South African investment group MAS has announced a significant shift in its investment strategy, moving away from its traditional Central and Eastern European property base. The group, which owns income-producing properties in Romania, Poland, and Bulgaria, will now focus on opportunities that offer asset quality, durability, downside protection, and long-term value creation. This change in strategy comes as MAS reported a 79% slump in earnings to €25.3m for the year to end-June.
MAS's earnings per share also took a hit, with basic earnings per share amounting to 4.46 euro cents, compared with 19.79 euro cents a year earlier. However, the adjusted net asset value per share rose to 179 euro cents, and headline earnings increased to €57.5m. The group has sold several assets, including its last Western European asset, Flensburg Galerie in Germany, for €11.7m in March, and six Romanian open-air malls and the Galleria Burgas in Bulgaria for about €247.8m in net proceeds.
The disposals have reduced MAS's directly owned property exposure and given the group greater flexibility to pursue investments outside its traditional markets. MAS's board believes that patience and selectivity are crucial to achieving superior long-term outcomes and has stated that it will not reinvest simply to protect short-term earnings. Instead, it will prioritize capital allocation and consider share buybacks where that offers better value.
During the year, MAS repurchased 28.5-million shares at an average price of €1.0726, equivalent to 4.08% of its issued share capital at the time. The group's loan-to-value ratio fell to 22.2% from 23.2%, while it held €70.2m in cash against debt of €418.4m. Prime Kapital Investments held almost half of MAS as at June 30, while Prime Kapital and parties deemed to be acting in concert held about 61%.
MAS's shift in strategy is expected to weigh on near-term earnings as capital is redeployed. The group will maintain sufficient liquidity to meet its commitments to the development joint venture with Prime Kapital while remaining selective about deploying the capital released through disposals. The group did not declare a dividend, citing its focus on capital allocation.
The transition is part of MAS's efforts to transform into a broader investment platform. The group has acknowledged that the process could take time and has warned that it will prioritize long-term value creation over short-term gains. MAS's investment decisions will no longer be dictated by geography or asset class, allowing it to pursue a wider range of opportunities.
The changes come as MAS seeks to adapt to changing market conditions and investor expectations. With a stronger focus on long-term value creation, the group is positioning itself for future growth and success. Key stakeholders, including Prime Kapital Investments, will be watching closely as MAS implements its new strategy and navigates the challenges and opportunities ahead.
Key points
- MAS reports 79% slump in earnings to €25.3m for the year to end-June.
- The group has sold several assets, including properties in Germany, Romania, and Bulgaria, for a total of €259.5m.
- MAS will prioritize long-term value creation over short-term gains, focusing on asset quality, durability, and downside protection.
