MAS adds German mall to Europe assets

MAS Real Estate, which is aggressively buying assets to drive its income growth, has acquired a shopping centre in Flensburg, northern Germany, in a deal worth nearly R1bn.

This means the company, which acts as a currency hedge for SA investors as it pays dividends in euros, has grown its asset base to more than R19bn.

MAS co-founder and CFO Malcolm Levy said that the Europe-focused property counter was on track to deliver double-digit euro dividend growth for its 2019 financial year, making it one of the most attractive offshore property stocks for JSE investors. Levy said MAS would spend €62.55m on its latest acquisition, the 25,540m² Flensburg Galerie, a popular shopping mall located near the Danish border.

The mall includes a number of blue-chip tenants on long leases, meaning the company has secured a regular stream of income, he said. MAS would also be able to enhance returns from the asset as it had vacancies for which the fund had potential tenants. There were also opportunities to add to or convert sections of the mall.

“The centre has direct access to the prime shopping street Holm and houses one of the main car parks serving the city centre,” said Levy. “With a catchment area of 500,000 people within a 45-minute drive, the centre is well-established in a strong retail location with solid anchor and fashion tenants.

“The asset provides an ideal opportunity for significant value to be unlocked through active asset management and we are excited about the substantial interest already received from a number of potential tenants,” said Levy.

MAS increased its dividend 30% for the year to June 2018. Levy said the group’s strategy, which had seen it add assets to its portfolio at a relatively rapid pace, would enable it to achieve similar growth in the June 2019 financial year.

About 60% of MAS’s annual revenue is generated in western Europe, where the group has a footprint in Switzerland and Germany. The other 40% is generated from MAS’s PKM Developments, a joint venture with eastern Europe-focused Prime Kapital. It has co-invested with the firm in a number of assets located in countries such as Bulgaria, Romania and Poland.