MAS REAL ESTATE INC Results presentation New Waverley, Edinburgh, UK Year ended 30 June 2016 1
TABLE OF CONTENTS i. Company profile ii. Strategic update iii. Recurring and potential EPS iv. Highlights of the year v. Review of the portfolio vi. Pipeline Bruchsal property, Germany vii. Capital management viii. Outlook ix. Appendices i. Recent additions to the portfolio ii. Developments iii. Management accounts Munich property, Germany 2 MAS REAL ESTATE RESULTS PRESENTATION 2016
COMPANY PROFILE PROPERTY INVESTOR, DEVELOPER AND OPERATOR SEGMENT PROFILE BY VALUE * MAS Real Estate Inc (“MAS” or the “group”) is a commercial property investor, developer and operator that is listed on the main board of the Johannesburg Stock Exchange (“JSE”) and the Euro-MTF market of the Bourse de Luxembourg. € m Income generating 309.1 BUSINESS STRATEGY Developments 24.5 €378.13 45.5 Land bank million MAS’ strategy is to generate sustainable and growing distributable earnings per share by acquiring, developing and operating retail, o ffi ce, industrial and hotel assets in Western Europe and more recently in Central and Eastern Europe. Where exceptional opportunities arise, the group will embark on mixed-use or residential developments with the view to either generate recurring income, such as campuses leased to universities, or capital gains. The company aims to distribute all of its distributable earnings on a semi-annual basis, with distribution of capital and GEOGRAPHIC PROFILE BY RENT * other profits at the discretion of the directors. MANAGEMENT € m Germany 15.77 MAS is internally managed, combining investment, development and asset management skills. 5.10 €22.07 UK Developments are undertaken by teaming up with strong developers that have intimate 1.20 Switzerland million knowledge of the local markets and by agreeing terms that lead to a strong alignment of interests. FUNDING MAS is targeting an aggregate portfolio LTV of 40% - 50%. Long-term debt funding is referred SEGMENT PROFILE BY PASSING RENT * and interest rates are managed through the group’s hedging strategy. Developments are currently funded through equity and refinanced at completion. LONG-TERM INCOME FROM STRONG COVENANTS € m Retail 15.77 Industrial/logistics €22.07 MAS has assembled a high quality portfolio of commercial property and developments across 4.12 Hotel 2.18 Western Europe and is currently expanding into Central and Eastern Europe in joint venture with million Prime Kapital. At 30 June 2016 the portfolio had an outstanding weighted average lease term of 12.3 years, occupied by tenants with strong corporate covenants. * Includes acquisition of Edeka portfolio 2 and the Munich property, acquired post year end 3 MAS REAL ESTATE RESULTS PRESENTATION 2016
STRATEGIC UPDATE • Income-generating property refinanced Updated strategy being implemented: & proceeds invested in further developments • High quality and growing distribution per share • Optimising balance sheet allocation 2015 Euro million 500 • 450 Focus on income growth through acquisition, asset 2016 400 management and development 350 300 Optimised • Expansion into CEE – developing and investing 250 200 • Gearing optimally to 40-50% portfolio LTV 150 100 50 • Prime Kapital partnership 0 Income-generating Development property property • Development joint venture • € 200m in 7.5% preference shares and Completed developments Previous listed investments, treasury, cash • held for income € 20m in 40% equity stake and proceeds from refinancing invested in new developments and accretive income • 8-10% income and +15% IRR generating property • Co-investment in income generating property Current investment focus Previous investment focus Income-generating Development Income-generating Development Listed Investments Treasury Existing WE ü Existing WE ü Existing WE ü Existing WE ü WE ü WE ü New CEE ü New CEE ü New WE ü New WE ? 4 MAS REAL ESTATE RESULTS PRESENTATION 2016
RECURRING AND POTENTIAL EPS Theoretical EPS assuming no further equity issues, gearing at 40% LTV and full investment of assets in income-generating properties Euro cents 10.0 2.0 9.0 8.0 5.8 7.0 0.8 6.0 1.8 0.2 5.0 1.1 8.1 4.0 6.4 3.0 5.4 4.6 4.3 2.0 1.0 - Passing rent Acquisitions - Passing rent - Property Property NRI Admin plus tax Recurring EPS NRI - Incremental Recurring EPS 30.06.16 committed committed outgoings - outgoings - optimised finance cost to potential 30.06.16 committed 40% LTV MAS is well positioned to go through an sustained period of earnings growth supported by the completion of its existing developments, committed and further pipeline acquisitions, recycling of capital into income-generating assets and increasing the gearing to its target LTV of 40-50%. 5 MAS REAL ESTATE RESULTS PRESENTATION 2016
HIGHLIGHTS INVESTMENT PROPERTY * DISTRIBUTION PER SHARE MEDIAN DAILY SHARE VOLUME 350 5.00 90 Euro cents 4.50 Thousands of shares Euro millions 311.6 76.2 4.50 34.3% 80 300 4.00 248.5 70 3.35 250 3.50 60 82.1% 3.00 200 50 40.8 2.50 40 1.84 150 2.00 30 1.50 100 64.8 20 1.00 50 10 0.50 1.1 0 0.00 0 2014 2015 2016 2014 2015 2016 2014 2015 2016 ADJUSTED NAV PER SHARE TOTAL ASSETS LOAN TO VALUE * 125 500 Percentage Euro cents Euro millions 18 Impact of Brexit/ 467.6 16.0 121.2 currency 16 120 450 410.5 14 12.3 115.1 115 400 12 10 110 350 310 8 103.8 4.8 105 300 6 4 100 250 2 95 200 0 2014 2015 2016 2014 2015 2016 2014 2015 2016 * Data extracted from management accounts 6 MAS REAL ESTATE RESULTS PRESENTATION 2016
REVIEW OF THE PORTFOLIO CONTRACTED RENT BY YEAR UK Euro millions 20 Germany 12 United Kingdom 18 Switzerland 16 Edinburgh O ffi ce 14 GERMANY Isle of Man 12 Headquarters 16 10 London O ffi ce 8 Frankfurt O ffi ce 1 6 1 4 SWITZERLAND 2 Prime Kapital O ffi ce - 2017 2021 2023 2025 2029 2031 2032 2033 2035 2019 2022 2024 2026 2027 2028 2034 2036 2037-46 pa ROMANIA 2018 2020 2030 Total contracted rent is € 248.4m 7 MAS REAL ESTATE RESULTS PRESENTATION 2016
INCOME-GENERATING PROPERTY EVOLUTION OF PASSING RENT 25 Euro millions 20 15 +63% 10 5 - Rent received Rent received Passing rent Munich Edeka portfolio 2 Adagio Adjusted passing FY2015 FY2016 30.06.16 rent 12.3 INCOME-GENERATING WALT Whitbred and arches Edeka portfolio 1 Aldi portfolio Toom portfolio Donaueschingen Lehrte Gotha Braehead Existing Heppenheim park Zurich Acquired post year end Chippenham Bruchsal Munich Edeka portfolio 2 8 0 5 10 15 20 25 30 Years MAS REAL ESTATE RESULTS PRESENTATION 2016
PIPELINE 30 June 2016 30.0 Development 129.0 113.5 150.0 Income-generating 91.0 67.8 - 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 Euro millions Further pipeline Exclusivity Committed 9 MAS REAL ESTATE RESULTS PRESENTATION 2016
CAPITAL MANAGEMENT Optimising the group’s sources of funding is one of the group’s key strategic objectives DEBT EQUITY ≈ 100% improvement in liquidity of traded share • GEARING PROGRAMME FOR CURRENT ASSETS Target portfolio LTV 40% - 50% • R1.2bn further equity raised to secure pipeline DRAWN/COMMITTED acquisitions and developments Debt - 31.08.16 € 98.9 million Weighted cost of debt 2.5% Weighted average term 9.2 years SHARES IN ISSUE NEGOTIATED 380 Millions Debt - 31.08.16 € 86.7 million Weighted cost of debt less than 2.50% 360 DRAWN/COMMITTED AND NEGOTIATED 340 DEBT BY CURRENCY 320 5% 300 28% € 185.6m 280 67% EUR GBP CHF 10 MAS REAL ESTATE RESULTS PRESENTATION 2016
OUTLOOK • MAS is well positioned to deliver a sustained period of significant growth in earnings and distributions on the back of: • A strong internally managed platform that can take on the management of significant further assets • Significant capital committed alongside our experienced partners Prime Kapital • A focus on two core investment categories which should deliver the optimal returns from our capital base in markets with strong growth potential • Balance sheet optimisation and e ffi cient capital management 11 MAS REAL ESTATE RESULTS PRESENTATION 2016
MAS REAL ESTATE INC Appendices New Waverley, Edinburgh, UK 12
RECENT ADDITIONS TO PORTFOLIO LEHRTE PROPERTY Acquired December 2015 Tenant OBI Contracted rent € 0.76m WALT 10.6 years A stand-alone retail warehouse let on a long-term lease to OBI, the largest DIY operator in Europe, part of the Tenglemann Group. This property was acquired because of the strong income, dominant location in surrounding area, and ability to refinance at low rates. Lehrte property, Germany WHITBREAD AND THE Arches Completed March 2016 Tenant Whitbread, various Contracted rent € 2.18m WALT 27.6 years The first delivery from phase I at New Waverley is the Premier Inn hotel, Hub by Premier Inn hotel, and associated retail. This development continues to progress well, with the current trading at the recently opened hotels being above expectation, which bodes well for the remainder of the phase I scheme that is being delivered later this calendar year, and phase II that is Premier Inn, new Waverley commencing. 13 MAS REAL ESTATE RESULTS PRESENTATION 2016
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