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MAS delivers strong DPS for half year, targets 30% for 2018 and 2019

By Suren Naidoo

MAS Real Estate – the Isle of Man based property group listed on the Johannesburg Stock Exchange and Luxembourg Stock Exchange – delivered a strong set of results for the half-year ending 31 December 2017, with distribution per share (DPS) of 3.58 euro cents. This represents an increase of 34.6% over the comparative period in the previous financial year.

The group’s latest results, which were released yesterday, buoyed its share price on the JSE, closing its results day more than 3% up. MAS said in a statement, it achieved distributable earnings of €17.1 million for the six-month reporting period, while it increased its EPRA NAV (net asset value) per share by 9%.

Newly appointed MAS CEO, Morné Wilken, commented: “The improvement in distributable earnings was driven by the full period effect of accretive acquisitions, completion of developments and the deployment of capital into PKM Developments. The team focused on active asset management and extensions to unlock additional value, and we expect this growth to continue over time.”

“We successfully disposed of some high valued assets, which allows for the reinvestment of capital into new growth opportunities across Central and Eastern Europe (CEE) and Western Europe,” he added.

Morné Wilken, CEO of MAS Real Estate Inc.

MAS said it had more than €400 million in its acquisition pipeline, which was currently undergoing due diligence. It said substantial acquisitions were expected to complete within the next six to twelve months.

Malcolm Levy, CFO of MAS said: “MAS has a strong balance sheet and with gearing at 25.8%, excluding the cash on hand, we have good headroom for growth. Our aim is to gear the overall portfolio to approximately 40% LTV and deploy our balance sheet to develop and acquire dominant assets in strong locations within CEE as well as undertake opportunistic developments and investments in Western Europe. Having said this, we will also look to recycle capital in Western Europe when the opportunity arises.”

MAS said mitigating the group’s future funding obligations in relation to PKM Developments has been a strategic priority. Accordingly, the group took advantage of the opportunity to raise adequate equity to fully meet its commitments to PKM Developments and to finance suitable acquisition opportunities.

Meanwhile, MAS has set an ambitious target of DPS growth of 30% per annum until June 2019. This, it said, was assuming a stable macro-economic environment prevailed; that no major corporate failures would occur; that the investments and developments reported on progressed in accordance with expectations; and, that budgeted rental income based on contractual escalations and market related renewals were collected.

“Given the substantial acquisition and development pipeline in place and further opportunities being pursued, the board is confident that the group is well placed to achieve its targeted distribution per share growth of 30% per annum until June 2019,” it said.

Wilken said: “(The) solid income producing portfolio and development pipeline of MAS underpins our objective of delivering high quality and growing distributions on a sustainable basis over time. The retention of investment discipline is core to our business and investment decisions will be made taking a long-term, sustainable view rather just meeting short term distributions. Our future pipeline remains strong and our expansion strategy is on track.”

South African JSE-listed capital growth fund, Attacq Limited, is a significant shareholder in MAS. Wilken, the former CEO of Attacq, took over as CEO of MAS last month. Attacq plans to convert to a SA Real Estate Investment Trust in 2019.