MAS Real Estate, with real estate assets in Europe, increased its annual dividend by 30% as a strong performance by its growing property portfolio boosted earnings.
The group’s income-generating portfolio performed very well during the reporting period, with net rental income increasing 35% and operating income growing 90% year on year, CEO Morné Wilken said at the release of the company’s financial results for the year to end-June.
About 60% of revenue was generated in Western Europe, where the group has a footprint in the UK, Switzerland and Germany. MAS also operates the PKM Developments joint venture with Eastern Europe-focused Prime Kapital, and had co-invested with the firm in a number of assets over the past year, Wilken said.
Prime is run by two highly respected East European real estate experts Martin Slabbert and Victor Semionov.
They founded former Romanian mall owner New Europe Property Investments (Nepi). Nepi merged with Rockcastle Global Real Estate in 2017 to form Nepi Rockcastle.
"The growth in distributable earnings per share was driven by the strong performance and accretive acquisitions of investment property, completion of assets in the development pipeline, investment in PKM Developments as well as distributions received from the investment in the REIT [real estate investment trust] portfolio over the reporting period," Wilken said.
During the reporting period, MAS acquired Uberior House in Edinburgh, Scotland in May 2018 for a consideration of €80.1m (about R1.412bn). Uberior House includes grade A offices, prominently positioned in the heart of Edinburgh’s financial district and is leased to Bank of Scotland on several leases that expire in 2025.
After year-end, the group also completed the acquisition of the Militari Shopping Centre in Bucharest, Romania and properties in Braunschweig, Germany. The acquisition of the Militari Shopping Centre, in conjunction with Prime Kapital, was completed in July for a purchase price of €95m.
MAS also acquired a retail centre as well as a smaller convenience centre in Braunschweig for €25m.
The acquisition holds a development opportunity to add 4,600m² of retail space, it said.
At year-end, the group held €147.8m in cash, excluding the cash held in PKM Developments. MAS had €242.7m of third-party debt finance at a weighted average cost of 2.69%, resulting in a group loan to value of 10%, which was low compared with market peers who had loan to values of about 40%.
MAS was targeting distribution growth of 15% for its 2019 financial year, it said.
The group, with a market capitalisation of R14.58bn, has seen its share price decline by nearly 13% over the past year.
On Friday, the price increased 2.7%, the biggest one-day increase since the end of July, to close at R22.60 at the close of trading.