News Release
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Jul 31,2015
First half 2015 results
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. Gross rental income up 7.7% on a like-for-like basis1
Paris, 31 July 2015: - MRM (Euronext code ISIN FR0000060196), a real estate company specialising in retail and office property, announced today its results for the first half of 2015. This publication followed the review and approval of the audited3 financial statements by MRM’s Board of Directors at its meeting of 30 July 2015. Application of the IFRIC 214 accounting standard to consolidated accounts for the first half of 2015 resulted in the Group making a pro forma restatement of accounts for the first half of 2014. Percent changes in this release have been calculated by comparing half-year 2015 accounts with half-year 2014 pro forma accounts. The application of IFRIC 21 will not impact the full-year consolidated accounts.
Asset portfolio of €220.3m at end-June 2015 The value5 of MRM’s asset portfolio was €220.3m at 30 June 2015, from €232.2m at 31 December 2014. This change reflected in particular a further disposal of an office building, the Plaza in the 12th arrondissement of Paris, for €16.8m (excluding transfer taxes). Restated for the effect of this disposal, the value of the asset portfolio rose by 2.0%. During the first half, investments totalled €2.1m and the fair value of the asset portfolio increased by €2.2m relative to 31 December 2014. 1Revenues 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.
Retail The value5 of the retail portfolio was virtually unchanged relative to end-December 2014, reflecting the overall stability of the rental situation and incorporating the launch of the restructuring plan at Les Halles in Amiens. Over the course of the first half, seven new leases or lease renewals were signed, representing annual rent of €0.3m. At 1 July 2015, the occupancy rate of the retail portfolio was 84%, from 83% six months earlier. At 1 July 2015, the annualised net rental income for the retail assets was €8.3m, the same level as at 1 January 2015. Offices The total value5 of the office portfolio rose by 6.4% on a like-for-like basis6 compared with end-December 2014. This reflected progress in letting of certain buildings which are still partially vacant, together with the execution of renovation investment for two buildings. Over the course of the first half, nine leases were signed, corresponding to €1.2m in annual rent. Three of these leases covered a total floor area of 7,250 sqm at Cap Cergy in Cergy-Pontoise. These leases will come into effect from the first quarter of 2016, taking the occupancy rate of this building from 27% at present to 85%. Another lease concerned Nova in La Garenne-Colombes. This will also come into effect in early 2016 and will boost the occupancy rate of this building to 72%. Given the start date of these leases and the disposal of Plaza, which had an occupancy rate of 85%, the occupancy rate of the office assets in operation fell slightly to 52% at 1 July 2015, from 54% at 1 January 2015. The marketing of available floor space in renovated and restructured buildings continues. At 1 July 2015, the annualised net rental income for the office buildings in operation was €3.2m. 6Adjusted for disposals made in the first half of 2015. Increased rental income and positive net income over the first half of 2015
Gross rental income from retail properties and offices grew by 3.1% and 18.9% respectively compared to the first half of 2014, the significant growth in office rental income being explained by the entry into force of new leases. On a reported basis, gross rental income fell by 20.4%, due to disposals of office properties since 1 January 2014. Overall revenues were 5.9% lower, at €7.0m, but rose by 7.7% on a like-for-like basis1. A further reduction in non-recovered property expenses4 (down -7.8% relative to the first half of 2014) helped limit the fall in net rental income to 4.8%, taking it to €4.6m. Current operating income was €2.4 million, 4.7% lower than the first half of 2014. Given the €2.2m increase in the fair value of the asset portfolio and the €0.5m reduction in financial costs, MRM’s net income was positive at €3.0m, compared to a loss of €6.7m in the first half of 2014. Increase in net operating cash flow
The €0.4m reduction in operating expenses to €1.8m (-15.4%) was due primarily to the introduction of a new structure for the asset management of retail properties. This resulted in a reduction in the scope of action of CBRE Global Investors and also by an expansion of the mission entrusted to the property managers and MRM’s recruitment of a Head of Asset Management. These two factors have not yet had an effect on the financial statements. Gross operating income increased slightly to €2.7m, from €2.6m in the first half of 2014. The net cost of debt continued to fall, reaching €1.2m (-13.1%). MRM thus generated net operating cash flow of €1.5m, from €1.2m in the first half of 2014.
MRM’s solid balance sheet With cash and cash equivalents of €20.1m at end-June 2015, MRM reduced its net debt by 15.8% relative to end-December 2014, to €91.9m. The net LTV ratio, which stood at 47.0% at 31 December 2014 improved further over the first half, to 41.7% at 30 June 2015. Given the dividend7 paid against 2014 results (€4.4m), the net operating cash flow in the first half (€1.5m) and the increase in fair value of the asset portfolio (€2.2m), the liquidation NAV decreased slightly to €122.3m at 30 June 2015, from €123.7m at 31 December 2014.
Outlook Since June 2013, MRM has undertaken a strategy of gradually refocusing on its retail property business. The further sale of an office property in the first half of 2015 brings the number of disposals of the nine office properties owned by MRM in June 2013 to four. One further office property is currently under sale agreement. With its solid financial structure, MRM seeks to exploit the potential for enhancing the value of its retail assets. Following the work done in order to adjust the value-enhancement plans, in the first half the Group launched a first programme for the Les Halles shopping mall in Amiens. Of a total of €27.5m in forecast investment identified for the retail properties, €8.5m is likely to be committed over the next twelve months.
Calendar Revenues for the third quarter of 2015 are due on 5 November 2015 before market opening. 7Distribution of reserves and premiums.
About MRM MRM is a listed real estate company with a portfolio worth €220.3 million (excluding transfer taxes) as at 30 June 2015, comprising retail properties (65%) and offices (35%). 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) and opted for the SIIC status on 1 January 2008.
For more information:
Appendix 1: Simplified IFRS income statement
Appendix 2: Quarterly rental income
Appendix 3: Balance sheet at 30 June 2015
Appendix 4: Asset sales since 1 January 2013
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