Mas portfolio benefits from value uplifts in New Waverley development and UK government’s 25-year lease

MAS Real Estate Inc, a commercial property investor, developer and operator posted a solid set of results for the year ended 30 June 2017 with its portfolio benefitting from gains of €36.8 million in the value of investment property, driven predominantly by value uplifts from the maturing New Waverley development and the value of the 25-year lease with the UK government.

Mas which is listed on the main board of the Johannesburg Stock Exchange and the Euro-MTF market of the Luxembourg Stock Exchange today reported an increase of 86% in passing rent, 91% in the income-generating portfolio and a 30% year on year increase in the distribution per share, from 4.50 to 5.85 euro cents for the year ended 30 June 2017.

The company’s results show distribution is underpinned by the increase in distributable earnings and strong pipeline of investments and developments.

This resulted in an increase in the adjusted NAV per share of 10% to 126.5 euro cents per share, despite the continued currency headwinds of a weakening sterling.

“The group has had an exceptional year. We have doubled our income-generating property portfolio in the year, in turn driving up rental income and earnings.”

“The successful CEE acquisitions made include the Nova Park Shopping Mall in Poland and the Galleria Portfolio in Bulgaria. Our 146-room Adagio hotel at New Waverley in Edinburgh completed in 2016 and we are excited about the successful conclusion of the 25-year lease agreement with the UK Government, which is proof of MAS’ ability to attract elite tenants to our iconic New Waverley development. This long-term lease, with the option to extend for up to a further 10 years, provides excellent security of income” commented Lukas Nakos, CEO of MAS.

During the reporting period, the group, through its joint venture with Prime Kapital, has advanced a number of highly accretive property developments. This includes Emonika, a mixed-use retail, office and hotel development in Ljubljana, Slovenia, which involves the development of a 59 000m² GLA mall and 21 000m² GLA of A-grade offices as well as a hotel and associated public space in a capital city that lacks a large modern and centrally located mall. The securing of the acquisition of senior debt on Era Shopping Park in Iasi, Romania, also provides a unique opportunity to redevelop an underdeveloped asset into a regional retail centre.

“The burgeoning pipeline in the development JV is expected to have a significant positive impact on our distributions per share. The development opportunities acquired by and available to the joint venture have substantially exceeded initial expectations, with the venture now targeting more than €1 billion of high quality developments across CEE. As a result, we increased our commitment to the Prime Kapital development joint venture,” said Nakos.   

The group raised €158 million via the issue of new ordinary shares in two over-subscribed private placings during the financial year. In addition, the group had €147 million of third-party debt finance in place as at 30 June 2017, having drawn-down a net amount of €112 million during the year at a weighted average cost of 2.14%.

Malcolm Levy, CFO of MAS said, “Our LTV at year end was 26% and the group’s weighted average cost of debt reduced from 2.50% to 2.32% year on year. We expect the LTV to continue moving towards the targeted level of 40% as the portfolio matures and will continue to optimise our funding mix as accretive opportunities in the pipeline are secured or developed.”

Shortly after year end, a further €53 million of debt was drawn-down against the Nova Park asset and further debt is expected to be drawn on the Bulgarian Galleria portfolio in due course.

Given the secured development pipeline and further potential developments being pursued, the board is confident that the group is well placed to deliver on the targeted growth in distribution per share of 30% over a 3 year period as set out in 2016, along with further growth thereafter.

“We remain focussed on generating sustainable and growing distributable earnings per share for shareholders by acquiring, developing and effectively managing a diversified portfolio of high-quality real estate investments in western, central and Eastern Europe. Our future pipeline is strong and our expansion strategy remains on track,” concluded Nakos.