MAS Real Estate Defies Pandemic And Opens New Open-Air Mall In Romania

In August 2020, Dambovita Mall, a 31,200m² GLA (gross lettable area) enclosed shopping centre, was opened with a high 92% occupancy. The mall’s international and national tenants have been trading well since opening and the centre is producing reliable and attractive cash flows from rental income, as it is the only mall in the county as well as due to a low-risk development strategy focused on anchor tenants.

On 18 March 2021, still under pandemic restrictions, Sepsi Value Centre, a 17,000m² gross lettable area open-air mall development was opened 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 surrounding areas of approximately 214,000 inhabitants.

The development team, housed in Prime Kapital, headed by founders Martin Slabbert and Victor Semionov, has completed more than 50 developments in CEE since 2007, all of which are very successful. MAS and Prime Kapital agreed a development joint venture in 2016 (Development JV). Slabbert and Semionov became MAS executive directors following a transaction with MAS in late 2019 whereby Prime Kapital sold its co-investment interest in 14 CEE income properties and its CEE asset and property management platform to MAS in exchange for MAS shares.  Following a transaction announced today, 18 March, wherein the Development JV agreed to acquire a further 28 million MAS shares from well-known SA REIT Attacq, MAS and Prime Kapital management and employees (via Prime Kapital, the DJV, MAS share purchase scheme and a large number of MAS’ and Prime Kapital’s employees that elected in 2020 to have their deferred cash bonuses converted into MAS shares) have a combined exposure to 21.07% of the shares issued by MAS, signalling management confidence in and 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 12 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 13of 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 CEE 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.