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JSE-listed European focused MAS Real Estate has acquired Atrium Mall in Arad, Romania, as it looks to expand further into central and eastern Europe.
The company provides SA investors with euro-denominated returns. It acts as a currency hedge against the rand.
About 60% of MAS’s revenue is generated in Western Europe, where the group has a footprint in the UK, Switzerland and Germany and the balance in Eastern Europe but the fund wants to re-balance this so that half is generated from each region.
The deal was completed through PKM Developments, a joint venture that the company has with eastern Europe-focused Prime Kapital.
Prime is run by East European real estate experts Martin Slabbert and Victor Semionov.
They founded former Romanian mall owner New Europe Property Investments (Nepi), which merged with Rockcastle Global Real Estate in 2017 to form Nepi Rockcastle.
Prime Kapital finds investment opportunities for MAS in central and Eastern Europe.
MAS, which has a market capitalisation of R13bn, would acquire the 28,600m² mall which has three levels in a deal worth €40.5m (R636m) from Cosmovia. The mall has a catchment area of 334,000 people within a 45 minute drive.
MAS would acquire the entire share capital of the asset owning company, Mastweight, which is a wholly owned subsidiary of Cosmovia. The purchase price of the shares is €28.1m after deductions for bank debt and working capital. This was funded from resources currently available on MAS’s balance sheet.
The mall has a total passing rent of €4.3m per year or €12.7 per/m² per month. Atrium’s turnover has grown 8.6% in the past year while footfall has grown 3.5% to reach 5.2-million visitors over the last 12 months. The current vacancy rate is 2.3% and the overall weighted average unexpired lease term is 2.8 years. Atrium’s annual net operating income for the year to December 2018 is estimated to be €3.5m.
“Our aim is to improve the quality of the retail offering and experience to customers through improved asset management and the introduction of new entertainment and leisure operators to drive further footfall. The reconfiguration of some parts of the mall will be considered in the medium term to enhance its configuration and increase dwell time,” said Malcolm Levy, executive director of MAS.
MAS’s share price is down 31% year to date. Its CEO Morné Wilken is set to leave at the end of 2018 and he will be replaced by founder Levy for a temporary period.
Wilken will become CEO of Hyprop Investments, the owner of shopping centres such as Hyde Park Corner, The Mall of Rosebank, Clearwater Mall and Canal Walk.
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.