FY 2018 IR Presentation_final

FY 2018 IR Presentation FINANCIAL & BUSINESS RESULTS April 2019

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

Company Overview SECTION 1

AFI Development at a glance Market Cap, as of 15 April 2019 Mkt price GDR, as of 15 April 2019 Mkt price B share, as of 15 April 2019 NAV (Equity), as of 31 December 2018 NAV per share, as of 31 December 2018 Portfolio Value*

US$193 mln US$0.200 US$0.169 US$746 mln US$0.71 US$ 1.25 bn

BUSINESS

PORTFOLIO VALUE*

HISTORY

•Full cycle real estate developer •Focus on unique large scale commercial and residential projects •Primary market: Moscow, Russia

•17 years on the market •Admitted to LSE in 2007 •Premium listing from 2010 •Free float – 35.12%

FINANCIAL STABILITY

• Liquidity position: US$100.2 million as at 31 December 2018 • Secured financing for on-going projects • 35% Debt to Total Assets ratio**

TRACK RECORD

•14 completed projects with total c.

0.6 mln sqm of space •Market reputation for high quality and professional property management

*Gross Asset Value of Portfolio based on JLL’s confirmation of their Valuations as of 31 December 2018 and BSV of Land Bank projects, Trading Properties and Hotels

• Substantial income generating portfolio.

Major project AFIMALL City BRAND

•Strong local and international brand

PORTFOLIO

• Four residential projects in active construction and marketing stage

• 8 Development Projects & land bank ** Bank loans only

4

Key Projects in Moscow Yielding Projects (retail, offices and hotels) 806

Value, US$ mil** Riverside Station Plaza II, Plaza Ib Berezhkovskaya

AFIMALL

(JLL and book value, as of 31 December 2018):

PLAZA SPA Kisl*

Aquamarine III

GLA (excl. hotels), sqm:

PLAZA SPA Zhel*

152.3K

* Outside of Moscow * * Hotels presented at cost value

BOTANIC GARDEN

Aquamarine Htl

Paveletskaya I

H2O

Projects Under Development PLAZA IV PLAZA II PLAZA IC AFIMALL

BEREZHKOVSKAYA

FOUR WINDS

BOLSHAYA POCHTOVAYA Odinburg**

Paveletskaya II

Botanic Garden

Kossinskaya

Plaza Ic

B. Pochtovaya

AQUAMARINE PAVELETSKAYA I H2O PAVELETSKAYA II

440

Value, US$ mil**

KOSSINSKAYA Plaza IV

(JLL and book value, as of 31 December 2018):

GLA, sqm:

205.3K

GSA, sqm:

743.2K

** Odinburg, Paveletskaya, Bolshaya Pochtovaya and Botanic Garden presented at cost value

Land Bank

ODINBURG

Yielding Projects

4

Value (BSV), US$ mil:

Projects under Development Completed Assets

Other

5

Project Update. Yielding Projects SECTION 2

AFIMALL City Update

(as of December 2018) Total GBA, sqm

274.9K

Total GLA (shops, offices, storage), sqm

107.0K

Occupancy

(as part of GLA total)

Parking lots Terminal NOI (JLL est.)

MV (JLL est.)

Loan balance as of the end of 2018

93%

 The occupancy increased to 93% at the end of December 2018, vs 92% at the end of September 2018  Continued improvement in the performance of the Mall is reflected in the 5% year-onyear increase in revenue to US$86.8 million for the year, and a 1% year-on-year increase in NOI to US$63.7 million.

2,022 US$ 76.8 m US$ 637.3 m US$ 459.7 m

ITEM, US$ million

Q1 2018 Actual

Q2 2018 Actual

Q3 2018 Actual

Q4 2018 Actual

2018 Actual

2017 Actual

USD=57

USD=62

USD=66

USD=66

USD=63

USD=58

(1) Revenue

26.1

24.7

24.9

27.9

103.6

99.5

(2) Operating expenses

(9.3)

(7.7)

(8.4)

(14.5)

(39.9)

(36.5)

(3) NOI

16.8

17.0

16.5

13.4

63.7

63.0

Note: the NOI projections are “forward looking statements” based on JLL 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

7

Yielding Properties Building

AFIMALL Ozerkovskaya III*

Berezhkovskaya

Moscow

Moscow

Moscow

Moscow City

CBD

Moscow

Retail

Office A

GBA, sqm

274 877

18 759

7 910

GLA, sqm

107 036

13 662

2 022

Location Class

Parking lots (total), # Ocupancy rate (31.12.2018), % NOI term., (JLL est.), US$ mn MV*, US$ mn

Tvesrkaya Plaza Ib Moscow

CBD Office & Street Office B Retail

Paveletskaya I Moscow

H2O Moscow

Aquamarine Hotel

Plaza SPA Plaza SPA Kislovodsk Zheleznovodsk

Moscow CBD

TOTAL

Caucasus Caucasus region region

Office B

Office B

Hotel

Hotel

Hotel

2 338

16 082

9 002

8 848

25 000

11 701

374K

6 928

2 050

13 506

8 012

275 keys

134 keys

151K

199

105

-

102

16

93%

100%

91%

83%

1%

65%

76.8

6.9

1.6

0.6

2.1

637.3

57.4

10.0

3.4

9.5

159 keys 15

46

14

79% **

68% **

69%**

1.3

-

-

-

89

7.0

13.0

40.8

9.6

788

* MV based on JLL’s confirmation of their valuations as of 31.12.2018. Hotels presented at cost value ** The hotel occupancy is presented as average for the year 2018

Note: the NOI projections are “forward looking statements” based on JLL 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

8

Project Update. Development Projects SECTION 3

Odinburg Residential OVERVIEW  The ODINBURG residential district is located in the town of Odintsovo, a modern area considered to be one of the best and most environmentally friendly towns in the Moscow region. (11 km from MKAD). A new highway to Moscow is in close proximity to the complex  The entire residential district takes up an area of 33 hectares, which will host eight 8-to-25 story buildings. The residential element will offer 9,419 apartments and a total sellable area of 461K sq.m (Including city share)

Ownership:50%

CONSTRUCTION STATUS and SALES Construction and pre-sales of apartments are ongoing in Buildings 3 (Phase I) and 6, the completed Building 2 is almost fully sold

As of December 2018 Type GBA, sqm

Residential 828.6K

GSA, sqm/GSA commercial total: 461.0/19.6K GSA resi (Phase I), sqm: 153.8K GSA resi (Phase II), sqm: 307.2K GSA commercial, sqm: 19.6K Apartments, total : 9,419 Phase I: 2,846 • Building 1 723 • Building 2 706 • Building 3 923 Phase II: 6,573 • Building 6 224 • Building 3 1329 Parking units: 4,563 Book value, US$ m (including value 90.3 of unsold apartments):

The Company has recently started construction and pre-sales of Building 3 (Phase II); construction of stand alone parking building has started in Q4 2018. As of 31 March, in Building 2 697 out of 706 contracts have been signed; for Building 3 (Phase I) 680 out of 923 contracts have been signed; for Building 3 (Phase II) 9 out of 1329 contracts have been signed and for Building 6 206 out of 224 contracts for sales of apartments have been signed.  Parking lots sold: Building 2: 75 units out of 81. Building 3: 41 units out of 86.

Building 3 (Phase II): 4 units out of 416. Building 6: 53 units out of 57.

10

AFI Residence Paveletskaya As of December 2018 GBA (total), sqm:

140.5K

GBA (phase I), sqm

52.9K

GBA (phase II), sqm

54.3K

GSA (total), sqm:

79.4K

Apartments (total), amnt

549

Apartments (phase I), amnt

175

Apartments (phase II), amnt

270

“Special units” (total), sqm

11.7K

“Special units“ (total), amnt

187

Commercial space, sqm

17.3K

Commercial space (phase I), sqm

5.9K

Commercial space (phase II), sqm

1.4K

Book value, US$ m (including value of unsold apartments):

53.2

According to common market practice in Russia and to applicable Russian laws, preliminary sales of apartments during construction are done in the form of “contracts of participation in construction”, which are executed between the developer and purchaser of an apartment. These contracts are registered with state authorities and enter into legal force after this state registration. However the Company considers that signed contracts have high probability of registration and entering into legal force and reports “units sold” as the number of contracts signed with the apartments purchasers. “Special units” are premises legally not zoned for housing, but are widely sold for residence (a person cannot register in this address, but the premises can be used for housing). The prices of ‘special units’ are normally lower than that of similar apartments (properly zoned housing units).

 Phase I has been almost fully delivered to customers. Phase II is currently under construction As of 31 March 2019, contracts for 372 apartments and 186 “special units” out of 632 total units have been signed Parking lots sold: 453 units

11

Bolshaya Pochtovaya As of December 2018 GBA (total), sqm:

138.8K

GBA (phase I), sqm

43.5K

GBA (phase II)

36.9K

GSA (total), sqm

84.8K

Apartments (total), amnt

626

Apartments (phase I), amnt

187

Apartments (phase II), amnt

219

Apartments (phase III), amnt

220

“Special units” (total), sqm

16K

“Special units“ (total), amnt

280

Commercial space, sqm

16K

Commercial space (phase I), sqm

8.4K

Book value, US$ m:

75.6

According to common market practice in Russia and to applicable Russian laws, preliminary sales of apartments during construction are done in the form of “contracts of participation in construction”, which are executed between the developer and purchaser of an apartment. These contracts are registered with state authorities and enter into legal force after this state registration. The Company considers that signed contracts have high probability of registration and entering into legal force and reports “units sold” as the number of contracts signed with the apartment purchasers.

 The development is located in Bolshaya Pochtovaya Street, in the Central Administrative District of Moscow  The project is constructed in four phases. The construction of Phase I has started in March 2017. Phases II and III are currently also under construction.

Marketing and sales at Phase III started in Q1 2019.  As of 31 March 2019, contracts for 251 apartments out of 626 (Phase I and II, III) have been signed  Parking lots sold: 165 units

12

Botanic Garden As of December 2018 GBA (total), sqm:

206.8K

GBA (phase 1), sqm

138.7K

GSA (total), sqm:

118.0K

GSA (phase 1), sqm

71.8K

Apartments (total), amnt

1384

Apartments (phase 1), amnt

805

Commercial space, sqm

6.9K

Commercial space (phase 1), sqm

6.2K

Book value, US$ m:

77.8

According to common market practice in Russia and to applicable Russian laws, preliminary sales of apartments during construction are done in the form of “contracts of participation in construction”, which are executed between the developer and purchaser of an apartment. These contracts are registered with state authorities and enter into legal force after this state registration. The Company considers that signed contracts have high probability of registration and entering into legal force and reports “units sold” as the number of contracts signed with the apartment purchasers.

 The development is located in Proezd Serebryakova, in the Northern Administrative District of Moscow  The project is developed in two phases. The construction of Phase I has started in March 2017. As of 31 March 2019, 348 out of 805 contracts for sales of apartments have been signed. Parking lots sold: 152 units out of 542.

13

Revenue recognition in residential projects The revenue from the sales of trading properties was calculated in accordance with IFRS 15. The revenue was recognised from pre-sales in the Odinburg, AFI Residence Paveletskaya, AFI Residence Pochtovaya and Botanic Garden projects, taking into account the degree of construction completion.

Impact of IFRS 15 on our financial performance is summarised in the table below:

US$ ’000

US$ ’000

Amounts without adoption of IFRS 15 US$ ’000

296 043 (136 485) (117 474) 42 084 (10 547) 31 537

(95 921) 82 980 (12 941) 2 588 (10 353)

200 122 (53 505) (117 474) 29 143 (7 959) 21 184

As reported Adjustments

Revenue Cost of sales of trading properties Others Profit before tax Tax expense Profit for the year

14

Development Projects - Commercial PLAZA IC

KOSSINSKAYA

(as of December 2018) Type GBA, sqm GLA, sqm Parking

Office A 50.2K 40.0K 238 pp

Status

Constructio n started in Q1 2019 61.1 mil

MV, US$

(as of December 2018) Type GBA, sqm GLA, sqm Parking MV, US$

Plaza II Plaza IV Plaza IC

Mixed use 108.5K 70.0K 1,200 pp 25.7 mil

Kossinskaya

PLAZA IV

PLAZA II

(as of December 2018)

(as of December 2018) Type

Retail

GBA, sqm GLA, sqm Parking MV, US$

22K 12.4K 44 pp 18.0 mil

Other

Type GBA, sqm GLA/GSA, sqm

Office A 92.3K 75.3K

Parking Status

389 pp

MV, US$

Construction start 54.0 mil

Financial update SECTION 4

Consolidated P&L Unaudited Reviewed Unaudited

Audited

Audited

Audited

Q1 2018 Actual

Q2 2018 Q3 2018 Q4 2018 12M 2018 12M 2017 Actual Actual Actual Actual Actual

USD=57 0.0 31.5 17.9

USD=62 0.0 31.8 60.8

(4) TOTAL REVENUE

49.4

92.6

65.1

(5) (6) (7) (8) (9)

0.2 (15.8) (1.4) (17.6) (0.3)

0.6 (14.7) (1.2) (32.8) (3.4)

(35.1)

ITEM, US$ million (1) (2) (3)

Construction consulting/management services Rental income Sale of residential and trading property Other income Operating expenses Administrative expenses Cost of sales of residential and trading property Other expenses

(10) TOTAL EXPENSES (11)

Share of profit of equity-accounted investees

(12) GROSS PROFIT (LOSS) (13)

Valuation gain (loss) on investment property

USD=63 0.0 126.5 169.6

USD=58 0.2 117.0 61.8

88.9

296.0

179.1

1.4 (13.8) (1.5) (34.5) (0.4)

1.1 (19.2) (1.5) (51.6) (0.5)

3.3 (63.4) (5.5) (136.5) (4.5)

3.8 (57.1) (6.0) (58.4) (2.4)

(52.0)

(50.1)

(72.7)

(209.9)

(123.8)

-

-

-

-

-

14.6

41.2

16.3

17.3

89.4

46.6

19.7

(73.8)

(11.5)

36.0

(56.4)

77.9

63.0

0.3 (7.3) (4.8)

0.6 (8.7) (14.1)

(0.0) 1.6 (35.2) (2.3)

(3.9) 7.5 0.7 (50.3) 12.4

(11.8) 24.2

(22.1) (78.6)

(35.8) 42.1

(37.3) 29.3

(4.3) (6.2)

(12.9) (21.1)

(4.0)

(14) RESULTS FROM OPERATING ACTIVITIES

10.6

87.7

(15) (16) (17) (18) (19)

0.4 (10.6) 6.2

(0.0) 0.3 (8.6) 10.4

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

(4.1) 6.5

2.2 89.9

(22) (23)

(1.0) (0.4)

(3.1) (15.3)

5.1

71.6

Profit on sale/disposal of properties/investment Profit on sale of Investment property Finance income Finance expense FX Gain/( Loss)

Current income tax Deferred income tax

(24) PROFIT (LOSS) FOR THE PERIOD

USD=66 USD=66 (0.0) 0.0 31.4 31.8 33.7 57.1

(0.3) (4.0)

19.9

0.0 13.5

(65.1)

31.5

2.0

61.0 2.0

(4.7) 17

Balance Sheet as of 31 December 2018 Audited #

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) (32) (33)

Investment property Investment property under development Property, plant and equipment Long-term loans receivable Intangible assets Investments Total non-current assets Trading property Trading properties under construction Inventory Short-term loans receivable Trade and other receivables Current tax assets Cash, cash equivalents and tradable securities Total current assets TOTAL ASSETS Equity Share capital Share premium Translation reserve Capital reserve Retained earnings TOTAL EQUITY Minority interest Long-term loans and borrowings Deferred tax liabilities Deferred income Total non-current liabilities Short-term loans and borrowings Trade and other payables Advances receivable Income tax payable Total current liabilities

(34) TOTAL LIABILITIES (35) TOTAL EQUITY AND LIABILITIES

Unaudited

Reviewed

Unaudited

Audited

31.12.2018 30.09.2018 30.06.2018 31.03.2018 31.12.2017 US$ mn US$ mn US$ mn US$ mn US$ mn 742,6 818,1 818,1 818,1 818,1 141,9 163,2 163,2 163,2 163,2 67,9 74,4 72,8 78,0 77,6 2,8 7,4 3,5 1,7 1,7 0,2 0,5 0,5 0,7 0,2 5,2 5,1 5,1 0,0 0,0 960,7 1 068,8 1 063,3 1 061,8 1 060,9 19,1 21,3 29,3 9,2 10,8 278,8 276,6 264,5 357,0 349,7 1,1 1,0 1,1 1,1 1,3 0,6 0,6 0,6 1,1 1,1 54,6 70,3 64,8 57,4 70,4 4,4 3,9 1,5 4,1 4,1

Change to year-end US$ mn % (75,5) (9%) (21,4) (13%) (9,8) (13%) 1,1 68% 0,0 13% 5,2 25630% (100,2) (9%) 8,3 77% (70,9) (20%) (0,2) (15%) (0,5) (47%) (15,8) (22%) 0,3 8%

100,2

114,5

108,0

118,4

106,0

(5,8)

(5%)

458,8 1 419,4

488,1 1 556,9

469,7 1 533,0

548,4 1 610,2

543,4 1 604,3

(84,6) (184,8)

(16%) (12%)

1,0 1763,4 (371,7) (19,3) (627,3) 746,1 (0,1) 487,3 54,8 12,0 554,0 16,4 37,4 65,4 0,0 119,3

1,0 1763,4 (360,6) (19,3) (562,3) 822,3 (0,0) 512,8 67,4 12,6 592,8 23,6 42,6 75,6 0,1 141,9

1,0 1763,4 (341,8) (19,3) (582,4) 820,9 0,1 520,6 62,9 13,1 596,5 16,9 41,9 54,0 2,6 115,5

1,0 1763,4 (300,8) (19,3) (660,3) 784,0 (0,1) 584,1 44,9 12,9 641,9 3,4 40,2 140,1 0,7 184,4

1,0 1763,4 (301,3) (19,3) (672,7) 771,1 (0,2) 492,5 42,7 12,6 547,8 86,8 65,1 123,8 9,9 285,6

0,0 0,0 (70,4) (0,0) 45,4 (25,0) 0,1 (5,1) 12,1 (0,7) 6,2 (70,3) (27,7) (58,4) (9,9) (166,3)

0% 23% 0% (7%) (3%) (69%) (1%) 28% (5%) 1% (81%) (43%) (47%) (100%) (58%)

673,3

734,7

712,0

826,3

833,3

(160,0)

(19%)

1 419,4

1 556,9

1 533,0

1 610,2

1 604,3

(184,9)

(12%) 18

Loans and cash position as of 31 December 2018  Gross balance of the bank loan portfolio (as of 31 December 2018) – US$503.4 million  Total cash balance and deposits (as of 31 December 2018) – US$100.2 million (including marketable securities)

Project

AFIMALL

Bank

Historical debt limit

VTB

Nominal Interest rate

Currency

135,8

0

CB Key Rate + 0,75% (8,5%)

RUB

324,0

0

4,2%

EUR

RUB 36.5 bn VTB

TOTAL AFIMALL Kislovodsk #1 Kislovodsk #2 Zheleznovodsk TOTAL/AVERAGE RATE

Balance as of Available 31 December (US$ mn) 2018, (US$ mn)

27.12.2022 459,7

VTB VTB VTB

$ 21.3 mn $ 11.8 mn $ 18.6 mn

Maturity

14,4 11,3 18,0 503,4

5,5% 0 0 0

4,2% 4,2% 4,2% 5,4%

EUR EUR EUR

21.02.2022 20.09.2022 20.09.2022

Financial covenants Kislovodsk #1, Kislovodsk #2 and Zheleznovodsk: 1) EBITDA/((Interest rate (LTM) + Debt (last reporting date)): >=0.15X; 2) Projected DSCR: =>1.2x; 3) Positive value of net assets AFIMALL City: 1) Projected DSCR/Actual DSCR: =>1.15x; 2) Positive value of net assets; 3) Total amount of CAPEX should not be higher than EBITDA for the current quarter

19

Gross/Net Asset Value Book Value Book Value

PROJECT

AFI Mall Berezhkovskaya (100%) Paveletskaya I Plaza H20 Ozerkovskaya III Plaza Ib Plaza II TOTAL INVESTMENT PROPERTY: Plaza Ic Plaza IV (100%) Kossinskaya Starokaluzhskoye shosse TOTAL INVESTMENT PROPERTY UNDER DEVELOPMENT: Ozerkovskaya Phase II (26) Odinburg Paveletskaya II TOTAL TRADING PROPERTY: Aquamarine Hotel Plaza SPA Zheleznovodsk Pyatigorskaya (Park Plaza Kislovodsk) Plaza Spa Kislovodsk TOTAL PROPERTY PLANT AND EQUIPMENT: Odinburg Botanic Garden Paveletskaya II Bolyshaya Pochtovaya TOTAL TRADING PROPERTY UNDER DEVELOPMENT:

TOTAL PORTFOLIO: CASH AND CASH EQUIVALENTS DEFFERED TAX LIABILITY TOTAL OTHER ASSETS AND LIABILITIES

TOTAL EQUITY:

Bank Net Company Loan Share

30.09.2018 31.12.2018 31.12.2018 696 637 (460) 12 10 12 10 10 7 63 57 4 3 22 18 818 743 (460) 66 61 67 54 29 26 1 1

0

31.12.2018 178 10 10 7 57 3 18 283 61 54 26 1

163

142

1 5 15 21 14 10 4 42 69 96 71 37 74

1 3 15 19 13 10 4 41 67 87 78 38 76

276

279

0

279

1 348

1 249

(504)

746 100 (55) (45) 746

0 (18) (26) (44)

Loans To Assets Value = 40% (LTV ratio) Loans To Equity (LTE ratio)

= 67%

142 1 3 15 19 13 (8) 4 15 23 87 78 38 76

20

Market Update SECTION 5

Macro Overview and RE Investment Market RUSSIAN MACROECONIMIC OVERVIEW

RUSSIAN REAL ESTATE INVESTMENT MARKET

• Russian economic growth: The Russian economy is expected to grow at moderate rates. OECD estimated 2018 GDP growth at 1.63% with 2019 forecast at 1.46%.

• During 2018, about US$2.9 billion (JLL) were invested in Russian real estate (a 38% decline year-on-year). Land plots for residential development accounted for a significant part of the investments.

• Exchange rates: The Rouble weakened significantly versus the dollar towards the end of 2018, reaching 69.82 at its peak in December. However, during January 2019 it strengthened back to RUR65.5-67/$1 levels. The rate at 31.12.2018 was RUR69.47 (vs. RUR65.59 on 30.09.2018).

• According to JLL, in 2018, 31% were invested in the office segment, 27.3% in retail, 22% were invested in residential projects (land plots and development rights). 73% of the invested capital was of Russian origin (with France leading among the international capital).

• The Central Bank of Russia (“CBR”) has increased its key lending rate by 25 bps to 7.75% in December 2018 (following another 0.25% raise in September), quoting increased inflationary risks and RUR/USD exchange rate volatility.

• Inflation: The consumer prices inflation for 2018 was 4.3% (annualised), close to the CBR target of 4.0%. CBR expects the 2019 inflation in the range of 5.0-5.5%.

• The biggest transactions in 2018 were the acquisition of Riviera SC in Moscow by KLS Eurasia Venture Fund and the acquisition of K-Rauta DIY hypermarkets in St Petersburg by Leroy Merlin.

Estimated Forecasted Investment Volume in 2019 (USD billion)

JLL *

CBRE

C&W*

3.5

4.0

2.8

* JLL estimate excludes acquisitions by end-users and joint ventures. C&W excludes residential transactions

Consumer Price Inflation forecasts

Source: CBR, RBC, OECD, C&W, Interfax 22

Source: C&W, JLL, CBRE

Office and Retail Markets Overview OFFICE MARKET OVERVIEW

RETAIL MARKET OVERVIEW

• New supply in 2018 amounted to only 133K sqm of new space in classes A and B combined (compared to 436K sqm delivered in 2017, data by C&W).

• The take up in 2018 was about 2 million sqm (C&W), a 5% decrease year-on-year. The take up was led by banks and finance, IT and retail. The vacancy rates in class A and B continue to decrease: According to JLL, in Class A the vacancy was recorded at 10.8% in Q4 2018 (vs 16.4% in Q4 2017) and in Class B at 9.8% (vs 12.8% in Q4 2017). Overall vacancy was 10.3% (vs 13.8% in Q4 2017).

• The rents in 2018 remained relatively stable. Asking rents for Class A prime central premises were at US$600-750 psqmpa.

Asking rents for Class A office buildings were US$370-615 and for Class B $130-385. Rouble denominated rents continue to prevail, with Class B working exclusively in roubles. Dollar denominated transactions accounted for 8.8% of all transactions during 2018 (C&W).

Base Rent, US$ psqmpa

Key indicators (JLL)

Units

Base rent Class A (Prime), US$ psqmpa

600-750

Base rent Class A, US$ psqmpa

370-615

Base rent Class B, US$ psqmpa

130-385

• Shopping centres completions in Moscow in 2018 amounted to 123K sqm (JLL), with Kashirskaya Plaza, Milya Zhulebino and Arena Plaza being the most notable. The development activity in the sector remains at historically low levels.

• 30 new brands entered the market in 2018. Most of these brands were in the fashion, footwear and cosmetics segments.

7 international retailers have left the market during the period.

• The vacancy rate across Moscow shopping centres as of the end of Q4 2018 was at 5.2% (JLL).

• Turnover rent (12-15%) with a low minimum rent continues to be the most common lease structure. Fixed exchange rates are commonly provided to tenants whose leases are foreign currency denominated.

C&W Prime rental rate indicator, US$ psqmpa

Key indicators (JLL)

Units

Prime rent, RUR psqma (prime shopping

195,000

centre gallery)

Overall vacancy,%

10.3%

Vacancy rate, Class A, %

10.8%

Source: JLL, C&W

Average rent, RUR psqma

74,000

Vacancy rate,%

Source: JLL, C&W

5.2% 23

Residential Market Overview RESIDENTIAL MARKET MOSCOW AND MOSCOW REGION

Average weighted asking price in primary residential market of “old” Moscow, by districts, end of Q4 2018 (RUR psqm)

MOSCOW:

• At the end of 2018, the supply of the “Old Moscow” primary residential market (excluding “apartments”) was about 2.29 million sqm (about 32 525 residential units), a 1.0% decrease compared to the end of Q3 2018 (data by Metrium Group).

• By the end of 2018 the weighted average asking price in the newly built business class residential market in Moscow amounted to RUR228,100 psqm (US$3,456, USD/RUB = 66).

Compared with the end of Q3 2018, the average prices increased by 1.4% in roubles. In the mass segment the weighted average asking price was RUR162,090 psqm (US$2,456, USD/RUB = 66) (data by Metrium Group).

North North-East

East North-West

Central

MOSCOW REGION:

• At the end of Q4 2018, the primary market supply (newly built residential units) in the Moscow region amounted to 2.8 million sqm (data by IRN).

West

South-East

• As of end of Q4 2018 the weighted average price per sqm in the Moscow region was RUR76,100 (US$1,153, USD/RUB = 66), (data by Azbuka Zhilya).

South

Source: Metrium Group, IRN, Azbuka Zhilya

Source: NDV Real Estate 2 4