MAS Real Estate shares jump on Prime Kapital acquisition
Shares rose as much as 20%, its biggest rise in six years, following news of the deal
Shares in JSE-listed MAS Real Estate rose as much as 20% on Thursday, its biggest jump in six years following news that the property group has acquired Prime Kapital (PK).
MAS said it has agreed to buy the remaining 20% stake in its investment joint venture (JV) with PK, as well as PK’s management company.
Daniel King, research analyst at Avior Capital Markets said MAS’s share price “rally [on Thursday] represents a recovery of material losses over the past two weeks. We believe that the transaction will more closely align all stakeholder interests”.
He said there has been much discomfort among investors regarding MAS’s working arrangement with PK. MAS currently owns 80% of the JV but has no management control. PK, with its 20% stake, has management control.
King also said recent losses in the company’s share price were caused by a failure to finalise a similar deal last month.
The company’s share price rose 19.07% to close at R18.73 on Thursday, having fallen 24.15% so far in 2019. The JSE’s property index has fallen 4.59% so far in 2019.
As part of the proposed transaction, MAS will appoint Prime Kapital owner-executives Martin Slabbert and Victor Semionov as CEO and COO of MAS, respectively, for a period of three years.
MAS, whose asset base has tripled since 2016, said on Thursday that it had beaten its distribution target for the year to end-June.
The company, which is focused on retail assets in Central and Eastern Europe, declared distributable earnings per share of 9.01 euro cents for the year, a jump of 41.9% from the prior comparative period. MAS had targeted distribution of 8.75 euro cents for the period, and opted to pay this amount.
The company has been rapidly expanding in Central and Eastern Europe, with acquisitions during the period including the Militari Shopping Centre in Bucharest, Romania, as well as the Flensburg Galerie Shopping Centre in Flensburg, Germany.
MAS chair Ron Spencer said in statement that the group is “convinced that our strategy of continuing to expand into [these] markets, and divest from Western Europe, is the most appropriate strategy for the group”.
Investment property, including those held for sale, rose 52.4% to €964.7m over the period. Net rental income grew 59.6% to €51.6m year-on-year, and net operating income 51.8% to €58.2m. Net asset value per share rose 2% to 137.6 euro cents.
MAS has said it wants to grow its distribution by 30% to about 11.37 euro cents per share by the year ending June 2022, but said on Thursday this targeted growth may not be linear.