MAS REAL ESTATE INC Annual results presentation September 2015 RESULTS PRESENTATION SEPTEMBER 2015 1
MAS REAL ESTATE INC Contents 1. Strategic update Lukas Nakos – Chief Executive Officer 3 2. Financial review Malcolm Levy – Chief Financial Officer 17 3. Portfolio review Jonathan Knight – Chief Investment Officer 24 4. Outlook Jonathan Knight – Chief Investment Officer 31 5. Closing comments Lukas Nakos – Chief Executive Officer 34 RESULTS PRESENTATION SEPTEMBER 2015 2
North Street Quarter Lukas Nakos Strategic update Chief Executive Officer RESULTS PRESENTATION SEPTEMBER 2015 3
MAS REAL ESTATE INC Company overview erview Our vision e are • To be the pre-eminent listed real estate investment company, with a Western GERMANY European focus and delivering sustainable 81,541 sqm UNITED KINGDOM 90,8% occupancy distributions whilst creating stakeholder value 107,806 sqm 92,9% occupancy Our mission • To acquire, develop and effectively manage a diversified portfolio of high quality real estate SWITZERLAND investments in Western Europe to deliver 5,699 sqm kdown 100,0% occupancy sustainable distributions and capital ome-generating property � Investments appreciation over time Number of property Property portfolio Rental area locations value ¤ sqm 30-Jun-14 10 64,751,842 46,092 30-Jun-15 19 248,538,806 195,406 RESULTS PRESENTATION SEPTEMBER 2015 4
MAS REAL ESTATE INC Highlights • Adjusted NAV per share grew 16,8% from 103,8 to 121,2 euro cents per share • Adjusted core income per share increased 20,9% from 2,82 to 3,35 euro cents per share • Profit for the year grew 858% to ¤48,5 million • Direct property portfolio grew by 283% from ¤64,8 million to ¤248,5 million • Income-generating property pipeline expanded to ¤276 million • Development property pipeline expanded to ¤173 million • Excellent debt terms signed / agreed on German assets to release further ¤60 million for re-investment • Internalised the investment adviser • Team grew from 7 to 20 • Migrated listing from JSE AltX to JSE Main Board • On track to increasing income distribution JULY 2014 OCTOBER 2014 DECEMBER 2014 2H15 FY15 1H FY16 2H FY16 1H FY17 – Acqusition of – Internalisation – Move to the – Acqusition of – Regearing of – Completion – Completion of German pipeline of investment Main Board of German pipeline portfolio and of Whitbread Adagio hotel assets # 1 adviser the JSE assets #2 acquisition of hotels – Planning – Acquistion of pipeline assets – Planning decision Langley Chippenham – Planning application Park property decision North Langley Park Street Quarter RESULTS PRESENTATION SEPTEMBER 2015 5
MAS REAL ESTATE INC Our business activities DEVELOP ACQUIRE properties sustainably to maximise the well tenanted properties in strong and income from, and growth in value of, the resilient locations investments OPTIMISE MANAGE capital structure of the business to enhance our portfolio effectively to maximise the shareholder return without undue exposure value created by the investments to excessive risk RESULTS PRESENTATION SEPTEMBER 2015 6
MAS REAL ESTATE INC Portfolio composition Portfolio composition • Our portfolio consists of four 13% segments 13% 8% • Two form the core of our business 44% 21% and are expected to grow over 12% 67% time; namely Income generating 22% property and Development property 30 June 2015 Expected 30 June 2014 • The remaining two are utilised as Income generating property Developments Investments Treasury required and expected to fluctuate around capital raising activity of the group, namely Investments and Portfolio overview Treasury 220 2014 • It is important to consider 205.8 2015 performance in light of the build- 165 up phase of the portfolio 164.4 Euro million 110 84.1 79.6 55 47.7 39.7 35.7 25.1 0 RESULTS PRESENTATION SEPTEMBER 2015 Income Generating PropertyDevelopment Property Investments Treasury and Corporate 7
MAS REAL ESTATE INC Income-generating • Core component of our portfolio • Gearing applied on a per asset basis as appropriate • Acquired or developed to hold for income • Acquisition hurdle core income of 6%+ • Diversification is achieved via jurisdiction, tenant industry, and sector 13% 44% 21% Income-generating property 22% Developments Investments Treasury 30 June 2015 RESULTS PRESENTATION SEPTEMBER 2015 8
MAS REAL ESTATE INC Developments • Core component of our portfolio • Properties developed on a pre-let basis to hold for accretive income and NAV growth • Developing usually allows for higher income yield and value growth than acquisition, but has resultant income time lags and carries inherent risks, so the percentage portfolio New Waverley, Edinburgh allocation is restricted, and dependent upon market cycle • Gearing applied either during construction on a conservative basis, or upon completion in line with income-generating parameters 13% North St Qtr, Lewes 44% 21% Income-generating property Developments 22% Investments Treasury 30 June 2015 RESULTS PRESENTATION SEPTEMBER 2015 9 Langley Park, Chippenham
MAS REAL ESTATE INC Investments Karoo return 70 • No specific target portfolio allocation 60 • Two investments made to date: Karoo Fund 50 Euro Million and Sirius, both made on an opportunistic 40 basis to benefit from the deep discounts 30 available to inherent value 20 • Both have performed exceptionally 10 • Karoo will be redeemed by early 2016 0 • We will only consider investments where there Acquistion Dec 2013 Jun 2014 Dec 2014 June 2015 Net Karoo Cumulative redemptions is a compelling case for doing so Sirius Real Estate share price since acquisition 55 13% 44% 21% 50 GBP pence 45 Income-generating property 22% Developments Investments 40 Treasury 30 June 2015 35 RESULTS PRESENTATION SEPTEMBER 2015 5-Dec-14 13-Feb-15 22-Apr-15 29-Jun-15 2-Sep-15 10
MAS REAL ESTATE INC Treasury Treasury portfolio cumulative profit • ¤180m capital was raised in February 2014 in order to achieve 6 scale for the business and to diversify the shareholder base • This capital was invested in a measured and considered manner in suitable direct property assets 5 • Due to the low interest rate environment ¤30m was placed in a portfolio of real estate equities in order to achieve both Euro million exposure to European real estate returns and enhance returns 3 available on cash • This portfolio has performed exceptionally and has now been substantially liquidated 2 • The allocation to the active treasury management strategy is likely to range from 0-10% of the investment portfolio 0 Jul 14 Sep 14 Nov 14 Jan 15 Mar 15 May 15 13% 44% 21% Income-generating property Developments Investments 22% Treasury 30 June 2015 RESULTS PRESENTATION SEPTEMBER 2015 11
MAS REAL ESTATE INC Strategic objectives Strategic Competitive advantage Progress Looking ahead objective Strong pipeline of income generating Invested ¤175,6 million in Relationships and partners property ¤276m current year, ¤126.9 million Strong pipeline of UK and German into income-generating Track record developments ¤173m property, ¤38,5 million into developments, and ¤10.2 Deal appraisal methodology million into investments Drive the acquisition Invest proceeds of gearing in accretive programme in Europe The remainder of the capital income generating properties and and development raised is allocated to the developments, and raise further capital on Creative approach programme in the UK current development a deal by deal basis subject to market construction conditions Planning and development Construction under way on capability Phase 1 at New Waverley for completion in April through Mixed use development ‘niche’ Construction start on Phase 2 New December 2016 in UK Waverley mid 2016 Deliver the existing developments in the Planning submitted - Lewes portfolio to planning approval, construct to income and profitable sale as Lease re-gears in existing Local partners and professional appropriate, thereby delivering both portfolio teams growing income and NAV Unlock value in existing portfolio Planning decision Chippenham mid 2016 New leases signed Current interest rate Planning decision Lewes end 2015 environment RESULTS PRESENTATION SEPTEMBER 2015 12
MAS REAL ESTATE INC Strategic objectives (cont) Strategic Competitive advantage Progress Looking ahead objective Term sheet signed on ¤30m Gear the portfolio optimally (40-50%) to Ability to acquire then gear debt facility, further ¤30m maximise portfolio income yield on a risk improves terms agreed on second facility adjusted basis Gear the portfolio optimally Deal flow strong in current Will return to market on deal by deal basis to markets through existing Draw-down imminent raise further capital from shareholders relationships Cautious approach and Increase income distribution, increase spread diligent consideration of each of shareholders, size of company and liquidity Continue to and every investment in the traded share improve investment Experience and skills of team, and process as the partners organisation Continue to build the portfolio of income grows Acquiring pipeline well generating and development properties on an earnings accretive basis. RESULTS PRESENTATION SEPTEMBER 2015 13
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