MAS Real Estate shows strength with open-air malls in Romania

The Sepsi Value Centre in Sfantu Gheorghe, Romania.
The Sepsi Value Centre in Sfantu Gheorghe, Romania.

MAS Real Estate has confirmed the opening of its second retail asset development during Covid-19.

In August 2020, the 31 200m2 GLA enclosed Dambovita opened in Romania with a 92% occupancy. The shopping centre’s international and national tenants have been trading well since its launch and the centre is producing reliable and attractive cash flows from rental income. It is the only mall in the county.

Under pandemic restrictions, the Sepsi Value Centre, a 17 000m2 GLA open-air development launched on the 18th of March 2021 in Sfantu Gheorghe, the capital of Romania’s Hungarian-speaking dominated Covasna county. Sepsi is a Hungarian language reference found in the Hungarian name equivalent of the town named after Saint George, with a population of approximately 56 000 and approximately 214 000 habitants in the surrounding areas.

The development team, housed in Prime Kapital and headed by founders Martin Slabbert and Victor Semionov, has completed more than fifty developments in Central Eastern Europe since 2007, all of which are successful. MAS and Prime Kapital agreed on a development joint venture in 2016.

Slabbert and Semionov became MAS executive directors following a transaction with MAS in late 2019 where Prime Kapital sold its co-investment interest in 14 Central Eastern European income properties and its asset and property management platform to MAS in exchange for MAS shares.

Following an announcement on the 18th of March 2021, wherein the development joint venture agreed to acquire a further 28 million MAS shares from well-known South African REIT Attacq, MAS and Prime Kapital management and employees (via Prime Kapital, the development joint venture, MAS share purchase scheme and a large number of MAS’ and Prime Kapital’ employees elected in 2020 to have their deferred cash bonuses converted into MAS shares) have a combined exposure to 21.07% of the shares issues by MAS, signaling management confidence in a very strong alignment with public shareholders.

MAS recently released its December 2020 financial results, which were testament to the good performance of its open-air malls in Romania, in respect of which it collected an impressive 96% of pre-Covid-19 rental expectations (i.e., when support measures, temporary enforced tenant closures and Covid-19 restrictions that had been introduced are disregarded).

MAS’ income property holdings are skewed to open-air malls in Romania which have proven to be more resilient than other retail centres during pandemic lockdowns and trading restrictions. The open-air malls have high concentrations of international and national anchor tenants. Apart from the convenience element, consumers feel a greater sense of safety when accessing stores directly from the outdoor parking. With Sepsi Value Centre opened for trade MAS currently has an interest in twelve operational open-air and enclosed malls in (five partially owned via a Development JV with developer Prime Kapital) and seven strip malls, in Romania. Prime Kapital has developed thirteen of these robust retail assets. 

Martin Slabbert, MAS chief executive officer, describes the strength of this market notwithstanding the pandemic: “Based on the strong performance of anchor tenants in open-air malls post Covid-19 pandemic lockdowns, which have proven to be less harsh in Romania compared to other Central Eastern European countries, it was decided to proceed with construction at Sfantu Gheorghe in September 2020. The development is the first modern retail scheme in the area, and it aligns with our requirements in terms of location and population density. Resumption of two further open-air mall developments is expected in April, subject to building permits being issued and pre-construction leasing targets being met.”

The €22.5 million investment in Sfantu Gheorghe, is directly accessible from the town’s main boulevard, in a densely populated residential area, approximately two kilometres from the city centre. Leasing and construction processes proceeded despite the pandemic and resulted in delivering the centre with high occupancy which was enthusiastically received by shoppers on opening day.

The open-air mall hosts a wide range of stores catering to all ages and interests, as well as the first full self-checkout hypermarket in the country with no cashiers and the first Carrefour hypermarket in Covasna county with a sales area of approximately 4,150m². It includes a service area, a fashion area, cafes with outdoor terraces, and a modern designed food court. The centre was developed according to a unique design concept, pioneered by Prime Kapital in Romania, with high quality materials and state-of-the-art equipment.