Hyprop’s failed attempt to gain control of MAS through a conditional voluntary offer would have been risky without it having access to certain MAS agreements, an analyst says.
Hyprop’s offer gave MAS shareholders a choice between cashing out or remaining invested through Hyprop shares.
However, the Canal Walk owner withdrew the offer on Friday after MAS declined to provide full access to its development joint venture (DJV) agreements — critical documents that outline the commercial relationship between MAS and Prime Kapital, which owns about 21% of the former.
According to Sesfikile Capital portfolio manager and head of research Naeem Tilly, the DJV agreements included sensitive terms — such as a development margin fee payable to Prime Kapital — that had not been previously disclosed to shareholders. “Without access to the full agreement, Hyprop chose not to proceed,” Tilly said. “That document was essential to assess the risks for shareholders.”
Prime Kapital holds a majority stake in PKM Development, while MAS owns the balance. The joint venture is responsible for managing and developing key real estate projects, particularly shopping malls and mixed-use developments.
The failed takeover attempt came just weeks after MAS’s largest shareholder, through PK Investments (PKI) launched an initiative to reshape MAS’s direction.
At an earlier extraordinary general meeting, PKI proposed a five-year asset realisation plan to unlock value while keeping MAS listed. Shareholders narrowly rejected both nonbinding resolutions, halting the proposal. If approved, PKI had pledged to withdraw its separate voluntary offer, which would have offered a faster monetisation path without triggering a change of control.
MAS was forced to suspend dividend payouts amid persistent liquidity pressure and refinancing risk and has signalled that distributions are unlikely to resume before its 2027 financial year.
MAS’s shareholders include the Public Investment Corporation (PIC), Sesfikile Capital, Anchor Stockbrokers and PKM Development.
Tension is rising ahead of an August 27 extraordinary general meeting, called by MAS shareholders with more than 15% of the vote, seeking to remove two directors, appoint four independent nonexecutive directors and address governance concerns.
Tilly believes the appointment of new independent nonexecutives could finally shift the company towards improved governance. “The board hasn’t always acted in the best interests of all shareholders,” he said.
Last week, Business Day reported that Hyprop CEO Morné Wilken, in an investor call, expressed a sense of investor fatigue with MAS’s management, and that shareholders had grown impatient with MAS and Prime Kapital.
Regional property consultant at eXp SA, Kura Chihota, said Hyprop’s approach appeared to be more about due diligence and responsible stewardship of an entity it was already involved in, rather than a strategic move to significantly increase its stake or take control.
Chihota said Hyprop had a solid track record of mobilising capital in the SA market and could have made a bolder binding offer if it so choose.
He said Hyprop may have been unable to fully assess the financial effect — or more importantly, forecast MAS’s future cash flows — without a clear understanding of the material obligations linked to the DJV agreements.
“This information was fundamental to any credible valuation, yet it was not made available, despite Hyprop’s direct request,” he said. “By contrast, Prime Kapital had that information readily at hand.”
He said had the Hyprop offer gone through, it could have significantly altered Hyprop’s carefully structured debt profile.
“Hyprop’s current debt maturity is staggered, with its next major redemption only due in 2030. A takeover of MAS might have introduced capital calls from restructured debt — something that could have undermined Hyprop’s ability to maintain its consistent dividend-paying track record,” Chihota said.
“Hyprop is highly aggressive in paying out dividends, recently increasing its payout ratio to as high as 95% and would rather prioritise earnings accretive deployment of capital ahead of net asset value (NAV) unlocking exercises. The 2023 suspension of dividends might have triggered Hyprop to up pressure and push for a board that could resume dividends after restructuring debt,” he said.
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