MRM: First half 2019 results
Press release
First half 2019 results
- MRM is now a pure-play retail property investment company
- Portfolio value: €163.5m, up 2.6% like-for-like
- Net rental income up 5.5%
- Net operating cash flow up sharply to €1.7m
- Solid financial position
Paris, 26 July 2019: MRM
(Euronext code ISIN FR0000060196), a real estate investment company
specialising in retail property, today announced its results for
the first half of 2019. This publication follows the review and
approval of the half year financial statements by MRM’s Board of
Directors at its meeting on 25 July 2019.
Asset management and rental activity during the
period
Sale of the Urban building
On 30 January 2019, MRM announced the sale
of Urban, an unoccupied 8,000 sqm office building forming part
of the La Croix de Chavaux property development in Montreuil, for
€6.3 million (excluding transfer taxes). This sale marks the
completion of MRM's plan to refocus its portfolio on retail
property initiated in June 2013.
Nova, MRM's last occupied office building, was
sold in May 2018.
Dynamic management of retail
assets
Letting activity was good in the first half of
2019, with 17 new leases or lease renewals signed and
representing an annual rent of €0.9 million. They
included:
- a lease for a 1,200 sqm unit at Aria Parc in
Allonnes;
- six leases in the Valentin shopping centre, which is currently
being redeveloped and extended;
- seven leases for a total of 1,700 sqm of office space in
the Carré Vélizy mixed-use property. The office space
(6,100 sqm) is currently 68% let compared to 51% six months
earlier, while the retail space (5,500 sqm) is still fully
occupied.
The occupancy rate1 for the
entire portfolio space stood at 84% at 1 July 2019, unchanged
from 1 January 2019. The financial occupancy rate rose from
83% at 1 January 2019 to 84% at 1 July 2019. The positive
impact of the arrival of new tenants was offset by two lease
terminations during the first half. Leases signed but not yet
effective at 30 June 2019 represent an increase of
300 bps in the physical occupancy rate and 220 bps in the
financial occupancy rate.
Annualised net rents were
nearly stable at €8.1 million at 1 July 2019 (-0.6%
compared with 1 January 2019). This change mainly reflects the
temporary closure of the Valentin shopping centre Cafeteria
(1,000 sqm) pending its move to a new unit in the centre
extension currently being built. Leases signed but not yet
effective at 30 June 2019 represent additional annualised net
rents of €0.7 million.
Increase in portfolio value on a like-for-like
basis
€m |
30 June 2019 |
31 December 2018 |
Change reported |
Changelike-for-like2 |
Retail |
163.5 |
159.3 |
+2.6% |
+2.6% |
Offices |
- |
5.4 |
-100.0% |
- |
Portfolio value (excl. TT) |
163.5 |
164.7 |
-0.6% |
+2.6% |
At 30 June 2019, the portfolio comprised
only retail assets, the scope of which did not
change during the first half. Its value stood at
€163.5 million at 30 June 2019, up 2.6% compared with
31 December 2018. This growth resulted in part from
investments made in the first half and in part from a moderately
favourable capitalization rate effect on some assets due either to
an improvement of their rental situation or to progress in
investments made during the period.
On a reported basis, i.e. including Urban, MRM's
last remaining office building which was sold in January 2019, the
portfolio value declined slightly by 0.6% compared with
31 December 2018 (€164.7 million).
Investments made during the
first half amounted to €3.0 million, mainly relating to:
- Continued redevelopment/extension works on the Valentin
shopping centre, due for completion in the second quarter of
2020;
- Renovation and repositioning of Galerie du Palais in Tours
during the first half, now renamed Passage du Palais. The customer
pathway has been redesigned and services improved to create a true
city-centre living place that meets the needs of the town's
residents.
Net rental income up 5.5%
€m |
H1 2019 |
H1 2018 |
Change reported |
Changelike-for-like3 |
Retail |
4.6 |
4.3 |
+7.0% |
+7.0% |
Offices |
0.0 |
0.8 |
-100.0% |
- |
Gross rental income |
4.6 |
5.1 |
-9.6% |
+7.0% |
Non-recovered property expenses, of which: |
(1.2) |
(1.8) |
-36.3% |
|
|
(1.1)(0.1) |
(1.3)(0.5) |
-19.4%-82.0% |
|
Net rental income |
3.4 |
3.2 |
+5.5% |
|
Revenues for first half 2019 correspond entirely
to gross rental income from retail assets that
increased by 7.0% to €4.6 million. Growth was driven mainly by
the impact of new effective leases, including the high street store
in Reims. Rent indexation also had a positive albeit moderate
impact.
Reported gross rental income fell by 9.6%
compared with first half 2018, which included €0.8 million of
rent from the Nova office building until 15 May 2018,
when it was sold.
The significant 36.3% decline in non-recovered
property expenses in first half 2019 compared with same period last
year was due to:
- The favourable impact of the sale of Urban, which was vacant,
and Nova, which was 80% occupied;
- Retail lettings and work on reducing property expenses on some
retail assets.
All in all, the decrease in non-recovered
property expenses more than offset the decline in reported gross
rental income. Consequently, net rental income
rose by 5.5% to €3.4 million versus €3.2 million the
previous year.
Net operating cash flow4 up
49%
€m |
H1 2019 |
H1 2018 |
Change |
Net rental income |
3.4 |
3.2 |
+5.5% |
Operating expenses |
(1.3) |
(1.4) |
-9.7% |
Other operating income and expenses |
0.2 |
0.2 |
-2.9% |
EBITDA |
2.3 |
2.0 |
+16.0% |
Net cost of debt |
(0.6) |
(0.8) |
-27.7% |
Net operating cash flow |
1.7 |
1.1 |
+49.0% |
EBITDA amounted to
€2.3 million in first half 2019 compared with
€2.0 million in first half 2018, an increase of 16.0% driven
partly by growth in net rental income and partly by a reduction in
operating expenses.
Net cost of debt decreased to €0.6 million
compared with €0.8 million in first half 2018, reflecting the
reduction in debt following the sale of Nova.
Consequently, net operating cash
flow rose sharply by 49.0% to €1.7 million compared
with €1.1 million in first half 2018.
Positive operating income and net income
Operating expenses decreased by 9.7% in first
half 2019. Recognition of non-recurring lease penalties, which made
up the bulk of the €1.6 million positive net balance of other
operating income and expenses, was offset by the write-down of the
corresponding receivable.
All in all, the reduction in operating expenses
combined with growth in net rental income led to a sharp 29.9%
increase in operating income before asset sales and change
in fair value.
After deducting investments during the period,
the rise in appraisal values resulted in a positive change in the
portfolio fair value of €1.2 million compared with a negative
change in first half 2018.
Net financial expense amounted to
€0.7 million compared with €1.1 million in first half
2018.
Consequently, consolidated net
income for first half 2019 came to a €2.4 million
profit compared with a loss of €4.9 million in the same period
the previous year.
The simplified income statement is attached in
an appendix.
Solid financial position
Gross debt stood at
€73.2 million at 30 June 2019 compared with
€74.1 million at 31 December 2018. No significant loan
repayments fall due before end 2021. At 30 June 2019, 85% of
debt was fixed-rate, with an average cost of debt down 19 bps
(156 bps in first half 2019 compared with 175 bps in
first half 2018).
Cash and cash equivalents at end-June 2019
amounted to €11.9 million compared with €13.5 million at
31 December 2018. The net LTV ratio was 37.5% compared with
36.8% six months earlier.
MRM has an available credit line of
€6.3 million for partial financing of capital expenditure.
Taking into account the dividend5 paid in first
half 2019 in respect of financial year 2018 (€4.8 million),
net operating cash flow generated during the first half
(€1.4 million) and the positive change in fair value of the
portfolio (€1.2 million), EPRA NNNAV came to
€100.2 million compared with €102.7 million at
end-December 2018 (see table in appendix).
Outlook
MRM is carrying on the final phase of its
€35.5 million investment plan initiated in 2016 and devoted to
seven of its nine retail property lines. All the renovation and
extension programmes have been committed on a staged basis. Five
have already been completed (Halles du Beffroi in Amiens, Sud Canal
in Saint-Quentin-en-Yvelines, Carré Vélizy in Vélizy-Villacoublay,
Aria Parc in Allonnes and Passage du Palais in Tours). At
30 June 2019, investments remaining to be paid totalled
€12.4 million.
All in all, out of the 6,900 sqm of
additional space that are part of the investment plan,
4,300 sqm have already been built or acquired, bringing MRM's
total retail portfolio6 to 85,000 sqm at end-June 2019.
At 30 June 2019, the works that have yet to
be carried out include:
- Completion of the 1,000 sqm redevelopment and
2,600 sqm extension of the Valentin shopping centre, MRM's
biggest investment programme, the shell units being due to be
delivered to the lessees in the second quarter of 2020 for public
opening in the third quarter of 2020;
- The smaller redevelopment program on the ground floor of
Passage de la Réunion in Mulhouse.
The investment programme is due to be completed
at the end of first half 2020. Beyond then, MRM will pursue
letting, re-letting and tenant rotation activities, confirming its
target of total annualised net rents in excess of €10 million,
based on an assumed physical occupancy rate of 95%. This target is
based on the current portfolio excluding acquisitions and
disposals.
Calendar
Third quarter 2019 revenues will be published on
8 November 2019 before market opening.
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:
MRM5, avenue Kléber75795 Paris Cedex 16FranceT +33
(0)1 58 44 70 00relation_finances@mrminvest.com |
Isabelle Laurent,
OPRG FinancialT +33 (0)1 53 32 61 51M +33 (0)6 42
37 54
17isabelle.laurent@oprgfinancial.fr |
Website: www.mrminvest.com
Appendix 1: Second quarter 2019 rental
income
€m |
Q2 2019 |
Q2 2018 |
Change |
Change like-for-like3 |
Retail |
2.30 |
2.14 |
+7.4% |
+7.4% |
Offices |
- |
0.26 |
-100.0% |
- |
Total gross rental income |
2.30 |
2.40 |
-4.2% |
+7.4% |
Appendix 2: Simplified IFRS income
statement
€m |
H1 2019 |
H1 2018 |
Change |
Net rental income |
3.4 |
3.2 |
+5.5% |
Operating expenses |
(1.3) |
(1.4) |
-9.7% |
Provisions net of reversals |
(1.7) |
(0.4) |
|
Other operating income and expenses |
1.6 |
0.2 |
|
Operating income before disposals and change in fair
value |
2.0 |
1.6 |
+29.9% |
Net gains/(losses) on disposal of assets |
(0.0) |
(0.1) |
|
Change in fair value of properties |
1.2 |
(5.2) |
|
Operating income |
3.1 |
(3.8) |
|
Net cost of debt |
(0.6) |
(0.8) |
-27.7% |
Other financial income and expense |
(0.1) |
(0.3) |
|
Net income before tax |
2.4 |
(4.9) |
|
Tax |
- |
- |
|
Consolidated net income |
2.4 |
(4.9) |
|
Appendix 3: Simplified IFRS balance sheet
€m |
30 June 2019 |
31 December 2018 |
Investment properties |
163.3 |
159.1 |
Assets held for sale |
0.2 |
5.7 |
Current receivables and other assets |
8.7 |
6.3 |
Cash and cash equivalents |
11.9 |
13.5 |
Total assets |
184.1 |
184.6 |
Equity |
100.2 |
102.7 |
Bank debt |
73.2 |
74.1 |
Other debt and liabilities |
10.7 |
7.8 |
Total equity and liabilities |
184.1 |
184.6 |
Appendix 4: Net Asset Value
|
30 June 2019 |
31 December 2018 |
Total€m |
Per share€ |
Total€m |
Per share€ |
EPRA NNNAV |
100.2 |
2.30 |
102.7 |
2.35 |
Replacement NAV |
111.1 |
2.55 |
113.4 |
2.60 |
Number of shares (adjusted for treasury stock) |
43,604,110 |
43,597,305 |
1 Calculated on the basis of total lots including those held
strategically vacant2 Adjusted for the asset sale in first half
20193 The change in revenues is 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.
4 Net operating cash flow = consolidated net
income before tax adjusted for non-cash items.5 Distribution of
premiums6 Plus 1,000 sqm temporarily closed in the Valentin
shopping centre pending completion of the Redevelopment stage of
this project.
- MRM - CP Résultats H1 2019 EN
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