On 2 March 2016, MAS announced that it had entered into a Development Joint Venture with Prime Kapital focused on commercial opportunities in Central and Eastern Europe. The development opportunities acquired by and available to the Development JV have substantially exceeded initial expectations, with the Development JV now targeting in excess of EUR 1 billion of high quality developments across CEE. In order to fund this pipeline, MAS has increased its commitment to the Development JV from EUR 200 million to up to a maximum of EUR 350 million of preference share capital, on the same terms as the previous commitment. MAS’ equity stake in the Development JV remains at 40%.
The increased commitment accompanies an expansion of the scope of the Development JV to include residential developments.
Rationale
The market opportunity in CEE remains compelling, with the Development JV offering many benefits to MAS, including the following:
i. Access to high growth, euro denominated jurisdictions, with improving capital markets and investor sentiment and sufficient scale to impact significantly upon MAS’ future growth potential;
ii. Access to good quality assets with higher income and capital returns, and growth in such returns, that are not readily available at this point in the cycle in Western European markets;
iii. Access to an experienced team with a proven track record of delivery in the CEE market, in a manner that ensures MAS’ exclusive access to them for this investment strategy (being development and redevelopment of commercial and residential real estate assets in CEE);
iv. Strong alignment of interest through Prime Kapital’s long-term co-investment; and
v. Speed to market, given the experience of Prime Kapital’s management team and established pipeline in this region.
The expansion of the Development JV further strengthens the relationship between Prime Kapital and MAS.
Residential opportunity
The shortage of modern, high quality residential accommodation in capital cities across CEE provides a further opportunity to benefit from high growth markets in which the purchasing power of residents is increasing strongly. The Prime Kapital team is well placed to leverage its experience in CEE to exploit this opportunity. Profits from the sale of completed residential developments will be used to support and drive distributions and distribution growth in the periods ahead.
This announcement is voluntary and for information purposes only.
