MAS aims to be JSE property king
• The group will be the JSE’s best-performing property stock for the next five years, says CEO
Romania-focused landlord MAS Real Estate will be the JSE’s best-performing property stock for the next five years as it expands further in the East European country, CEO Martin Slabbert predicts.
Romania-focused landlord MAS Real Estate will be the JSE’s best-performing property stock for the next five years as it expands further in the East European country, says CEO Martin Slabbert.
Speaking in an interview with Business Day, he said the company’s exit from Western Europe is almost complete and it is set to grow in Romania, Eastern Europe’s second-largest economy where it is developing the best-quality residential projects the country has had since the fall of communism.
“I believe our company is in an excellent position. MAS has transformed from a group based in Western Europe that was run by accountants into a company based in the best-performing economy in Eastern Europe, Romania. It is now run by a team including property professionals and has grown its staff from about 30 people to 200,” he said.
“We are primed to grow largely through our development pipeline. A large part of this are our residential developments and I foresee us being the best-performing property stock on the JSE for the next five years,” he said.
MAS owns assets worth €1.208bn (R20.6bn) including developments in progress. It is building residential schemes in Bucharest and Iasi.
Its first Bucharest development, which will be completed in December, will include 480 apartment units. It is also working on a second development in Romania’s capital, Bucharest, and one in Iasi, the country’s second-largest city.
In Central and Eastern Europe (CEE), its completed assets are worth about €480m. Most of these are retail assets across Romania with some smaller assets in other countries within Eastern Europe.
Slabbert spoke after MAS announced it had raised €300m in an inaugural five-year senior unsecured green bond.
He said this strengthened the company’s balance sheet further and placed it in “an exclusive but limited club of much larger property companies that have successfully accessed the international bond markets”.
MAS’s balance sheet is the healthiest in the listed property sector, with a loan-to-value (LTV) of 12%, head of listed property funds at Stanlib, Keillen Ndlovu, said.
The building of the bond took place over a single day, May 12, and attracted investment from several leading global asset managers and investors, said Slabbert.
MAS’s strong financial position is also indicated by its corporate ratings, he said: Ba1 stable from Moody’s Investors Service and BB positive from Fitch Ratings. The participation of the European Bank of Reconstruction and Development as an investor contributed to the success of the issuance.
Of the €300m, about €140m would be used to repay existing secured finance on CEE assets and the balance would be used for new CEE investments.
“As a management team, we always had sustainability at the forefront of our thinking. Our assets are managed with a longterm-hold mindset and therefore it makes economic sense to think of our investments in a sustainable manner. As a result, MAS obtained green certification for all of its CEE assets, making it the only JSE-listed property company with this level of certification,” Slabbert said.
Ryan Eichstadt, head of research at Meago Asset Managers, said MAS is attractive because of its deep accretive development pipeline, the proven ability to execute on a significant disposal programme and stated strategy.
“Their CEE retail assets have performed extremely well during the pandemic given the open-air format and lower exposure to office-related trade,” Eichstadt said.
Though the company did not declare a dividend for its interim period ending December 2020, there were no additional tax consequences, given that it is not a real estate investment trust (Reit), which continues to afford the management with the flexibility in managing cash flows and a prudent balance sheet position. Reits are forced to pay a minimum 75% of their distributable income as a dividend each financial year.
MAS’s CEE malls were revalued upwards by 2% in the six-month period to endDecember 2020.
Ndlovu said MAS has the strongest balance sheet in its sector, with a LTV of 12%. LTV measures a company’s debt relative to its assets and 40% is considered to be the limit above which financial stress is felt on a balance sheet.
MAS’S FIRST BUCHAREST DEVELOPMENT WILL INCLUDE 480 APARTMENT UNITS
“MAS does not need to raise equity and is in a great position to find growth opportunities,” Ndlovu said.
MAS, which has a market capitalisation of R12bn, was created in 2008 as an initiative of several large SA property investors and wealthy individuals who were keen to diversify their holdings into overseas markets. As much as 80% of its investor base is South African, including the ultra-wealthy Oppenheimer family that bought R500m worth of shares at the beginning of 2021.