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MAS PLC's CEE Market Thrives: Footfall Up 5%, Sales Rise by 6% | Rateweb
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MAS PLC’s CEE Market Thrives: Footfall Up 5%, Sales Rise by 6%

MAS PLC, a Malta-registered green property owner and operator, has released a pre-close trading update. This precedes the financial results announcement for the year ending June 30, 2024. MAS operates in Central and Eastern Europe (CEE), focusing on retail assets in Romania, Bulgaria, and Poland.

Operational Highlights

Consumption remained robust across CEE markets in early 2024. MAS properties experienced strong trading activities. Like-for-like (LFL) footfall for January-April 2024 was 5% higher than the same period in 2023. Tenants’ sales per square meter (m2) rose by 6%.

Jan 24Feb 24Mar 24Apr 24Total
Footfall106%111%106%99%105%
Open-air malls107%112%105%100%105%
Enclosed malls105%108%107%98%104%
Tenants’ sales106%107%112%100%106%

MAS achieved a 99.3% collection rate over the four-month period. Occupancy in CEE retail assets slightly increased to 97.8% from 97.7% in December 2023.

Key Developments

New Openings and Expansions

Arges Mall, MAS’s largest commercial development, opened on April 25, 2024, with 95% occupancy. Initial tenant sales exceeded expectations.

Flensburg Galerie in Germany saw occupancy rise to 97.6% from 89.6% in December 2023. Footfall and tenant sales improved significantly year-over-year.

The refurbishment of Galleria Burgas completed in May 2024. Enhancements included a reconfigured food court and improved leisure facilities. Prahova Value Centre added 2,900m2 of gross leasable area (GLA) to meet anchor tenant demand.

Mall Moldova’s extension and redevelopment are on schedule. Leasing activity remains strong, with high interest from international and national tenants. The Silk District Residential project and Pleiades Residence are nearing completion. Handover of residential units is set for July 2024.

Debt Management and Funding

MAS implemented a revised debt management strategy to address changing global funding conditions. The company aims to raise secured bank funding for unencumbered properties in CEE. This move is designed to mitigate refinancing risks related to its bond maturing in May 2026.

Since June 2023, MAS secured €156 million in new loans and signed term sheets for an additional €90.5 million. In April 2024, MAS issued €40.2 million in unsecured debt through a private placement. These new notes mature in April 2029 with a 6.5% coupon rate.

Development Joint Venture (DJV)

MAS holds a 40% stake in PKM Development Ltd, its development joint venture with Prime Kapital. By April 2024, MAS had invested €420.2 million in preferred equity with €49.8 million in undrawn commitments. Additionally, MAS provided a €30 million revolving credit facility, undrawn as of April 30, 2024.

PK Investments Limited, a subsidiary of PKM Development, acquired 61,841,522 additional MAS shares. These acquisitions were funded through preferred equity drawdowns. This strategy aims to maximize value creation for MAS shareholders.

Earnings Guidance and Prospects

MAS expects diluted adjusted distributable earnings for FY 2024 to range from 8.83 to 9.31 eurocents per share. However, potential net realisable value (NRV) impairments on DJV’s residential inventory could impact final earnings. The company is evaluating the recoverable amounts of land for residential developments.

Despite these challenges, MAS remains confident in its strategy. The focus on capital allocation, operational excellence, and cost efficiency aims to sustainably grow distributable earnings per share.

Conclusion

MAS PLC’s strategic initiatives and robust trading performance highlight its resilience and growth potential in CEE markets. The company’s proactive debt management and focused investments aim to maximize long-term returns for shareholders.