conference call will be by pre-registration only. ... carry out their own due diligence into MAS Real Estate Inc. Recipi
MAS REAL ESTATE INC.
NEWSLETTER FEB 2015 An architect’s impression of the NSQ development in Lewes
So, we made it. Before the end of 2014 we completed, as we had hoped, our move to the main board of the JSE. The move marks a major development in the history of the company since its listing on the AltX in 2009. MAS has grown substantially in size since we raised in the market the equivalent of €180 million in a private placing in February last year. Today it’s a vastly different company to just 12 months ago. Our shareholder base has also grown, and we expect it to grow even further now that we have a main board listing, which makes the share much more tradable. Perhaps it is a good place to reiterate the objective we set ourselves, which is to have, by the end of 2016, 90% of our portfolio invested in income producing assets and the balance of 10% in development and value-add opportunities. To achieve this, we will continue to acquire and develop assets in our core markets, as well as evaluating potential acquisitions over a wider spread of locations in Europe to ensure we achieve our target of distributing an annual 6% income on capital invested by shareholders. INTERIM RESULTS ANNOUNCEMENT The interim results will be released on Monday, 9 March, at 12:00 SA time (10:00 UK time), with a results conference call at 15:00 SA time (13:00 UK time). The results conference call will be by pre-registration only. Details for pre-registration will be circulated shortly and will be available on the website. The results, together with the results presentation, will be available on the website www.masrei.com.
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PORTFOLIO UPDATE In our November newsletter we mentioned our new acquisitions in Germany, in the towns of Frankenthal, Gummersbach and Nordhausen, as well as one in the state of Baden-Württemberg. In every instance we secured long-term leases with the tenants, all of them leading businesses in their respective fields in Germany. Since then a fifth acquisition in Germany has been finalised, this time in the town of Heppenheim situated in an affluent area about 50 km south of Frankfurt. Here we’ve acquired a retail and office park at a cost of €25,6 million (about R340 million). The two large warehouses on the property are let to Bauhaus and Media Markt, prominent players in the fields of DIY and consumer electronics in Germany. Once gearing is in place, this Heppenheim asset is expected to deliver a net initial yield of 6,8% after costs. It also offers scope for partial redevelopment in the medium term which would further enhance income returns on capital invested. All five of these new acquisitions are immediately income-generating and together will add about €4,7 million in gross annual income to the portfolio. Heppenheim property
MAS REAL ESTATE INC. NEWSLETTER FEB 2015
Langley Park, the 19 ha industrial warehousing and office park acquired in Chippenham
BACK INTO THE UK We also recently expanded our UK portfolio with the acquisition of a 19 ha industrial warehousing and office park in Chippenham in Wiltshire, for £32 million (about R573 million). Known as Langley Park, the property, located close to the town centre, offers about 75 000 m² of office and industrial space. It houses a number of strong core tenants such as leading technology manufacturers Siemens, IXYS and Schneider Electric. We intend re-gearing these leases and consolidating the existing industrial estate into a 12 ha business and technology park. Chippenham is close to Bath and the Cotswolds and, once the ultra-fast electrified railway line has been completed in a few years’ time, will be only 50 minutes from London’s Paddington station. We will be enhancing our investment in the new business and technology park by obtaining planning approval to turn 7 ha of our site situated right next to the station into a residential and food retail development. We expect approval for such a development to be granted in 2016. Our planning will provide for up to 400 residential units on this part of the site. These units in particular are expected to be highly popular given the current lack of centrally located residential accommodation in the town.
ELSEWHERE IN THE UK Several times in the newsletter we have referred to the North Street Quarter development in the town of Lewes in the South Downs National Park. A short update will explain what sets this riverside development apart from almost all our others. Yes, it is also a development combining residential and commercial components but with a difference. Because the town is located within a national park, environmental factors played an enormous role in the planning, which was preceded by extensive public consultation especially on design issues. We are now finally in a position to submit our proposal for what will be a £150 million (about R2,7 billion) gross value development. For this project we have entered into a partnership agreement with the Lewes District Council that owns the adjoining land. The planning submission is a joint one with the Council and provides for the simultaneous development of the two adjoining properties. The joint plan allows for 416 homes (of which 40% will be affordable housing), creative workspace and a 1 800 m² health centre, as well as a new public square, parking for 330 cars and walkways meandering along the banks of the River Ouse. Once the necessary approvals have been obtained we shall be seeking to bring in a development partner. It is estimated that the redevelopment of the site – at present populated by mainly industrial buildings – will take up to five years.
WHAT LIES AHEAD In the short-term, we shall be focusing on raising debt on the recently acquired German assets. We expect to benefit from the current, very attractive low interest rate environment in the Eurozone. In the next few months, we shall also be working on finalising several other transactions involving the acquisition of more quality assets in Germany. In addition, we are working with our local partners in Switzerland and Germany on a number of larger scale transactions, which will help to diversify our portfolio. At the same time we have been pursuing quality assets in several other countries in Western Europe. We expect that we shall be able to conclude our first transaction in at least one of these new locations during the course of 2015.
This document does not constitute an offer of interest in MAS Real Estate Inc., nor does it purport to solicit offers to subscribe for interests in MAS Real Estate Inc. Information contained in the document is believed by the issuer to be accurate and correct, and statements of opinion in this document are considered by the issuer to be reasonable, in each case at the date of this document, but the issuer does not accept responsibility for any such information, and all recipients of this document are expressly reminded of the requirement to carry out their own due diligence into MAS Real Estate Inc. Recipients should make their own assessment and take independent professional advice on the merits of investment and the legal, regulatory, tax and investment consequences and risks of doing so. The issuer accordingly accepts no responsibility to any person for the consequences of any person placing reliance on the content of this document for any purpose.
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