Property company MAS has a chunky R15.6 billion market cap and is up around 2.7% in 2022, a modest increase. Over the past 12 months, the share price is up around 26.5%. The fund is focused on Central and Eastern Europe, with properties in countries like Romania and Bulgaria.
The company has announced the acquisition of six subsidiaries (and thus six retail centres) of PKM Development Limited in Romania. MAS already owns a 40% stake in PKM, so this is an acquisition from a related party.
Along with this deal, MAS plans to execute certain amendments to the joint venture agreement in place with PKM. PKM is part of the Prime Kapital Holdings group. That group and its associates (including the former CEO of MAS) holds around 21.5% of MAS’ ordinary shares.
As you can see, there are lots of cross-holdings here. To protect minority shareholders, related party rules make these deals more onerous from a compliance perspective and require an independent expert to opine on whether the deal is fair.
These proposed deals are part of MAS’ strategic objectives to achieve annual like-for-like net rental growth of at least 4% on the Central and Eastern Europe retail assets from a normalised post-Covid base.
Other goals to be achieved by the 2026 financial year include the completion of commercial developments at a cost of around EUR600 million by the joint venture. The expected weighted initial net yield on these developments is at least 9%. In addition, the joint venture is aiming for residential sales and deliveries of at least EUR200 million per annum at net after tax margins of 20%.
In commercial property (i.e. offices), MAS plans to acquire high quality assets worth at least EUR150 million during the 2022 financial year and another EUR50 million in 2023.
Shareholders should keep a watchful eye on MAS’ announcements, as further details on the transactions will be announced in due course.
