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MAS PLC - Voluntary trade update and pre-closing statement

Release Date: 22/12/2021 08:02
Code(s): MSP     PDF:  
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Voluntary trade update and pre-closing statement

Registered in Malta
Registration number C99355
JSE share code: MSP
ISIN: VGG5884M1041
LEI code: 213800T1TZPGQ7HS4Q13
(‘MAS‘, ’the Group‘ or ’the Company’)



This voluntary announcement is a pre-close update prior to release of MAS’ financial results for the six months
ending 31 December 2021 updating shareholders on operations, progress concerning strategic objectives and
Covid-19 restrictions. Unless otherwise stated, figures are presented on a proportionate consolidated basis.

The Group is a green property owner and operator focused on Central and Eastern Europe (‘CEE‘), with
investments in retail assets in Romania, Bulgaria, and Poland. MAS also benefits from exposure to high-quality
commercial and residential developments via the Development Joint Venture (‘DJV‘)1 with partner Prime Kapital.


Information regarding Central and Eastern European gross leasable area (‘GLA‘) affected by restrictions, like-for-
like (‘LFL‘) footfall (compared to 2019), LFL tenants’ sales (compared to 2019), income entitlements (including
invoicing, waivers and deferrals), collection rates (collections compared to invoicing) and pro forma collection
rates (collections compared to the total expected income disregarding Covid-19’s impact) for the five-months
ended 30 November 2021, is detailed in Table 1 (all figures reported 16 December 2021).

Table 1:
                                               Jul 21      Aug 21      Sep 21     Oct 21       Nov 21       Total

Open GLA(2)                               %        97          97          96         71            9          74
Restricted GLA(3)                         %         3           3           4         29           91          26
Closed GLA(4)4                            %         -           -           -          -            -           -

Footfall (2021 compared to 2019)          %        96          94          93         86           60          86
 Open-air malls                           %       108         102         101         92           64          93
 Enclosed malls                           %        84          86          84         78           55          78

Tenants’ sales per m2 (2021 compared      %       108         107         105        102           74          99
to 2019)
 Open-air malls                           %       118         113         115        111           78         107
 Enclosed malls                           %        96         100          93         89           67          89

Total pre-pandemic income expectation    €m       4.1         4.1         4.1        4.1          4.1        20.5
 Income waived, deferred, or suspended   €m         -           -           -          -          0.1         0.1
 Due income (invoiced)                   €m       4.1         4.1         4.1        4.1          4.0        20.4
Collection rate                           %        99          99          99         96           93          97
Pro forma collection rate                 %        98          98          98         96           93          97

1  DJV is an abbreviation for a separate corporate entity named PKM Development Limited (PKM Development), an associate 
   of MAS since 2016, with independent governance. MAS owns 40% of the ordinary share capital of PKM Development, 
   an investment conditional on it irrevocably undertaking to provide preference share capital to PKM Development on 
   notice of drawdown. MAS’ undertakings to PKM Development arose prior to Prime Kapital’s founders joining MAS’ Board
   in November 2019 and are unaffected. By 30 November 2021, MAS had invested €283.1million in preference shares and 
   had an obligation of €136.9million outstanding (figures not proportionally consolidated). The balance of the ordinary 
   share capital in PKM Development was taken up by Prime Kapital in 2016 for €30million in cash, and, in terms of 
   applicable contractual undertakings and restrictions: 
       (i)   is not permitted to undertake real estate development in CEE outside of PKM Development until the DJV’s 
             capital commitments are fully drawn and invested, or 2025;
       (ii)  contributed secured development pipeline to PKM Development at cost;
       (iii) takes responsibility for sourcing further developments, and
       (iv)  provides PKM Development with all necessary construction and development services via integrated in-house 

2  GLA open for trade without restriction.
3  GLA open for trade subject to restrictions (computed on a pro rata basis to reflect days with restrictions).
4  GLA closed for trade (computed on a pro rata basis to reflect closures).

Until October 2021, trading in all Central and Eastern European countries where the Group operates was mostly
unaffected by social distancing measures. Romania and Bulgaria are the European Union countries with the
lowest vaccination rate. An increase in infections during September led Romanian authorities to strengthen
restrictions, and both countries introduced significant restrictions on 25 October, making the presentation of a
Covid-19 certificate (proving either vaccination or recovery) mandatory prior to entering a shopping centre.
Infection rates in Romania decreased during November and restrictions were eased on 9 December 2021,
extending access to customers presenting a negative Covid-19 test.

Footfall in CEE was robust for the first four months of the 2022 financial year and decreased significantly once
severe restrictions in Romania and Bulgaria were reintroduced. Similarly, tenants’ sales have continued to exceed
pre-pandemic levels, but were negatively impacted in these countries from November, not to the same extent as

Pro forma collection rates were excellent, approaching pre-pandemic levels. Although management expect
collection rates for November and December 2021 to be affected by restrictions introduced October 2021, the pro
forma collection figure for November should be considered with caution as collection efforts are ongoing.

In respect of leasing, new tenants and extensions were generally signed at similar, or above, pre-pandemic rental
levels, resulting in occupancy of Central and Eastern European assets increasing to 94.4% on 30 November 2021
(93.2% on 30 June 2021).

Operations, including collections, in Western Europe (‘WE’) remained consistent with the six-months ended 30
June 2021.

Developments, extensions and refurbishments

Growing MAS’ investment in new, quality income properties and improving sustainable future distributions through
exposure to residential developments rolled-out by joint-venture partner Prime Kapital remain two strategic
priorities aimed at maximising total long-term returns from property investments on a per share basis.

Barlad Value Centre (30 November 2021) and Prahova Value Centre (3 December 2021), the DJV’s third and
fourth retail developments completed since the pandemic started, have opened with high occupancy rates (99%
and 96% respectively).

The contractual breach by one of the two sellers in respect of Arges Mall development (reported previously) was
beneficially settled, and leasing continued with significant interest from national and international tenants.

All other developments previously reported continue broadly in accordance with expectations and Prime Kapital
has identified and secured, via the DJV, additional commercial and residential pipeline estimated at €182.3million
and €512.7million, respectively, at cost. While some projects are subject to due diligence, all are subject to zoning
and/or permitting. Further details on the newly secured pipeline will follow in due course.

Asset sales in WE

Additional sales of assets in WE with an aggregate value of €53.6million have been contracted to date, compared
to the most recent aggregate book values of €44.4million. This includes the completed disposals of Adagio Hotel
(UK), Malling Brooks land holding (UK) and contracting the sale of the Gotha retail asset (Germany), closing
subject to ordinary German pre-emption rights, but excludes the New Uberior House office property (UK) sale
previously reported, which was completed 26 August 2021 and contracted prior to 30 June 2021.

MAS’ remaining Western European assets held for sale are Flensburg Galerie (Germany), Arches street retail
units (UK) and Langley Park land holding (UK). These assets had a combined book value of €82.7million with
€42.8million secured bank debt outstanding on 30 June 2021.

Strategy update

MAS aims to maximise total long-term returns from property investments on a per share basis by focusing on
capital allocation, operational excellence, sensible leveraging and cost efficiency, sustainably growing
distributable earnings per share. As shareholders have previously been informed, MAS and Prime Kapital, via the
DJV, have adopted ambitious growth targets and quantified strategic objectives, which are achievable within the
current capital base, while maintaining a full pay out to shareholders of distributable earnings.
Progress made to date, including the contribution of additional commercial and residential pipeline identified and
secured in the DJV, means the Company is well positioned in relation to achieving stated objectives and long-
term strategic targets, despite short-term disruption caused by Covid-19.

21 December 2021

For further information please contact:
Dan Petrisor, MAS P.L.C.                      +40 741 184 921
Leon Allison, MAS P.L.C.                      +27 82 307 3667
Java Capital, JSE Sponsor                     +27 11 722 3050

Date: 22-12-2021 08:02:00
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