Q3 2013 IR Presentation by AFI Development

Q3 2013 Investor Presentation FINANCIAL & BUSINESS RESULTS November 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

AFI Development at Glance Market Cap, as of Nov 18, 2013 Price per share as of Nov 18, 2013 NAV (Equity), as of September 30, 2013 NAV per share, as of September 30, 2013 Portfolio Value*

•Full cycle real estate developer

US$ 0.85 bn US$ 0.81 US$ 1.71 bn

BUSINESS

US$ 1.64

•Focus on unique large scale commercial and residential projects

•Strong liquidity position: US$ 140,3 mn as at September 30, 2013 FINANCIAL STABILITY

•Primary market: Moscow, Russia

US$ 2.5 bn

•Secured financing for on-going projects • 30% Debt to Total Assets**

Portfolio Value* •12 years on the market

HISTORY

•Admitted to LSE in 2007 •Premium listing from 2010

•16 completed projects with total c. 0,6 mln sqm of space TRACK RECORD

•Market reputation for high quality and professional property management

•Free float – 35,12%

•Strong global brand

BRAND * Gross Asset Value of Portfolio based on C&W Valuation as for 30 June 2013 and BV of Land Bank projects, Trading Properties and Hotels

•Affiliate of Africa Israel Group (64,88% owner) , a major conglomerate with global focus on real estate, construction and infrastructure

•Impeccable credit history

•Substantial income generating portfolio. Major project AFIMALL PORTFOLIO

•2 projects are in active stage of development •5 Pipeline projects & land bank

** Bank loans only

Key Projects in Moscow Current Portfolio Yielding Assets (retail, offices and hotels) Value**

US$ 1.7 bn

(afid share, C&W):

AFIMALL City

Ownership:50%

Tverskaya Ib, II

Berezkovskaya

GLA(excl. hotels),sqm: NOI stab.

Four Winds***

204K sqm US$ 217 mn

( excl. hotels):

Botanic Garden H2O

Plaza SPA Zhel*

Plaza SPA Kisl *

Paveletskaya, 1

Aquamarine Hotel

Ozerkovskaya III

Pochtovaya, Phase I Tverskaya Plazas Four Winds

AFIMALL City Berejkovskaya

H2O Office

Otradnoe

* Outside of Moscow

Aquamarine Complex

** Hotels presented with cost value

Paveletskaya, Phase # II Paveletskaya, 1

Kosinskaya

Development Projects Value*** (C&W):

GLA,sqm: Tverskaya Plazas Odinburg*

Pochtovaya

GSA, sqm: NOI stab:

Kosinskaya

US$ 747 mn

252K 574,3K US$ 142,3 mn

Paveletskaya II

*** Odinburg presented with cost value

Land Bank Value (BV):

US$ 20 mn

Other 4 Note: the NOI projections are â&#x20AC;&#x153;forward looking statementsâ&#x20AC;? 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

SECTION 1 Project Update Yielding Projects

AFIMALL City Update (1/3) CURRENT STATUS:  NOI for the 9m 2013 reached US$ 48,4 mn compared to US$ 38,9 mn due to increase in AFIMALL operating activity Q1 2013 Q2 2013 Q3 2013 9M 2013 9M 2012 Revenue

23.2

24.9

26.5

74.6

62.1

Operating expenses

(8.6)

(8.1)

(9.5)

(26.2)

(23.3)

NOI

14.6

16.7

17.0

48.4

38.9

Up to 24%

 Growth in occupancy with total leased area reaching circa 82,046 sq.m. as at 30 September 2013 (from 80,020 sq.m. as at 30 June 2013 and 74,353 sq.m. at yearend 2012)

PROJECT HIGHLIGHTS (as of September 2013) Total GLA(shops, offices, storage), sqm Total GLA shops only, sqm % of GLA shops only

107.2K 96,8K 85%

Stabilized NOI (C&W est.)

US$151.2 mn

MV (C&W est.)

US$ 1.160 bn

Loan balance as for September, 2013

US$ 603 mn

 One of the most renowned department stores in Moscow TSUM has sighed a longterm lease for 1,688 sqm at the 1st floor and became the new main tenant during Q3.  The AFIMALL sustainable increases its popularity and awareness by the management quality work in improvement of tenant mix  AFIMALL became one of the top stages holding Annual Russian Fashion Week Show  The Company reduced the interest rate for US portion of the loan from Libor+6,6% to Libor +5.02%

AFIMALL and Moscow-City Development (2/3) MOSCOW CITY DEVELOPMENT

 Moscow City existing office space is approximately 500K sq m, with another 600K sq m of office space expected to be constructed by 2015. AFIMALL

 The Moscow City vacancy rate is c. 25% (existing buildings)  Hotel Novotel, launched last quarter, will add additional visitors to the Mall. Existing supply (number of rooms) – 360, pipeline (number of rooms) - 319  The following buildings are expected to be completed: Federation Tower (East), Eurasia Tower(107,5K) and OKO(gla:87K sqm) — by the end of 2014, IQ-quarter (gla:107K and Evolution Tower — by the end of 2015 (about 600,000 sq m of office area in total)

Existing Office Complex 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)

Under Construction 2, 3 – Evolution Tower 11 – IQ-quarter 12 – Eurasia Tower 13b – Federation Tower (East) 14 – Mercury City Tower 16a – OKO 16b – Parking

 2 additional metro lines: Prolongation of Tretyakovskaya till Ramenki, construction of Hordovaya with 4 different lines connections (Vystovochnaya, Polezhaevskaya, Hodinskoye Pole, Dinamo, Savelovskaya) by 2014 (see next slide)

Planned 15 – Moscow City Government Building 20 – Exposition and Business Center 7

AFIMALL and Moscow-City Transport Infrastructure(3/3) 

Today: (0) – “Vistavochnaya” – metro station at the lowest level of AFIMALL City



Till the end of 2013 (start of 2014): Point (1) – “Delovoy Center” will be connected with Point (2) - “Park Pobedy”.



“Delovoy Center” is going to be an additional station at the lowest level of AFIMALL City



2015: Point (1) – “Delovoy Center” will be connected with Point (3) – “Khoroshevskaya”



Point (2) - “Park Pobedy” will be connected with Point (4) -“Ramenki”

1 0

(2014

Ozerkovskaya (Aquamarine III) CURRENT STATUS:

 AFID reached a binding agreement to dispose Bld#1 in Aquamarine Complex to a Russian State controlled corporation.  Total transacted area of Bld #1 is approximately 11,994 sq.m and includes terraces & 71 parking spaces.  The consideration amounts to US$91.5 mn excluding VAT, AFID expects to receive net profit on the transaction in the amount of approximately US$14.6 million (expected to be recognized in Q4 2013).

Bld # 1 PROJECT HIGHLIGHTS* (as of September 2013) GBA, sqm:

73,4K

GLA, sqm

55,4K

MV (C&W est.)

US$ 389 mn

Loan balance as for September, 2013

US$ 220 mn

* The data presented for all project ( Four Buildings) before disposal of Bld # 1.

Yielding Properties

Building

AFIMALL

Ownership Location

Berezkovskaya

Paveletskaya, bld. 1

Tvesrkaya Plaza Tverskaya Plaza Ib II

H2O

Ozerkovskaya III***

Aquamarine Hotel

Plaza Spa Kislovodsk

100%

74%

99.1%

100%

Moscow

CBD

CBD 11,701

Moscow City

Plaza SPA Zheleznovodsk

50% Kavkaz region

100% Kavkaz region

GBA, sqm

304,205

11,612

16,246

10,698

2,104

6,008

73,346

GLA, sqm

107,208

10,250

14,085

8,990

1,909

6,008

55,422

2,075

150

126

551

86%

96%

73%

87%

79%

52%

62%

1,251*

443

244

206

527

455

750

ADR 242

ADR 379

ADR 229

Class

Retail

Office B

Street retail & Office

NOI stab (C&W est.), US mn

151.6

5.8

4.6

2.9

1.3

4.5

MV(AFID share),US$ mn**

1,160

31.3

30.1

18.3

9.0

CAP Rate

10%

12%

13.5%

14%

12%

Parking lots (total), # Ocupancy rate (shops only), % Current Net Rent as of 30.06.2013, $/sq m

85%

***

Street retail & Office A & Street Office Retail

159 keys

25,000 275 keys

8,931 134 keys

Hotel

46.0

31.5

389.1

31.0

25.0

23.0

11.5%

10%

9.5%

13%

* Current Net rent for AFIMALL presented as for the end of September, 2013 and does not include discounts ** MV based on C&W valuation as for 30.06.2013. Hotels presented by cost value ***Project is not leased yet

SECTION 2 Project Update Projects next for Development

Pipeline Projects Development Status PARAMETERS: Type: Residential GBA(Phase I), sqm: 200,8K GSA(Phase I total), sqm: 149,4K # of Apartments: 2,620

CURRENT STATUS:

PARAMETERS: Type: Mix GBA, sqm: GLA, sqm: MV(C&W),mn:

CURRENT STATUS:

• The first construction works on the land plot, allocated for the 1st stage in Phase # 1 have been launched (54,5K sqm from 200,8K sqm of GBA) • The mortgage accreditation was passed with one bank

ODINBURG

111,7K 90,3K S$ 103,5

• The end of construction works was shifted from Q4 2013 to H1 2014 • The project was submitted to top Russian banks

KOSINSKAYA PARAMETERS: Type: Office GBA, sqm: 51,2K GLA, sqm: 32,5K MV(C&W): US$ 105,8 mn

CURRENT STATUS:

PARAMETERS: Type: Office, Retail GBA/GLA, sqm: 108K/61,4K MV(C&W): US$ 168,6 mn

CURRENT STATUS (Plaza IV):

PARAMETERS: Type: Residential GBA, sqm: 170,4K GSA/GLA, sqm: 63,2K/28,0K MV(C&W),: US$ 142,3mn

CURRENT STATUS:

• • • •

Approval documentation GPZU and GZK are in place Design works are in process. Project design stage – stage P finalized The company finalized the top list to choose General Contractor Start of construction : H1 2014

TVERSKAYA IC

PLAZA IV

BOLSHAYA POCHTOVAYA

PARAMETERS: Type: Office GBA, sqm: GLA, sqm: MV(C&W),mn: TVERSKAYA PlAZA IIA

• Land plot’s borders clarification has been finalized • Securing approval documentation

• Design works are in process • Securing approval documentation

CURRENT STATUS: 10,5K 7,6K US$ 12,4

• According to the article dated 29.10.2013 and published on the official web-site of the Moscow Government, the Construction Department of Moscow Government has made decision to start an active phase of redevelopment at Tverskaya Zastava Square already in 2014 (and the first stage of redevelopment will focus on construction of an additional overhead road across the railway lines), whereas the date of completion of these works remains unclear, which will incur significant delay and, thus, pose high 12 uncertainty with the timeline of the subject Plaza IIa project

Paveletskaya II: change in Value CURRENT STATUS:

 The Company finalized negotiations with Moscow City Government to change the permitted usage of land plot  In November AFID has received a signed land lease agreement for 6 years for further development  Thus, assumptions in valuation report made by Cushman & Wakefield have to be adopted for company valuation

 Land lease agreement for construction of residential and commercial space

PROJECT HIGHLIGHTS

signed at Paveletskaya II in November 2013 resulting US$81.0 million

(as of September 2013)

Type

GBA, sqm: GSA/GLA, sqm:

Business class Residential

151,4K

gross valuation gain (US$64.8 million net of taxation), which is included in Company Q3 2013 result

53,2K/21,0K

BV(cadastral value), mn:

11,6

MV(C&W), mn:

92,6

Land Bank Projects

Project

Type

Land (ha)

GBA upon completion (sqm)

BV as of 30.06.2013, US$ mn

Park Plaza Kislovodsk

Hotel resort

5.3

40,000

7,2

Versailles, Kislovodsk

Hotel resort

0.6

12,350

7,2

Ruza

Mixed use

387

n/a

3,6

St. Petersburg

Mixed use

3.07

n/a

1,8

TOTAL

19,8

Extensive land bank 

Land bank – projects of the Company is currently put on hold

Land bank strategy 

Activate projects upon securing required financing and evaluation of demand level from prospective tenants/buyer



Full flexibility regarding future development in various cycles of the economy – the major competitive advantage for the Company

Note: MV upon completion and GBA upon completion are “forward looking statements” based on JLL valuation assumptions 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

SECTION 3 Financial Update

Income Statement and Statement of Financial Position #

Q1 2013 Q2 2013 Q3 2013 9M 2013 9M 2012 Actual Actual Actual Actual Actual

ITEM ('000)

(1)

Construction consulting/management services

0.0

0.1

2.2

(2)

Rental income

33.1

35.4

36.6

105.1

84.9

(3)

Sale of residential and trading property

0.2

55.0

1.8

57.1

4.6

33.4

90.5

38.4

162.3

91.8

3.2

0.4

0.8

4.4

0.2

(4) TOTAL REVENUE (5)

Other income

(6)

Operating expenses

(21.4)

(17.8)

(18.3)

(57.5)

(44.2)

(7)

Administrative expenses

(4.0)

(7.0)

(2.1)

(13.0)

(15.7)

(8)

Cost of sales of residential and trading property

(0.2)

(31.8)

(1.3)

(33.2)

(3.8)

(9)

Other expenses

(1.8)

(0.8)

(1.5)

(4.1)

(1.0)

(24.2)

(56.9)

(22.3)

(103.4)

(64.5)

(0.6)

(0.1)

(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

0.3

(0.5)

8.6

33.5

16.3

58.4

16.5

41.0

47.4

104.9

25.1

74.5

63.7

163.3

(16)

Profit on sale/disposal of properties/investment

32.1

(17)

Finance income

15.7

1.5

1.2

18.5

(18)

Finance expense

(16.8)

(17.7)

(16.8)

(51.2)

(19)

FX Gain/( Loss)

(9.2)

(19.6)

5.1

(23.7)

(20)

Translation reserve reclassification due to disposal of subsidiary

(21) Net finance income/(costs) (22) PROFIT BEFORE INCOME TAX (23)

Current income tax

(24)

Deferred income tax

(25) PROFIT FROM CONTINUING OPERATION

(30.3)

(40.5) 16.7

(35.8) 38.8

(10.5) 53.2

(86.7) 108.7

(0.4)

(0.5)

(1.3)

(0.7)

(10.7)

(11.9)

(23.3)

27.7

40.8

84.1

15.6

 (4) Revenue reached US$ 162,3 mn since the beginning of the year, which is 77% higher that same quarter last year  (2) Rental income achieved USD 105,1 mn for 9m2013, which is 24% higher than same period 2012  AFIMALL contribution in rental income is US$ 74,5 mn

6.3

33.5

 (12) Gross profit went up to 74% compared September 2012 and come up to USD 58,4 (65.4) mn as for |September 2013 (275.3) (243.4)

2.3

 (13) Valuation gain US$ 47,4 mn is mostly related to change in value of Paveletskaya II (45.4) and Plaza IIa 16.7 13.0

 (25)Profit from continuing operation amounted to US$ 84,1 mn compared to loss in US$ 276,6 mn for the comparative period in (3.0) 2012

(15.7) (288.7) 15.1

(276.6)

Statement of Financial Position Changing US$ mn

30.09.2013 US$ mn

31.12.2012 US$ mn

1,679.9 631.7 5.9 69.8 21.7 0.2 0.0

1,292.3 567.7 82.4 76.6 113.5 0.5 0.2

387.6 64.0 (76.5) (6.7) (91.8) (0.2) (0.2)

30% 11%

2,409.3

2,133.1

276.1

13%

6.6 120.7 0.6 0.1 90.4 3.0 140.3

3.6 141.8 0.6 0.1 78.3 2.3 174.8

3.0 (21.1) (0.0) (0.0) 12.1 0.7 (34.6)

83%

361.7 2,770.9

401.6 2,606.0

(39.9) 164.9

1.0 1763.4 (145.4) 95.2

1.0 1763.4 (144.6) 9.7

(0.0) 0.0 (0.7) 85.6

0% 1% 886%

1,714.3 (0.9)

1,629.5 (3.0)

84.8 2.1

803.9 126.1 21.4

554.6 81.9 20.2

249.3 44.2 1.3

45% 54% 6%

951.4

695.0

256.4

37%

20.6 85.4

17.3 267.1

3.3 (181.7)

19% (68%)

106.1

284.5

(178.4)

-63%

(33) TOTAL LIABILITIES

1,057.5

976.5

81.0

(34) TOTAL EQUITY AND LIABILITIES

2,770.9

2,606.0

164.9

# (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (18) (19) (20) (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) (32)

NARRATIVE Investment property Investment property under development Investment in Joint Ventures Property, plant and equipment Long-term loans receivable VAT recoverable Goodwill

Non-current assets Trading properties Trading properties under construction Inventory Short-term loans receivable Trade and other receivables Current tax assets Cash and cash equivalents

Current assets TOTAL ASSETS Equity Share capital Share premium Translation reserve Retained earnings TOTAL EQUITY Minority interest Long-term loans and borrowings Deferred tax liabilities Deferred income

Non-current liabilities Short-term loans and borrowings Trade and other payables

Current liabilities

ď&#x201A;§ (2) Related to change in valuation of Paveletskaya II and Tverskaya Plaza IIa projects.

16% 29%

ď&#x201A;§ (23) Retained earnings for the beginning of the period were US$9,7 mn

Loans and cash position as of September 30, 2013  Gross balance of the bank loan portfolio (as of September 30, 2013) – US$ 823 mn  Total cash balance and deposits (as of September 30, 2013) – US$ 140,3 mn

 The Company decreased the interest rate on the AFIMALL City loan in US dollars from 3 months LIBOR+6.7% to 3 months LIBOR+5.02%. The average rate for AFIMALL loan decreased from 8,2% to 7,3%

Project

Bank

Balance as of September 30, 2013

Available (US$ mn)

Nominal Interest rate

Currency

Maturity

RCB

$294

9.5%

RUB

01.04.2018

RCB

$309

3-m Libor+5,02%

USD

$603

$41

7.30%

$220 *

3-m Libor+5,7%

AFIMALL (Refinance) TOTAL AFIMALL RATE

Ozerkovskaya III (100%)

VTB

TOTAL/BLENDED RATE Financial covenants

RUB

26.01.2015

$823

AFIMALL Liquidation Value of the property should be higher than sum of the outstanding principal and six months interest Q3 Revenue: not less than US$ 19,8 mn (including VAT)

As of September 30, 2013 the Company is in line with the covenants

Portfolio NAV as of September 30, 2013 PROJECT

Book Value

Bank Loan

30.09.2013

AFI Mall Berezkovskaya (100%) Paveletskaya I (1) Plaza H20 Ozerkovskaya III Plaza Ib Plaza II

1,160 42 30 18 388 9 32

(603)

TOTAL INVESTMENT PROPERTY:

1,680

823

Plaza Ic Plaza II a Plaza IV (100%) Kosinskaya Bolyshaya Pochtovaya Paveletskaya II Ruza St. Petrsburg Ozerkovskaya III (underground utilities)

106 12 169 104 142 93 4 2 1

TOTAL INVESTMENT PROPERTY UNDER DEVELOPMENT: Ozerkovskaya Phase II (26)

TOTAL TRADING PROPERTY:

TOTAL PROPERTY PLANT AND EQUIPMENT: TOTAL TRADING PROPERTY UNDER DEVELOPMENT:

CASH AND CASH EQUIVALENT DEFFERED TAX LIABILITY* TOTAL OTHER ASSETS AND LIABILITIES

TOTAL EQUITY:

LTV= 33%

LTE = 48%

856

631 6

31 23 7 25 7

94 Odinburg

557 42 30 18 168 9 32 106 12 169 104 142 93 4 2 1

Aquamarine/Ozerkovskaya 26 Plaza SPA Zheleznovodsk Pyatigorskaya (Park Plaza Kislovodsk) Plaza Spa Kislovodsk (Tirel) (50%) Versailles (Kislovodsk)

TOTAL PORTFOLIO:

632

(220)

NAV

6 31 23 7 25 9

121

95 121

121

2,532

823

1,710 140 (126) (10)

1,714

ANNEX Market Overview Yielding Projects

Market Overview (1/2) MACROECONOMIC UPDATE •

GDP: In Q3 Russian economy entered stagnation phase and GDP growth reached 1,3% compared to 1,2% in Q2 2013 and 1,0% compared to Q3 2012. So far Russia is still ahead of Eurozone with its 0.3% growth rate but way below other BRIC partners and even USA with their 2.5%.

MACROECONOMIC UPDATE 10.00

140

Oil price (Brent, US$ per barrel)

8.00 6.00

120

4.00

•

Oil price (Brent): In September oil price slowed down compared to Q2 2013 on 0,7% and increased on 1,4% compared to September 2012. The World oil prices in the medium term will be reduced, their current level looks a bit overstated as a result of the existing political risks. Consumer sector: Economy is supported primarily by consumer market, which is fuelled by increase of pensions and salaries in public sector. Retail trade turnover is growing at about 4% - much faster than economy in general.

100

2.00

109.2

0.00

-2.00 -4.00

-6.00 40

-8.00 -10.00 United States Germany Czech Republic Russia

Inflation: Consumer prices in Q32013 increased by 1.1%, with YTD inflation totaling 4.7%. Probability to meet inflation yearly target of 6% remains very high.

MOSCOW OFFICE MARKET OVERVIEW

•

Supply: Over Q3 2013 6 new office buildings were brought on the market with rentable area of c. 240K sq m. More than 50% of completed office space in this quarter is Class A developments, the most significant of which are Mercury City Tower (87,574 sq m). More than 80% of supply – areas outside of TTR. Vacancy: Despite the strong new supply in Q3, the overall vacancy rate remained stable at the level of 13.1% Nevertheless, vacancy rates for Class A are particularly high at 18.9% as several new high-quality developments added available spaces to the market. Rental rates: The rental market remained flat over this quarter with prime rents at USD1,000 to USD1,150/sq m per year, Class A rents stand between USD600 and USD850, for Class B+ USD350–600/sq m per year and for Class B- falling in the range USD250–400. Yield(prime): The capitalization rates in Moscow remained almost the same in Q2 2013 ( 8,5%)

MOSCOW OFFICE MARKET OVERVIEW 2,200

2,000

2,000 1,800 US$/psqm/pa

•

Europe United Kingdom Poland

1,600

1,500

1,400

1,000 800

1,200 1,150 1,150 1,150 1,150

1,400

1,200

800

850

1,000 850

600 400

620

850

870

650

class A CBD Prime source: AFID, JLL, C&W

Units

Prime rate (trophy assets)* (US$/sqm/year)

1,150

Base rent Class A (US$/sqm/year)

850

Yields (prime)

8,5%

Overall Vacancy rate

13,1%

Vacancy rate, Class A

18,9%

850

2007 2008 2009 2010 2011 2012 Q1 Q2 Q3 2013 2013 2013 average Class A

Key indicators

Source: Commercial Real Estate Report, JLL; Cushman and Wakefield Report; EIU Russia, Rosstat *Prime base rents refer to rents in high quality buildings in the Central Business District (CBD).

Market Overview (2/2) MOSCOW RETAIL MARKET OVERVIEW

MOSCOW RETAIL MARKET OVERVIEW

•

5,000

Supply: One shopping center opened in Moscow this quarter - Raikin Plaza (GLA of 35,000 sq m). Other two big openings were in St-Peterburg (GLA of 48K sqm) and Syktyvkar (GLA of 30K sqm.)

4,500

4,800 4,500

•

4,500

Vacancy: Vacancy rate has been stable in Q3. The share of vacant spaces in quality premises is 2.5%. It is significantly lower compared to most European capitals. Rental rates: No significant changes were witnessed in rental rates over the quarter. The prime rent for 100 sqm. space in quality premises remains at the level of USD3,000–4,500 sq m/year. Average rental rate in shopping centres is USD 500–1,800 sq m/year.

Prices Moscow: The average price in Q3 2013 for primary business-class residential premises(incl. apartments) amounted to US$ 7,500 psqm compared to US$ 7,390 in Q2 2013. At the moment the price for business-class residential unit in CBD of Moscow in the primary market reached a level of US$ 11,000 – 13,000 US$ psqm. Prices in the Moscow region was unchanged and stood at the average rate c. US$ 3,000 psqm

Units

CBD prime rates (US$/sqm/year)

3,000 – 4,500

3,000 2,500 2,000 1,700 1,500

2,000

1,800

1,350 1,150 1,350 1,200 1,350 1,150 1,150

1,000

Average base rent (US$/sqm/year)

500 – 1,800

Prime Yields

500

Vacancy rate (market average)

Yield(prime): The capitalization rates in Moscow remained the same as in Q1 2013 and amounted at 9% for retail sector

Supply: As the end of Q3 213 the supply of new residential remained stable and amounted to 1,5 mln sqm (incl. apartments and elite class). Business class and comfort class took the significant part of supply.

Key indicators

4,500

3,500

Prime rents

2,5%

Base rents

MOSCOW RESIDENCTIAL MARKET

MOSCOW RESIDENTIAL MARKET •

4,500 4,000 4,000 4,000 3,700

4,000 USD psqm pa

•

8,000 7,500

Key indicators (Moscow)

Units

CBD prime (US$/sqm)

13,000

7,500 7,000 6,500

Average price (US$/sqm)

7,500

Key indicators (Moscow Region)

Units

Average Price (US$/sqm)

3,000

6,000 5,500 5,000

2010

2011

2012

2013

Source: Q3 Marketbit C&W report; Blackwood report, intermarksavills

Contact Information

Registered office AFI DEVELOPMENT PLC Spryou Araouzou 165, Lordos Waterfront Building 5th Floor, Flat/Office 505, 3035 Limassol, Cyprus Tel. +357 25 310975 Principal office of operating subsidiary AFI RUS 16 A Berezhkovskaya Embankment, building 5, Moscow, 121059, Russian Federation. Tel: +7 495 796 99 88 http://investors.afi-development.ru