Focus on high-growth areas still paying off
There’s hardly a fund manager who doesn’t have MAS Real Estate on their stock-pick list.
The rand-hedge property play’s popularity has no doubt been driven by its stellar 30% dividend growth, reported this month for the year ending June, and the 91% growth in its income-generating asset base.
The market likes the shift in focus from the UK and Germany to development opportunities in Central and Eastern European (CEE) countries.
MAS’s CEE foray will be led by Prime Kapital, founded by Martin Slabbert and Victor Semionov, ex-directors of Romania-focused New Europe Property Investments, now known as Nepi Rockcastle.
The joint venture with Prime Kapital has no doubt placed MAS on the radars of investors who may not have previously taken an interest . Slabbert and Semionov have built a track record in Romania and neighbouring countries where they have been developing and managing shopping centres for more than a decade.
MAS’s share price is up nearly 43% over the past 12 months. This month, it tested a high of R26.54 following the release of impressive results for the year ending June. So if investors haven’t yet bought MAS shares, have they missed the boat? It doesn’t appear so. Liliane Barnard, CEO and portfolio manager at Metope Investment Managers, says MAS is one of their top three property picks despite the strong run in the share price.
She notes that future returns will be supported by MAS’s strategy to dispose of mature assets in the UK and Germany and recycle the capital into higher yielding development prospects in the CEE region.
Keillen Ndlovu, head of listed property funds at Stanlib, says it’s not too late to buy MAS shares. “The company has a strong management team with a proven ability to unlock value for shareholders. MAS is on track to continue to deliver dividend growth of 30%/year for at least the next two years, which is attractive given the more muted distribution growth numbers expected from SA-focused property companies.”
At the MAS results presentation in Sandton this month, CEO Lukas Nakos said though a number of SA property players are expanding their portfolios into the CEE region, MAS’s tie-up with Prime Kapital gives it a competitive edge. He noted that most other investors in the region are simply buying existing assets and collecting rent.
“Prime Kapital, on the other hand, has the specialist skills to develop new shopping centres from scratch at attractive yields and to redevelop underperforming ones.”
Since MAS announced its entry into the CEE region via the Prime Kapital partnership about a year ago, the company has bought three malls: Nova Park (32,600m2) in Gorzow, Poland; and Galleria Burgas (37,500 m2) and Galleria Stara Zagora (21,300m2), in Bulgaria.
In addition, MAS is targeting a development pipeline in the region worth €865m. The latter includes 11 value centres across Romania, with either Carrefour or Kaufland as the food anchor, as well as two super-regional malls, the one being part of an 80,000m2 mixed-use development in Slovenia, and the other a redevelopment of a 50,000m2 centre in Iasi, Romania’s secondlargest city after Bucharest.
MAS is also looking to cash in on the huge housing shortage in Romania. It has acquired land for two large-scale developments in Bucharest that will deliver 930 residential units.