Today reported outstanding results for the six-month period ended 31 December 2016, showing a 50% growth in its investment portfolio and a 19.3% increase in its distribution to 2,66 euro cents per share for the six months ended 31 December 2016.
The company has seen strong growth in distributions in line with its stated target of 30% per annum growth in distribution per share, underpinned by its strategy of acquiring, developing and operating retail, office, industrial, logistics and hotel assets in western Europe and central and eastern Europe (“CEE”).
“The Group has had a productive start to the financial year. It has grown its income-generating property portfolio by 67.5% in the six months ended 31 December 2016, with the acquisition of the German Edeka MIHA food retail portfolio, a logistics property let to Volkswagen in Munich, and the completion of its Adagio hotel development at New Waverley, in Edinburgh.
“In addition, the successful acquisition of the Nova Park mall in Poland, in partnership with Prime Kapital, demonstrates the synergy created by leveraging the partnership’s development and asset management expertise to add value, in this case by both reconfiguring and extending the mall to ensure its regional dominance, and growth in earnings over future periods” commented Lukas Nakos, CEO of MAS.
The group continues to pursue a number of highly accretive property developments, which when completed are expected to have a significant positive impact on per share distributions.
During the reporting period, the group raised R500 million via the issue of new ordinary shares and ended the period with €20,80 million in cash. MAS is targeting a long-term aggregate portfolio debt LTV of 40%, which may fluctuate up to a maximum of 50% on a temporary basis as the portfolio grows. The company prefers long-term debt funding and interest rates are managed through the group’s hedging strategy. Developments are generally funded through equity and refinanced at completion.
Malcolm Levy, CFO of MAS said, “We have drawn-down on third-party debt during the reporting period, resulting in an increase of the group’s debt LTV to 25,1% at the end of the reporting period from 12,3% at 30 June 2016. The current conservative debt level still provides good headroom for growth.
In addition, we expect to draw-down on an additional approximately €100 million of secured debt against various assets in the portfolio at a weighted average cost as low as 1,9% per annum. A key focus for MAS remains optimising our balance sheet and efficiently managing our capital as we grow.”
The group made significant progress in expanding its acquisition and development pipeline during the six-month period. As of 31 December 2016 the group had secured several additional earnings enhancing acquisitions and a number of attractive new development opportunities.
“Our CEE income-generating and development joint ventures with Prime Kapital have unlocked very exciting opportunities in Slovenia, Poland and Romania, as well as other CEE countries. Both the accretive acquisition opportunities with value-add potential and high quality development opportunities being pursued should continue to deliver significant growth in MAS’ distributable earnings per share in line with our stated targets over the coming years,” said Nakos.
Given the secured development pipeline and further potential developments being pursued, the board is confident that the group is well placed to achieve recurring distributable earnings per share in close proximation to its targeted growth in distribution per share of 30% per annum for the current and following two years.
“We’ve made good progress so far, and remain focussed and on track to meet our targets,” concluded Nakos.