optical Center and
V&B. A total of 22 leases representing
total annual rent of €1.5 million came into effect on a
staggered basis over the year. This includes the reletting of three
medium-sized units and the coming into force of the lease for the
new retail space created at Aria Parc in Allonnes.
Strong letting progress over the
year resulted in a sharp increase in the occupancy rate to 84% at
1 January 2019 compared with 76% at 1 January 2018. As a
result, annualised net rents rose by 11% to €8.2 million at
1 January 2019 compared with €7.4 million at
1 January 2018.
Portfolio of €165 million at
31 December 2018
The value of MRM's portfolio was €164.7 million at
31 December 2018, down 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[3], the
value of the portfolio rose by 1.5%.
The value of retail properties was €159.3 million at
31 December 2018, up 0.2% 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 0.4%.
Investments made in 2018 reached
€14.5 million, relating to the two largest projects included
in MRM's retail properties value-enhancement plan. These are:
-
The partial redevelopment and 2,600 sqm
extension of the Valentin shopping centre near Besançon, due to be
opened to the public in early 2020;
-
The 2,300 sqm extension programme at Aria
Parc in Allonnes to create a 3,300 sqm medium-sized unit that
was taken up by Maison Dépôt in October
2018.
Rental income
| €m |
2018 |
2017 |
Change reported |
Change
like-for-like[4] |
| Retail |
8.7 |
9.0 |
-3.0% |
-3.5% |
|
Offices |
0.8 |
2.2 |
-64.0% |
+2.5% |
| Gross rental income |
9.5 |
11.2 |
-14.9% |
-3.0% |
|
Non-recovered property expenses |
(2.9) |
(3.4) |
-15.1% |
|
| Net rental income |
6.7 |
7.8 |
-14.8% |
|
Gross rental
income in 2018 totalled €9.5 million, down 14.9% relative
to 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 3.0%.
Gross rental income from retail properties came to €8.7 million in 2018.
This 3.0% fall relative to the previous year results primarily to
the vacating of three medium-sized 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), only partly offset by new leases, which came into effect
on a staggered basis in the course of 2018.
Office rental
income reflects rents of the Nova building until 15 May 2018,
when the property was sold.
Non-recovered property expenses
decreased further in 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 €6.7 million in 2018 compared with
€7.8 million in 2017, generated entirely by retail properties.
Taking account of the sale of Nova in May 2018 and the amount of
non-recovered expenses relating to Urban, net rental income from
offices was zero in 2018.
Sharp increase in net operating
cash flow[5]
|
€m |
2018 |
2017 |
Change (reported) |
| Net rental income |
6.7 |
7.8 |
-14.8% |
| Operating
expenses |
(2.5) |
(2.8) |
-11.0% |
| Other
operating income and expense |
(0.3) |
(1.4) |
|
| EBITDA |
3.9 |
3.6 |
+7.2% |
| Net cost
of debt |
(1.5) |
(1.9) |
-21.4% |
| Net operating cash flow |
2.4 |
1.7 |
+38.5% |
EBITDA increased to
€3.9 million compared with €3.6 million in 2017, despite
the decline in net rental income. This growth is due to the
reduction in operating expenses and a lower level of non-recurring
expenses in 2018 relative to 2017.
Net cost of debt decreased to
€1.5 million compared with €1.9 million in 2017 as a
result of the reduction in debt following the sale of Nova (see
"Solid financial position" below).
Consequently, net operating cash
flow increased significantly to €2.4 million compared with
€1.7 million in 2017.
Impact of change in fair value on
net income
While MRM benefited from net
reversals of provisions of €0.3 million in 2017, charges net
of reversals totalled €0.2 million in 2018, leading to an
operating profit before asset sales and change in fair value of
€3.7 million in 2018 compared with €4.0 million in
2017.
The amount of investments during
the period being offset by higher yields and lower market rental
values applied by experts for the year end appraisal, MRM recorded
a negative change in the fair value of its portfolio of
€12.1 million.
Consequently, despite a
significant reduction in net cost of debt, MRM posted a
consolidated net loss of €10.4 million in 2018, compared with
a loss of €4.6 million in 2017.
The simplified income statement is
attached in an appendix.
Solid financial position
Gross debt decreased from
€95.3 million at 31 December 2017 to €74.1 million
at 31 December 2018. This significant reduction was due to the
repayment of the €22.0 million loan from SCOR following the
sale of the Nova building.
As a result, and taking account of
drawings in the amount of €3.4 million on a credit facility
dedicated to financing the retail value-enhancement plan, no
significant loan repayments are due before the end of 2021.
Furthermore, at 31 December 2018, 85% of debt was at fixed
rates, with an average cost of debt down 168 bp in 2018.
At the end of December 2018, MRM
had cash and cash equivalents of €13.5 million compared with
€13.3 million at 31 December 2017.
Net debt therefore stood at
€60.6 million at 31 December 2018 compared with
€81.9 million at 31 December 2017. The LTV ratio was
36.8% compared with 41.0% a year earlier.
Taking into account the
dividend[6] paid in
2018 in respect of the 2017 financial year (€4.8 million), the
net operating cash flow generated during the year
(€2.4 million) and the negative change in the fair value of
properties (-€12.1 million), EPRA NNNAV was
€102.7 million compared with €118.0 million at
31 December 2017.
Net Asset Value |
31.12.2018 |
31.12.2017 |
Total
€m |
Per share
€ |
Total
€m |
Per share
€ |
| EPRA NNNAV |
102.7 |
2.35 |
118.0 |
2.70 |
| Replacement NAV |
113.4 |
2.60 |
133.2 |
3.05 |
Number of shares
(adjusted for treasury stock) |
43,597,305 |
43,632,801 |
Subsequent
events
On 30 January 2019, MRM
announced the sale of Urban, an unoccupied 8,000 sqm office
building in Montreuil, for €6.35 million. This transaction
marks the completion of the disposition plan initiated in June 2013
and aiming at refocusing MRM's portfolio on retail properties.
This transaction brought the total
cumulative sales of office property by MRM since mid-June 2013 to
€132 million, an amount which is 9.8% above appraisal values as at
30 June 2013 plus CAPEX.
Proposed
payout
MRM's Board of Directors has
decided to propose the payment of premiums of €0.11 per share in
respect of the 2018 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 29 May 2019.
The intended coupon date will be 5 June 2019 and payment will
be made on 7 June 2019.
Outlook
In 2019, MRM will complete the
rollout of the investment plan dedicated to its retail portfolio,
concerning seven of the nine properties in the portfolio.
During 2018, MRM committed a total
of €21.0 million in investment corresponding primarily to the
launch of its largest project, the redevelopment/extension of the
Valentin shopping centre, as well as the extension of a vacant lot
with a view to creating a medium-sized unit within Aria Parc in
Allonnes. This was taken up in October 2018 by Maison Dépôt, which has not yet opened its doors to the
public.
At end-December 2018, a total of
€34 million of investment was committed in respect of the
retail property value-enhancement plan, while the total investment
budget is estimated at €35.5 million over the period from
2016-2019. Four projects have already been completed (Les Halles du
Beffroi in Amiens, Sud Canal in Saint-Quentin-en-Yvelines, Carré
Vélizy in Vélizy-Villacoublay and Aria Parc in Allonnes). In total,
out of the 6,900 sqm projected additional space,
4,300 sqm has already been built, bringing the size of MRM's
total retail portfolio to 86,400 sqm at the end of December
2018.
2019 will be dedicated to the
continuation of works at the Valentin shopping centre with a view
to opening the extension to the public in early 2020, as well as
two smaller programmes concerning the refurbishment of La Galerie
du Palais in Tours and the redevelopment of the ground floor of Le
Passage de la Réunion in Mulhouse.
Taking account new space currently
being created and assuming a retail portfolio occupancy rate of
95%, MRM confirms its target of total annualised net rents of over
€10 million on completion of the value-enhancement plan,
scheduled for early 2020 (excluding acquisitions or asset
sales).
Composition of the Board of
Directors
At its meeting of 21 February
2019, MRM's Board of directors co-opted Valérie Ohannessian to
replace Gérard Aubert, who died on 30 December 2018. This
co-opting follows that of Gilles Castiel, decided by the Board of
directors during its meeting of 6 December 2018, to replace
Jean Guitton, who resigned as Board member following his
retirement. Valérie Ohannessian and Gilles Castiel have both joined
the Audit Committee.
As at 21 February 2019, the
Board of Directors therefore consisted of six members, including
two independent members, as follows:
-
François de Varenne, Chairman of the Board of
Directors
-
Jacques Blanchard, Chief Executive Officer and
Board member
-
Brigitte Gauthier-Darcet, independent Board
member
-
Valérie Ohannessian, independent Board
member
-
Gilles Castiel, Board Member
-
SCOR SE, Board member represented by Karina
Lelièvre
The co-opting of Valérie
Ohannessian and of Gilles Castiel will be proposed to shareholders
for ratification at the Annual General Meeting to be held on
29 May 2019.
Calendar
Revenues for the first quarter of
2019 are due on 10 May 2019 before market opening. The general
shareholders' meeting to approve the financial statements for 2018
will be held on 29 May 2019.
About MRM
MRM is a listed real estate
investment company that owns and manages a portfolio 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 |
2018 |
2017 |
| Net rental income |
6.7 |
7.8 |
| Operating
expenses |
(2.5) |
(2.8) |
| Provisions
net of reversals |
(0.2) |
0.3 |
| Other
operating income and expense |
(0.3) |
(1.4) |
| Operating income before disposals and change in fair
value |
3.7 |
4.0 |
| Net
gains/(losses) on disposal of assets |
(0.1) |
(0.0) |
| Change in
fair value of properties |
(12.1) |
(6.4) |
| Operating income |
(8.5) |
(2.5) |
| Net cost of
debt |
(1.5) |
(1.9) |
| Other
financial income and expense |
(0.4) |
(0.2) |
| Net income before tax |
(10.4) |
(4.6) |
| Tax |
0.0 |
0.0 |
| Consolidated net income |
(10.4) |
(4.6) |
Appendix 2: Quarterly rental
income
| €m |
Q4 2018 |
Q4
2017 |
Change |
Change
like-for-like4 |
| Retail |
2.29 |
2.22 |
+4.9% |
+2.9% |
| Offices |
- |
0.53 |
- |
- |
| Total gross rental income |
2.29 |
2.75 |
+4.9% |
+2.9% |
Appendix 3: Balance sheet
Simplified IFRS balance sheet
€m |
31.12.2018 |
31.12.2017 |
| Investment
properties |
159.1 |
158.5 |
| Assets held
for sale |
5.7 |
41.1 |
| Current
receivables/assets |
6.3 |
7.0 |
| Cash and
cash equivalents |
13.5 |
13.3 |
| Total assets |
184.6 |
219.9 |
|
Equity |
102.7 |
118.0 |
| Financial
debt |
74.1 |
95.3 |
| Other debt
and liabilities |
7.8 |
6.6 |
| Total equity and liabilities |
184.6 |
219.9 |
[1] Proposed
payout of premiums subject to approval by shareholders at the
Annual General Meeting to be held on 29 May 2019.
[2] 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.
[3] Development
of the portfolio adjusted for asset sales carried out in 2018.
[4] 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.
[5] Net
operating cash flow = consolidated net income before tax adjusted
for non-cash items.
[6]
Distribution of premiums.
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responsible for the content, accuracy and originality of the
information contained therein.
Source: MRM via Globenewswire
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