MAS Real Estate enters Bulgaria market with two shopping mall acquisitions

Galleria Burgas Mall, Bulgaria.
Galleria Burgas Mall, Bulgaria.

MAS Real Estate Inc. today announced the acquisition of two shopping malls in Bulgaria, for €62 million. The malls have been acquired from Globe Trade Centre S.A. and European Bank for Reconstruction and Development. The Galleria Burgas Mall and the Galleria Stara Zagora Mall and are located in the Bulgarian cities of Burgas and Stara Zagora respectively.

“We are very pleased with the acquisition of the Galleria Burgas and Galleria Stara Zagora malls. This transaction is in line with our plans to expand into markets with growing economies across Central and Eastern Europe by acquiring accretive income-generating assets with real upside potential through our joint venture with Prime Kapital”.

“The transaction increases our income-generating property portfolio by 15,3% from EUR406,4 million to EUR468,4 million,” says Lukas Nakos, CEO of MAS.

Galleria Burgas is the dominant shopping centre in Burgas, the 4th largest Bulgarian city with a population of 200,000. The mall benefits from a total catchment area of approximately 480,000 people within 60 minutes’ drive, as well as a significant number of tourists during the summer holiday season, the city being in the vicinity of the most popular Black Sea resorts on the Bulgarian coast. The mall is centrally located in the northern area of the city with excellent visibility from and access to a major boulevard in front of the mall and is well served by public transport.

“Galleria Burgas has a broad tenant mix consisting of 115 tenants including primarily international fashion and entertainment brands (including Bershka, CCC, Cinema City, Deichmann, H&M, Humanic, Ikea, Intersport, LC Waikiki, Lee Cooper, Lidl, Massimo Dutti, Oysho, Terranova and Zara). Due to strong performance and tenant demand, a significant centre extension is being considered with the intention to enhance the earnings from this asset,” commented Nakos.

Galleria Stara Zagora is the dominant shopping centre in Stara Zagora, the 6th largest Bulgarian city. The mall benefits from a total catchment of approximately 400,000 people within 45 minutes’ drive. The mall is centrally located, has excellent visibility being positioned at the crossroads of two main city boulevards and is served by public transport. The tenant mix is focused primarily on fashion and entertainment and consists of 71 tenants (which includes brands such as Bershka, Cinema City, CCC, Deichmann, DM, H&M, Intersport, Kenvelo, LC Waikiki, New Yorker, Nike, Pull&Bear and Stradivarius).

“Galleria Stara Zagora is in need of refurbishment and offers value enhancing opportunities through operational streamlining and commercial layout improvement. With our asset management expertise we have formulated an approach to improve the operational capacity of the mall with the intention to enhance the net income earned from the asset,” says Nakos.

MAS’ effective economic interest in the acquisition is the equivalent of an 80% direct participation in the performance of the malls and a 20% participation at the weighted average cost of funding achieved by the acquisition in line with the previously announced co-investment agreement with Prime Kapital.

“This acquisition forms part of our investment JV with Prime Kapital, and demonstrates the team’s ability to access outstanding accretive deal flow.

The continuous increase in purchasing power within these regions underpins the investment case in the region in general, and for these two acquisitions in particular.  We remain focused on delivering high quality and growing income distribution per share to shareholders. Our expansion strategy is on track and we are excited about the future pipeline of the company,” concluded Nakos.