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MAS P.L.C.
Registered in Malta
Registration number C 99355
JSE share code: MSP
ISIN: VGG5884M1041
LEI code: 213800T1TZPGQ7HS4Q13
('MAS', 'the Group' or 'the Company')
VOLUNTARY TRADING UPDATE
Introduction
This trading announcement is a pre-close update prior to the release of MAS' financial results for the financial year to 30 June 2025.
It details information regarding the Group's markets, strategy, and operations.
MAS is a green property owner and operator focused on Central and Eastern Europe ('CEE'), with investments in retail assets in Romania,
Bulgaria, and Poland. The Group also benefits from exposure to high-quality commercial and residential developments via the Development
Joint Venture ('DJV')1 with Prime Kapital Holdings Ltd ('Prime Kapital') as the developer and general contractor. MAS aims to maximise
total long-term returns from property investments, on a per share basis, by focusing on capital allocation, operational excellence,
sensible leverage and cost efficiency, with a view to sustainably growing distributable earnings per share.
Corporate governance and prospects
Earlier this year, as announced to MAS' shareholders on 3 March, MAS negotiated and entered into a framework agreement with Prime Kapital
for a transaction in terms of which the DJV would (subject to the satisfaction or waiver of certain conditions precedent) repurchase the
60% ordinary shares held by Prime Kapital in the DJV and the joint venture arrangement between MAS and Prime Kapital, as conducted through
the DJV, would then terminate. However, Prime Kapital withdrew from that transaction in April, prior to the transaction being proposed to
MAS' shareholders for approval. A month later, the MAS board of directors ('Board') received a letter from PK Investments Limited
('PKI', a wholly-owned subsidiary of the DJV, which owns more than 20% of the issued share capital of MAS) in terms of which PKI informed
MAS that it intends making a voluntary offer to all shareholders of MAS to acquire all the shares in the issued share capital of MAS not
already held by PKI. MAS received two subsequent letters from PKI (on 27 May and on 5 June, respectively) referring to certain improvements
to the terms of PKI's originally intended voluntary offer. In the meantime, Hyprop Investments Limited ('Hyprop') released an announcement
on 26 May referring to a potential competing voluntary offer for MAS, which was followed by a capital raise (via accelerated bookbuild offering)
by Hyprop on 2 June, which concluded on the same day.
Furthermore, PKI, DJV and Prime Kapital sent a letter to MAS, requesting the Board to convene an extraordinary general meeting ('EGM') of MAS
shareholders by 11 July 2025, for the purpose of considering and voting on two resolutions proposed by PKI ('EGM Resolutions'). In its letter
requisitioning the EGM ('EGM Demand letter'), a substantial part of which was quoted in MAS' 19 June announcement and included in MAS' notice
convening the EGM as distributed to MAS shareholders on 20 June, PKI referred to its recent engagements with other MAS shareholders and the
feedback received during this process as being the rationale for requisitioning the EGM.
The Board acknowledged the proposed EGM Resolutions and PKI's exercise of its statutory rights under the Malta Companies Act and MAS' Articles
of Association ('Articles') to present these resolutions to MAS' shareholders for consideration and approval. By doing so, the Board fulfilled
its obligations under the Malta Companies Act, the Articles, and the JSE Listings Requirements, mindful that the conditional undertakings offered
by PKI and its affiliates to MAS (and its relevant subsidiaries) ('Undertakings') are contingent on, among others, the approval by MAS' shareholders
of the proposed EGM Resolutions by 11 July 2025. If the EGM Resolutions are approved by the requisite majority of MAS' shareholders, the Board will
take shareholders' guidance into account in reassessing MAS' strategy to maximise total shareholder returns, noting that the EGM Resolutions do not
detract from or restrict the powers of the Board to manage and administer the Company, nor create binding obligations on the Company. The Board
will still need to assess whether, and to what extent, to give effect to the EGM Resolutions (if approved by shareholders), including whether any
actions authorised by the EGM Resolutions are in the best interests of MAS and its shareholders.
As referred to in previous announcements, the priority of payments out of the DJV is the subject of a difference of opinion between the parties which
stems from an interpretation of the 2022 DJV Relationship Extension Letter (the terms of which were approved by MAS' shareholders on 30 June 2022).
Prime Kapital has indicated that its view is that surplus capital and/or capital profits can be distributed to the DJV's ordinary shareholders at any
time, subject to the satisfaction of a 20% TNAV test. This test refers to the condition that, following the proposed distribution, the aggregate amount
of the tangible net asset value of the DJV (that is net asset value which includes only assets and liabilities likely to crystallise on disposal less the
aggregate amount of nominal share capital and share premium account attributable to the preferred equity) must be at a level which is in excess of
20% of the aggregate amount of nominal share capital and share premium account attributable to the preferred equity. MAS' view, on the other hand,
is that all accrued unpaid preference dividends must be paid in full before any surplus capital and/or capital profits can be distributed to the DJV's
ordinary shareholders, subject to the satisfaction of the 20% TNAV test. The effect of the 'Enhanced DJV Distribution Waterfall', as described in the
Undertakings contained in the EGM Demand letter, is that accrued unpaid dividends rank in priority to any distributions to the DJV's ordinary
shareholders, as contended by MAS. Therefore, should the Undertakings become unconditional and be accepted by MAS (noting that further MAS
shareholder approvals may be required for certain aspects) and assuming that the DJV will make and continue to make distributions on the basis set
out in the Undertakings, then the priority of payments out of the DJV will align with MAS' interpretation. If, however, the Undertakings do not become
unconditional or are not accepted by MAS, and MAS and Prime Kapital do not resolve their difference of opinion regarding the priority of payments out
of the DJV, the matter may need to be referred to arbitration. At this stage, however, there is no formal dispute, and the DJV board has not approved
any distributions in line with Prime Kapital's interpretation of the priority of payments out of the DJV.
MAS has made numerous substantive disclosures to the market regarding the DJV arrangements, which arrangements from the outset included the
construct of the development margin alongside the fixed dividends on preferred equity, and in the interest of transparency, considers it helpful to, and
will in due course, publish an appropriate summary of the DJV Agreement and DJV Relationship Extension Letter, as prepared by MAS' lawyers. In
light of the confidentiality provisions contained in the DJV Agreement, MAS will be engaging with Prime Kapital for its consent to publish the summary.
Further, the EGM Resolutions are proposed amidst potential competing bids from PKI and Hyprop, neither of which has yet made formal offers to MAS'
shareholders. The Board was not consulted by either potential offeror regarding the proposed terms of their respective offers to shareholders.
Nonetheless, the Board is committed to the highest standards of business integrity, ethical values and corporate governance, and will continue to act
in the best interests of MAS and its shareholders. To this end, the Board is finalising the appointment of a reputable South African investment bank to
act as its independent corporate advisor, and has appointed Valeo Capital to act as its independent transaction sponsor, to assist with the Board's
consideration of the implications of the potential bids, as well as in respect of the change in strategy as proposed to shareholders via the EGM
Resolutions proposed by PKI in the EGM Demand letter. Until the review process has concluded, the Board cannot express a view or recommendation
on either the potential voluntary bids (assuming they become formal offers to MAS shareholders) or commit to the implementation of the EGM
Resolutions should these be approved by MAS' shareholders. Further updates will be provided in due course.
The Board notes its commitment to the strict management of conflicts of interest. In accordance with the Group's governance framework, directors'
conflicts of interest are recorded, and conflicted directors do not vote on matters that give rise to such conflict. This is a matter of general practice for
the Board and it was fully enforced throughout all discussions and negotiations on the recent framework agreement with Prime Kapital (which, as noted
above, has since terminated), previous potential transactions being considered by the Board, as well as any matters arising since, related to MAS'
relationship with Prime Kapital, PKI or the DJV. With respect to all confidential discussions preceding or regarding the potential voluntary bid by PKI,
the requisitioned EGM meeting as well as legal advice obtained regarding various matters between the parties, those directors with an indirect beneficial
interest therein have not been privy to either the discussions between the non-conflicted directors or with their lawyers and advisors, information
circulated for such purpose or part of the forum that decided upon such matters.
Also, the Board has constituted an ad-hoc committee comprised of Independent Non-Executive Directors, to address facilitating the proper discharge
of the Board's duties and responsibilities, and the appropriate management of any and all requests made by shareholders in terms of the provisions
of articles 41 and 42 of the Articles ("Applicability of Mandatory Bid Provisions of Malta Listing Rules" and "Applicability of Squeeze-Out Right Provisions
of Malta Listing Rules").
Lastly, the Board is committed to appointing additional Independent Non-Executive Directors, and executive directors with no existing or previous ties
to Prime Kapital (including its shareholders and/or subsidiaries) to join the Board. To this end, the Board confirms that Bogdan Oslobeanu, recently
appointed as MAS' CFO with effect from 1 July 2025, has no relationship with Prime Kapital. At the same time, the Board progressed its process to
identify candidates for appointment as Independent Non-Executive Directors and formally extends an invitation to shareholders to provide any
recommendations by submitting an email to cosec@masrei.com regarding potential independent candidates by 18 July 2025, to be considered for
Non-Executive Director positions on the Board.
Operations
Information presented in this section regards only MAS' directly-owned properties and does not include operational information in respect of properties
owned by the DJV.
Consumption remained strong in all Central and Eastern European countries where the Group operates during the first five months of the 2025 calendar
year, with all the Group's properties benefiting from robust trading. Overall, like-for-like ('LFL') footfall in the Group's directly-owned properties in CEE
for the five months to 31 May 2025 was slightly above the same period in 2024, and tenants' sales per m2 exceeded prior year levels by 7%, both in
enclosed malls and in open-air malls. Table 1 presents detailed operational information regarding Central and Eastern European LFL footfall and
tenants' sales (compared to the same period of the previous financial year) and collection rates for the five months to 31 May 2025. The collection
rates include collections up to 23 June 2025.
Table 1: CEE Retail properties operational performance
Jan 25 Feb 25 Mar 25 Apr 25 May 25 Total
Footfall (2025 compared to 2024) % 105 94 101 102 100 101
Open-air malls % 108 95 103 102 100 102
Enclosed malls % 100 94 96 102 100 98
Tenants' sales per m2 (2025 compared to 2024) % 108 107 105 112 103 107
Open-air malls % 110 107 109 114 103 109
Enclosed malls % 105 105 100 109 102 104
Collection rate % 99.6 99.5 99.4 98.8 98.6 99.2
Collection rates for the five-month period were excellent at 99.2%. Occupancy of Central and Eastern European retail assets, decreased marginally to
97.8% on 31 May 2025 (98.0% on 31 December 2024), mostly due to the Group's completed strip malls assets disposal during the period. Occupancy
cost ratios (excluding certain tenant categories: supermarkets, DIYs, entertainment and services) to 31 May 2025 remain healthy and have slightly
improved to 10.8% (10.6% on 31 December 2024).
At Flensburg Galerie (Germany), occupancy has increased to 97.4% (95.8% on 31 December 2024). Footfall and tenants' sales have however
underperformed those in the same five months to 31 May 2024.
Developments
Construction at Mall Moldova, Iasi, owned by the DJV, was finalised as scheduled, and the centre opened on 17 April 2025. It is Romania's second
super-regional enclosed mall and retail node, and the only one of this magnitude outside of Bucharest. This is the largest shopping destination in the
Moldova region, bringing in the Eastern part of the country over 250 national and international retail brands, of which 50 exclusively. Occupancy at
opening was over 94% of the centre's 87,100m2 GLA., part of a 110,000m2 retail destination, and footfall and tenants' sales since then were exceptional.
If appropriate, further details and progress on the DJV's secured development pipeline will be made available in due course.
Liquidity, capital allocation and debt management update
The Group's approach remains to maximise risk-adjusted total long-term returns from investments on a per-share basis. Following a strategic review
in June 2023, a revised debt management plan was put in place to raise bank funding secured against all of MAS' unencumbered properties in CEE
aimed at reducing refinancing risks associated with its bond maturity in May 2026 and its funding commitments to the same date, as well as suspension
of dividend payments to cover the shortfall.
Since 30 June 2023, MAS has provided regular updates regarding progress achieved and impact on its liquidity sources and remaining capital
commitments to 30 June 2026. Table 2 below includes information on 31 May 2025 regarding the Group's commitments (including its capital
commitments to the DJV, capital expenditure requirements and debt amortisation payments) assuming the suspension of dividend payments by MAS,
and assuming MAS receives no dividends from the DJV until the bond's maturity. No impact of a potential change of control of MAS was taken into
account when preparing this information. On 31 May 2025, the Group held EUR174million in cash and near-cash instruments and was in the process of
finalising documentation in respect of a EUR45million secured bank loan for which the terms had been agreed.
Processes are ongoing to source further additional capital required to fund the Group's commitments. Some of these processes refer to additional
potential asset disposals, which include the Flensburg Galerie asset. Once disposal processes are sufficiently advanced the Group can make a
classification of such assets as 'held for sale' in compliance with strict IFRS standards.
Table 2: Capital Requirements ' 31 May 2025
Total commitments to 30 June 2026: EUR262million
Existing bond (notional) DJV revolving credit facility Capex1 Debt amortisation2
EUR173million EUR30million EUR21million EUR38million
Sources of capital to 30 June 2026: EUR262million
Cash and near-cash instruments3 Secured debt under negotiation Required additional funds
EUR174million EUR45million EUR43million
1 Estimated capital expenditure (including EUR14million regarding DJV extensions).
2 Estimated debt amortisations, maturities and raising fees.
3 Cash and near cash instruments include cash and cash equivalents but exclude cash in debt service reserve accounts and tenants' guarantees.
Funding commitments to DJV
On 31 May 2025, PKI owned 153,498,569 MAS shares. By the same date, MAS had invested an aggregate EUR470million in preferred equity and, as a
result, MAS had no further undrawn commitments to invest in additional preferred equity in the DJV. In terms of the 2022 DJV Relationship Extension
Letter (the terms of which were approved by MAS' shareholders on 30 June 2022), MAS also has a commitment to make available to the DJV a
EUR30million revolving credit facility, which was undrawn on 31 May 2025 (figures not proportionally consolidated).
On 6 June 2025, MAS received notice that the DJV will exercise its put option in respect of the two property extensions built and owned by the DJV to
existing MAS directly owned properties, being the Baia Mare and Roman Value Centres' extensions (granted in terms of the acquisition agreement of
28 February 2019, announced on 4 March 2019). This acquisition will allow the Group to fully consolidate its position in respect of these properties by
directly owning the entirety of the respective retail properties, which will include the extensions. It is expected that the transfer of properties from the
DJV to MAS will take place by 31 August 2025. The cash consideration will include the fair valuation of properties and working capital adjustments.
EUR14million was already taken into account as a commitment estimated to be paid by 30 June 2026 to the DJV as part of MAS' liquidity planning in
respect of Capex requirements.
Earnings guidance
The Company expects its results from operations to achieve IFRS basis MAS distributable earnings guidance for the financial year to 30 June 2025,
ranging from 9.37 to 9.79 eurocents per share, with no change to the assumptions on which the previously communicated guidance has been based.
This guidance has not been audited or reviewed by MAS' auditors and is the responsibility of the Board.
1 'DJV' is an abbreviation for a separate corporate entity named PKM Development Ltd ('PKM Development'), an associate of MAS since 2016, with independent
governance. MAS owns 40% of PKM Development's ordinary equity (EUR20million), an investment conditional on it irrevocably undertaking to provide preferred
equity to PKM Development on notice of drawdown. By 31 May 2025, MAS had invested an aggregate of EUR470million in PKM Development and had no further
obligation outstanding to invest in additional preferred equity in PKM Development. In addition, in terms of the 2022 DJV Relationship Extension Letter
(the terms of which were approved by MAS' shareholders on 30 June 2022), MAS has committed to provide PKM Development a revolving credit facility of
EUR30million at a 7.5% fixed rate, which was undrawn on 31 May 2025 (figures not proportionally consolidated). The balance of the ordinary equity in
PKM Development (EUR30million) was taken up by Prime Kapital in 2016 in cash. In terms of applicable contractual undertakings and restrictions governing
the DJV, Prime Kapital:
(i) is not permitted to operate or own a stake of more than 15% in any CEE commercial or residential real estate development or redevelopment business
outside of PKM Development until the earlier of (i) the DJV's capital commitments and third party financing being fully drawn and invested; and
(ii) 23 March 2030;
(ii) contributes 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 an integrated in-house platform.
30 June 2025
For further information please contact:
Irina Grigore, MAS P.L.C. +356 27 66 36 91
Java Capital, JSE Sponsor +27(0)60 572 2299
Date: 30-06-2025 08:00:00
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