Acquisition of investment properties in Bulgaria
MAS Real Estate Inc.
Registered in the British Virgin Islands
Registration number 1750199
Registered as an external company in the Republic of South Africa
Registration number 2010/000338/10
SEDOL (EMTF): B96VLJ5
SEDOL (JSE): B96TSD2
JSE share code: MSP
(“MAS” or “the group”)
ACQUISITION OF INVESTMENT PROPERTIES IN BULGARIA
In line with the group’s strategy of investing across the broader European market, shareholders are advised that MAS
has, through a subsidiary, PKM Investments S.á.r.l. (“PKM”), entered into sale and purchase agreements (the “SPAs”)
to acquire all the shares in the Galleria Burgas Mall (“GB”) from Globe Trade Centre S.A. and the European Bank for
Reconstruction and Development (jointly referred to as the “vendors”) and all the shares in the Galleria Stara Zagora
Mall (“GSZ”) from Globe Trade Centre S.A (collectively, “the acquisition”). GB and GSZ are located in the Bulgarian
cities of Burgas and Stara Zagora respectively (“the malls”).
SALIENT TERMS OF THE ACQUISITION
The purchase price for the acquisition is EUR 62 million (“purchase price”) payable to the vendors in full on the day
preceding completion of the final transaction agreements (namely, once the SPAs have become unconditional), and to
be settled with a combination of cash and debt. Completion is expected to take place no later than 23 May 2017.
GB is the dominant shopping centre in Burgas, the 4th largest Bulgarian city with a population of 200,000. The mall
benefits from a total catchment area of approximately 480,000 people within 60 minutes’ drive, as well as a significant
number of tourists during the summer holiday season, the city being in the vicinity of the most popular Black Sea
resorts on the Bulgarian coast. The mall is centrally located in the northern area of the city with excellent visibility from
and access to a major boulevard in front of the mall and is well served by public transport.
GB was opened in spring 2012, has a gross lettable area of 37,180 m², 1,200 parking spaces, contracted net rental
income of EUR 4.35 million, an occupancy cost ratio of 13.0%, an occupancy rate of 96.7% and a weighted average
rental per square metre of EUR 10.08 per month. It has a broad tenant mix consisting of 115 tenants including
primarily international fashion and entertainment brands (including Bershka, CCC, Cinema City, Deichmann, H&M,
Humanic, Ikea, Intersport, LC Waikiki, Lee Cooper, Lidl, Massimo Dutti, Oysho, Terranova and Zara). Due to strong
performance and tenant demand, a significant centre extension is being considered.
GSZ is the dominant shopping centre in Stara Zagora, the 6th largest Bulgarian city with a population of 140,000. The
mall benefits from a total catchment of approximately 400,000 people within 45 minutes’ drive. GSZ is centrally
located, has excellent visibility being positioned at the crossroads of two main city boulevards and is served by public
GSZ was opened in autumn 2010, has a gross lettable area of 21,642 m², 740 parking spaces, contracted net rental
income of EUR 1.05 million, an occupancy cost ratio of 13.1%, an occupancy rate of 93.6% and a weighted average
rental per square metre of EUR 4.32 per month. The tenant mix is focused primarily on fashion and entertainment and
consists of 71 tenants (which includes brands such as Bershka, Cinema City, CCC, Deichmann, DM, H&M, Intersport,
Kenvelo, LC Waikiki, New Yorker, Nike, Pull&Bear and Stradivarius). The mall is in need of refurbishment and offers
significant value enhancing opportunities through operational streamlining and commercial layout improvement.
The SPAs contain standard terms and warranties for a transaction of this nature.
The purchase price reflects the fair value attributed to the malls, as at 7 April 2017, as determined by the directors of
MAS. The directors of MAS are not independent or registered as professional valuers or professional associate
valuers in terms of the South African Property Valuers Profession Act 2000 or otherwise. Net rental income detailed
above approximates the net profits attributable to the acquisition.
The acquisition is categorised as a Category 2 transaction in terms of the JSE Listings Requirements.
The acquisition is subject to various administrative conditions precedent that are standard for a transaction of this
CO-INVESTMENT AGREEMENT WITH PRIME KAPITAL
The acquisition has been undertaken in terms of a long-term co-investment agreement that MAS has entered into with
Prime Kapital Limited (respectively, “the co-investment agreement” and “Prime Kapital”). MAS' effective economic
interest in the acquisition is the equivalent of an 80% direct participation in the performance of the malls and a 20%
participation at the weighted average cost of external funding achieved by the acquisition in line with the previously
announced co-investment agreement. All future acquisitions made under this co-investment agreement shall result in
the effective economic interest for MAS detailed here.
Prime Kapital has sourced and will manage this and future acquisitions going forward under the co-investment
MAS is dual primary listed on the Main Board of the JSE and the Euro MTF market of the LuxSE.
19 April 2017
For further information please contact:
Sarah King, Acting Company Secretary, MAS Real Estate Inc. +44 1624 625000
Java Capital, JSE Sponsor +27 11 722 3050
Charl Brand, M Partners, Luxembourg +352 263 868 602
Date: 19/04/2017 11:30:00
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