Year End 2013 Investors Presentation FINANCIAL & BUSINESS RESULTS March 2013
Disclaimer
This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of AFI Development Plc (the "Company") or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this document, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of the Company or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with the document. This communication is only being distributed to and is only directed at (1) qualified institutional buyers (within the meaning of Rule 144A of the United States Securities Act of 1933, as amended (the "Securities Act") or (2) accredited investors (as defined in Rule 501(a) of Regulation D adopted pursuant to the Securities Act). Any person who is not a "qualified institutional buyer" or "accredited investor" should not act or rely on this document or any of its contents. This document contains "forward-looking statements", which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or GDRs, financial risk management and the impact of general business and global economic conditions. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as at the date as of which they are made, and the Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. Neither the Company, nor any of its agents, employees or advisors intends or has any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this document. The information contained in this document is provided as at the date of this document and is subject to change without notice. 2
SECTION 1
Company Overview
Company at Glance Market Cap, as of March 14, 2014 Price per share, as of March 14, 2014
US$ 0.77
NAV (Equity), as of December 31, 2013
US$ 1.73 bn
NAV per share, as of December 31, 2013
US$ 1.65
Portfolio Value*
US$ 2.5 bn
BUSINESS
Portfolio Value* Development Projects 21%
•Strong liquidity position: US$ 203,3 mn as at December 31, 2013
•Full cycle real estate developer
US$ 0.81 bn
Land Bank 1%
HISTORY
•Focus on unique large scale commercial and residential projects
FINANCIAL STABILITY
•Primary market: Moscow, Russia
• 29% Debt to Total Assets**
•13 years on the market
•14 completed projects with total c. 0,6 mln sqm of space
•Admitted to LSE in 2007 •Premium listing from 2010
TRACK RECORD
Under Construction 9%
•Strong global brand
Yielding and Hotels 22%
BRAND * Gross Asset Value of Portfolio based on C&W Valuation as for 31 December 2013 and BV of Land Bank projects, Trading Properties and Hotels( inc. JV)
•Affiliate of Africa Israel Group (64,88% owner) , a major conglomerate with global focus on real estate, construction and infrastructure
•Impeccable credit history •Market reputation for high quality and professional property management
•Free float – 35,12% 47% AFIMALL
•Secured financing for ongoing projects
•Substantial income generating portfolio. Major project AFIMALL PORTFOLIO
•2 Projects are in active stage of development •5 Pipeline projects & land bank
** Bank loans only 4
Key Projects in Moscow Yielding Assets (retail, offices and hotels) US$ 1.7 bn
Value** ( C&W, Dec, 31 2013):
Tverskaya IB
Riversede Station AFIMALL
195K sqm
GLA(excl. hotels),sqm: NOI stab. PLAZA SPA Kisl*
PLAZA SPA ZHEL* Aquamarine III
US$ 204 mn
( excl. hotels):
Ownership:50% * * Hotels presented with cost value
Aquamarine Hotel Paveletskaya,1
* Outside of Moscow
H2O
Projects Under Development Value**
US$ 749 mn
(afid share, C&W):
Odinburg**
Expolon
Paveletskaya II
Plaza IC
Plaza iia
GLA,sqm:
217,6K sqm
GSA,sqm:
588,4K sqm
Pochtovaya
Plaza IV
Active phase of construction
** Odinburg presented with cost value
Land Bank
Yielding Assets
Projects under Development
Value (BV):
US$ 19 mn
Completed Assets
Other 5 Note: the NOI projections are “forward looking statements� based on C&W valuation assumptions and Company estimations and they can be realized or not realized due to factors beyond the Company's control including, among others, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or GDRs, financial risk management and the impact of general business and global economic conditions
Company Achievements during the year 2013
Achievements 2012 (1/2) STATUS
COMMENT
In Q1 2013 the transaction relating to the disposal of 50% share in Four Winds Limited was finalized. The consideration is US$103.5 mn for AFID share In Q2 2013 The Company has finalized a disposal of 643 parking lots to VTB which resulted with net cash flow for the Company at the amount of US$ 54.5 mn. Net profit is c.US$ 20 mn In December 2013 the Company completed a transaction on disposal of one of the four buildings in Ozerkovskaya III project. The consideration amounted to an equivalent of US$91.5 million
and applicable Russian VAT.
In Q3 2013 the Company decreased the US$ loan interest in AFIMALL US$ part of loan facility from 6,5%+3mLibor to 5,02+3mLibor% (annual saving c. US$5,2 mn)
In Q1 2013 the company obtained a new loan facility in the amount of US$ 220 for
In Q1 2013 the Company has launch the first stage of the residential project “Odinburg”, which has approximately 2,652 apartments, with a total area of over 33 hectares located 11 km west of Moscow in the town Odintsovo. In December 2013 the Company began initial sales.
Ozerkovskaya III Project with interest rate 3m Libor+5,7%
In November 2013, the Company signed a 6-year land lease agreement in Paveletskaya II for further development and construction of the residential and commercial space. This resulted in a
US$81.0 million gross valuation gain (US$64.8 million net of taxation) in in Q3 2013.
6
Company Share Performance 2010 - 2013
Achievements 2012 (1/2) STATUS
COMMENT
120.00% 100.00% 80.00% 60.00% 40.00% 20.00% 0.00% -20.00% -40.00% -60.00% -80.00%
AFI Development PLC Price
AFI Development PLC Sponsored GDR RegS Price
MirLand Development Corporation Plc Price
LSR Group OJSC Sponsored GDR RegS Price
PIK Group OJSC Sponsored GDR RegS Price
Etalon Group Ltd. Sponsored GDR RegS Price
R.G.I. International Limited Price
7
SECTION 1 Project Update Yielding Projects
AFIMALL City Update
AFIMALL CITY (as of December 2013) Total GBA, sqm
283,2K
Total GLA(shops, offices, storage), sqm
107.2K
Occupancy end of Dec, (as of shops only)
87%
Occupancy end of Dec, (as % of GLA total)
79%
Parking lots, numbers
2,075
Stabilized NOI (C&W est.)
US$149.2 mn
MV (C&W est.)
US$ 1.160 bn
Loan balance as for December, 2013
US$ 600mn
During 2013, AFIMALL City reported a strong increase (45% year-on-year) in footfall. This was reached despite the ongoing construction works in the Mall's surrounding area The actual rented area reached 84,5K sqm as the end of 2013, which is 14% up compared to 74,3K sqm as the end of 2012. AFIMALL introduced and become a new home for the several well-known and new brand over the year such as TSUM Discont, Forever 21, Marc O’Polo, Lee Cooper, New Balance In Q3 2013 the Company decreased the loan interest in US$ part of loan facility for AFIMALL from 6,5%+3mLibor to 5,02 % +3mLibor (annual saving c. US$5,2 mn) Q1 2013
Q2 2013
Q3 2013
Q4 2013
2013
2012
Revenue
23.2
24.9
26.5
29.5
104.1
81.4
Operating expenses
(8.6)
(8.1)
(9.5)
(8.8)
(35.1)
(33.2)
NOI
14.6
16.7
17.0
20.7
69.0
48.2 9
+43%
AFIMALL and Moscow-City Development
AFIMALL
Moscow City existing office space is approximately 570K sqm, within 1,2 mn sqm of office space expected to be constructed. By 2015 total office stock expected to reach 1.1m sq m
About 120,000 workforce are expected to work in the Moscow City area by the time all planned office has been constructed
MOSCOW CITY DEVELOPMENT Existing Office Complex
Under Construction
0 – Tower 2000 4 – Imperia Tower 8 – CityPoint 9 – Capital City 10 – Naberezhnaya Tower 13a – Federation Tower (West) 19 – Northern Tower 6, 7 – Central Core (AFIMALL City)
2, 3 – Evolution Tower 11 – IQ-quarter 12 – Eurasia Tower 13b – Federation Tower (East) 14 – Mercury City Tower 16a – OKO 16b – Parking
Planned
The Moscow City vacancy rate increased to c. 25% due to the launching of the new buildings
recent
Apartments area around 0.5 mln sqm (155,000 sq m (800 apartments) commissioned)
Hotel area around 153,000 sqm (Novotel (25,000 sqm) opened in February 2013) At the beginning of 2014 the new metro station Delovoy Center, which has a direct access to the mall, has started its operations This new station (Delovoy Tcents) provides direct access to AFIMALL City and will over the next two years become the main connecting point for a new line, which will link the densely populated residential districts Ramenky, Horoshevskiy, Savyolovsky and Maryina Roscha 10
15 – Moscow City Government Building 20 – Exposition and Business Center
AFIMALL and Moscow-City Development
AFIMALL
11 Based on C&W report
Yielding Properties
Building
Location Class GBA, sqm GLA, sqm Parking lots (total), # Ocupancy rate, % Average rent as of 31.12.2013, $/sq m NOI stab (C&W est.), US mn NOI Year 2014 (C&W est.), US mn MV(AFID share),US$ mn**
****
AFIMALL
Ozerkovskaya III
Moscow Moscow City
Berezkovskaya
Moscow CBD Office A & Street Retail
Moscow
61,772
107,208 2,075
Tverskaya Plaza II
Paveletskaya, bld. 1
H2O
Tvesrkaya Plaza Ib
Moscow CBD Office & Street Retail
Moscow
Moscow
Office B
Office B
11,612
6,008
16,246
46,247
10,250
6,008
466
150
-
1,231
*
Aquamarine Hotel*
Plaza SPA Kislovodsk
Plaza SPA Zheleznovodsk
TOTAL
Moscow CBD Office & Street Retail
Moscow CBD
Kavkaz region
Kavkaz region
Hotel
Hotel
Hotel
10,698
2,104
8,931
25,000
11,701
437K
14,085
8,990
1,909
159 keys
275 keys
134 keys
195K
-
126
81
-
15
-
15
91%
95%
96%
76%
95%
71%
56%
59%
750- Office 500 - retail
579
594
365
357
689
ADR 231
ADR 371
ADR 223
149.2
38.4
5.2
2.5
4.5
2.7
1.3
-
-
-
204
89.0
12.2
4.6
2.8
2.9
1.6
0.9
-
-
-
114
1,160
324
39
32
30
17
9
31
25
22
1,688
Retail 283,128
** 79%
Office B
• Current Net rent for AFIMALL presented as for the end of December, 2013 • ** Occupancy is a % of GLA total (107,2sqm) *** MV based on C&W valuation as for 31.12.2013. Hotels presented by cost value and 100% of the project **** Information after disposal of 1 Bld Project is not leased yet
12
Ozerkovskaya III Update
OZERKOVSKAYA III* (as of December 2013) Total GBA, sqm
61,6K
Total GLA, sqm
46,2K
Parking lots, numbers Stabilized NOI (C&West.)
466 US$38.4 mn
MV (C&W est.)
US$ 323,7 bn
Loan balance as for December, 2013
US$ 205 mn
The sale of Building 1 in Aquamarine III to Russian diamond miner and producer Alrosa JSC was the result of successful marketing efforts and in line with overall management strategy. In addition to being a successful transaction, the disposal is a strong benchmark for the entire Aquamarine complex and should assist it in attracting other high quality tenants similar to Alrosa. The transaction consisted of a gross office area of 10,985.8 sq.m., a terrace of 418.9 sq.m. and a 15.8% share title to common areas of the Complex, which totaled 3,728.6 sq.m. The total transacted area corresponded to approximately 11,994 sq.m. The consideration was paid in cash and amounted to an equivalent of US$91.5 million and applicable Russian VAT. Following the transaction, the Company retains title to the remaining three buildings of the Complex, which have a combined area of 62,800 sq.m. (GLA 46,247 sq.m.).
* information after bld 1 disposal
13
SECTION 2 Project Update Development Projects
Odinburg Residential
ODINBURG (as of December 2013) Type Ownership, %
Residential 100%
GBA,sqm
739,1K
GSA, sqm/GSA commercial total: Phase I, sqm: Phase II, sqm:
469,3K 149,4K 319,8K
Apartments, total :
8,899
Phase 1: Stage 1
2,652 650
Parking units:
In October 2013, AFI Development began construction at “Odinburg”, the Company’s largest residential projects with a total area of over 33 hectares located 11 km west of Moscow in the town Odintsovo. Initial construction works, allocated to the first stage of Phase I were launched in October 2013. In December 2013 the Company began initial sales of the Crown residential building. For the convenience of customers, the Company has constructed a sales office with an area of about 600 sq.m. Within this office, potential buyers can receive comprehensive consultation on the project as well as apply for a mortgage loan. As for March, 12, 2014 107 signed contracts are in place.
Barks approved to provide the morgage for individuals
2,656
15
Plaza IC ( 2 Brestskaya, 50/2)
PlAZA IC (as of December 2013) Total GBA, sqm
51,2K
Ownership
100%
Total GLA, sqm
32,4K
Parking lots, numbers MV (C&W est.)
280 US$ 110,6mn
During 2013 the Company progressed with the development of the most asvanced office project in the Tverskaya Zastava area - complex Plaza Ic, which is a Class A office complex located in the cultural and business quarter of the Tverskoy sub-district. The building is located within a 4-minute walk of the circle line of the Belorusskaya metro station, which serves as the main transport hub linking the city centre with one of Moscow’s main airports – Sheremetievo International Airport. The project has a GBA of 51,200 sq.m. (including underground parking of approximately 519 parking spaces) and an estimated GLA of 32,454 sq.m. Following the registration of a 10-year land lease agreement, the Company successfully finalised the development concept and is in the final stages of preconstruction works. Start of construction is scheduled for H1 2014 and the Company is currently in the process of selection and appointment of the general contractor. On March 7, 2014 the Company has received the Construction Permit 16for further development.
Main Pipeline Projects Plaza IV (Gruzinskiy Val, 11)
PLAZA IV
(as of December 2013) Type Ownership GBA,sqm GLA/GSA, sqm Parking units:
PAVELETSKAYA II POCHTOVAYA
Office A, retail 95% 108,0K
(as of December 2013) Type Ownership
58,6K/2,7K GBA,sqm 1,210
Status:
• During 2013 the Company progressed with securing the land lease agreement with Moscow authorities, having finalized the borders of the land plot.
GLA/GSA, sqm Parking units: Status:
Residential, retail
(as of December 2013)
100% Type 151,4K Ownership 21,0K/53,2K GBA,sqm 1,760 GLA/GSA, sqm
Residential, retail
100% 170,3K 28,K/63,1K
Parking units: 1,771 Status: • The Company finalised negotiations with the Moscow City authorities to change the permitted usage ofPARAMETERS: the land plot. • Currently, the Company is working on • In November 2013, the Company signed a Type: 6-yearMix land lease securing the land lease agreement to allow agreement for further development and construction of the construction in accordance with the new GBA, sqm: 111,7K residential and commercial space. development plan as well as on the planning GLA, sqm: 90,3K • This resulted in a US$81.0 million gross valuation gain and design of the project. MV(C&W),mn: S$ 103,5 (US$64.8 million net of taxation).
17
SECTION 3
Financial Update
Consolidated P&L #
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Actual Actual Actual Actual
ITEM ('000)
2013 Actual
2012 Actual
(1)
Construction consulting/management services
0.0
0.0
0.0
0.1
0.2
3.6
(2)
Rental income
33.1
35.4
36.6
39.5
144.6
117.1
(3)
Sale of residential and trading property
0.2
55.0
1.8
0.5
57.5
4.8
33.4
90.5
38.4
40.0
202.3
125.5
3.2
0.4
0.8
2.0
6.4
0.8
(17.8)
(18.3)
(19.0)
(76.5)
(65.2)
(4) TOTAL REVENUE (5)
Other income
(6)
Operating expenses
(21.4)
(7)
Administrative expenses
(4.0)
(7.0)
(2.1)
(3.9)
(16.9)
(20.2)
(8)
Cost of sales of residential and trading property
(0.2)
(31.8)
(1.3)
0.6
(32.6)
(3.8)
(9)
Other expenses
(10) TOTAL EXPENSES (11)
Share of profit of equity-accounted investees
(12) GROSS PROFIT (13)
Valuation gains on investment property
(14)
Impairement loss for trading property and hotels
(15) RESULTS FROM OPERATING ACTIVITIES (16)
Profit on sale/disposal of properties/investment
(17)
Profit on sale of Investment property
(1.8)
(0.8)
(1.5)
(1.4)
(5.5)
(1.5)
(24.2)
(56.9)
(22.3)
(21.7)
(125.1)
(90.0)
(0.6)
(0.1)
0.3
8.6
33.5
16.3
16.5
41.0
(0.3)
(0.8)
23.9
18.0
76.3
59.4
47.4
0.3
106.2
(265.9)
-
(1.2)
25.1
74.5
63.7
32.1
-
-
(2.2)
180.4
0.2
32.3
2.4
27.8
27.8
-
Finance income
15.7
1.5
1.2
2.5
21.0
18.5
(19)
Finance expense
(16.8)
(17.7)
(16.8)
(15.7)
(66.9)
(57.3)
5.1
(5.2)
(28.9)
16.6
FX Gain/( Loss)
(9.2)
(19.6)
Translation reserve reclassification due to disposal of subsidiary
(30.3)
-
-
-
(40.5) 16.7
(35.8) 38.8
(10.5) 53.2
(18.4) 26.6
(22) Net finance income/(costs) (23) PROFIT BEFORE INCOME TAX
(30.3)
(105.2) 135.3
Current income tax
(0.4)
(0.4)
(0.5)
(7.6)
(8.9)
(2.0)
Deferred income tax
(0.7)
(10.7)
(11.9)
0.9
(22.5)
18.2
27.7
40.8
19.9
103.9
(17) Sale of Ozerkovskaya III (26) Profit for the period amounted to US$ 103,9 mn compared to loss in US$ 275,5 mn in 2012
-
(25)
15.6
went up to 29%
(22.2) (291.8)
(24)
(26) PROFIT FOR THE PERIOD
(12) Gross profit compared 2012
(272.0)
(18)
(21)
AFIMALL contribution in rental income is US$ 104,1 mn
(65.4)
17.1
(20)
(2) Rental income achieved USD 144,6 mn for 12m 2013, which is 23% higher than in 2012
(275.5)
19
Statement of Financial Position #
NARRATIVE
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (16) (17)
Investment property Investment property under development Investment in Joint Ventures Property, plant and equipment Long-term loans receivable VAT recoverable Goodwill
(18) (19) (20) (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) (32) (33)
TOTAL ASSETS Equity
Non-current assets
Changing US$ mn
31.12.2013 US$ mn
31.12.2012 US$ mn
1,609.8 635.3 5.6 69.7 21.7 0.4 0.0
1,292.3 567.7 82.4 76.6 113.5 0.5 0.2
317.5 67.5
% 25% 12%
(6.8)
Increase in total equity was driven by US$ 103,9 mn of net profit for the period
(0.1) (0.2)
Debt to equity ratio ( 47%)
2,342.5
2,133.1
209.4
10%
Trading property Trading properties under construction Inventory Short-term loans receivable Trade and other receivables Current tax assets Cash and cash equivalents Other investments
6.4 127.2 0.6 0.8 106.4 (4.1) 193.3 10.0
3.6 141.8 0.6 0.1 78.3 2.3 174.8 0.0
2.8 (14.6) (0.0) 0.7 28.1 (6.4) 18.5 10.0
78%
Current assets Assets held for sale
440.6 0.0
401.6 71.3
39.1 (71.3)
10%
2,783.1
2,606.0
177.1
7%
1.0 1763.4 (150.5) 117.7
1.0 1763.4 (144.6) 9.7
(0.0) 0.0 (5.8) 108.0
0% 4%
1,731.7 (2.2)
1,629.5 (3.0)
102.1 0.8
0.0 778.9 125.3 22.0
38.3 554.6 81.9 20.2
(38.3) 224.4 43.3 1.9
40% 53% 9%
Non-current liabilities
926.2
695.0
231.2
33%
Short-term loans and borrowings Trade and other payables
27.0 100.4
17.3 267.1
9.7 (166.8)
56%
Current liabilities
127.4
284.5
(157.1)
(34) TOTAL LIABILITIES
1051.4
976.5
74.9
8%
(35) TOTAL EQUITY AND LIABILITIES
2,783.1
2,606.0
177.1
7%
Share capital Share premium Translation reserve Retained earnings TOTAL EQUITY Minority interest Trade and other payables Long-term loans and borrowings Deferred tax liabilities Deferred income
Strong cash position with US203,3 million in cash ,cash equivalents and marketable securities as at 31 December 2013, compared to US$174,8 million as at 31 December 2012
36% 11%
Investment property is significant part of total asset portfolio
Comments: (1) Acquisition of 50% of shares in Ozerkovskaya III, sale of Bld. 1 (2) Revaluation of Paveletskaya II (3)(5)(17) Sale completion of Four Winds (10) Disposal of 643 parking lots to VTB and construction of Odinburg
6%
20
Loans and cash position as of December 31, 2013
Gross balance of the bank loan portfolio (as of December 31, 2013) – US$ 805 mn Total cash balance and deposits (as of December 31, 2013) – US$ 203,3 mn (marketable securities included)
Project
Bank
Balance as of December 31, 2013
Available (US$ mn)
Nominal Interest rate
Currency
RCB
$291
-
9.5%
RUB
RCB
$309
-
3-m Libor+5,02%
USD
$600
$41
7.32%
$205
$0
3-m Libor+5,7%
01.04.2018
AFIMALL TOTAL AFIMALL
Ozerkovskaya III (100%) TOTAL/AVERAGE RATE
Maturity
VTB
$805 *
RUB
26.01.2015
6.97%
The Company is in line with all financial covenants
21
Net Asset Value PROJECT
Book Value
Bank Loan Net Company's Share
31-Dec-13
31-Dec-13
31-Dec-13
AFI Mall Berezkovskaya (100%) Paveletskaya I Plaza H20 Ozerkovskaya III Plaza Ib Plaza II
1,160 39 30 17 324 9 32
(600)
560 39 30 17 118 9 32
TOTAL INVESTMENT PROPERTY:
1,610
(805)
Plaza Ic Plaza II a Plaza IV (100%) Kosinskaya Bolyshaya Pochtovaya Paveletskaya II Ruza St. Petrsburg
111 12.40 168 107 139 93 4 1
TOTAL INVESTMENT PROPERTY UNDER DEVELOPMENT:
635
Ozerkovskaya Phase II (26) 4Winds residential
5 1
Aquamarine Hotel Plaza SPA Zheleznovodsk Pyatigorskaya (Park Plaza Kislovodsk) Plaza Spa Kislovodsk (Tirel) (50%) Versailles (Kislovodsk)
31 22 7 25 7
TOTAL TRADING PROPERTY:
6
TOTAL PROPERTY PLANT AND EQUIPMENT:
93 Odinburg
TOTAL TRADING PROPERTY UNDER DEVELOPMENT:
TOTAL PORTFOLIO:
*
CASH AND CASH EQUIVALENT DEFFERED TAX LIABILITY TOTAL OTHER ASSETS AND LIABILITIES
TOTAL EQUITY:
* Including marketable securities
(205)
111 12 168 107 139 93 4 1
0
LTV= 33%
805
LTE = 47%
635 5 1
0
9 31 22 7 25 7
0
127
93 127
127
0
127
2,471
(805)
1,668 203.3 (126) (13)
1,732
22
Annex
Market Update
Market Overview and Capital Markets RUSSIAN MACROECONIMIC OVERVIEW • Russian economic growth fell to 1.3% in 2013, down from 3.4% in 2012. Stagnation was caused by a slowing-down of Eurozone economies, the drop of industrial production growth to about zero as well as reduction of fixed investments from 6.6% in 2012 to 0.2% in 2013. • Despite a slowdown in Russia's overall economic growth during 2013 retail trade and the consumer market recorded above average growth in real terms at 4.5% year-on-year. • At the same time, inflation remained under control and largely unchanged year-on-year at 6.5%, whilst the country enjoyed close to full employment. • Oil prices continued to drive Russian budget revenues with the share of oil and gas revenues at 46.1% in 2013, against 50.2% in 2012 and stood at the level of US$ 105 in the end of 2013.
RUSSIAN REAL ESTATE INVESTMENT MARKET • In 2013, Russia had the third-highest foreign direct investment inflows in the world. High investment flows into Russia are expected to continue over the coming years. • Total investments into commercial real estate in 2013 made up $7.45 billion which is similar to the volume of investments in 2012. Many transaction were in the process of finalization at the end of 2013 and they are expected to be closed in the first quarter of 2014. • The current yields for Prime commercial real estate projects in Moscow in 2013 were 8.5% for offices, 9.0% for retail. In 2014 we expect that capitalization rates for the best properties will not be corrected significantly.
• Unemployment rate remained the lowest 2013 and stood at the level of 5,5% GDP growth by country, % 8.0
160 140
Oil Price, US$ per Barrel
120
6.0
8000
16.00
Investments, US$ mn and Yield (%)
7000
14.00
6000
12.00
100 80
4.0
March, 3, 2014 US$ 110,8
60 2.0
40 0
-2.0 -4.0 50.0 -6.0
9.00
5000
20
0.0
Unemployment rate, %
40.0 -8.0
10.00
4000
8.50 8.00
3000
6.00
2000
4.00
1000
2.00
30.0 20.0 Czech Republic
Germany
Poland
Russian Federation
United Kingdom
United States
Europe
Euro area
10.0
0
0.00 2004
0.0
Office France Italy Spain United States
Greece Russian Federation United Kingdom Euro area
2005
2006
Retail
2007
2008
2009
Warehouse
2010
2011
Other
2012
2013
Office
Retail 24
Office and Retail Markets overview OFFICE MARKET OVERVIEW
RETAIL MARKET OVERVIEW
• Whilst the overall volume of project completions in 2013 increased by 57% year-on-year to 888,270 sq.m., only 25% of new office schemes met Class A requirements, with the majority classified as Class B
• During 2013, the Russian market received 1.65 million sq.m. of new quality retail space, slightly below the completion volumes seen in 2012 (1.7 million). 9 quality shopping centres totalling 231,850 sq.m. opening in Moscow
• The average vacancy rate increased slightly to 13.7%, whilst rental rates continued to grow by 7-12% year-on-year, subject to building class and location
• Throughout 2013, the average vacancy rate and rental levels remained stable across all sub-sectors. The level of vacant space in quality retail shopping malls reached record lows at 1,5% 2,5%, driven by the low level of new construction in Moscow
• The average asking rental rate for Class A buildings amounted to US$ 870 while for Class B, the average asking rental rate was stable at US$530. Average annual rental rates for prime office space were at the level of US$1,200 per sq.m. (excluding VAT and operational expenses) • Looking to 2014, 70% of the announced pipeline is located outside of central Moscow, with overall completion volumes estimated at slightly below 2013 levels. Rental rates are expected to remain largely stable
5,000
2,000
Key indicators
2,000
Prime rate, US$ sqmpa (US$/sqm/year)
1,800 1,500
US$/psqm/pa
1,600 1,400
1,000
1,150 1,000
1,150 1,090 800 850
800
800
930
600 400
Base rent Class A US$ sqmpa
1,200
1,200
710 600
• According to developer’s plans 3,2 bn sqm of new quality retail space might be delivered the next year in Russia, most likely around 60-70% will be opened.
710
740
790
850
Units
4,000
950-1,150
3,500
580-850
Yields (prime)
8,75%
Overall vacancy,%
13,7%
4,500
4,500
USD psqm pa
2,200
• Moscow retail gallery rental rates are in the range of US$ 500-4,000
4,500 4,500
4,800 4,000 4,000
3,500
3,700
4,000
3,000
3,000- 4,500
(prime shopping center retail gallery)
3,000 2,500 1,800 1,700 2,000 2,000 1,500 1,350 1,350 1,300 1,150 1,200 1,350 1,500 1,000
18,0%
0
Base rent, US$ psqma
500-1,800
Yields (prime)
8,5%
Vacancy rate,%
2,5%
Vacancy rate,%
1,1%
(prime shopping centers)
(Class A CBD )
class A CBD Prime
Prime rate, US$ psqma
Units
500
640
Vacancy rate,% average Class A
Key indicators
Prime rents
Base rents
25
Residential Market Moscow and Moscow region • According to Rosstat, 69.4 million sq.m. of housing was commissioned in Russia during 2013, which is 5.5% more than during 2012. The Moscow region continued to witness the highest levels of construction with 6.9 million sq.m. introduced across the Moscow suburbs. • The volume of new supply in the business segment in Moscow is estimated at 82,000 sq.m. At end 2013, the average market price for business class apartments stood at US$ 6,851 per sq.m. • At end-2013, the average market price for apartments in the Moscow region stood at RUR74,830 or US$2,276 per sq.m., up 6% year-on-year. • According to Rosserest the amount of mortgage transactions in 2013 reached 24.6% of total, compared to 20.5% in 2012. • In economy segment the amount of mortgage is about 50%-70% • One of the reasons for the mortgage market growth in 2013 was the slow down of mortgage rates at the level of 12,5%
Source: Blackwood Report, 2013, Rosstat 26