STRICTLY CONFIDENTIAL FOR ADDRESSEE ONLY VALUATION REPORT # 12-MOSC-900262 LSR GROUP PORTFOLIO
PREPARED FOR JSC GROUP LSR
DATE OF VALUATION DECEMBER 31, 2012 FEBRUARY 25, 2013 A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
TABLE OF CONTENTS
EXECUTIVE SUMMARY 1 A VALUATION REPORT 2 1 INSTRUCTIONS 3 2 BACKGROUND TO THE VALUATION 3 3 CONFLICTS OF INTEREST 3 4 BASIS OF VALUATION 4 5 INSPECTIONS 4 6 ASSUMPTIONS AND SOURCES OF INFORMATION 5 7 TENURE AND TENANCIES 5 8 NET ANNUAL RENT 7 9 TOWN PLANNING 7 10 STRUCTURE 9 11 SITE AND CONTAMINATION 9 12 PLANT AND MACHINERY 9 13 GENERAL PRINCIPLES 9 14 SPECIAL ASSUMPTIONS, RESERVATIONS AND DEPARTURES 10 15 MATERIAL CHANGE 10 16 VALUATION 10 17 DISCLOSURE AND PUBLICATION 11 18 AGGREGATE VALUATION 11 19 CONFIDENTIALITY 16 B MARKET OVERVIEW 18 C VALUATION AND VALUATION CONSIDERATIONS 82 D DESCRIPTION OF PROPERTIES 93 E APENDICES 289
VALUATION & ADVISORY CUSHMAN & WAKEFIELD
EXECUTIVE SUMMARY
LSR GROUP PORTFOLIO Valuation agreement: # 12-MOSC-900262 dated December 21, 2012 Date of the valuation December 31, 2012 Date of the report February 25, 2013 Period of valuation process December 2012 – March 2013 The name and the address of JSC Group LSR the Client Legal address: 36 Kazanskaya Street, Saint-Petersburg, Russia, 191031 Postal address: 36 Kazanskaya Street, Saint-Petersburg, Russia, 191031 OGRN 5067847227300 INN 7838360491 / KPP 783801001 Central OSB # 1991 / 0774 North-West bank of OAO Sberbank Rossii, Saint-Petersburg Operating account 40702810555230183587 Correspondent account 30101810500000000653 BIK 044030653 The name and the address of Cushman and Wakefield LLC the legal entity the Valuer has Legal address: Gasheka St., 6, Moscow, Russia, 125047, labor contract with Postal address: Gasheka St., 6, Moscow, Russia, 125047, OGRN 1047797054227 as of 06.10.2009. Information on the Valuer Konstantin Lebedev, a member of the Russian self-regulatory society of appraisers (registration #0000730 as of 22.08.2007), located at: 2A, 1st Basmanniy pereulok, Moscow, 107078. Legal address of the Russian society of appraisers: 21, Novaya Basmannaya St., Bld 1, Moscow, 107078. Insurance policy of liability: OAO Ingosstrakh (contract #433-039073/12 as of 22 June 2012). Degree in Business valuation (Diploma “ПП No: 517059” as of 28 June 2002. Professional experience of 10 years. Location/Situation The properties are located in Saint-Petersburg, Leningradskiy Region, Moscow, Moscow Region and Ekaterinburg. Portfolio Description The LSR Group portfolio comprises residential and commercial properties. Exchange Rate as at valuation $1 = 30,3727 RUR (Source: Central Bank) date Market Value of the Portfolio 119 921 010 000 Rubles Net of VAT (One Hundred Nineteen Billion Nine Hundred Twenty One Million Ten Thousand) This summary is strictly confidential to the addressee only. It must not be copied, distributed or considered in isolation from the full report.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 1
A VALUATION REPORT
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 2
To: The Bord of Directors, JSC Group LSR 36 Kazanskaya Street, Saint-Petersburg, Russia, 190031
and
Goldman Sachs International Peterborough Court 133 Fleet Street London EC4 2BB United Kingdom
J.P. Morgan Securities Ltd. 10 Aldermanbury London EC2V 7RF United Kingdom
VTB Capital plc 14 Cornhill London EC3V 3ND
Portfolio: LSR GROUP PORTFOLIO
Report Date: February 25, 2013
Valuation Date: December 31, 2012
1 INSTRUCTIONS
APPOINTMENT In accordance with your request, as confirmed by the Valuation Agreement #12-MOSC-900262, dated December 21, 2012 (“Agreement”), concluded between Cushman & Wakefield OOO (“C&W”) and JSC LSR Group (“the Client”), we have considered each Property as set out below and made all necessary enquiries to provide you with our opinion of Market Value of the freehold interest in the buildings and the long leasehold interests and freehold interests in the land plots beneath the buildings.
We understand that the current valuation will be used for regulated purposes only. No other purpose is intended or should be inferred.
The properties and interests valued are detailed in Part D of this report.
The extent of our professional liability to you is detailed in Part E of this report. We confirm that we have sufficient knowledge, skills and understanding to undertake the valuation competently.
2 BACKGROUND TO THE VALUATION We understand that this valuation report and the Schedule (together, the “Valuation Report”) are required for the completion of the Client’s financial accounts, dated December 31, 2012, and we hereby give our consent for such inclusion, this report may not be used for any other purpose.
The effective date of the valuation is December 31, 2012.
3 CONFLICTS OF INTEREST A Conflict of Interest is defined by the RICS Valuation Standards (“the Red Book”) as:
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‘A threat to independence or objectivity’.
Cushman & Wakefield have acted for the Client with respect to annual Valuation services, which were provided in January – March 2012 with respect to the LSR Group Portfolio, however, we do not believe that this creates a conflict of interest.
4 BASIS OF VALUATION The valuation and report has been prepared in accordance with the RICS Valuation – Professional Standards (the “Red Book") by a valuer acting as an External Valuer, as defined within the Red Book. We confirm that the valuer conforms to the stipulated requirements.
BASIS A Basis of Value is defined by the Red Book as:
‘A statement of the fundamental measurement assumptions of a valuation.’
In accordance with our instructions from the Client, the properties in Part D has been valued on basis of Market Value.
DEFINITIONS Market Value
VS 3.2 defines Market Value as:
‘The estimated amount for which an asset or a liability should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.’
Market Value is an internationally accepted basis of valuation, entirely consistent with the normal valuation basis followed in each country where the Properties are located. The Properties are held either as properties held as investments, properties held for development, or properties in the course of development and we have therefore used the appropriate property investment and development valuation methodology to calculate Market Value of each Property.
Our Valuation Report is also in accordance with the relevant rules and recommendations of PR 5.6.5G of the Prospectus Rules (and related guidance) published by the Financial Services Authority and the relevant guidance published by the European Securities and Market Authority.
In this Valuation Report:
LSR Group legal share (%) means the percentage stake that you have told us that the Client has in the legal entity by which the Property is held. For the avoidance of doubt we have valued a 100% share of the legal interest identified in each Property.
5 INSPECTIONS The properties were inspected by Joshua Askew MRICS, Director, Fedor Zavileysky MRICS, Senior Consultant, Irina Doshchenko, Senior Consultant, and Polina Mitina, Senior Consultant.
All the information on the dates of inspection and by whom it was inspected is presented in Part D.
The properties were inspected internally and externally from ground level.
The properties were not measured and we have assumed that the development scheme areas measurements, areas and dimensions that the Client has provided to us are accurate and have been calculated by appropriately qualified
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professionals in accordance with all the necessary requirements and the local standards of measurements. We have also relied upon the detailed information that the Client provided to us with regard to the internal measurements and dimensions and assume these are also accurate. Any variation or inaccuracies in the information provided to us would affect the opinion as to value reported herein.
6 ASSUMPTIONS AND SOURCES OF INFORMATION An assumption is stated in the Glossary to the Red Book to be a “supposition taken to be true” (“assumption”). Assumptions are facts, conditions or situations affecting the subject of, or approach to, a valuation that, by agreement, need not be verified by a valuer as part of the valuation process. In undertaking our valuations, we have made a number of assumptions and have relied on particular sources of information. We believe that the assumptions we have made are reasonable, taking into account our knowledge of the Properties, and the contents of reports made available to us.
However, in the event that any of these assumptions prove to be incorrect then our valuations should be reviewed. The assumptions we have made for the purposes of our Valuations are referred to below. We have made an assumption that the information which the Client and its professional advisers have supplied to us in respect of the Properties is both full and correct.
It follows that we have made an assumption that details of all matters likely to affect value within their collective knowledge such as prospective lettings, construction timetables, completion schedules, outstanding requirements under legislation and planning decisions have been made available to us and that the information is up to date.
In completing the valuations herein, we have made the following assumptions:
• land plots held under long leaseholds will be renewed at lease expiry, effectively into perpetuity – the right of renewal to the current long leaseholder is established at law in Russia; • that shares in land leases held in Special Purpose Vehicles can be sold; • all notices have been served validly and within appropriate time limits; • the Properties exclude any mineral rights; • vacant possession can be given for all accommodation which is not leased; • that where currently the permitted use of the land plots is not identical with a use which currently permits the construction of residential or other planned development, we assume that it will be possible to achieve such a permission and have reflected this permitting risk in our valuation inputs which determine value; • where the Client holds part shares in projects, we have assumed that no material reasons exist why such shares may not be sold as at the date of valuation and that co-owner’s consent will be given for such disposals; • where the Client intends to acquire long-leasehold or freehold shares in land or buildings within the current portfolio, either through negotiation with current owners or at the expiry of a build lease/investment contract, that such ownership or long leasehold tenure will be granted; • that any bank pledges/mortgages relating to the subject properties owned either directly or partly by the Client itself, or by one of its subsidiaries, will not have any detrimental effect on value and will in no way impede the normal open market disposal of such properties as at the date of valuation; • that where the relocation of families and or trading entities must take place as a necessary condition of development at a Subject Property, that such relocation takes place in a timely manner and that such relocations pose no unusual risk of delay to the proposed development project.
7 TENURE AND TENANCIES We have had access to the public title deeds or lease documentation in respect of the Properties but these do not always reveal all aspects relating to title. Each valuation has been based entirely on the information which the Client has supplied to us as to tenure, tenancies and statutory notices. We understand each property is either held by the Client, its subsidiaries, or jointly with third parties.
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We have valued a 100% share of the tenure stated in each Property, unless otherwise specifically stated, as if each Property was held entirely by the Client as at the valuation date. We have not made any adjustment to value, which may be appropriate when considering fractural ownership for each individual Property.
Unless disclosed to us to the contrary and recorded in the Property descriptions, each valuation is on the basis that:
• the Property possesses a good and marketable title, free from any unusually onerous restrictions, covenants or other encumbrances; • where the interest held in the property is leasehold, there are no unreasonable or unusual clauses which would affect value and no unusual restrictions or conditions governing the assignment or disposal of the interest; • leases to which the Property may be subject are on standard market terms, and contain no unusual or onerous provisions or covenants which would affect value; • all notices have been served validly and within appropriate time limits; • the Property excludes any mineral rights; and • vacant possession can be given of all accommodation which is unlet, or occupied either by the Client or by its employees on service occupancies. Unless otherwise stated our valuation is for a full share interest in the Property and assumes that a good and marketable title exists. This should be taken into account in consideration of individual Properties. Where specific outstanding costs have been identified to us as being required to arrive at ownership of a full share interest in the requisite Property or in order to obtain the necessary permits, these costs have been taken into account in the valuation in full.
For some properties we have been informed by the Client that investment contracts are held for the development. In these cases our valuations assume that a ground lease and an ownership certificate will be issued upon completion of the development, as is normal development practice in Russian real estate market.
In some cases land plots underlying the Properties are held leasehold. The long-term (49-years) lease is the most common type of ownership of land in Moscow and the Moscow Region, and such leases are treated as virtual freeholds due to legislative rights to renew and prolong such long leasehold interests, which are codified in Russian law. On the majority of these land plots buildings are held freehold according to the corresponding ownership certificates.
Real estate development projects in Russia are subject to a complicated regulatory framework, which may result in development projects being conducted on land that is leased under a long term lease from the relevant or under a short term construction lease. Where the property is still in development on a short-term land lease, such lease may be terminated early where the developer fails to make timely rental payments or complete the development on time or if a breach of other obligations under the lease agreement or the investment contract occurs.
In addition, if construction has not been completed during the term of the short-term lease, there is no assurance that the term will be renewed to proceed with the property construction. Once registration of ownership of the completed building has been obtained, by Russian law a developer is entitled either to enter into a long-term lease agreement in relation to the land with the relevant state authority or obtain the ownership rights (freehold interest) in the land. The maximum term of a long-term lease is currently 49 years. We have assumed that, where applicable, construction will be completed during the term of the relevant short-term ‘build’ lease or investment contract and that registration of ownership will be obtained. We have assumed that in all cases the Client or its subsidiaries, will obtain long-term lease agreements or ownership rights post registration.
Russian law also provides for the right of an owner of a building to acquire ownership rights to the underlying land plots which are in the federal or municipal ownership. In addition, with respect to development properties, developers may enter into investment contracts. An investment contract entered into between a land lease owner and a regional or local government often serves as a condition to the execution and renewal of a short-term construction land lease agreement. At the same time, a failure to enter into a land lease agreement promptly after the execution of the investment contract may constitute a material breach of the investment contract.
If a developer does not complete the development by the agreed date, it could lead to termination of the land lease agreement and the investment contract. A material breach of an investment contract may entitle the regional or local
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government to impose contractual penalties on a developer, or may lead to delays in completion of construction or rescission of the investment contract in its entirety. The relevant governmental authorities may require the removal of any incomplete construction or, alternatively, may argue that partially incomplete construction is an “unauthorised construction” and seek a court ruling declaring such construction to be state property or ordering its demolition.
In the event of termination of a land lease (whether during the term or at the expiry of the term) under the Civil Code of Russia, there is a risk that the land owner will acquire the right to buy the building in question on that land at a price to be determined by a court or request the demolition of the building. However, there is a lack of court practice or precedent on how these provisions will actually operate, and in this valuation we assume no investment contract or short term lease will be terminated due to a delay to complete or other material breach.
In addition, some state authorisations and permits that are required for construction are issued for a certain term specified in such authorisations and permits. If developers are unable to commence or complete particular developments by the specified dates, they will be required to apply for a renewal or extension of the respective authorisation and permit, which may be a complicated and time-consuming process. In this valuation we assume that the Client or its subsidiaries will be successful in the renewal or extension of such authorisations and permits.
8 NET ANNUAL RENT We were provided by the Client with net annual rent as at the date of valuation for each existing Property for lease.
Net annual rent is defined as:
“the current income or income estimated by the valuer:
(i) ignoring special receipts or deductions arising from the property;
(ii) excluding Value Added Tax and before taxation (including tax on profits and any allowances for interest on capital or loans); and
(iii) after making deductions for superior rents (but not for amortization), and any disbursements including, if appropriate, expenses of managing the property and allowances to maintain it in a condition to command its rent”.
9 TOWN PLANNING We have not made formal searches, but have generally relied on verbal enquiries and any informal information received from the Local Planning Authority, or from the Client. Each valuation is on the basis that the Property has been erected either prior to planning control or in accordance with a valid planning permission and is being occupied and used without any breach of planning or building regulations. Except where stated otherwise, each valuation is on the basis that each Property is not affected by proposals for road widening, Compulsory Purchase, planning inquiry, or archaeological investigation.
Although, where appropriate, we have considered the Client’s business plan to develop each Property, each valuation reflects our opinion of an appropriate development that could reasonably be expected to form the basis of a bid for a Property by a third party. I.e. the Highest and Best Use as defined by the International Valuation Standards has been considered for each Property.
The Highest and Best Use is defined in Paragraph 3.4 of IVS 1 as: “The most probable use of a property which is physically possible, appropriately justified, legally permissible, financially feasible, and which results in the highest value of the property being valued”.
All lands in Russia are assigned to a particular land category and must be used for certain purposes, i.e. a “permitted use”, in order to achieve more optimal use of different land plots.
Through the Land Code, land in Russia is divided into the following seven categories, with a designated prescribed use for each:
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1. agricultural land; 2. settlement land; 3. industrial land; 4. lands specially protected areas and objects (e.g. nature parks); 5. forest land; 6. water land; 7. reserved land. Generally, lands of settlement are used for development of commercial real estate property. In addition, each land plot has a certain permitted use, which requires the owner of the land plot to use if for strictly determined purposes, for example, for constructions and management of an office building.
Construction and development in Russia is a complex multi-stage process, which involves compliance with many regulatory requirements, and obtaining authorisations from a large number of authorities at the federal, regional and local levels. Development in Russia is primarily governed by the Town-Planning Code, Civil Code, Land Code and other federal laws and regulatory acts.
In addition, construction activity is subject to regional and local regulation. Under Russian federal law, the basic steps typically required for commencement of construction projects are:
• obtaining the rights to land; • preparation of design documentation and obtaining infrastructure/utilities documentation; • obtaining a construction permit; • performing construction works; • obtaining a conclusion on conformity of construction with the applicable rules (ZOS) and operational permit; and • registration of title to the new building. Property development activities are subject to regulation by various governmental entities and agencies in connection with obtaining and renewing various permits, approvals and authorisations, as well as with ongoing compliance with existing laws, regulations and standards. A number of preliminary planning and architectural design approvals, as well as land ownership and lease rights, are necessary in order to receive construction permits and commence construction.
For any project being developed or redeveloped in a major city, the architectural design must be approved by several administrative bodies within the city administration. In addition, each project must receive administrative approvals from various governmental agencies, including the fire, health and safety, environmental protection and sanitary departments, as well as technical approvals from various utility providers, including providers of electricity, gas and sewage services. These requirements may hinder, delay or significantly increase the costs of development activities. The development or redevelopment of properties is carried out pursuant to certain specifications, including building area measurements, approved by certain state compliance authorities and, ultimately, upon the issuance of a construction permit issued by the regional or local authorities.
Valuation of the Property “held for future development” or “in the course of development” assumes that all required planning permission consents will be received within a normally acceptable timescale and that there are no such issues which would materially delay the issuance of the required consent, or have a material effect on value or marketability.
In the event that a developer changes design documentation during the process of construction, a developer will need the design documentation to be examined by state authorities and the previously issued construction permit to be amended. In some cases developers conduct the process of applying for construction permits concurrently with construction works.
We have assumed that the projects that the Client intends to develop in the future will not fail to conform to the project documentation or otherwise fail to comply with regulatory requirements, and that the Client will hence not be subject to fines or penalties, or to the cancellation of any project by governmental officials.
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Regulatory authorities exercise considerable discretion in the enforcement and interpretation of applicable laws, regulations and standards, the issuance and renewal of permits, approvals and authorisations, and in monitoring compliance of companies with the terms thereof. Russian authorities and other authorised organisations have the right to, and frequently do, conduct inspections of existing and development properties.
We assume that all of the Client’s developments and completed or existing buildings fully comply with such existing laws and regulations and that an inspection of any of the Client’s properties would not bring to light any conditions or breaches detrimental to the construction, or construction timetables relied upon for the purposes of this valuation.
10 STRUCTURE We have neither carried out a structural survey of each Property, nor tested any services or other plant or machinery. We are therefore unable to give any opinion on the condition of the structure or services at any Property. Each valuation takes into account any information supplied to us and any defects noted during our inspection, but otherwise are on the basis that there are no latent defects, wants of repair or other matters which would materially affect each valuation.
We have not inspected those parts of each Property which are covered, unexposed or inaccessible and each valuation is on the basis that they are in good repair and condition.
We have not investigated the presence or absence of High Alumina Cement, Calcium Chloride, Asbestos and other deleterious materials. In the absence of information to the contrary, each valuation is on the basis that no hazardous or suspect materials or techniques have been used in the construction of any Property.
11 SITE AND CONTAMINATION We have not investigated ground conditions/stability and each valuation is on the basis that any buildings have been constructed, having appropriate regard to existing ground conditions. Where the Property has development potential, our valuation is on the basis that there are no adverse ground conditions which would affect building costs.
However, where you have supplied us with a building cost estimate, we have relied on it being based on full information regarding existing ground conditions. We have considered the Client’s construction estimates in the light of typical market norms.
We have not carried out any investigations or tests, nor been supplied with any information from you or from any relevant expert that determines the presence or otherwise of contamination (including any ground water). Accordingly, our valuation has been prepared on the basis that there are no such matters that would materially affect our valuation.
12 PLANT AND MACHINERY Process-related plant/machinery and tenants’ fixtures/trade fittings have been excluded from each valuation.
No specialist tests have been carried out on any of the service systems or utilities present in each building or at each land-plot, and for the purposes of our valuations we have assumed that all are in good working order and in compliance with any relevant statute bye-law or regulation.
13 GENERAL PRINCIPLES Each valuation is based on the information which has been supplied to us by the Client or which we have obtained in response to our enquiries. We have relied on this information as being correct and complete and on there being no undisclosed matters which would affect each valuation.
In respect of tenants’ covenants, whilst we have taken into account information of which we are aware, we have not received a formal report on the financial status of the tenants. We have not been supplied with any information to
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indicate that there are material arrears or that the tenants are unable to meet their commitments under the leases. Each valuation is on the basis that this is correct. You may wish to obtain further information to verify this.
Where we have reflected development potential in a valuation, we have assumed that all structures at the Property will be completed using good quality materials and first class workmanship and that the development scheme, where held as an income producing tenanted asset, will let to tenants who satisfy the tenant mix policy and are of reasonable covenant status and on typical market lease terms.
We have made subjective judgments during our valuation approach in arriving at our opinion and whilst we consider these to be both logical and appropriate they are not necessarily the same as would be made by a purchaser. The purpose of the Valuations does not alter the approach to the Valuations.
Property values can change substantially, even over short periods of time, and so our opinion of value could differ significantly if the date of valuation was to change. If you wish to rely on our Valuations as being valid on any other date you should consult us first. Should you contemplate a sale of any of the properties valued herein, we strongly recommend that the Property is given proper exposure to the market.
Each valuation assumes that there is an active letting and funding market. This Valuation Report should be read in conjunction with the contracts referred to above, our terms of engagement and in particular our Standard Terms and Conditions of Appointment of C&W as Valuers.
You should not rely on this report unless any reference to tenure, tenancies and legal title has been verified as correct by your legal advisers.
CURRENCY The property has been valued in RUR. The valuation has been converted to the reporting currency – RUR, adopting an exchange rate of 1 USD = 30.3727 RUR (Source: Central Bank) as at December 31, 2012. We have not reflected any local realisation taxes.
14 SPECIAL ASSUMPTIONS, RESERVATIONS AND DEPARTURES We confirm that each valuation is not made on the basis of any Special Assumptions or any Departures from the Practice Statements contained in the Red Book. Subject to the general limitations of our inspections and sources of information set out above, each valuation is not subject to any specific Reservations in relation to restricted information or Property inspection.
15 MATERIAL CHANGE We hereby confirm that as at the date of this Valuation Report:
We have not become aware of any material change since December 31, 2012 in any matter relating to any specific Property covered by our Valuation Report which in our opinion would have a material effect on the Market Values as at today’s date, or
In relation to market conditions and movements in the property markets in which the Properties covered by our Valuation Report are located, we do not consider that any movement in respect of the Properties constitutes material change since December 31, 2011.
16 VALUATION Subject to the contents of this report and based on current values, we are of the opinion that the Market Value of the freehold and leasehold interests in the Subject Properties as at the date of valuation, is fairly reflected in the sum of:
119 921 010 000 Rubles
(One Hundred Nineteen Billion Nine Hundred Twenty One Million Ten Thousand)
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Net of VAT
17 DISCLOSURE AND PUBLICATION You must not disclose the contents of this valuation report to a third party in any way without first obtaining our written approval to the form and context of the proposed disclosure. You must obtain our consent, even if we are not referred to by name or our valuation report is to be combined with others. We will not approve any disclosure that does not refer sufficiently to any Special Assumptions or Departures that we have made.
In relation to the preceding financial year of C&W, the proportion of the total fees payable by the Company to the total fee income of the firm is less than 5%.
This Valuation Report has been prepared for inclusion in the listed financial reports and circulars of the Company. We hereby consent to inclusion of this Valuation Report in such listed financial reports and circulars.
18 AGGREGATE VALUATION Subject to the foregoing, and based on values current as at December 31, 2012, we are of opinion that the Market Value of each 100% share of each freehold and leasehold interest in each Property, as set out in the Appendix to this Report, is as follows:
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Valued interst, % # Property Tenure Property type C&W MV, RUR (LSR Legal Share)
Freehold
Saint-Petersburg Properties
Properties held as investments Existing buildings 1 Gelios Freehold Class B 400 300 000 100% 2 Litera Freehold Class B 275 100 000 100% 3 Kazanskaya 36 Freehold Class B 711 900 000 100% 4 Paradniy Quarter 11 Freehold Class A 366 800 000 100% Properties held for future development Commercial propeties held for future development 5 Salova Freehold Class B 670 927 413 100% Residential propeties held for future development 6 Oktyabrskaya Embankment Freehold Mass market 5 915 928 444 100% 7 Tsvetnoy gorod Freehold Mass market 9 385 360 740 100% Properties in the course of development Elite class residential 8 Radishcheva 39 Freehold Elite 2 641 860 244 100% 9 Morskoy Freehold Elite 1 043 182 796 100% 10 Venice Freehold Elite 990 004 437 100% 11 Kuybysheva 13 (Dom na Dvoryanskoy) Freehold Elite 475 947 372 100% Business class residential 12 Europe city Freehold Business 5 079 220 514 100% Stage 1 100% Stage 2 100% Stage 3 100% Stage 4 100% 13 Smolenskaya Freehold Business 422 314 459 100% Mass market residential 14 Antey Freehold Mass market 426 493 831 100% 15 Murinskiy kvartal Freehold Mass market 4 635 345 651 100% 16 Ruch'i Freehold Mass market 2 375 762 069 100% 17 Sofiya Freehold Mass market 5 947 565 269 100% 18 Marshala Blukhera (Kalina-park) Freehold Mass market 4 322 985 474 100% 19 Moskovskoe shosse, 3 (VIVA) Freehold Mass market 2 974 747 885 100% 20 Vitebskiy, 15 Freehold Mass market 1 795 641 053 100% 21 Shuvalosvkiy kar'er Freehold Mass market 3 526 003 500 100% Commercial properties
Country side residential properties (land plots) 22 Bolshoy Alakul Freehold Land plot 221 972 616 100% 23 Dachnoe Freehold Land plot 147 550 924 100%
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Valued interst, % # Property Tenure Property type C&W MV, RUR (LSR Legal Share)
Freehold
Moscow Properties Properties held as investments Existing buildings 24 Davydkovskaya Freehold Business 344 900 000 100% Properties in the course of development Business class residential 25 Leningradskoe Highway 58 Freehold Business 1 812 986 910 100% 26 Grunvald Freehold Business/Elite 1 065 896 632 100% Mass market residential 27 New Nakhabino Freehold Mass market 2 060 447 434 New Nakhabino 1 phase Mass market 100% New Nakhabino 2 phase Mass market 100%
Ekaterinburg Properties Properties held as investments Existing buildings Business class residential 28 Evropeyskiy Freehold Business 3 587 241 100% Mass market residential 29 Furmanova parking Freehold Parking 12 552 882 100% Properties in the course of development Mass market residential 30 Michurinskiy Freehold Mass market 1 562 791 991 100% 31 Kalinovskiy Freehold Mass market 297 476 497 100% Properties held for future development Mass market residential 32 40 let Komsomola Freehold Mass market 790 516 639 100% Total Market Value of the properties held freehold, RUR 62 704 070 916
Share in Aggregate Market Value of the properties freehold, RUR 48%
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Valued interst, % # Property Tenure Property type C&W MV, RUR (LSR Legal Share)
Leasehold
Saint-Petersburg Properties
Properties held as investments Existing buildings 33 Zolotaya Kazanskaya Leasehold Class B 379 300 000 100% Properties in the course of development Elite class residential 34 Smolniy Park Leasehold Elite 10 535 100 673 100% Stage 1 100% Stage 2-3 100% Stage 4 35 Nevskiy 1 Leasehold Elite 1 731 810 656 100% 36 Paradniy Quarter Investment contract Elite 5 795 620 617 100% Stage 1 100% Stage 2 100%
37 Kovenskiy Leasehold Elite 473 816 145 100% Business class residential 38 Morskie bashni Leasehold Business 2 005 141 831 100% Mass market residential 39 Uyzhnaya Aquatoria Leasehold Mass market 4 698 547 349 100% 40 Avrora Leasehold Mass market 3 606 187 526 100% 41 Vostok Leasehold Mass market 2 007 585 100% Commercial properties 42 Paradniy Quarter (offices) Investment contract Class A 1 246 511 717 100% 43 Nevskiy 68 Leasehold Elite 2 107 379 216 100% 44 Kamenoostrovskaya kollektsiya (offices) Leasehold Class B 476 469 966 100%
Moscow Properties Properties held as investments Existing buildings 45 Tverskoy 16 Leasehold Class A 1 196 785 000 100% Properties in the course of development Commercial properties 46 Noviy Balchug Investment Contract Class A 2 285 181 061 100% Properties in the course of development Business class residential 47 Donskoy Olymp Investment Contract Business 5 905 211 874 100% Mass market residential 48 iBitsa Investment Contract Mass market 5 903 620 350 100% 49 New Domodedovo 1 phase Leasehold/Freehold Mass market 3 809 591 542 100% 50 New Domodedovo 2 phase Leasehold Mass market 2 449 897 152 100%
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Valued interst, % # Property Tenure Property type C&W MV, RUR (LSR Legal Share)
Leasehold
Ekaterinburg Properties Properties held as investments Existing buildings Business class residential 51 Zeleniy Mys Leasehold Business 300 050 842 100% Mass market residential 52 Bakinskikh Komissarov parking Leasehold Parking 30 970 428 100% Properties in the course of development Mass market residential 53 Tatischev Leasehold Mass market 293 714 329 100% 54 Residential building (KOSK) Leasehold Mass market 191 502 187 100% 55 Vonsovskogo (Berezovaya Roshcha) Leasehold Mass market 626 738 620 100% 56 Technicheskaya - Sortirovochnaya (ProgressLeasehold Mass market 370 682 826 100% Properties held for future development Mass market residential 57 Latviyskaya Leasehold Mass market 795 099 101 100% Total Market Value of the properties held freehold, RUR 57 216 938 595
Share in Aggregate Market Value of the properties held leasehold, RUR 52%
GRAND TOTAL PORTFOLIO 119 921 010 000
The Total valuation sum stated above represents the aggregate of the current values attributable to the individual Properties and should not be regarded as a valuation of the Portfolio as a whole in the context of a sale as a single lot.
We have considered an appropriate development commencement date and development period for each Property in isolation, based on each property’s particular circumstance. Each valuation does not consider any effect of multiple properties being developed concurrently (e.g. any resource, expense or savings issues if undertaken by a single developer), or released to the market (occupation or investment) together.
The Summary Valuation Schedule shows our opinion of the appropriate discount rate on an un-leveraged basis as used in the valuation of each Property. This discount rate is calculated on the assumption that each Property would be held for a reasonable period to allow stabilisation of income upon development completion or full and complete sale of all residential and other units offered for sale and that no debt is used.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 15
19 CONFIDENTIALITY No reliance may be place upon the contents on the Valuation Report by any party for any purpose other than in connection with the Client’s financial reports.
You must not modify, alter (including altering the context in which the report is displayed) or reproduce the contents of this valuation report (or any part) without first obtaining our written approval. Any person who contravenes this provision shall be responsible for all of the consequences of the same, including indemnifying C&W against all consequences of the contravention. C&W accepts no liability for any use of the Report that is in contravention of this section.
The Valuation Report is provided to the Addressees as set out on the first page of the Valuation Report for the specific purpose to which they refer. The Valuation Report forms part of the Client’s financial reports and may be referred to in supplementary documents. The Addressees of the Valuation Report may rely on it. No reliance may be placed upon the contents on the Valuation Report by any party for any purpose other than in connection with the public financial reports produced by the Client.
Neither the whole nor any part of the Valuation Report nor any reference thereto may be included in any other published document, circular or statement, nor published in any way without our written approval of the form and context in which it is to appear.
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Nothing in this paragraph shall prevent the Addressees of this Valuation Report from quoting from, referring to or disclosing this Valuation Report (without any reliance) in communications with its professional advisers duly bound by obligations of confidentiality or as may be required by law, regulation, or upon designation by the relevant listing authority or any other competent authority or judicial authority. Disclosure of this Valuation Report by the Addressees of this Valuation Report is not prohibited if required (i) in connection with any actual or threatened legal, judicial or regulatory proceedings (for the avoidance of doubt, this shall include disclosure by any Addressee in connection with any form of due diligence defense) or for the purpose of resolving any actual or threatened dispute or (ii) in communications to insurers in connection with an actual or threatened dispute or claim, or (iii) in connection with the Addressees' due diligence enquiries of the contents of the financial reports of the Company.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 16
To the fullest extent permitted by the law (including any mandatory responsibility arising from the listing rules of any stock exchange) we do not assume any responsibility to and we hereby exclude all liability arising from use of and/or reliance on this report by any person or persons for the purposes of determining whether or not to purchase shares in the Client other than those parties to whom this report is addressed.
Yours faithfully
Signed for and on behalf of Cushman & Wakefield.
Sergey Riabokobylko FRICS Konstantin Lebedev MRICS, CCIM, ASA Managing Partner Partner, Head of Department Cushman & Wakefield, Valuation & Advisory Russia & CIS RICS Registered Valuer Tel: +7 495 797 9600 Tel: +7 495 797 9600 [email protected] [email protected]
Joshua Askew MRICS Irina Doshchenko Director Senior Consultant Valuation & Advisory Valuation & Advisory RICS Registered Valuer Tel: +7 495 797 9600 Tel: +7 495 797 9600 [email protected] [email protected]
Alexey Romantsov MRICS PhD Polina Mitina Consultant Senior Consultant Valuation & Advisory Valuation & Advisory RICS Registered Valuer Tel: +7 495 797 9600 Tel: +7 495 797 9600 [email protected] [email protected]
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 17
B MARKET OVERVIEW
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 18
MACRO REVIEIW
SUMMARY The political disturbances of 2012 have largely shadowed the economic results of the year which, actually, were somewhat positive.
The Rosstat assessment of the Russian economy for 3Q12 pointed to a deceleration to 2.9% YoY in the pace of economic activity, down from 4.0% YoY in 2Q12 and 4.9% YoY in 1Q12. The GDP slowdown was driven on the demand side by softer consumer spending, and on the supply side by weaker manufacturing activity (3.2% during January - November) and a poor agricultural harvest. Softer demand should be attributed to higher inflation diminishing consumers’ real purchasing power.
However, consumer spending is still robust (and accounted for 6% during January-November) and the Russian economy still shows a positive growth rate, at an expected level of 3.5% for 2012. In 2013 the modest economy acceleration is expected backed by a global economy recovery, oil price stability and firm internal demand. Various macro-economic sources show similar expectations, which means that we don’t expect new surprises from external factors influencing real estate market.
REAL ESTATE IMPACT • Economic slowdown. The Russian economy is already in a slow mode. Thus a further slowdown will not strongly affect the real estate market. However, the amount of cash in the hands of people, corporations and the government depends on commodity prices, so commodity market softening remains a major risk for real estate. • Currency risk. Local currencies depend on commodity prices. A strong Ruble is good for the real estate economy, however, there is always a risk of devaluation in the long run. • Political risk. The commercial real estate market as an industry is less vulnerable to political risk. However, real estate assets are viewed as safe haven stores of value.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 19
CAPITAL MARKETS
SUMMARY • The total volume of investments in Russia in 2012 accounted for US$7.44 bn. • The total volume of investments in offices was US$2.86 bn. • Retail and Hospitality segments set local records with US$ 2.59 and US$ 1.34 bn accordingly • Prime capitalization rates in Moscow are: 8.75% for offices, 9.25% for shopping centers, 9.5% for hospitality assets and 11.5% for industrial properties. • Expected commercial property investment volume for 2013 is US$ 8bn.
MAIN DEVELOPMENTS After a short softening of investment activity in Q3, the investment market gained momentum and, due to a few large transactions, closed at the end of 2012 with a total volume of investments at US$ 7.45 bn, an almost equal level to 2011 (US$7.55 bn). The completion of a number of major deals widely expected in the market which could have made 2012 a second record breaking year, were postponed to 2013.
Nevertheless, the most indicative transactions of 2012 showed that the real estate investment market in Russia has entered a new stage of qualitative and quantitative growth.
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Apart from previous years, the office and retail segments showed almost equal results in 2012: US$ 2.85 and US$ 2.59 bn respectively.
As always, office investments are located in Moscow, this is the third largest market in Europe, with more than 13mn sqm of total stock and an impressive pipeline of more than 2 mn sqm. Among the remarkable transactions were such trophy, A and B+ assets as Ducat III, Legion II, Silver City and Bolshevik factory. The office market remained the strong and firm basement of the Russian property investment market, however, its further growth depends on the plans of new large-scale investors.
The retail segment enjoys high investment demand that leads to outstanding performance. The largest deal of 2012 – Galleria shopping center in St. Petersburg, was coupled with several transactions in Moscow, including luxury centre Vremena Goda and Hymeney, Two more recent transactions, showing, hopefully, new trends. The first one is the sale of Karnaval shopping center in Chekhov, in the Moscow Region – demonstrating that investors started to look at regional assets, although in proximity to the core Moscow market.
The second one is more important is Actor Gallery shopping center in Moscow – first deal of the SOFAZ (the State Oil Fund of Azerbaijan) which has further investment plans for Russia – we welcome this new participant to the market.
Investment in the hospitality segment exceeded US$ 1bn mark for the second consecutive year. The 2012 volume of US$1.34 bn is twice as much compared to the pre-crisis and are 10-times higher than post-crisis years of 2009 and 2010. Similarly to offices, the most remarkable deals belong to the Moscow market: Metropol, Radisson Slavyanskaya and Intercontinental Tverskaya are among them. The demand for quality and successful hotels grows and bear-ing in mind that there are more than 58 investment quality assets in Moscow, the hospitality segment will play a significant role in the future. We also expect that upcoming worldwide events like the 2014 Olympics and 2016 Football World Championship will expand the hospitality investment market beyond Moscow.
The demand for industrial property is limited by geography and supply, however, this segment succeeded in contributing to overall property investment by US$660 mn – about 30% lower than 2011, yet equal to the pre-crisis average. The remarkable sales of PNK-Vnukovo and Pushkino Logistics Park demonstrate the main trends in the segment: big investors are still scarce and the market is still being driven by end-users/owner occupiers.
Moscow retained its third position ranking among the top European investment markets, showing solid performance: of the US$ 6.11bn volume of total investments in Moscow, US$ 2.82 bn came to the office segment, US$ 1.39 for shopping centers, US$ 1.24 bn was invested in hospitality assets and US$ 660 mn in industrial property.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 21
The second largest property market in Russia, St. Petersburg, showed US$ 1.18 bn investment volume, mainly due to the Galleria retail transaction, becoming the first deal above 1bn on the Russian market. Although this transaction was the corner stone for the entire Russian property market, the city lack investment quality assets, thus, the city will perform below this US$ 1bn benchmark in the near future.
The global economic recovery gains pace we expect to see growing interest in the Russian property market which will lead to higher results.
CAPITALIZATION RATES The capitalization rates for prime are stable and now account for 8.75% for office assets 9.5% for retail and hospitality assets and 11.5% for quality W&I objects. As usual, the best assets on the market are traded at rates 40 – 50 bps lower.
MONEY MARKET Q4 saw ruble stability against the USD/EUR basket with minor weakening of 5 bps. In total in 2012 the ruble strengthened against the basket by 450 bps conforming to both official forecasts and market expectations.
The CBR refinancing rate in 2012 increased by 25 bps which increased the cost of money.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 22
Debt financing remained available for large developers and investors. The most active players are domestic Sberbank, VTB and Alphabank, thus the conditions of loan financing are similar across this group of lenders: the best and unique projects are preferable with LTVs up to 70%, amortization up to 10 years and at the rate of 13% and higher for ruble- denominated loans.
Foreign banks provide loan financing as well, however, their market share is very modest.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 23
ST. PETERSBURG RESIDENTIAL REAL ESTATE MARKET
PRIMARY HOUSING MARKET TRENDS Having analyzed the year of 2012, we should note that there was an overall rise in prices for the primary housing market in St. Petersburg. All in all, the price growth index in the primary market increased by 15.02% in 2012. The average supply price index reached 96,150 rubles.
Average price of supply in newly build houses 86 000 84 000 82 000 80 000 78 000 76 000 74 000 72 000 70 000 Dec Jan Feb Mar Apr Jun Jul Aug Sept Oct Nov Dec 2011 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012
Source: OOO “Tsentr ocenki i konsaltinga Sankt-Peterburga”
When analyzing change in the average cost of 1 square meter according to the classes of housing, the highest growth was reported in elite and comfort class housing. Here growth reached approximately 10.7%. Growth increased by 10.5% in the economy class segment, and by 7.8% in business class housing.
In general, according to market analysts, the primary housing market stabilized and market averages reverted to pre- crisis levels in 2012.
Average price of 1 sq m of residential area 115 000 110 000 105 000 100 000 95 000 90 000 85 000 80 000 Jul 2012 Jul Jan 2012 Jan Jun 2012 Jun Feb 2012 Feb Apr 2012 Apr Aug 2012 Aug 2012 Oct Mar 2012 Mar May 2012 May Dec 2012 Dec Sept 2012 Sept 2012 Nov
Completed Secondary Primary
Source: OOO “Tsentr ocenki i konsaltinga Sankt-Peterburga”
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 24
One of the main tendencies of 2012 was the quality of housing facilities brought into the market. There are more housing estates than single houses being constructed in the city. The developers choose bigger land parcels for construction. Quality of construction had visibly increased as well. As far as mass-market housing is concerned, the apartments are mostly delivered in the finished condition. Layouts of the apartments satisfy up-to-date requirements.
LAUNCHING OF HOUSING By the end of 2012 the number of buildings launched for housing was over 2% greater as compared to the same period last year.
436 housing facilities, i.e. 1,729,241.7 square meters, were constructed in St. Petersburg as of the 4th quarter 2011.
466 housing facilities, i.e. 1,778,314.9 square meters, were constructed in St. Petersburg as of the 4th quarter 2012.
Table, Completed residential buildings for Q3-Q4 2012
September October November
Number of residential 4/45 6/40 8/38 buildings – multi- dwelling / individual
Area of completed 87,772 208,725 149,178 residential buildings, sqm
Source: OOO “Tsentr ocenki i konsaltinga Sankt-Peterburga”
CHANGES IN THE SUPPLY IN THE PRIMARY HOUSING MARKET (ACCORDING TO CLASS – ELITE, BUSINESS, MASS-MARKET) In December 2012 half of the supply in the primary housing market of St. Petersburg fell into the economy class. The economy class share of supply reached 58.7%. The average supply price per 1 square meter increased to 75,500 rubles.
The leading position in the volume of multi-storied housing construction in the economy class segment is held by the northern districts of St. Petersburg. These districts boast well-developed infrastructure and good transport accessibility. 37% of original supply in the primary market is offered in the Primorsky District (over 20%) and the Vyborgsky District; 10.2% of supply – in the Krasnoselsky District; approximately 10% – in the Moskovsky District and 8.9% – in the Nevsky District.
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Structure of supply on the primary market depending in the class
70% 60% 50% 40% 30% 20% 10% 0% Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 2011 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012
Business Comfort Econom
Source: OOO “Tsentr ocenki i konsaltinga Sankt-Peterburga”
Share of supply in business and comfort class segments of St. Petersburg’s primary housing market reached 41.3%, with 32.9% in comfort class housing (101,000 rubles per 1 square meter) and 8.4% in the business class segment (166,000 rubles per 1 square meter on average in respect of sales prices).
Structure of supply on the primary depending in the district 25%
20%
15%
10%
5%
0%
Source: OOO “Tsentr ocenki i konsaltinga Sankt-Peterburga”
Leaders in business class segment are central districts of St. Petersburg. Demand is stable, scope of supply has increased. According to ASTERA analysts, 28 housing facilities were under construction at the end of 2012. Total area of buildings under construction is 770,000 square meters. The greatest supply is reported in Moskovsky District (30%) and Petrogradsky and Central Districts (17 to 20%).
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 26
Property District Class Number of flats Developer
Paradniy Quarter, Central Premium 465 Vozrozhdenie SPb Phase 2-3
Leontievskiy Mys Petrogradskiy Premium 399 OOO NPF TEST
Sobranie Petrogradskiy Premium 264 RBI
Smolniy Quarter Central Premium 190 Vozrozhdenie SPb
Novella Primorskiy Premium 54 RBI
Pobedy 5 Moskovskiy Premium 51 Legenda Intelligent Development
Brilliant House Petrogradskiy Premium 34 Tetra-Invest / Fort Group
Suomi Vasileostrovskoy Business 360 UIT Lentek
Novomoskovskiy Admiralteyskiy Business 474 YIT
Riverside Primorskiy Business 497 Setl City
Novomoskovskiy Admiralteyskiy Business 156 YIT
Dom na Linii Vasileostrovskoy Business 38 Solo Group
Radishcheva 39 Central Premium 148 Vozrozhdenie SPb
Kovesnkiy 5 Central Premium 8 Vozrozhdenie SPb
Stremyannyi 15 Central Premium 32 Soyuzgenstroy
Nalichnaya St. / Vasileostrovskoy Business >200 GOU VPO Gornyi Nakhimova St. University
Dom Megalit na Primorskiy Business 27 Megalit Dibunovskoy
Dom na Malom Vasileostrovskoy Business 23 Solo
Edelveis Primorskiy Business 76 Sfera
Source: OOO “Tsentr ocenki i konsaltinga Sankt-Peterburga”
The structure of supply in the under-construction segment mostly consists of one-room apartments, studio- apartments and two-room apartments. As compared to the top of 2012, prices for one-room apartments grew by 13.68%, studio-apartments – by 10.2%, and two-room apartments – by 9.66%.
Growth was also observed with multi-room apartments, however, to a lesser extent: 9.04% with three-room apartments and 8.36% with four-room and larger apartments.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 27
The situation seems to be quite the reverse with the supply structure in the primary completed housing market. Two- room and multi-room apartments prevail. The supply price has grown by 10.14% and 9.18%. The supply price for three-room apartments has increased by 4.57%. Growth is quite feeble with studio-apartments – only 1% growth is reported. In one-room apartments, however, the price per 1 square meter has decreased by 0.29%.
PRIMARY HOUSING MARKET DEMAND (ACCORDING TO CLASS – ELITE, BUSINESS, MASS-MARKET) There was a steady growth in demand in the primary housing market throughout the entire year in 2012.
85 housing projects had been completed in St. Petersburg by the 4th quarter 2012 with due account paid for construction phase of housing estates.
There is a greater demand for mass-market housing under construction in the northern part of St. Petersburg: 16% of this supply is in Vyborgsky and Primorsky Districts.
Demand for housing under construction in the business class and comfort class segments is greater in the central districts of St. Petersburg: Moskovsky District (30.3%) and Petrogradsky District (20.7%).
28 business class (79%) and premium class (21%) housing facilities were under construction at the end of the 4th quarter 2012.
According to the results of under-construction market analysis, the volume of elite housing development will increase. The most promising development sites are industrial zones located in the central districts of St. Petersburg: Moskovsky, Vasileostrovskoy and Admiralteysky Districts.
In general, the primary housing market shows rapid growth. Aggregate demand and supply continue to increase. Apartments in the mass-market segment are frequently sold at an early phase of construction (pre-construction projects).
Growing demand for newly built housing is conditioned by the quality and a vast range of supply (over 40,000 apartments per month).
Pricing also has an impact on demand. The average price per 1 square meter in the economy class apartments is 75,000 rubles in the primary market. The above prices may increase by 15-20% by the date of commissioning.
As for the type of mass-market construction, there is a greater price increase with brick and cast-in-place buildings. For this type of construction compared to the previous period (4th quarter 2011), prices grew by 11.7%. Price increases in respect of panel buildings increased by 8.9%.
COST CHANGES IN THE PRIMARY HOUSING MARKET (ACCORDING TO CLASS – ELITE, BUSINESS, MASS- MARKET) The cost per square meter in the primary housing market of St. Petersburg depends directly upon the location of the building. The cost of 1 square meter is reported to be the highest in the central districts of St. Petersburg, and is much lower in the remote districts.
The highest cost per square meter in houses under construction is observed in the Central, Petrogradsky and Vasileostrovskoy Districts of St. Petersburg. The cost per square meter in the central districts varies from 120,800 to 169,400 rubles.
The lowest cost per square meter of housing (66,000 rubles) is reported in the suburb districts of St. Petersburg: Nevsky and Krasnoselsky Districts.
PRICES FOR PARKING SPACES IN ELITE, BUSINESS AND MASS-MARKET CLASS HOUSING ESTATES Apartments on the first floor are few and far between in modern houses and the more so in large housing estates. Both developers and purchasers have by far assessed the advantages of using these premises for commercial purposes.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 28
Inclusion of commercial premises into a housing project is a source of extra income, especially considering that the cost of one square meter in commercial premises is higher than that of housing, and highly developed infrastructure adds to the cost of housing itself.
Disorganized parking is a huge problem in Russia’s large cities. However, this problem may be solved through construction of parking spaces designed for a certain number of car owners residing in a new housing estate.
Availability of parking spaces in new apartment buildings/houses is a positive pricing variable.
Economy class houses should have some parking spaces available for sale. Business class houses should have one or more parking spaces for each apartment – it is an essential criterion.
Multi-level surface and underground parking is an effective solution to the problem of keeping a great number of vehicles on a small territory.
The sale price of a parking space depends upon construction site location, encumbrances associated therewith, land lease rates, project features and parking type’s main structural elements.
Having analyzed the occupancy rate data and availability of vacant spaces for sale and rent, as well as some other collateral data, we are assured that parking spaces will be highly marketable in densely populated districts with high purchasing capacity. An average rental rate for a parking space varies from 4,000 to 8,000 rubles per month.
Selling prices in the suburbs of St. Petersburg varies from 500,000 to 900,000 rubles per space depending on the level and the size of a parking space. As a rule, there is an additional monthly charge for servicing.
Selling prices in elite and club houses in St. Petersburg vary from 1,500,000 to 2,500,000 rubles depending upon the level and the size of the parking space.
Parking spaces in multi-level facilities are actively sold in intensively developing districts that hold or will hold a great number of well-to-do residents.
As the approved plan for construction of multi-level surface parking spaces shows, a keen competition is expected in this segment.
BRIEF SURVEY OF OFFICE REAL ESTATE MARKET IN ST. PETERSBURG According to BN listing, the supply of commercial property intended for rent accounts for 2.1 thousand addresses in the 4th quarter 2012. As compared to the 3rd quarter, no notable changes in supply are reported (change in supply is reported to be only 2.6%). As compared to the same period of the previous year (4th quarter 2011), supply has decreased by 3.3%.
DEMAND PARAMETERS (OCCUPANCY RATE AND VACANCIES, STRUCTURE OF DEMAND FOR OFFICE PREMISES ACCORDING TO THE CLASS, DIFFERENT OCCUPANCY RATE IN CERTAIN CLUSTERS) Demand for and distribution of office premises over the districts have not changed over the past several years. The main pricing variables in selecting office real estate by the tenants are management level and rented area, distance from the nearest metro, transport accessibility, technological and engineering infrastructure, availability of parking and parking spaces, convenient layouts and business environment status. Taking into account the above factors, the least popular with tenants are office premises located in the Kalininsky and Krasnoselsky Districts due to their remoteness from the city center and fledgling housing development.
A great number of offices are located in the central districts of the city. This fact is conditioned by close proximity to the historic center and the city administration. These districts include: Vasileostrovskoy District (offices are mainly located along the Sredny Avenue of Vasilevsky Island), Moskovsky District (supply has grown due to the completion of Pulkovo projects), Petrogradsky District (offices are mainly located along Kamennostrovkoy Avenue, Bolshoy Avenue of Petrogradskaya Storona, Pirogovskaya and Petrogradskaya Embankments), Central District (offices are mainly
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 29
located along Nevsky Avenue, Moyka and Fontanka Embankments). Average monthly rental rates in the central districts are circa 914-1,000 rubles per square meter, in the suburbs (for instance, Frunzensky District and Nevsky District) – 550 rubles per square meter per month. However, according to market analysts, tenants’ demand for office premises in Vasileostrovskoy District is decreasing because of the island’s isolation and subsequent congestion of traffic arteries and subway stations to and from the island.
By the end of 2012, 141,000 square meters of class A and B office premises have been developed and commissioned in St. Petersburg.
Most of the above projects were developed in Moskovsky and the Central Districts of St. Petersburg. The premises most in demand are those with total area of 100 to 500 square meters.
55% of introduced office premises fall into the category of A-class commercial property; 25% are qualified as B-class and 19% as B+ class commercial property.
As for the location of office premises, the most expensive are those located in the Central and Petrogradsky Districts of St. Petersburg with average monthly rent rate of 914-1,000 rubles per square meter. Less costly offices are located in Nevsky and Frunzensky Districts with average monthly rent rates of 550 rubles per square meter, depending upon location, total area and condition.
As compared to the top of 2012, number of vacant office premises reduced by 0.5% in the 4th quarter 2012. According to estimates, total vacancy rates were 10% in A-class business center, 5.6% in B-class business centers and 4.4% in B+ class business centers at the end of the 4th quarter 2012.
RENT RATES Business premises and service sector facilities are reported to be the most expensive in the commercial real estate market in terms of cost per square meter. Monthly rent rates for such premises reaches 1.2-1.4 thousand rubles per square meter. The average rent rate for office premise figures up to 897.6 rubles per square meter per month, multi- purpose premises are offered at the average rate of 1.1 thousand rubles per square meter per month, depending upon location, total area and condition as of Q4 2012.
The greatest changes in prices throughout the quarter were reported in office and business premises. Average supply prices grew by 7.1% and 8.1% (in the 3rd quarter of 2012 the price worked out at 837.9 and 1.1 thousand rubles per square meter per month).
The greatest growth throughout the year was reported in office premises and totaled 17.8%.
As for the location of office premises, the most expensive are those located in the Central and Petrogradsky Districts of St. Petersburg with average monthly rent rates of 914-1,000 rubles per square meter. Less costly offices are located in the Nevsky and Frunzensky Districts with average monthly rent rates of 550 rubles per square meter, depending upon location, total area and condition.
Across 2012, rent rates grew by 7.6% for A-class offices, 5.5% for B-class offices and 16.3% for B+ class offices.
SUPPLY AND RENTAL RATES FORECASTS According to different estimates, 190,000-210,000 square meters of high-quality office premises was to be commissioned in 2012.
Supply of commercial premises offered for rent in the 4th quarter 2012 accounted for 2,100 addresses, which is 3.3% less than in the 4th quarter 2011.
Strong demand is reported for office premises in business centers with flexible pricing policies and located in the central districts of St. Petersburg, as well as for office premises located along main traffic arteries of the central districts.
Main tendencies in the office real estate market of St. Petersburg:
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 30
• Frozen projects are recovering in the office real estate market after the crisis; • Rent rates are growing moderately; • Vacancy levels are stabilizing; • Demand is compensated for by the introduction of new high-quality premises.
COMMERCIAL PREMISES ON THE FIRST FLOORS OF RESIDENTIAL HOUSES
SCOPE AND SPECIFICS OF SUPPLY According to BN listings, the aggregate supply of commercial premises in the 4th quarter 2012 accounted for 2.8 thousand addresses, where 35.4% of the facilities can be used as office and business premises or service sector facilities and 6.8% are designed for trading.
DEMAND SPECIFICS St. Petersburg’s commercial real estate market is growing rapidly. A great number of new trading facilities have opened.
At the end of 2012 a street retail segment development was reported as well as numerous attached hypermarkets and shopping centers. The grocery segment is also growing quickly.
Demand for integrated business premises continues to increase. It should be noted that there is poor supply of marketable, integrated business premises in the St. Petersburg market.
AVERAGE RENT RATES Rent rates have been growing throughout 2012. Average rates equaled to 800-4,000 rubles per square meter per month for these premises.
According to BN listing, the most expensive business premises in St. Petersburg’s commercial real estate market are those with the rent rates of 1.2-1.4 thousand rubles per square meter per month.
It should be remembered, however, that rent rates are conditioned by the location of commercial premises. The most popular premises are located along central streets with good passing footfall. Rent rates for such business premises may vary from 5,000 to 6,000 rubles per sqm per month. Rent rates for highly marketable business premises may vary from 10,000 to 11,000 rubles. Nevsky Avenue, the main highway of St. Petersburg’s Central District, is one of the areas with a higher rental rate.
Most business premises offered for rent are located in the Primorsky and Central Districts of St. Petersburg.
The internal area of business premises offered for rent in this segment varies from 60 to 139 square meters.
SUPPLY AND RENTAL RATE CHANGE FORECAST According to GVA Sawyer, the level of vacant areas at the end of 2012 was 6-7% of total existing space. Gradually growing demand will be compensated for by the introduction of new high-quality premises.
250-300 square meters of rentable premises were realized in shopping centers in 2012. A 10% growth was reported as compared to the previous period (4th quarter 2011).
13 shopping centers are to be developed and put into operation in St. Petersburg in 2013 to expand rentable premises by 11.8%.
Estimated increase in business premises is expected to be 372,000 square meters or 12.4%.
Rent rates in business centers and integrated premises will stabilize due to strong demand from retail chains.
Main tendencies in the regional and micro-regional commercial premises segment include:
• Rental rates grow; • Developers assimilate vacant premises located near new subway stations for new business and shopping centers;
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 31
• Trade operators work out plans for sales outlets expansion; • New business infrastructure concept-based housing estates are being built in the suburbs; • New commercial corridors appear upon completion of housing construction projects; • There is little supply of marketable commercial premises.
BRIEF SURVEY OF THE MARKET OF LAND PARCELS FOR CONSTRUCTION OF COTTAGE ESTATES AND TOWNHOUSES IN THE LENINGRAD REGION
KEY TENDENCIES IN THE MARKET OF LAND PARCELS FOR CONSTRUCTION OF COTTAGE ESTATES AND TOWNHOUSES In general, there was fast development of the country-side property market reported in St. Petersburg and in the Leningrad Region in 2012. A number of cottages and low-rise estates have grown notably; demand and supply have recovered.
371 facilities in cottage estates located in the suburbs of St. Petersburg and in the Leningrad Region were offered for sale in the 4th quarter 2012.
The north of the Leningrad Region is the most popular in terms of the demand.
Purchasers’ requirements for land parcels (availability of engineering facilities, high-quality access roads, and internal infrastructure) increase.
COTTAGE ESTATES/TOWNHOUSES GEOGRAPHY The most popular and in-demand suburb of St. Petersburg is Kurortny District with a 5.5% share of cottage estates.
The north of the Leningrad Region remains the most popular country-side real estate segment. The Vsevolzhsky District is in favor. The majority of sales in this segment accrue to houses with a permanent right of residence within 10-15 km of St. Petersburg. The Vyborgsky District ranks second. In aggregate, these districts represent 50.8% of total supply in the market of cottage and low-rise estates.
There is also significant supply in the Priozersky, Lomonosovsky and Gatchinsky Districts with an average share of 8 to 11.2%.
Currently 49.3% of projects offer finished cottages and land parcels with obligatory construction contract terms (the purchaser of the land parcel signs a binding contract with the seller for the construction of a cottage on the said parcel by the seller or its contractor). There are also projects which offer cottages and land parcels with or without construction contracts and mixed projects which offer cottages, land parcels and townhouses. 50.7% of projects offer ground for purchasing land parcels for self-development.
One of the main pricing variables having an impact on demand is the proximity of the land parcel to the city. There is a larger portion of construction-free land parcels farther from the city. When closer to the city, the purchasers prefer to acquire land parcels with finished, ready-for-use houses for permanent residence or sections in townhouses.
STRUCTURE OF THE SUPPLY OF LAND PARCELS FOR CONSTRUCTION OF COTTAGE ESTATES AND TOWNHOUSES In economy and comfort class estates, land parcels are usually sold for the purposes of free development (no obligatory construction contract). The developer may offer a contract, often at a substantial discount on the parcel.
Purchasing of land is considered as the most affordable and money-saving solution; however, it should be noted that the price for one hundred square meters does not always include the cost of communications which may be equal to or surpass the price of the parcel.
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The country-side cottage estate market shows a steady growth in supply. However, there is also a tendency of decreasing vacancies.
High purchasing activity was reported at the top of 2012. The number of cottage estates reduced by the second half of the year. This reduction was conditioned by the estimated completion of most of the cottage estate projects.
2012 demonstrated the lowest sales rate (sales were opened in 80 new estates) in four years.
The mean statistical area of land parcels sold in the 4th quarter 2012 equals to 19.7 hundred square meters.
The maximum average areas were sold in the Vyborgsky District of Leningrad Region (25.6 hundred square meters). The lowest average areas were sold in the Volosovsky District with average areas of land parcels of about 10 hundred square meters (8 to 12 hundred square meters).
The cost of one land parcel in a cottage estate depends and is estimated with regard to its location. One of the main pricing variables is close proximity to the green belt and water reservoirs.
At the end of 2012 the average price for land parcels in cottage estates located close to St. Petersburg totaled 397,500 rubles per one hundred square meters. At the same time, the cost of one hundred square meters of land in ready-for-use cottage estates in the Leningrad Region totaled 139.6 thousand rubles. The maximum cost of land per one hundred square meters was reported in the Kurortny District of St. Petersburg and the Vyborgsky District of Leningrad Region.
PRICE FORMATION IN THE MARKET OF LAND PARCELS FOR CONSTRUCTION OF COTTAGE ESTATES AND TOWNHOUSES The vast majority of transactions for purchasing country-side property are associated with land parcels (approximately 65-70%). Purchasing of parcels with finished ready-for-use cottages comprises only 10-12% of all transactions. There is considerable growth in demand for townhouses reported. They are being actively promoted and marketed. The share of townhouse sales of total sales for the cottage segment approached approximately 20-23% in the first and second quarters of 2012. Purchasing of apartments in low-rise houses was only 3%.
The availability of engineering communications within the territory of the estate plays a great role. In most case, the cost of one hundred square meters of land does not include the cost of communications that may be equal to or even surpass the price of the parcel. However, purchasing of a land parcel is considered a more affordable solution. That is why less costly land parcels with communications is the most in-demand land in the market of country-side property in the St. Petersburg and Leningrad Region.
As of the 4th quarter 2012, the average supply price for land parcels without construction contracts located in the Leningrad Region equals 1,500,000 rubles; with the cost of finished cottages (inclusive of land parcel cost) figures up to an average of 9,000,000 rubles.
The supply price depends greatly upon the location of the land parcel within the cottage estate (proximity to the water reservoir, forest, center of the cottage estate), construction technologies and selection of construction materials.
59 cottage estate projects were being realized in the Vuborgsky District of Leningrad Region in the 4th quarter 2012. In 44 of the above projects land parcels offered for sale are for further development. The average price of one hundred square meters of land reported in December 2012 equaled 235,000 rubles.
SUPPLY IN THE MARKET OF LAND PARCELS FOR CONSTRUCTION OF COTTAGE ESTATES AND TOWNHOUSES Approximately 75% of supply by the end of the year was formed by land parcels without construction contracts and mixed development estates.
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The most popular and highly demanded land parcels are located in the Vsevolzhsky, Lomonosovsky, Gatchinsky and the Tosnensky Districts of the Leningrad Region with a 8-15 hundred square meter area range. Such land parcels are intended for non-profit summer partnerships and have no or minimal communications. Prices vary from 700,000 to 1,500,000 rubles.
In general, both growth and demand for supply was observed in the year of 2012. Affordable supply was reported in the market.
Demand for interconnected cottages remained steadily high throughout the year. Currently many developers have started launching in the townhouses market segment instead of the detached cottages segment.
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MOSCOW RESIDENTIAL REAL ESTATE MARKET The year of 2012 was marked by an intensive recovery process in the Moscow residential property market – prices have reverted to pre-crisis levels.
One of the key events of the year was the incorporation of 148 thousand hectares of territories in the south and south-west of the Moscow Region into the city of Moscow to be known as New Moscow since July 1, 2012.
Following the effective date of the law, the primary housing market of Big Moscow was appended with supply oriented towards mass demand. Average supply prices in the incorporated territories were originally twice lower than within the Moscow Automobile Ring Road (MKAD). This resulted in price rises in newly built houses in the old habitable districts of Moscow, the share of which was determined in the aggregate supply by the end of the year.
On the other hand, there is a growing purchaser count, as a rule restrained in budget, in the economy and middle class housing sector. This segment of purchasers has now received an opportunity to acquire housing in the new territories of Moscow.
The property market is also very responsive to changes in politics and macro-economics in the country and in the world – the year of 2012 was no exception. The Presidential Election, volatility of exchange rates, instability in the euro-zone countries and vague prospects for global economic recovery all implied certain risks, which were logically reflected in the decisions and preferences of potential purchasers. A wave-like dynamic in demand was consequently observed in the property market throughout the year.
SUPPLY
GENERAL INFORMATION According to the Moscow Construction Supervision Committee, 1.55 million square meters of housing was put into use within Moscow’s former boundaries in the first 9 months of 2012, showing a 34% growth as compared to the same period of the previous year when only 1.16 million square meters had been launched. 210,000 square meters of housing were put into use in the incorporated territories. According to Blackwood, 1.49 million square meters of housing were launched within the territory of the enhanced Moscow in the first 11 months of 2012. Preliminary figures indicate 2.4 million square meters launched in 2012; so the target was hit and beaten by 14% compared to the previous year (2.1 million square meters). This correlates with Miel data: the amount of supply within the boundaries of New Moscow has grown by 13.2%. Thus, the aggregate supply in the territory of Big Moscow reaches approximately 2.5 million square meters.
According to Miel Group, primary market supply in Moscow has increased by 4.1% in 2012 as compared to similar indices in 2011.
The greatest share of the primary market is comprised by 2-room apartments (40% of all supply). Shares of 1 and 3- apartments are roughly equal (29% and 27%, respectively).
According to preliminary estimates of INFOLine-Analitika, five of the country’s largest developers produced 5.74% of all market supply in 2012, i.e. 3.745 million square meters. SU-155, LSR, PIK and Morton were listed among Russia’s largest housing developers in 2012. According to market experts, the highest increase rate was observed with companies which combined their own capacities in house-building plants and concrete goods manufacture for public contracts with more marginal commercial projects. According to the company’s data, the share of public contracts in SU-155’s stock of orders reached 70% in 2010-2011.
Sales in 2012 Construction in 2012 area, changes in 2011, changes in 2011, area, changes in No Company sq.m. % billion rub. % sq.m. 2011, % 1 PIK 658,000 29 44.8 47.3 n/a n/a
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2 SU-155 543,804* n/a 34-36.7** n/a n/a n/a 3 Morton 512,000 18 43 7 800,000 0 4 LSR 447,000 31 37 46 n/a n/a * January-September, 2012 ** Forecasted proceeds Source: INFOLine-Analitika
ECONOMY AND COMFORT CLASS In 2012 launches of housing in the economy class sector increased by 34%, as compared to 2011.
In the first half of 2012, main portion of buildings launched in the market (over 60%) comprised comfort and economy class facilities. Yet the share of completed business and elite class housing grew in the second half of the year.
Economy class is being gradually driven outside the Moscow Automobile Ring Road (MKAD). According to the estimates of Est-a-Tet, there were only about 11 projects (with a total area of 800,000 square meters) completed in 2012 in Moscow. At the same time, the primary market for New Moscow is being constantly resupplied with new housing facilities, as reported by Miel. Supply of new housing in new territories grew by 84.9% in 2012.
The finished apartment format was developing and became further entrenched in Moscow property market in 2012.
As Miel reports, the greatest share of economy class housing is being constructed by 1-2 large developers. The key projects in the comfort class (economy format housing with certain advantages over economy class, such as improved planning, situated in ecologically clean areas, etc.) and economy class sectors are as follows: a project by ZAO GRAS in Ostashkovskaya str., LIFE-Mitinskaya by Pioneer Group, Bolshoye Kuskovo by PIK, Zelyony Bereg by YUIT, and M- House by FSK Leader. Several housing estates brought new stages and new buildings (for example, LIFE-Volzhskaya, Tsaritsino, Golovino) into the market.
BUSINESS CLASS The business and elite class segment supply increased again from 36% to 50% in the second half of 2012.
Construction of the most outstanding and symbolic of Moscow’s premium class housing is concentrated in Khamovniki. It is the location where most of the primary premium class housing has moved over the past two years. 60% of all elite class apartments in the Moscow’s primary market are accumulated in Khamovniki.
Vast territories of former industrial districts allow for the implementation of high quality comprehensive development projects. In Khamovniki developers do not need to squeeze new housing estates between the Soviet era quarters.
According to Kalinka Real Estate Consulting Group, Khamovniki outstripped the Arbatsky and Tverskoy Districts in demand among purchasers; and 45% of all Moscow’s premium class apartments were sold here in October through to November. Strong demand for housing in the new elite cluster has stimulated a price rise in new housing: average price per square meter increased by 12% up to 18.056 thousand UDS in 2012 (as reported by Knight Frank).
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DEMAND
GENERAL INFORMATION At the beginning of 2012, there was strong demand for residential property in Moscow, which is typical of an active market. According to the Moscow Department of the Russian State Register, 44,382 residential property transactions were reported in Moscow in the 1st half of 2012. The amount of registered transactions increased as compared to 2011; however, rates of increase (+5% as compared to the 1st half of 2011) are much lower than those of the pre- crises period. It is evident that the market is going through its main recovery phase. This increase was mainly due (as well as in 2011) to the development of mortgage lending: the growth of mortgage transactions was much greater than the general increase in transactions. Approximately 30% of transactions were mortgage-based (33% - according to Blackwood).
According to Blackwood’s market report, there were 96,956 residential property transactions made in aggregate in 2012, which exceeded the 2011 and 2010 results by 6% and 13%, respectively. It should be noted that the number of transactions (77.4 thousand transactions) was even greater than in the pre-crisis period of 2007. The most transactions were, as before, made at the end of the year – 29.5 thousand transactions (including 11.4 thousand in December) were made in the 4th quarter 2012.
It should be, however, considered that the main reason for the increased number of transactions were transactions made in the territories of New Moscow incorporated on July 1, 2012. There was no feverish demand in the Moscow market; however, buying activity was rather high. On the whole, buying activity has reverted to pre-crises levels; and deferred demand is gradually being realized. A high level of activity was reported in spring; demand decreased in the summer influenced by seasonal factors. The second peak in activity was, as usual, observed at the end of autumn / the beginning of winter.
A large increase in transactions was also a result of the growing number of mortgage transactions. Thus, there were approximately 32 thousand mortgage-based transactions made in 2012, which is 30% greater than in previous years.
Purchaser profiles have not changed notably over the year. As before, customers purchase apartments for themselves or their relatives (children and parents). Investment transactions accounted for about 15% of the total. It should be noted that purchasers have become more demanding in respect of the quality of the projects they will purchase and their implementation, as well as in regards to customer service levels.
ECONOMY AND COMFORT CLASS Growth of economy class transactions was mainly due to transactions made under construction co-investment agreements. According to Blackwood, there were 12.1 thousand transactions reported under construction co- investment agreements in 2012, which is 2.5 times greater than in 2010-2011. This was also a result of incorporation of new territories, where most transactions in the primary market are made under construction co-investment agreements. In addition, there was growth in a number of co-investment construction projects in the “old” Moscow.
As the Pioneer Group reports, purchasers in the economy and comfort class segments showed the greatest demand for 1-room apartments (37% of total transactions). The share of demand for 2 and 3-room apartments were roughly equal (29% and 25%, respectively).
There are an increasing number of economy and middle class housing purchasers who are constrained in budget but who now have the opportunity to acquire housing in the new territories of Moscow, which are less expensive.
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BUSINESS CLASS Below is the data produced by IntermarkSavills with respect to changes in demand in the primary business class housing market of Moscow, January 2010 – November 2012.
Source: IntermarkSavills
Approximately 170 primary market business class transactions were made in November 2012 (apartments and apartment estates), which is close to the peak of demand reported in April through May this year.
The average area of a business class apartment purchased in November 2012 was 106 square meters.
In November 2012, over half of purchasers of newly built business class apartments chose completed houses rather than those under construction.
PRICES
GENERAL INFORMATION The residential property market has been through an active phase of recovery throughout 2012. Prices are headed for pre-crises levels.
According to Miel, the weighted average supply price in the primary housing market of Moscow grew in December by 1.3% and reached 231,100 rubles per square meter, which is equal to 7,503 UDS per square meter. However, we believe that this price reflects a seasonal run-up typical of the end of the year.
According to the more conservative data of R-Way, the average price for one square meter in the primary housing market (accounting for both business and economy class segments) in 2012 equaled approximately 6,103 UDS per square meter with an average price of 6,717 UDS per square meter in the business class segment, an average price of 6,538 USD per square meter in comfort class segment and 5,055 UDS per square meter in economy class segment.
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Average price per square meter in the primary housing market of Moscow
14 000
12 000
10 000 11 562
8 000
6 000 7 455 6 998 6 662 4 000 6 267 5 154 5 077 4 872 4 793 2 000 7 739 4 794 4 499 4 566 5 276 4 864 6 287 4 962 5 652 7 635 6 786 5 160 4 801 7 591 6 103 5 217 4 132 11 578 4 411 0 ЦАО САО СВАО ВАО ЮВАО ЮАО ЮЗАО ЗАО СЗАО сред.Average значение Businessбизнес-класс class средниеAverage цены Economyэконом-класс
Source: R-Way
ECONOMY AND COMFORT CLASS According to Miel, in December 2012 the weighted average supply price in New Moscow reached 86,900 rubles per square meter (2,679 USD). Price for middle class housing has grown by 16.7% starting 2012, which is largely conditioned by depletion from the market of most in-demand apartments in the buildings within the segment’s lowest price brackets.
A limited number of economy class segment players and a small amount of affordable quickly erected housing in the market (7-10% of public offer, according to Miel) facilitate retention of high prices for economy class housing.
As of December 2012, average price for economy and comfort class housing in the primary market of “old” Moscow equaled to 132,000 rubles per square meter (4,285 USD). At the end of December 2012, as reported by Miel, the supply price for economy class housing reached 140,700 rubles per square meter (4,568 USD). According to the Pioneer Group, the price in the comfort class segment varied from 104,400 rubles per square meter (3,389 USD) in Tsaritsino Estate to 190,000 rubles per square meter (6,168 USD) in Wellton Park.
BUSINESS CLASS As reported by Miel experts, the most distinctive feature of price change in 2012 was a 17.2% growth of supply side asking prices in the business class segment. Following the expansion of Moscow’s borders and a reduction of infill development in the “old” territories, comfortable business class houses located in Moscow’s prestigious districts have gained more market share and have had an impact on supply prices.
According to IntermarkSavills, the cost of one square meter in business class housing varies from 6,800-7,350 USD.
The weighted average supply price in primary business class housing reached 7,300 USD per square meter in November 2012 (year-to-date increases equaled approximately 7%).
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Source: IntermarkSavills
FORECAST There are practically no vacant sites for development left within the territory of “old” Moscow; which is why industrial zones are most likely to be developed. The economy class segment will continue to expand from the “old” Moscow boundaries. Most new projects will develop in the comfort and business class segments.
Multi-functional complexes are announced to be launched in the market in 2013 to enclose apartments in the apart- hotels featuring hotel services, which are currently lacking in Moscow’s market.
Incorporation of new territories into Moscow was executed by law to offer a huge opportunity for property market formation within these territories that will feature low-rise development with good transport infrastructure. However, the project is a long-term one; and we are unlikely to see any notable progress in the next year. New Moscow will have a serious impact on the new housing market exclusively in the event of complex development of the above territories and upon budget investments in infrastructure.
According to Miel’s estimates, the trends that have formed at the end of 2012 will continue in 2013. The supply in the primary market of “old” Moscow will be presented by 200-250 facilities. The economy class segment will continue to expand from the Moscow boundaries to the territories of New Moscow.
Supply price increases will remain within inflationary growth limits and will not exceed 8-10% in the summary. Price increases are possible with particular projects upon completion of certain construction stages.
Stability and growth tendencies are expected in 2013 in the event of stable policy and a status quo in the global and national economies.
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YEKATERINBURG REAL ESTATE MARKET
SUMMARY
Indicators Unit Values Changes per Changes per quarter, % year, %
Scope indicators Scope of supply at the construction stage Total thsnd.sq.m. 2,043 32 -24 Including “frozen” supply thsnd.sq.m. 104 -3 18 Including “active” supply thsnd.sq.m. 1,938 -2 15 Classes of construction structure Economy thsnd.sq.m. 1,264 -6 26 Comfort thsnd.sq.m. 621 7 4 Business thsnd.sq.m. 44 -41 1 Elite thsnd.sq.m. 9 - - Price indicators Average price per 1 sq.m. Primary market rub./sq.m. 58,017 -1.6 7.3 Secondary market 70,003 2.3 9.7 Economy 54,819 -1.8 6.8 Comfort 62,399 3.6 15.2 Business 97,161 0.4 6.5 Source: Research Department of Realtor Data Center of Ural Real Estate Chamber
• Overall scope of housing at different stages of construction reverted to the level of 2006-2007, and by the end of 2012 equaled 1,938 thousand square meters.
• In the second half of 2012 market players were actively launching new projects in the market. Some developers move on to new quarters laying the grounds for the mid-term and long-term development.
• Real estate market transactions remain numerous while the rate of increase of the above transactions has declined.
• Housing market became more balanced by the end of 2012. Launching of new projects and growth of secondary market supply has limited price increases. As compared with 2009, prices for apartments have grown by 30-40% and now are higher than pre-crisis levels. We believe that price increases seriously limit of the pool of new purchasers and restricts further housing market turnover growth.
• In the 4th quarter of 2012, some sellers started offering discounts for apartments under construction. In most cases the incentives are limited to 3-5% discounts.
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KEY INDICATORS OF SOCIAL AND ECONOMIC DEVELOPMENT OF THE SVERDLOVSK REGION AND THE CITY OF YEKATERINBURG
INDICATOR Sverdlovsk Region Yekaterinburg January-September January-September January-September January-September 2012 2011 2012 2011
1. Demography population (at the start of 2012, growth per year) 4,307.6 thousand 100.2% 1,411.1 thousand 101.8% people people newly born 45.6 thousand 105.2% 14.5 thousand 106.8% people people deceased 44.9 thousand 98% 12.2 thousand 101.1% people people natural increase (decrease) in population + 0.7 thousand - + 2.27 thousand 153% people people marriages 9.5 per 1000 people 96.9% 9.5 thousand 95.8% (total) divorces 4.8 per 1000 people 96% 4.7 thousand (total) 92.5% 2. Economy Consumer price index 105.7% 105.7% Retail turnover 616.5 bln.rub. 108.1%1 434.7 bln.rub. 108.4%1 Scope of public fee-based 1 2 services 155 bln.rub. 102.3% 40.9 bln.rub. 108.6% Number of enterprises 135 345 94.1%3 Pay raise index (in nominal 2 2 prices) 24,656 rub. 115.5% 31,846 rub. 114% Industrial production index 108.7% 158% Scope of construction and 1 2 installation works 81.7 bln.rub. 96.6% 20 bln.rub. 94.8% Investments to capital stock 78.9 bln.rub. 100.2%2 Unemployment level (overall) 5.8%
1_ In comparable prices 2_ In nominal prices 3_ October 1, 2012 as compared to October 1, 2011
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HOUSING-UNDER-CONSTRUCTION PROFILE Market players were actively engaged in the launching new projects in the second half of the current year. In the 4th quarter 2012 construction of over 170 thousand square meters began. Part of this is represented by new market facilities, the other part by developing housing estates and commencement of work at further stages. The above processes ensured that the volume of new housing construction remained at a relatively high level.
In 2012 the market reached pre-crises levels in terms of housing construction volume. Market players took the initiative in new sectors and laid the ground work for mid-term market development. Some of these projects have already been launched in the market; some will come out in 2013. The portion of “frozen” projects remains rather small – approximately 5% (104 thousand square meters).
Volumes of residential premises under construction, thousand sqm
2 500 Under construction Construction is frozen 2 000
1 500
1 000
500
0 09 11 10 12 09 10 11 12 09 10 11 12 10 11 12 10 12 11 09 10 11 12 ------Jun Jun Jun Jun Oct Oct Oct Oct Apr Apr Apr Feb Feb Feb Dec Dec Dec Dec Aug Aug Aug Aug
Source: Analytical department RITS UPN
Overall volume of housing under construction at different stages in Yekaterinburg as of the 4th quarter 2012 equaled 1,938 thousand square meters. An increase in demand and quick sales recovery in the market allowed many companies to recover the old level of construction volume. But as compared with the pre-crisis period, the number of large market participants continued to increase over 2012.
In 2011 the problem of choice in the primary market in many districts of the city remained rather acute; the market was under-served. Many developments were introduced to the market only in 2012 due to the sluggishness and cautiousness of many companies in making decisions in view of an unstable foreign economic environment. Currently the situation in the market has changed. Purchasers now have a wider choice in both the primary and secondary markets.
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Volume of multi-apartment housing under construction in Yekaterinburg grouped into classes, thousand square meters
December March June September December Changes per 2011 2012 2012 2012 2011 years, % Total 1643 1536 1657 2001 1938 18 Economy 1003 1020 1091 1349 1264 26 Comfort 597 473 523 579 621 4 Business 43 43 43 74 44 1 Elite 0 0 0 0 9 -
Source: Analytical department RITS UPN In the 4th quarter 2012, an elite class project re-emerged in the market with the construction commencement of the last blocks of Tikhvin Club- House. This project is most likely to be one of the most expensive projects in the housing segment in the future (140-160 thousand rubles per square meter). The higher end of the price range is only reported in respect of apartments in Iset Tower (about 200 thousand rubles per square meter).
Structure of residential premises under construction by types, Q4 2012, %
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2011 2012 2012 2012
December March June September 2012 December
Economy Comfort Business
Source: Analytical department RITS UPN
However, it occurred that increases in construction volume and recovery of supply were mainly experienced in the economy segment. Focusing upon mass purchasers has been one of the main trends in the past years. The market now offers more space-effective apartments and functional lay-outs. New housing starts to compete for purchasers with the local secondary market. Regional expansion also stimulates economy class development. This process involves not only suburban areas but also satellite towns. Steady demand for such projects with inhabitants of Yekaterinburg formed at least 5-7 years ago. However, the suburbs could not offer a large number of projects and a verity of choice until now. In 2012 the situation began to change. The fullest activity in this sector was reported in Sredneuralsk, where several projects were launched which are capable to compete with Yekaterinburg for purchasers. It can be stated that in general, the current supply structure fits the needs of the market. We suppose that this balance is not likely to undergo any crucial changes in the medium term.
It is important that in the past two years developers have managed to win back the confidence of purchasers after the crisis, when approximately half of the existing construction projects were frozen. Several years ago the pace of construction in Akademichesky District was unsurpassed in the local market and unachievable by most of its players. Today many companies can boost the same rate of construction with project implementation in 1-2 years.
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The above can be partially explained by the fact that many market players are being steadily financed by the banks, which helps ensure a predictable pace of construction. Most developers therefore keep to their commitments to follow the term of construction. This stimulates sales at early stages of construction. Important factors in such projects are a stable construction pace, a high level of quality and confidence in the developer.
In the past few years there was a tendency toward a growth in supply in the number of cast-in-place concrete frame buildings. The share of panel-assembled and brick housing in new projects tended to decline. Brick housing stands out from other projects and the developers of such projects traditionally succeed in sales. However, brick technology is only used by small and medium-sized companies in infill projects. Market leaders are not willing to risk the construction period and technological effectiveness despite potentially greater demand.
Structure of residential premises under construction by types of frame, Q4 2012, %
2,90% 10,70%
Monolithic frame 86,40% Brick Precast panel
Source: Analytical department RITS UPN We have the same situation with mid-rise houses (up to 5 stories). In accordance with the master plan of city development, the share of such houses shall be at the level of 30% of supply; however, their current share is only 5%. Increases in supply in this segment are only expected with robust development of the suburbs and outskirts of the city. There are still some changes taking place in this sector. Thus, at the end of 2012, Nova-Story Company (LRS Group) set up a new project known as Michurinsky consisting of 3-stories multi-apartment houses. Atomstroycomplex Company proceeded with European Village, which project was revised to include low-rise multi- apartment houses.
There is a tendency towards notable reduction in the volume of housing construction in the center of Yekaterinburg and expansion of supply to the districts of the 2nd price zone, in the past years.
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Structure of residential premises under construction by zones, Q4 2012, %
0,90%5,80% 15,20% Center 38,20% 1 zone
39,80% 2 zone 3 zone 4 zone
Source: Analytical department RITS UPN Decentralization is one of the most persistent tendencies in the housing construction market of the past years. Today, more and more satellite towns are being engaged in this process. Market development follows the path of least resistance; developers harness the least occupied and the most convenient sites for construction. The process of slum dwelling displacement and complex development of built-up areas is very slow.
Regional distribution of housing under construction (active sites) as of December 2012, sq.m. District Total area Yekaterinburg 1,938,134 Avtovokzal 228,784 Akademichesky 256,606 Botanichesky 24,077 VIZ 175,619 Vtuzgorodok 84,218 Gorny Shchit 6,951 Elizabeth 3,192 ZhBI 0 Izoplit 2,388 Istok 0 Karasyeozersk 5,681 Koltsovo 7,760 Kompressorny 19,124 Maly Istok 513 N. Sortirovka 32,177 Parkovy 22,301 Pionersky 79,663 S. Sortirovka 69,253 Uktus 192,930 UNTs 115,331 Uralmash 73,481 Khimmash 6,505 Downtown 103,298 Chermet 84,598 Shartashsky 13,180 Shirokaya Rechka 66,567 Elmash 150,458
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YU-Z 113,479
Source: Analytical department RITS UPN Active construction works are reported in the Akademichesky District within a 5 quarter schedule. The project’s developer has slightly changed its approach in the timing of commissioning of the built-up houses. Some of the houses have been commissioned at the end of the current year; some will be introduced in 2013. Further commissioning will most likely depend upon the pace of market sales and the possibility of participating in government housing improvement programs. At the same time, there was a new factor reported which has deterred long-term district development, i.e. a backlog of social infrastructure which needs to be developed and which slows the pace of housing construction. The city government appeared to be unable to finance this sector.
The regional distribution of housing may be evaluated as uneven. In many districts of the city there is still low competition. The main scope of supply (approximately 70%) is concentrated in the southern part of the city displaying both regional and quality competition. In addition, results of the announced projects analysis are evident that this will be the line of further market development in the years to come. There is no doubt that market players should consider potential imbalances in the supply and intensify their efforts in northern city areas.
Volume of multi-apartment housing under construction (excluding suspended projects) in Yekaterinburg as of December 2012
Construction stage Construction volume, sq.m. Share, % Site preparation 91,681 5 Excavation works, erection of foundation 288,771 15 First floors erection 363,166 19 Mid-floors erection 217,835 11 Upper floor erection 191,293 10 Interior finishing 785,388 41
Source: Analytical department RITS UPN A large number of projects at the final stage are quite common for the second half of the year. Most of the above projects are subject to commissioning in the last days of the year.
The fact that most projects at the “site preparation” stage in previous quarters are now showing stable volume growth and moving to the next stages, is a good sign for the market. In addition, the market continues to widen with newly built houses, many of which have not yet been offered for sale. This process was really slow just a year ago and did not fit the needs of the market but this situation has changed.
By the end of 2012, we may say that potential purchasers are given a choice of housing at different stages of construction. In addition, there is no appreciable differentiation between quality and district. In the short run, competition in the housing market is expected to grow with new projects being launched. This will take place by virtue of sales stabilization in the market. It can be, thus, assumed that purchasers in 2013 will become more demanding when choosing specific projects or apartments.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 47
PRICE ANALYSIS Decreases in volume of housing under construction, rapid recovery of mortgage lending, deferred demand and a growing number of transactions throughout 2011 have predetermined price behavior. Notable price increases from 10% to 20% were reported by the end of 2011 in different segments. In 2012 the rate of price increases decreased. The primary market showed an average of a 7% price growth in the city; price growth in the secondary market did not exceed 10%. However, it was rather notable in specific segments.
Moderate price increases against the growing number of transactions can be explained, first of all, by increasing supply in the secondary market and growing competition from the new housing segment. Moreover, account should be taken of changes in the primary market supply structure – there are now a greater number of apartments at an early construction stage (with lower prices) in the market.
The scope of supply in the secondary market grew by 27% in 2012. Growth in supply of one-room apartments reached 47%. The number of apartments offered for sale in the primary market increased by at least 20%. Supply has stabilized by the end of the year but we leave open the possibility for further increases early in 2013. In 2012 prices for apartments in Yekaterinburg have fully recovered after the crisis of 2009 and reached the highest level ever.
Stabilization in supply was reported by many market players. Some of developers are resorting to marketing campaigns in order to stimulate sales, and offering 3 to 5% discounts for some categories of apartments.
We continue to stick to the opinion that the market situation in Yekaterinburg is fostering a stabilization of prices. In the mid run, we expect growing completion in the market and more demanding purchasers. We believe that current price levels in the market are nearing their local threshold and are creating serious barriers for new purchasers. Thus, we leave open the possibility of price adjustment in particular projects and certain quality and district segments.
Dynamics of average asking prices per sq.m, rubles
80000 70000 60000 50000 40000 30000 20000 10000 0 09 09 10 10 11 11 12 09 11 10 08 12 12 11 12 09 12 11 09 09 10 10 10 12 ------Jul Jan Jun Jun Jun Feb Sep Sep Feb Feb Apr Apr Apr Aug Oct Aug Oct Mar May Dec Dec Dec Nov Nov
Primary market Secondary market
Source: Analytical department RITS UPN Average supply price per square meter of various quality groups in the secondary market, 4th quarter 2012, rub./sq.m. Districts 4th quarter 3rd quarter 4th quarter Changes in the Changes in the 2011 2012 2012 last quarter, % last year, % Average 63,836 68,442 70,003 2.3 9.7 Apartments built after 2000 73,235 74,504 77,669 4.2 6.1 Khryushchyovki 59,158 65,613 66,743 1.7 12.8
Source: Analytical department RITS UPN
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 48
Although the rate of price growth in 2012 has decreased, there are still some changes typical of an imbalance in the current market between supply and demand. The rate of price growth in “khryushchyovka” segment (i.e. the Krushchyov Era accommodation type) is much higher than that of the newly built sector. This is typical for “low- competition” periods of development, when buyers have little alternatives. The cheapest housing located in remote districts becomes the lead recipient of demand. In most cases it is the worst housing as well. As a rule, such periods last from 1 to 2 years, and are then followed by stabilization or recession.
One more typical feature of market recovery is the swift growth of prices for compact apartments. For instance, prices for 1-room apartments have gone up by 32% since the end of 2010, while 3-room apartments have only grown by 24% and 4-room apartments by 20% over the same period.
We suppose that the current stage of development is nearing its end, and that 2013 will be a more balanced period. Under conditions of growing supply and stable market the punchers will be focused on quality and will spend more time in searching for and comparing of the alternatives.
Average supply price per square meter of housing depending upon number of rooms, 4th quarter 2012, rub./sq.m. Districts 4th quarter 3rd quarter 4th quarter Changes in the Changes in the 2011 2012 2012 last quarter, % last year, % Secondary market 1-room apartments 70,780 76,286 77,999 2.2 10.2 2-room apartments 63,206 68,304 69,788 2.2 10.4 3-room apartments 62,418 65,654 67,611 3.0 8.3 4 and more rooms 65,287 69,291 70,627 1.9 8.2 Primary market 1-room apartments 57,221 61,814 61,250 -1 7 2-room apartments 53,496 57,614 58,389 1 9 3-room apartments 50,637 56,325 54,613 -3 8 4 and more rooms 57,221 61,814 61,250 -1 7
Source: Analytical department RITS UPN Average values are rather unstable in the primary market due to the limited number of the apartments offered and unstable supply structures.
The recent lowering of prices in newly built houses is primarily conditioned by the expansion of the market in remote districts. Still, most projects remain stable in price. Developers of some projects located in the more remote districts are gradually raising prices while nearing the date of commissioning; some projects offer only minor discounts.
Average supply price per square meter of housing in the secondary market depending upon the district, 4th quarter 2012, rub./sq.m. District 4th quarter 3rd quarter 4th quarter Changes in Changes in 2011 2012 2012 the last the last year, quarter, % % YEKATERINBURG 63,836 68,442 70,003 2.3 9.7 DOWNTOWN 82,630 86,202 90,056 4.5 9.0 AVTOVOKZAL 65,935 72,178 74,387 3.1 12.8 YUGO-ZAPADNY 62,599 68,474 70,550 3.0 12.7 VIZ 70,230 72,972 73,023 0.1 4.0 PARKOVY 62,211 70,078 71,280 1.7 14.6 BOTANICHESKY 66,274 70,221 71,431 1.7 7.8 ZARECHNY 62,735 67,961 68,677 1.1 9.5 VTUZGORODOK 62,429 67,182 68,863 2.5 10.3 SHARTASHSKY 62,021 66,628 67,307 1.0 8.5 ZHBI 59,400 66,188 68,215 3.1 14.8 PIONERSKY 63,101 70,897 72,006 1.6 14.1
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 49
AKADEMICHESKY 57,099 62,547 61,613 -1.5 7.9 UNTS 53,776 64,598 67,000 3.7 24.6 SINIYE KAMNI 53,346 59,744 59,671 -0.1 11.9 URALMASH 56,789 62,421 62,934 0.8 10.8 ELMASH 56,882 64,487 65,494 1.6 15.1 VOKZALNY 70,958 71,984 72,624 0.9 2.3 N. SORTIROVKA 55,546 61,135 62,313 1.9 12.2 S. SORTIROVKA 50,101 56,314 57,675 2.4 15.1 CHERMET 52,260 58,786 59,200 0.7 13.3 KHIMMASH 54,279 60,807 62,042 2.0 14.3 UKTUS 56,069 61,948 62,600 1.1 11.6 ELIZABETH 52,387 57,569 60,282 4.7 15.1 KOLTSOVO 42,367 54,072 53,897 -0.3 27.2
Source: Analytical department RITS UPN The most notable price movements in the finished housing market in the last year were reported in the following districts: Koltsovo, UNTs, Elizabeth, Elmash, Staraya Sortirovka. The weakest dynamics were reported in the central districts. This is also typical of an under-supplied market during a price-rise period, when price of units do not reflect quality. However, currently this tendency is not as notable as in 2006.
We suppose that as soon as the market is saturated with new projects, price levels in different segments (both quality and district) will level out, and changes in price will be conditioned by a fair evaluation of quality, location, the parameters of the scheme and individual apartments.
Average supply price per square meter of housing in Yekaterinburg, rub./sq.m
Territory 4th quarter 3rd quarter 4th quarter Changes in Changes in 2011 2012 2012 the last the last year, quarter, % % Secondary market Downtown 82,630 86,202 90,056 4.5 9.0 1st zone 64,939 70,639 71,982 1.9 10.8 2nd zone 56,158 62,704 63,751 1.7 13.5 3rd zone 52,108 58,793 59,968 2.0 15.1 4th zone 41,996 49,665 50,671 2.0 20.7 Primary market Downtown 67,833 77,677 81,416 4.8 20.0 1st zone 56,689 62,265 63,845 2.5 12.6 2nd zone 50,183 54,916 53,948 -1.8 7.5 3rd zone 43,919 51,164 52,790 3.2 20.2
Source: Analytical department RITS UPN
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 50
Change of average sale prices, rub./sqm
80000 70000 60000 50000 40000 30000 20000 10000 0 09 10 11 09 12 10 11 11 10 09 11 12 12 08 09 10 10 09 10 09 12 11 12 12 ------Jul Jan Jun Jun Jun Oct Oct Apr Apr Apr Feb Feb Feb Sep Sep Dec Dec Dec Aug Aug Nov Nov Mar May
Primary market Secondary market
Source: Analytical department RITS UPN Notable price rise in the 3rd quarter 2012 was reported in the downtown. This was primarily conditioned by the decreasing supply and changes in the supply structure. Low-budget supply is decreasing with every year. The core of the current supply in the primary market is formed by 3-4-room apartments.
Average prices in the districts located in the first to second price zones have not changed notably in the last quarter. This was due to continuous renewal of current supply.
Change of average asking price per sqm on the primary market
90000 80000 70000 60000 50000 40000 30000 20000 10000 0 10 11 12 10 10 11 11 10 12 12 11 10 12 11 12 13 10 11 12 ------Jul Jul Jul Jan Jan Jan Jan Sep Sep Sep Mar Mar Mar May May May Nov Nov Nov
Center Zone 1 Zone 2 Zone 3
Source: Analytical department RITS UPN
As far as quality is concerned, there is still a considerable price gap between the mass housing segment (economy, comfort) and business class segment represented by single projects. Prices in this segment have stabilized during the last quarter. However, the pace of sales in these houses falls greatly behind all other segments. Houses commissioned in 2010-2011 are still present in the market.
Prices per square meter in economy class houses do not differ greatly from those in the comfort segment. However, purchasing budgets in the two groups differ considerably because of the larger apartments in the comfort segment.
Average supply price per square meter of housing in the primary market of Yekaterinburg, rub./sq.m.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 51
Class 4th quarter 3rd quarter 4th quarter Changes in Changes in 2011 2012 2012 the last the last year, quarter, % % Economy 51,332 55,831 54,819 -1.8 6.8 Comfort 54,158 60,234 62,399 3.6 15.2 Business 91,200 96,756 97,161 0.4 6.5
Source: Analytical department RITS UPN
Dynamics of average supply prices by types, rub./sq.m
120000
100000
80000
60000
40000
20000
0 4th quarter 2011 3rd quarter 2012 4th quarter 2012
Economy Comfort Business
Source: Analytical department RITS UPN
Average supply price per square meter of housing in the primary market, rub./sq.m.
Stage 4th quarter 3rd quarter 4th quarter Changes in Changes in 2011 2012 2012 the last the last year, quarter, % % Excavation works, foundation 52,529 56,482 53,000 -6.2 0.9 Erection of walls 50,234 56,350 57,623 2.3 14.7 Interior finishing 58,395 60,600 60,387 -0.4 3.4 Completed and commissioned 62,760 67,900 71,786 5.7 14.4
Source: Analytical department RITS UPN In the past months a notable growth was reported in the finished newly built houses segment only. With a limited number of apartments, sellers were quite confident in adjusting their demand as the supply was decreasing.
In general, a slowdown in price growth and their stabilization seems quite logical in the current situation. Prices in most segments of both the primary and secondary markets have jumped to a record high. At the same time, the economic base precedent for the current price-growth period is not as stable as in the previous years. Mortgage availability has become the key factor in rapid price recovery over the past years.
It was mortgage lending that brought housing market transactions to a higher level in terms of the number of the said transactions. Unlike previous periods of mortgage buoyancy, today most purchasers prefer the primary market. Relocation of mortgage funds to newly built houses is an important factor in construction volume growth and stable market development. In addition, mortgage growth rates in the past years outstripped the pace of development of the housing market itself and were barely comparable to the scope of supply in the construction market. Such imbalances were one of the reasons for price growth.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 52
We believe that further price growth will become unsustainable for today’s market. Stabilization should become a turning point in a developing market which is balanced and competitive. In 2010-11 market players were selling apartments under conditions of growing transactions and an increasing number of purchasers by virtue of rapid mortgage lending recovery. However, current price levels will not allow for further expansion of purchasers in the market even by virtue of affordable mortgages.
As described and discussed above, in 2013 we believe that most sellers will have to compete in a tougher market in Yekaterinburg.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 53
EVALUATION OF HOUSING MARKET SALES Specific features and limitation:
• Until April 2005 share participation construction agreements were not subject to obligatory state registration. However some real estate transactions are still not subject to registration when pertaining to housing under construction. There is hence no centralized source that can provide information concerning the number of transactions in the primary housing market.
• The Database of the Ural Real Estate Chamber, the Yekaterinburg New Housing Development Database and any other real estate databases in Yekaterinburg currently do not allow for the monitoring of sales (apartments discontinued from sales and reasons of such discontinuation) in the primary market.
• There are no summary statistics with respect to sales of specific companies. Gathering of detailed information does not seem possible.
Taking into account the above limitations, primary market sales in Yekaterinburg can be evaluated by means of recurrent evaluation of supply pursuant to Federal Law No. FZ 214 and the number of contracts made.
Period Share of supply in the Number of share Estimated primary share agreements, % agreements according the market sales State Register data 4th quarter 2009 29.4 929 3,160
1st quarter 2010 37.5 1,123 2,995
2nd quarter 2010 34 807 2,374
3rd quarter 2010 33.4 852 2,551
4th quarter 2010 41.8 1,169 2,797
1st quarter 2011 42.3 829 1,960
2nd quarter 2011 43.8 1,134 2,589
3rd quarter 2011 40 1,404 3,510
4th quarter 2011 48.8 1,772 3,631
1st quarter 2012 47.9 990 2,067 2ns quarter 2012 49.1 1,345 2,739
3rd quarter 2012 52.9 1,567 2,962
Source: State Register, Research Department of Realtor Data Center of Ural Real Estate Chamber
The above evaluation of market sales may be at variance with reality due to a non-proportional distribution of sales between projects under different types of agreements (trust agreement, housing associations, preliminary agreements and the like). In some cases the above variance may reach 15-20% of the given level. Nevertheless, we suppose that the above calculation fairly reflects sales dynamics and market trends.
A number of transactions in the housing market have been growing steadily in the past years. However, the annual growth rate is notably slower than in the secondary market. This is primarily due to an overall reduction in the number of new houses that have vacant apartments for sale. Thus, many purchasers not having found a satisfactory offer in the primary market, have to search the secondary sector in search of the apartment.
However, some companies find these conditions quite comfortable and increase the pace of sales by increasing their market share.
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FORECAST FOR CONSTRUCTION VOLUMES AND PUTTING HOUSING IN COMMISSION
VOLUME OF HOUSING UNDER CONSTRUCTION In the second half of 2012 volume of housing under construction was reported to be nearing the pre-crisis level. Company set up numerous new projects. Although some of these projects are not displaying stable dynamics, the changes are evident. Many of the new projects are huge and will be present in the market for at least 3-5 years. Many sites development will be held back due to continuous resettlement process and engineering preparations. These changes are definitely positive for the market, and it is evident that many companies are ready for mid- and long-term projects. In addition, large sites provide for stable market supply over a long period.
The volume of housing under construction has varied from 1.3-1.7 million square meters for years. At the end of 2012 it reached a level of 1.9-2.0 million square meters. This value will drop in the next few months due to completions of a large number of houses. However, we may say that in 2012 the ground was laid for a stable market dynamic, at least in the short run.
This does not yet guarantee growing volumes of construction in the long run as the market remains unstable, and many market players will have to adjust their plans should negative trends emerge in the European and Global economic environment or if the demand begins to decrease in the market.
This way or another, the volume of housing under construction in 2012 reverted to the level of 2006-2007. This, alongside with price indicators and transactional statistics proves that the market has overcome the ramifications of the 2009 crisis and is open to further development. However, it needs new stimuli in order to gain volume, which are currently still insufficient.
We give a rather conservative estimation of market expansion in 2013 and do not expect major changes in the volume of housing under construction in 2012.
Expert estimation of volumes of housing, thousand sqm
2500
2000
1500
1000
500
0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Economy Comfort Business Elite
Source: Analytical department RITS UPN No notable changes in the structure of housing are expected. There may be rotation in the upper price segment upon introduction to the market of certain announced elite and business class projects.
We believe that Yekaterinburg has many opportunities to grow volumes in housing construction in the mid to long term, due to the following factors:
1. Favorable economic environment.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 55
2. Dropping of administrative and infrastructural limitations on development.
3. Production of a system of grounded strategic goals for developing living for city residents. Setting priority trends for development and moving towards targets.
Putting in commission
In the past years stable increases were reported in commissioning housing facilities in Yekaterinburg. The decline was only reported in 2009, when about 40% of projects were frozen.
Commissioning of housing facilities in 2000-2011, thousand square meters 1 Territory Yekaterinburg Sverdlovsk Region Year 2007 898,700 1,653,100 2008 955,000 1,704,340 2009 816,261 1,594,400 2010 1,026,700 1,755,000 2011 1,050,000 1,817,800 Source: Sverdlovskstat Source: Analytical department RITS UPN However, the rate of housing commissioning does not fully reflect the processes that take place in the city market. The core of the market is formed by multi-apartment houses, and commissioning thereof is of utmost importance in the market. Unfortunately, official data does not segment the commissioning index correctly. We analyzed the address list of completed projects, and put multi-apartment houses into a separate group. Thus, it can be argued that the volume of commissioned urban housing has not increased. Moreover, in 2011 it declined to the level of 2006- 2007.
Volume of housing commissioning in Yekaterinburg, sq.m. 2009 2010 2011 Total 816,261 1,026,700 1,050,000 Individual developers 233,533 119,000 261,300 Individual housing in cottage communities 14,417 19,268 53,144 Multi-apartment housing 568,311 888,432 735,556 Source: Sverdlovskstat
Source: Analytical department RITS UPN Having analyzed the structure of housing facilities under construction, we may say that the task “to build not less than in the previous year” set by the Government of Yekaterinburg is likely to have been accomplished in 2012. With the current rate of construction, the volume of multi-apartment houses may reach 800-900 thousand square meters.
In 2013 the market will have a chance to reach a level of 2012 or exceed it. However, in the case of decreasing buying activity and price level adjustment, some companies may change the rate of implementation of projects. However, this is unlikely to result in a commissioning collapse.
PRICE LEVEL The post-crisis stage of housing market development in 2010-2011 was characterized by a growing number of transactions. Buying activity grew by virtue of deferred demand and rapid mortgage lending recovery.
However, in the second half of 2011 the re-emergence of stability problems in the global financial system was reported. There was a general slowdown and gross domestic product decline in several European countries. However, the inertial housing market not only ignored these external changes but developed behavior typical of feverish development periods. Given a limited primary market supply and a decrease of choice in the secondary
1 Official data on housing commissioning in 2012 have not been published on the date of this report
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 56
market, many purchasers put the quality of the housing facility on the back burner. In 2012 there was a price growth slowdown. Despite little market revival in the autumn, we believe that overpricing may create serious barriers for attracting new purchasers to the market.
A tendency toward growing real estate transactions remains, but the rate of this indicator has slowed down. We do not see any basis for preserving former dynamics. Growth of sales in the apartment market is not expected in 2013. Further growth of market turnover will be possible upon stabilization, leveling price distortion between different quality groups and the formation of new long-terms factors of development.
In addition, the new housing market is being actively renewed and replenished with new projects. Supply in the secondary market also remains high. Competition between sellers will be growing in 2013.
We cannot disregard the fact that there are still certain risks for medium-term development in the global economy. This, in turn, places certain limitations on bank policies and purchasers’ behavior. As the experience of the previous years has show, purchasers’ expectations may change very quickly, banks may tighten their requirements for borrowers, and developers may stop construction very abruptly.
Thus, differentiating between local and global factors, we come to the conclusion that the current stage of price growth is nearing its end. The most probable scenario of market development in 2013 is characterized by stabilization of prices and minor negative price adjustment.
Expert evaluation of price dynamics in the housing market of Yekaterinburg, rub./sq.m Primary market Secondary market
1st quarter 2007 58,939 69,007 2nd quarter 2007 56,027 68,743 3rd quarter 2007 54,211 67,407 4th quarter 2007 56,116 65,834 1st quarter 2008 56,549 64,499 2nd quarter 2008 58,211 63,860 3rd quarter 2008 57,296 64,404 4th quarter 2008 55,240 62,191 1st quarter 2009 52,969 58,210 2nd quarter 2009 49,511 54,640 3rd quarter 2009 47,860 52,545 4th quarter 2009 49,164 52,959 1st quarter 2010 49,326 53,433 2nd quarter 2010 48,171 52,893 3rd quarter 2010 49,096 53,661 4th quarter 2010 49,121 55,427 1st quarter 2011 50,413 57,120 2nd quarter 2011 51,789 58,128 3rd quarter 2011 52,250 59,870 4th quarter 2011 53,084 63,836 1st quarter 2012 55,194 66,339 2nd quarter 2012 57,816 67,129 3rd quarter 2012 58,944 68,442 4the quarter 2012 58,017 70,003 1st quarter 2013 F 57,500 68,500 2nd quarter 2013 F 56,500 67,500 3rd quarter 2013 F 56,500 66,000 4th quarter 2013 F 57,000 66,000 The forecast may be adjusted and clarified depending upon situation development in the external and internal markets. Source: Analytical department RITS UPN
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Expert estimation of average price level, rub./sqm
80000 70000 60000 50000 40000 30000 20000 10000 0
Primary market Secondary market
Source: Analytical department RITS UPN As for long-term development, we continue to believe that Yekaterinburg has considerable potential for further housing construction development. Low housing levels and the poor quality of housing stock pave the way for price growth and boom-like market development (frequent booms give way to declines). This problem may be solved by renovating housing stock and maintaining high volumes of new construction. Moreover, the new housing market is in a good position to diversify and differentiate qualitatively. The new housing market, having demonstrated increases in construction volumes, offered no high-quality alternatives in the past years and created no stimuli to moving to a new apartment. Quality development of the housing market and the formation of a modern living environment are the long-term trends that will, sooner or later, come to the fore and will become a dominant factor in market development.
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ANALYSIS OF THE PRIMARY MARKET OF INTEGRATED AND ATTACHED COMMERCIAL PREMISES IN YEKATERINBURG1 The main peculiarity of this type of commercial premises consists in the fact that its designated use, whether it belongs to office, shopping or any other premises, in most cases cannot be defined until the date of commissioning. Although integrated and attached premises are designed in view of their functional use, they are often positioned in the market as free-use commercial premises.
Therefore, we will be analyzing the primary market of this type of premises without regard to any use segments but suppose that the share of such premises, that is integrated and attached facilities, will account for at least 50-60%.
Construction activity in the market has remained high in the past quarter. At the end of the year the developers were trying to commission the maximum number of facilities. As a result, the volume of intense construction (sites with noticeable construction activity) has somewhat reduced from 2 001 sq.m. to 1 938 sq.m. At the same time, the share of “frozen” construction has grown from 79 000 sq.m. to 104 000 sq.m.
The section below will only dwell upon facilities where there is definite activity in construction and installation.
SCOPE AND STRUCTURE OF SUPPLY The volume of construction in the housing market reached pre-crisis levels by the end of the third quarter. This resulted in a growing volume of integrated and attached commercial premises. Currently it accounts for 124 000 sq.m.
Until recently a high percentage of integrated and attached commercial premises (approximately 20-25%) were built in the Downtown area. However, in the past years the trend in the market has been moving towards decentralization. The share in the Downtown has dropped to 10%. The bulk of the housing construction is gradually moving towards densely populated districts located in the first and second price zones which fall to a share of 57% and 17%, respectively. There is a lower demand for commercial premises here; which is why the share of integrated facilities in overall construction volumes is gradually declining.
There are very few housing construction projects in the fourth price zone. Currently there is only one scheme in these remote areas that presupposes the construction of integrated commercial premises.
Primary market of integrated and attached commercial premises, supply and construction volumes, sqm
Period I Q 2012 II Q 2012 III Q 2012 IV Q 2012 construction supply construction supply construction supply constructi supply Factor on
Center 5,530 1,600 5,190 300 9,850 900 13,150 3,590
1st zone 53,560 16,250 51,460 13,500 65,660 17,990 71,360 14,840
2nd zone 15,120 2,380 16,090 2,110 19,400 2,780 21,110 5,340
3rd zone 7,520 2,770 9,310 2,560 8,290 2,610 17,020 6,190
4th zone 0 0 0 0 0 0 1,170 920
Source: Analytical department RITS UPN In the past quarter there was an increase in supply in the primary market of integrated and attached commercial premises, both by virtue of the launching of new projects in the market and the through the introduction of premises that had been held by developers until the final stages of construction. Compared to a year ago, over 56% growth was reported including 27% in the fourth quarter. In all, there are 31 000 sq.m. of commercial premises offered in the primary market today. Nearly half of them are located in the first price zone districts. Certainly there are rather more
1The segment of integrated and attached premises includes commercial premises in the residence houses.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 59
premises offered for sale by the developers in completed houses. They are often expensive and overpriced when compared to similar projects under construction.
Change of construction volumes of integrated and attached commercial premises, thousand sqm
Source: Analytical department RITS UPN The structure of the supply as against construction stage has changed notably due as many of projects have entered their final construction stage. Increase in the scope of supply in the segment of houses at the mid-completion stage is conditioned by offering of supply that was held back by developers at an early stage. Thus, this supply makes approximately 25% of the construction volume.
Purchasers’ choices are still anything but wide. For example, in the Downtown area there is supply only in three facilities, while the VIZ District offers alternatives for purchasing commercial premises in a dozen of housing estates. A similar situation is observed in the Avtovokzal District. Supply is quite limited outside the first zone. Despite the increase in volume the market remains poorly differentiated.
There is no doubt that developers still have premises to offer but hold them back at present. Such premises will come out in portions, and some of them are already offered for sale in completed schemes. Among such developers is Renova-Story Group, which is engaged in construction of over 8.5 thousand sq.m. of commercial premises in Akademichesky District. Following commissioning of the houses these premises will come into the market. We did not consider these premises in this report as they are not offered for sale at the stage of construction, and, being non-typical and much localized supply, will distort the general picture of market structure.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 60
Supply volume by construction stages, sq.m
Source: Analytical department RITS UPN A reduction in the volume of supply which was observed early in the year in the primary market is not expected in the near future. However, there will be no rapid increase either.
PRICE INDICATORS In the past twelve months positive supply price dynamics have been observed in the primary market of integrated and attached commercial premises. Notable negative changes were only reported in the third quarter, which was caused by the introduction of new facilities at early stages of construction to the market and single instances of decreases in the facilities that were initially overpriced. In the fourth quarter prices did not change in most housing estates. The dramatic upturn in the Downtown and in the third zone was caused by “high-price” supply in three projects: Belinskogo-Bolshakova in the Downtown area (Atomstroycomplex, 2 800 sq.m. at a price of 120 000-130 000 rub./sq.m.), Krasnoleye-Chkalova, Phase 3 (Atomstroycomplex, 1 998 sq.m. at a price of 70 000-75 000 rub./sq.m.) and Chkalova-Vonsovskogo-Amundsen, Phase 1 (Atomstroycomplex, 808 sq.m. at a price of 70 000-85 000 rub./sq.m.) in UNTS District. Tight sampling makes average price indicators too susceptible to particular units. Thus, changes in just one project may result in a notable jump in prices.
Dynamics of sales prices in the primary market, sqm
Source: Analytical department RITS UPN
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Changes in supply prices for commercial premises in residential houses under construction, rub./sqm Period IV Q I Q 2012 II Q III Q IV Q Changes per Changes per 4 2011 2012 2012 2012 quarter, % quarters, % Area
City 71,090 75,150 86,106 77,855 79,332 +1.9 +11.6
Center 86,165 83,197 88,000 96,865 119,234 +23.1 +38.4
1st zone 75,872 80,445 94,698 82,114 81,283 -1.0 +7.1
2nd zone 66,888 63,774 71,977 68,750 68,652 -0.1 +2.6
3rd zone 47,186 49,184 52,278 51,694 62,794 +21.5 +33.1
Source: Analytical department RITS UPN Average price increases within the city accounted for +11.6 % over four quarters. Bargaining with developers is only possible with single projects. Sometimes discounts are offered in the case of an hundred per cent payment.
SHORT-TERM DEVELOPMENT FORECAST In the short run, an increase in integrated and attached commercial premises is likely to materialise due to changes in the market structure that can be observed even today. Housing construction volume reverted to pre-crisis levels. In addition, there are more and more “complex” projects, where several houses have common infrastructure including numerous commercial premises. Market volumes will depend greatly upon the Akademichesky project which has approximately 8.5 thousand square meters of integrated and attached premises under construction. As a result, a decrease in the volume of housing under construction in the Downtown area and within the first zone districts, including a great number of economy and comfort class projects, will not cause a decrease in the volume of commercial premises.
Market replenishment by means of converting old housing stock into non-housing stock is expected to be minor. Most of the suitable apartments located on streets with high traffic flows have already been converted into commercial premises. The rest of them do not meet the technical requirements of market operators or have a disadvantageous location.
Therefore, we may say that in the nearest two years overall growth rates in the segment of integrated and attached commercial premises will increase.
Average price indicators in the rental market will continue to depend upon the scope and the structure of supply. In the first-second quarters of 2013 rental rates will most probably remain at the current level; no notable changes are expected. In separate segments there might be both positive and negative adjustments. Notable positive dynamics in the market are expected by the summer. Rental rate growth is unlikely to exceed +10-12 %.
The most probable scenario for the sales market is a resumption of price growth. However, adjustments tend to be minor. This segment is still very susceptible to the expectations related to macroeconomic factors. Supply price dynamics will reach +5 to +10 % by the end of the year.
It should be noted that this forecast purports rather an optimistic scenario of market development in the short run. It presupposes that the economy of the country, region and city will not be exposed to any serious stresses and main economic indices will, at least, not worsen.
It should be further noted that commercial property market is still very sensitive to external influences and depend upon macroeconomic factors. Adverse changes in the global economy may result in rapid decreases in demand and subsequent price decreases.
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Change of rental rates, rub./sqm/month
Source: Analytical department RITS UPN Change of sale prices, rub./sqm
Source: Analytical department RITS UPN
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PARKING SPACES MARKET OVERVIEW FOR HOUSING ESTATES IN YEKATERINBURG Average price of a parking space in the housing estates of Yekaterinburg is at the level of 800 thousand rubles. Following the recovery of prices in 2011, price growth trends did not develop any further in 2012. In addition, average values in various regional sectors decreased by 5-11%.
The permanent parking garage market has not experienced major changes. Given that underground parking spaces outside the first price zone are barely present in the resale market, prices for permanent garages may be considered as a possible price substitute for underground spaces plus a notional price addition of 25-35% as underground parking is traditionally more expensive than permanent garages.
In general, although the problem of storing motor-cars over night is growing from year to year, the public still shows little buying activity. Most drivers prefer storing their vehicles in outside and in the open, i.e. in the yards or guarded surface parking.
Average price for a standard parking space in the underground parking, rub.
Source: Analytical department RITS UPN
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Average price for a standard garage, rub.
Source: Analytical department RITS UPN
Average price development for underground parking spaces and permanent garages in Yekaterinburg, thousand rubles per item period mid late mid late mid late mid late Changes area 2009 2009 2010 2010 2011 2011 2012 2012 over 2012 underground parking spaces city 799 819 734 715 726 814 797 772 -5,1 center 954 945 891 947 1004 1057 978 941 -10,9 1st zone 671 761 675 606 637 769 735 684 -11,1 permanent garages (all types) city 661 616 563 573 551 596 596 578 -3,1 center 860 774 697 730 732 754 753 755 0,1 1st zone 667 633 607 592 577 612 635 644 5,2 2nd zone 502 489 439 427 391 465 447 421 -9,5 3rd zone 405 424 422 403 394 436 436 399 -8,6
Source: Analytical department RITS UPN
New housing market is gradually moving further from the city center together with the new parking market. Major property market supply remains within the first price zone. Current supply in late 2012 is shown in Table 2. Throughout 2012 several developers embarked on various marketing actions in order to stimulate sales of parking spaces (discounts, interest-free payment by installments over 1-2 years, etc.).
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Prices for a parking space in the underground parking of a housing estate under construction in Yekaterinburg Area Address Construction Estimated Stage Class of Average Type of Price, rubles per parking commencement completion the facility price per the garage space sq.m. in the Year Quarter Year Quarter apart., in min. max. rubles
AVTOVOKZAL TRAKTORISTOV 2008 3 2012 1 completed Economy 73,750 Under- 650,000 950,000 STR., 4 ground parking AVTOVOKZAL BELINSKOGO- 2011 1 2013 1 interior Comfort 71,000 686,000 790,000 FURMANOVA STR. finishing AVTOVOKZAL LUGANSKAYA 2008 1 2011 3 completed Economy 72,000 Under- 550,000 850,000 STR., 6 ground parking AVTOVOKZAL MASHINNAYA – 2007 1 2013 2 top floors Economy 57,900 Under- 585,000 800,000 SCHMIDT STR. erection ground garage AVTOVOKZAL SOYUZNAYA – 2011 2 2012 4 completed Comfort 88,500 Under- 650,000 900,000 SHCHORS STR., ground PHASE 3 (houses 3 parking (SHCHORS STR., 105), 6 (SOYUZNAYA STR., 4)) AVTOVOKZAL SOYUZNAYA – 2011 2 2013 1 completed Comfort 90,833 Under- 650,000 900,000 SHCHORS STR., ground PHASE 3 (houses 7 parking (SURIKOVA STR., 53/А), 8 (SOYUZNAYA STR., 6)) AVTOVOKZAL TSIOLKOVSKOGO 2010 1 2013 1 interior Comfort 65,000 Under- 500,000 550,000 STR., 27 PHASE 2 finishing ground parking BOTANICHESKY FUCHIK – 8-GO 2011 2 2012 3 completed Comfort sold Under- 590,000 950,000 MARTA STR. (П/К 4, ground 3Б) parking BOTANICHESKY FUCHIK – 8-GO 2011 3 2012 3 completed Comfort 55,744 Under- 590,000 950,000 MARTA STR. (П/К ground 3А) parking
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BOTANICHESKY FUCHIK – 8-GO 2011 4 2013 2 mid floors Comfort 76,400 Under- 590,000 950,000 MARTA STR. (П/К erection ground 2) parking VIZ YUMASHEVA STR., 2008 1 2012 1 completed Comfort 71,123 None. 750,000 750,000 15 Offered in Admiralsky Housing Estate VIZ PAPANINA STR., 2009 1 2011 3 completed Business 81,000 Under- 800,000 800,000 18 ground parking VIZ TATISHCHEVA – 2008 2 2012 4 completed Economy 60,000 Under- 500,000 500,000 TOKAREY STR. ground garage VIZ SHEVELEVA- 2010 4 2013 1 mid floors Economy 76,433 Under- 700,000 700,000 PAPANINA STR., erection ground PHASE 2 parking VIZ SHEVELEVA- 2012 1 2013 1 mid floors Economy 75,250 Under- 700,000 700,000 PAPANINA STR., erection ground PHASE 3 parking VOKZALNY MASHINISTOV 2008 2 2010 4 completed Comfort 75,000 Under- 550,000 650,000 STR., 3 ground parking VOKZALNY MAIKOPSKAYA 2007 2 2011 4 completed Economy 49,500 Under- 470,000 470,000 STR., 25 ground parking VTUZGORODOK BIBLIOTECHNAYA 2007 4 2012 3 interior Economy 69,176 Under- 550,000 750,000 STR., 45 finishing ground parking VTUZGORODOK KURYINSKY, 10А 2012 2 2013 4 foundation Economy 75,900 Under- 750,000 750,000 (apartments) erection ground parking PIONERSKY PIONEROV – 2010 3 2012 3 interior Economy 62,592 Under- 450,000 450,000 SOLNECHNAYA finishing ground STR. parking PIONERSKY SMAZCHIKOV 2009 4 2012 4 interior Economy 72,000 Under- 700,000 700,000 STR., 3 PHASE 3 finishing ground parking PIONERSKY SOVETSKAYA – 2011 1 2013 1 interior Economy 67,950 550,000 1,500,000 URALSKAYA STR., finishing PHASE 4 PIONERSKY SHALINSKY, 3/1 2010 4 2012 4 top floors Economy 69,000 350,000 700,000 erection
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PIONERSKY SHALINSKY, 3/2 2010 4 2012 4 interior Economy 67,500 350,000 700,000 finishing
SARTASH KUIBYSHEVA STR., 2012 1 2013 3 mid floors 66,492 Under- 400,000 500,000 MARKET 98 erection ground parking YU-Z VOLGOGRADSKA 2011 1 2012 4 interior Comfort sold Under- 600,000 600,000 YA STR., 88, 2ПК finishing ground parking YU-Z VOLGOGRADSKA 2012 1 2013 3 foundation Comfort sold Under- 600,000 600,000 YA STR., 88, 3ПК erection ground parking YU-Z MOSKOVSKAYA 2006 3 2011 3 completed Comfort 74,750 Surface 1,100,000 1,100,000 STR., 66 garage YU-Z CHKALOVA STR., 2007 4 2010 4 completed Comfort 63,000 Under- 350,000 700,000 124 PHASE 2 ground parking YU-Z CHKALOVA STR., 2008 1 2011 4 completed Comfort 66,000 Under- 350,000 700,000 124 PHASE 3 ground parking YU-Z YASNAYA STR., 20 2006 2 2012 4 completed Comfort 75,000 Under- 990,000 990,000 ground parking UKTUS ALTAISKAYA – 2011 4 mid floors Economy 58,538 Under- 300,000 400,000 YAKUTSKAYA erection ground STR., PHASE 2 parking UKTUS GASTELLO STR., 2006 3 2012 2 interior Economy sold Under- 500,000 500,000 32 finishing ground garage UKTUS PAVLODARSKAYA 2008 1 2011 2 completed Economy 55,000 Under- 540,000 540,000 STR., 48/А ground parking UKTUS SHCHERBAKOVA 2011 3 2013 3 foundation Economy 57,667 Under- 500,000 580,000 STR., 20 (2 ПК) erection ground parking URALMASH RESPUBLIKANSKA 2007 4 2012 4 interior Economy sold Under- 400,000 700,000 YA – RABOCHIKH finishing ground STR., PHASE 1 parking URALMASH RESPUBLIKANSKA 2007 4 2012 2 top floors Economy sold Under- 400,000 700,000 YA – RABOCHIKH erection ground STR., PHASE 2 parking ELMASH STACHEK – FR. 2012 1 2013 3 top floors Economy 46,150 350,000 480,000 BRIGADES STR., erection PHASE 2
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ELIZABETH MOLOTOBOITSEV 2011 2 2013 1 first floors Economy sold Under- 350,000 350,000 – BISERTSKAYA erection ground STR. parking CENTER KRASNOARMEISK 2008 4 2010 4 completed Business 100,000 Under- 1,600,000 1,600,000 AYA STR., 71 ground parking CENTER MOSKOVSKAYA 2010 2 2011 3 completed Comfort 70,750 Under- 750,000 750,000 STR., 77, PHASE 3 ground parking CENTER MOSKOVSKAYA 2008 2 2011 4 completed Comfort 66,908 Under- 750,000 750,000 STR., 77, PHASE 4 ground parking CENTER MOSKOVSKAYA 2011 2 2012 2 completed Comfort 67,000 Under- 750,000 750,000 STR., 77, PHASE 5 ground parking CENTER MOSKOVSKAYA 2011 2 2012 4 completed Comfort 75,000 Under- 750,000 750,000 STR., 77, PHASE 6 ground parking CENTER SHEVCHENKO 2007 1 2011 3 interior Business 76,000 Under- 1,200,000 1,200,000 STR., 18 finishing ground parking CENTER SCHEINKMAN 2008 1 2012 4 interior Business 96,250 Under- 1,300,000 1,300,000 STR., 121/А ПК1 finishing ground parking CENTER SCHEINKMAN 2008 1 2010 4 completed Business 96,250 Under- 1,300,000 1,300,000 STR., 121/Б ПК2 ground parking
Source: Analytical department RITS UPN
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COUNTRY HOUSES MARKET PROFILE Currently the vast majority of all 200 cottage communities that we monitor are at the design stage or under construction. Most of the projects introduced into the market in the past years are sold in a “no construction contract land” format and fall under no specific construction completion term. Major construction activity in such projects is limited to the construction of roads, installation of engineering and service systems and lines and fencing of the community. Rates of construction progression in such communities vary greatly from one another.
Organized cottage community market structure depending upon the project development stage, 4th quarter 2012
Source: Analytical department RITS UPN
Changing of cottage community market structure depending upon the type of supply
Source: Analytical department RITS UPN
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Growth in the supply of “no construction contract land” projects has been a key change to the supply pattern in the market in the past few years. Its current share equals approximately 83%. This market transformation has dramatically changed the supply itself and the composition of buyers in the country-side estate. On the one hand, the above change may be viewed as a move towards mass-market consumers. Relatively low purchase prices for land and unlimited terms for the timing of construction of a house allow middle-income families access to the market. The range of potential purchasers has since grown considerably. On the other hand, this process has been rather spontaneous and was, first of all, conditioned by a lack of companies in the market capable of developing long-term projects, and having sustained financing.
The vast majority of companies engaged in developing cottage communities have neither the resources nor the economic incentives for long-term projects. Many market players prefer to exit from their projects as soon as possible by selling land parcels.
And while urban multi-apartment property market players are displaying a notable pace of development and investing in new large-scale projects, there are very few quality changes in the country-side property market.
The above discussion demonstrates implicit evidence of a lack of confidence in the country-side sector on the part of professional market players, and of a lack of preparedness for mass development of projects in this sector.
In most cases when “no construction contract land” does not sell, stand-alone cottages are offered. And only in a few cases semi-detached housing is added to the supply. One of the most recent tendencies is the revision of projects located within the city boundaries and a revision (adding) of their formats. The introduction of low- rise multi-apartment housing as a separate trend within the cottage community sector will become one of the main trends in the country-side market in the coming years. Currently there are several projects being executed including the following:
• Zapadny (Western) Housing Estate in Akademichesky District, 3-storey houses. On sale.
• Apartment houses of 3 stories are being constructed in Marshal Cottage Community in addition to cottages. No sales.
• Michurinsky Community, 3-stories houses. Pending sales.
• European Village, Koptyaki. Semi-detached housing and 3-storey multi-apartment houses are being constructed in addition to cottages. On sale.
• Zolotaya Gorka Multi-format Community, Koptyaki. Cottages and multi-apartment houses are currently under construction. On sale.
• Karasyeozersky-2 Community. The project expanded its share of semi-detached and multi-apartment (4 stories) housing. On sale.
In addition, there are several communities oriented as well towards low-rise multi-apartment housing at the design stage. We expect a notable growth of supply in the near future. The above trend will diversify the suburban property market and give impetus to the development of the suburbs.
Despite certain increases in supply in the townhouse sector in 2012, attached houses have not yet become a mass product in the local market. Most such projects still remain at the mid and high end. Consequently, such projects often fail to compete with stand-alone cottages. We suppose that a shrinkage of gross sellable areas of these townhouse apartments and situation nearer to city’s infrastructure may stimulate robust development in this sector.
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The Tyumensky direction/district remains the most popular route/district in the cottage community market. It has the greatest supply in both cottages (with construction contracts) and land parcels. It also has the greatest number of projects announced. Buyers are offered a wide choice of alternatives within the city boundaries and along Polevskoy route/district as well as in the suburbs of Yekaterinburg. Other routes/directions are represented by single communities.
Distribution of cottage communities along the directions in view of the announced projects, 4th quarter 2012
Source: Analytical department RITS UPN General stock of finished cottages and semi-detached houses in these communities is still rather low. After several years, less than 2000 households have been absorbed. Despite the considerable groundwork laid in 2005-2007, commissioning is still very modest. There is a slight rise in the number of households commissioned in 2011. Notable growth in the semi-detached housing sector is a result of the Svetlorechinsky Project which was implemented through the offices of the Yekaterinburg Government. In addition, several houses have been completed in “old” communities. No considerable changes took place in 2012.
General stock of households in cottage communities of Yekaterinburg
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Source: Analytical department RITS UPN It can be stated, altogether, that the general stock of finished individual housing in cottage communities remains rather tight, particularly in the semi-detached housing (townhouses) format.
Changes in the scope of households that have been commissioned in the organized cottage communities at the end of the period * 2010 2011 4th quarter 2012 Semi-detached houses 159 299 299 Cottages 1,212 1,444 1,529 Total 1,371 1,743 1,828
Source: Analytical department RITS UPN * Widespread practice of selling land parcels without construction contracts complicates accounting of the facilities commissioned. Retrospective data may be edited after inspection of the cottage communities.
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SCOPE AND TRENDS OF SUPPLY
COTTAGES AND SEMI-DETACHED HOUSES Amid the global crisis (2008-2009) scope of supply in the cottage community market reduced greatly as a normal response to declining demand. It was largely a result of the full suspension of many projects at different stages of development, general construction slowdowns and adjustments of project phasing plans. Some companies put on hold construction and sales waiting for market upswings, other companies changed community design plans (land plot sizes, layouts of cottages, format of the supply) on the go.
Changes in the scope of the declared supply in organized cottage communities
Source: Analytical department RITS UPN In the spring of 2011 many companies became more active and started to bring their supply to the market. It was partially a result of seasonal build cycles in the construction process, and partially by an upswing in market demand. However, by the end of 2011 the scope of the market supply reduced again. It continued to decline throughout the first half of 2012. Reduction of the declared supply was largely conditioned by the ongoing re- formatting of projects and the growth of “no construction contract land” supply. At the end of 2012 increase in supply in the cottage communities was reported as a result of the introduction of new projects to the market (Zavidovo, Phase 2; opening of sales in the European Village project; the reopening of sales at the Zubrovo Community), and the expansion of declared supply within particular projects.
The share of the semi-detached houses equals approximately 18%. Many townhouse projects were frozen in the previous years and have not been unfrozen yet. Many developers have given up on this format for some projects in favor of multi-apartment housing (Queen’s Bay) or cottages (Nikolin Klyuch). Nevertheless, we still consider this trend as a promising “city” format for individual housing and expect further increases in supply in the medium term. However, to make this type of housing a mass product, one should offer consumers some functional projects, which are comparable in price with 3-4-room apartments in the central districts of the city.
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Cottage community market structure discounting for no construction contract land, 4th quarter 2012
Source: Analytical department RITS UPN Supply structure in the organized cottage community market depending on the construction stage, 4th quarter 2012
Source: Analytical department RITS UPN In 2012 there were a number of finished projects and houses under construction grew. Nevertheless, their share is still very small. Out of 977 households offered for sale, only 141 were completed and 182 are under construction. The vast majority of sellers offer construction contracts in the community at an early stage of development. Thus, in most cases purchasers are unable to evaluate the household itself and the project in general.
It is important that as a result of the crisis most developers attempted to adjust projects to conform to purchasers’ affordability criteria. Many developers switched to land sales which did not require the signing of obligatory contracts for construction, thus giving buyers an opportunity to choose a construction company, the design of the house and the technology of construction at their own discretion. The same was reported even in the most expensive projects such as Karasyeozersky-2, Palniks and some others, which already possess the required infrastructure. However, management companies in such projects are very particular with respect to the approval of such projects and on control over the construction process.
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Before the crisis, many companies considered no “no construction contract land” sales as a main competitive advantage of cottage communities and a necessary condition for positioning in the “business” and “elite” categories. Today such products are presented as a step forward to the buyer, as a customer-oriented approach which allows flexibility within the project. One way or another, we consider this fact as evidence that the country-side property market remains shallow and unstructured. It lacks large companies having sufficient financial resources and experience in implementing large-scale projects which are capable of creating the impetus for mass re-accommodation of buyers from the urban property market. Besides, there are still too many barriers in the market (low level of transport and social infrastructure development) which limit the development of the country-side sector at the same rate as the urban property market.
Structure of “no construction contract land” supply in cottage communities, 4th quarter 2012
Source: Analytical department RITS UPN In this category there is a steady demand for land. Relatively low barriers for entry into such projects and an individual approach to construction and financing are key selling points.
Nevertheless, we consider an increase in the sales of projects of the “no construction contract land” sales category as a negative development for the market. It is not easy to ensure the continuity of architectural style, observe the terms of construction and improve the community with this scenario of project implementation. It is also impossible to compare the goals of land purchasers. Most such projects have no steady financing and depend upon the pace of sales. In the long run, these projects may cause serious risks for all the country-side property market as they may create negative sentiment toward such schemes.
The fact that engineering lines in most of the projects are not yet installed creates a serious problem in this sector. Sellers are merely making commitments to construct roads, and electricity and gas connections for the community. Sources of financing are often the receipts from selling the above land parcels. For all the diversity of supply, purchasers are still short of land parcels with connected infrastructure.
An overwhelming majority of parcels are located along the Tyumensky and Polevskoy Routes. These very routes encompass the largest land stock suitable for cottage development. In 2012 there was a considerable increase in supply along the Serovsky Route. This was due to the introduction to the market of new sites in the Upper Pyshma Distric, Baltym Community.
The “No construction contract land” market continues to differentiate into 2 groups:
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1. Projects with fast developing engineering infrastructure and active construction. Purchasers continue to take high interest in such communities to allow the sellers to raise prices as the parcels sell and engineering works progress. In many such communities owners are already moving into the houses built, which improves project appeal.
2. “Problematic” projects that do not practice construction works or demonstrate little changes can only rely upon price dumping.
Country-side property market buoyancy started only in 2011 after a decline in 2008-2009. Construction works resumed, supply grew, and purchasers pursued their interests in country-side projects.
Sellers raised prices for land parcels and construction works in view of construction market buoyancy and increases in the cost of construction and installation works. This took place together with further adjustment of the supply to the effective demand. However, the rate of price increases notably diffeedr from that in the urban property sector. While prices for apartments in Yekaterinburg have grown by 23% since the 1st quarter of 2011, cottages have gone up by 9%.
Average price changes for households in cottage communities, rubles per sqm
Source: Analytical department RITS UPN In the past few years, cottage community market has been influenced by seasonal factors. At the end of the year when the winter begins there is a sales slowdown in country-side projects which causes sellers to announce discounts and price reductions in many projects. In spring there is seasonal buoyancy exactly the other way round. The current year is no exception. Many made considerable price adjustment in the first half of the year, while average price reduction was reported at the end of the year.
A considerable part of the supply in cottages under construction is still represented by communities positioned in the high price segment. In the previous periods many projects in the mid price and economy class segments have switched their implementation strategy to “no construction contracts” sales; and are only beginning to practice house sales again.
It should not go unnoticed that the purchasing budget in many projects has been reduced as a result of the crisis not only due to the adjustment of price per square meter. Most sellers have also minimized the area of standard houses and started offering smaller land parcels (from 6 hundred square meters).
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Average supply price per 1 sq.m in the household (house, land parcel with service lines) in Yekaterinburg and its suburbs (less than 40 km away), rubles per sq.m
4th quarter 1st 2nd quarter 3rd quarter 4th quarter 2011 quarter 2012 2012 2012 2012 Cottages 40,614 42,129 46,154 47,563 45,910 Semi-detached houses 45,718 46,147 48,039 48,348 44,388
Source: Analytical department RITS UPN
Average price level in cottage communities, 4th quarter 2012, million rubles
Route Average price per 1 Average household price, million rubles sq.m. in the Cottage Semi-detached house household, rubles Moskovsky, Chusovskoy 44,787 11.2 10,0 Polevskoy 40,889 9.5 n/a Rezhevskoy, Staropyshminsky 42,855 8.7 n/a Serovsky, Starotagilsky 46,198 9.1 6.4 Tyumensky 42,761 10.0 3.9 Chelyabinsky 50,522 11.1 4.7 City boundaries 47,562 9.7 9.7
Source: Analytical department RITS UPN Chusovskoy Route was originally developing as a high price project under the stimulus of the first communities of Karasyeozersk and Palniks. However this route may not be considered as the most attractive with regard to environmental or natural peculiarities of the area. Conversely, Chelyabinsky Route started to develop and has gained popularity primarily because of its environmental component; that is appealing forests and water resources.
Serovsky Route is a route with limited land resources suitable for mass cottage construction but featuring a number of unique natural sites and popular settlements. However, currently the purchasers have practically no choice of communities along this route.
Just the contrary, Tyumensky and Polevskoy Routes are rich in land resources and there are a lot of projects on both agricultural lands and lands belonging to the settlements. Along these routes there are projects positioned as elite or business class, however the majority of projects are oriented towards mass demand.
In the medium term, we expect the market to widen with projects in the mid to low price segments along many routes.
Communities located within the city boundaries should also be mentioned. Price levels for such projects are traditionally higher. Considering that most of the cottages are purchased for permanent residence, transport accessibility and the proximity of social infrastructure (kindergartens, schools, hospitals, stores, etc.) is of great importance. And since there are no communities with their own social infrastructure in the market, purchasers prefer those located within the city or near to it.
It can be stated today that, after recovery of prices following the recessionary collapse, the market has stabilized. In the short run there are no internal assumptions for considerable price moves in the market.
Cottage community supply in the format of “no construction contract land” continues to grow.
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Price ranges in this sector are very wide and are conditioned by several factors:
• Project development stage, scope of completed engineering works on site.
• Category of land and permitted uses.
• Area appeal, proximity to water bodies, forests, etc.
• Schedule of project financing, availability of funds for area development with the developer.
Some 3-4 years ago sales of land with no construction contract were rare. Such parcels were offered within particular projects with high readiness, and traditionally had service lines installed. However, new projects started to appear over time in the market at early construction stages when service lines were absent and were still to be built. Most projects were executed on agricultural lands. An increase in the supply resulted in a reduction of average price per 1 hundred square meters of land.
In the past few years market price levels have stabilized. Most projects lie within the range of 50-100 thousand rubles per 1 hundred square meters. A persistent declining of average values is caused by the ongoing introduction of new projects to the market which lack service systems.
There is a standard practice of raising prices as projects are connected to electricity and, gas and access roads are built. The average price level in communities with engineering infrastructure available is approximately 134.5 thousand rubles as of the 4th quarter 2012, while the average value in projects under construction is 64.4 rubles per 1 hundred square meters.
Active construction of infrastructure in particular economy class communities serves as a favorable market factor.
Average price for land in cottage communities, 4th quarter 2012, rubles per 1 hundred square meters
Routes, locations Average price per 1 hundred square meters of land Tyumensky 58,367 Staropyshminsky, Rezhevskoy 108,529 Moskovsky, Chusovskoy 137,500 Chelyabinsky 94,473 Serovsky, Starotagilsky 81,652 Polevskoy 65,748
Source: Analytical department RITS UPN The situation seems quite logical depending upon the route. The most expensive projects are located along the Chusovskoy Route, where the most expensive cottage communities are concentrated. Chelyabinsky and Serovsky Routes are known for limited and mixed supply. Tyumensky and Polevskoy Routes are the most popular mass routes with over 90% of land supply in the cottage communities. Most projects located along these routes are at an early stage of development and have low levels of engineering preparedness and area improvement.
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Price zones in Yekaterinburg
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Center Boundaries of the streets: Moskovskaya, Chelyuskintsev, Vostochnaya, Dekabristov, Belinskogo, Bolshakova
1 zone Residential districts: Avtovokzal, VIZ, Parkoviy, Yugo-Zapadniy, Botanicheskiy, Zarechniy, Vtuzgorodok, Shartashskiy Rynok, Yuzhniy, ZhBI, Pionerskiy, Vokzalniy
2 zone Residential districts: Uralmash, El’mash, Zavokzalniy, Novaya Sortirovka, Sibirskiy, Sinie Kamni, Uktus, Shirokaya Rechka
3 zone Residential districts: Shinniy, Chermet, Apparatniy, S.Sortirovka, Khimmash, Lechebniy, Compressorniy, Elizavet, UNTs.
4 zone Residential districts: Shartash, Izoplit, Koltsovo, Ptitsefabrika, N-Isetskiy, Sem’ Klyuchey, Rudniy, Istok, Verkhnemakarovo, Pyshma, Sadoviy, Shabrovskiy, Palkino, Shuvakish, Medniy, Chusovskoe ozero, Sovkhoz, Gorniy schit, Palniks, Kalinovskiy, Severka
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C VALUATION AND VALUATION CONSIDERATIONS
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VALUATION METHODOLOGY The three traditional valuation techniques used to value property: The Sales Comparison Approach; The Income Approach; and The Cost Approach. We have valued the majority of the properties using the income approach; except for the following properties: Tverskoy Boulevard, 16. However, where possible, we have taken into account and cross-referenced our income approach results with those of the sales comparable approach.
The cost approach has not been used as this produces a “Non-Market Value” suitable for financial statements relating only to “specialised properties”. An overview of the Sales Comparison Approach and the Income Approach and how these relate to the Russian Market, follows.
THE SALES COMPARISON APPROACH It is a fundamental aspect of the comparable approach to valuation that it proceeds by analogy. The valuer isolates those characteristics of the object to be valued which in his view affect value and then seeks another object of known or ascertainable value possessing some or all of those characteristics with which he may compare the object he is valuing. This method therefore involves analyzing all available information on sales or asking prices of comparable properties that have taken place and making adjustments in the prices achieved to reflect the differences in the properties sold and the property to be valued.
This approach hinges on the availability of reliable market evidence of comparable sales. Distinctions must be drawn between information that is known to be accurate and reported information that is second hand or at best hearsay. Only information that is known to be accurate can be relied upon with any degree of comfort to provide an accurate valuation.
There are severe difficulties in applying this valuation approach in emerging real estate markets, including Russia, as due to their comparative immaturity the availability of reliable market information is very limited.
The principal problem is a lack of transparency and a low volume of recorded deals. In mature property markets there is a wealth of information available on completed sales transactions, in the form of yields and total sales prices, and this makes it relatively straight-forward to assess the market value of any property. In the Russian real estate market this sort of information is often not available, and where the details of transactions are publicized their accuracy cannot always be guaranteed. In addition, a majority of transactions in the Russian real estate market takes place “off-market” and therefore details of them are seldom known beyond those who were party to the deal.
The volume of completed deals is very low in all sectors of the Russian real estate market. In addition – as outlined above, deal information is rarely reported accurately and is often manipulated for other reasons benefiting the separate parties to any sale deal. Therefore it is often necessary to use offered prices as a basis for assessing the opinion as to value using the sales comparison approach.
Development sites are transacted, but these transactions are usually “off-market” and therefore reliable comparable information is therefore only available to the parties to the transactions and their advisers – who are usually bound by confidentiality restrictions.
Therefore, in the majority of cases, we have not applied the Sales Comparison Approach.
THE INCOME APPROACH
DISCOUNTED CASH FLOW One of the most commonly used techniques for assessing Market Value within the Income Approach is the Discounted Cash-Flow (DCF). This is a financial modeling technique based on explicit assumptions regarding the prospective cash-flow of a property or business and the costs associated with being able to generate the income. To this assessed cash-flow a market-derived discount rate is applied to establish a net present value of
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the income stream. This Net Present Value (“NPV”) is an indication of Market Value6. This approach is considered to be a sophisticated valuation technique as the inputs to a DCF are derived from market data, econometric projections and current prevailing market sentiment.
When applied to an existing investment property, the valuer models the future cash-flow at the premises as contracted in the lease agreements, applying inflation, non-recoverable costs, a deduction for any repairs or capital expenditure required, a deduction for an annual sinking fund and any other income generating or income reducing items that may be appropriate. Where leases expire, the valuer will apply re-letting voids (if appropriate) and assumes that the rent for each space will revert to the currently prevailing Market Rent appropriate to that property and space. Market Rent will be determined according to current market conditions and data, but a conservative growth rate will normally be applied. This growth rate, which is usually nominal and includes inflation, is also determined according to current data about the market and in which direction the market is perceived to be moving.
Once properly modeled, as described above, an exit or terminal yield and a discount rate will be applied to the resulting income stream. The exit yield represents the yield a third party purchaser would pay for the income stream in the final year of the discounted cash-flow and will usually be based on current market yields adjusted for the likely dynamics of the income stream at the end of the holding period. The exit yield assumes a sale of the asset to an investment purchaser and reflects the investor’s likely bid for the property.
The discount rate applied to the income stream represents the purchaser’s market based minimum hurdle rate of return required to purchase the asset. It is thus the rate which a third party purchaser will not venture below to purchase the property (a lower return being below the minimum IRR required to justify buying the asset). This discount rate, when discounted to the present to determine the Net Present Value of the property (here identical to the Market Value) represents the hurdle rate of return which the most competitive investment purchaser would bid in order to buy the property.
For the basis of the current valuation, where the most of current properties are still under development, the income approach is the most relevant. The residual value for properties under development or properties held for future development is the NPV of all future income streams less the NPV of all future costs. The costs include all of the development costs still outstanding in respect the Properties and future incomes are assessed based on current returns for completed properties of a similar nature in the market adjusted to reflect the expected completion date for the particular project and anticipated future trends in rents and /or sales prices.
The costs and incomes associated with development projects have been assessed on the basis of standard construction costs in the market together with properties or projects specific information provided by the developer and current market returns adjusted to reflect anticipated future trends.
In order to assess the residual valuation of the land/or the project a discount rate has to be applied to the projected cash-flows. The discount rate is market derived and reflects the minimum returns a typical investor would require to undertake a project of this type. This approach then provides the maximum value that an investor would be willing to pay for the land in its current condition, being the Net Present Value of all identified future costs and incomes at the necessary rate of return.
The difficulty in applying this method in the Russian market is assessing the correct market derived discount rate, due to the very small number of transactions, the lack of transparency in the reporting of information and in the wide variations in returns required on projects from different investors.
In the Russian market this approach specifically excludes the use of debt and the effect of leverage. The availability of debt, and on what terms, varies widely from investor to investor, and there is no market standard – especially in a comparatively immature debt market such as Russia. Pre-debt/un-geared discount and capitalization rates are therefore used to represent the risk-return requirement of investors.
6 International Valuation Standards Seventh Edition – Guidance Note 7
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We have applied the Investment/Income method in our valuation as the properties under development would be purchased at the date of valuation by a potential developer looking for income and capital returns, that is, the development would be assessed by a potential purchaser on the basis of the rate of return it could be produce from sales and lettings. The income approach is therefore the most appropriate method of determining the price that a developer purchaser would bid for the sites and schemes in their current states.
GLOBAL ASSUMPTIONS FOR THE INCOME APPROACH Below we provide the main assumptions that have been applied in current valuations:
FOR EXISTING COMMERCIAL PROPERTIES: Our model assumes a resale of the asset at the end of a 5-year holding period, at which point the development will be completed and stabilized. Our DCF valuation thus projects incomes and costs for a 5 year period running from 2013 to 2017, with a hypothetical resale of the asset in Q4 2017, following the 5 year holding period.
PROJECTED PERIOD The duration of the lease periods has been assessed on the basis of the existing lease agreements.
The duration of future leases has been assessed with regard to typical market terms and lease durations for similar leases in the current market and are assumed to start after a letting void of 1 to 3 months.
We have assumed that owner-occupied properties would be re-let to current tenants represented by LSR Group subsidiaries and no void period was applied.
Office premises at Gelios business center would be re-let at a Market Rent after expiration of the current lease agreements within 1 month.
Office premises at Litera business center would be re-let at a Market Rent after expiration of the current lease agreements within 4 months.
ESTIMATED RENTAL VALUE / MARKET RENT In preparing our valuation we have made reference to rental values appropriate to the nature and use of the accommodation as well as the location of the Property on completion. As at the respective date of valuation we have estimated the rental income based on our ERVs for the different uses and qualities of net leasable areas likely to be produced from the design and construction brief passed to us by the Client.
In order to analyze the Estimated Rental Value of each property as well as to understand how the market rental values differ from the current contracted passing rent, we have analyzed the characteristics of each Property and the current rental market in St Petersburg together with our in-house Office Agency team who are deeply involved in leasing transactions on a daily basis. We have based our analysis on existing rent rolls, preliminary agreements with potential tenants and on our market knowledge.
The Market Rent applied is net of operating costs, taxes and insurance costs and assumes appropriate and prevalent current lease terms.
ERV GROWTH Based on the market research carried out by C&W and taking into account current trends in the office market, for ERV growth we have applied for 5.0% for 2013-2018.
INDEXATION On the basis of information provided to us, we have applied rent indexation for all tenants according to the rent rolls in regards to each property.
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TENANT’S COVENANT STATUS Given the location and the proposed quality of the properties we have assumed that, given supply and demand in the current market, properties will attract National Russian companies which comprise strong, credit worthy financial covenants able to meet the rental obligations of their leases on short to long-term leases.
BREAK OPTIONS There are no landlord’s or tenants’ break options in the current leases and pre-leases. We have therefore assumed that the current leases and pre-leases will remain in place until their expiry dates. We have assumed that future occupational leases will not contain break options.
VACANCY RATE Where there were vacancies as at the valuation date we have applied a certain letting void period. We did not apply any long-term vacancies for the existing properties.
FEES ON LEASING AND ACQUISITION When selling and leasing commercial premises, it is a standard market practice to use a brokers’ services. Taking into account the size of each property, standard market practice and other relevant characteristics, we have estimated brokers’ fee commission. Thus, brokers’ fees for sale have been applied at the rate of 0.50% which includes agency fees and legal fees for documenting and completing the transaction.
We have not applied any leasing commission due to the Company has its’ own company to lease premises.
NON-RECOVERABLES AND OPERATING EXPENSES The nature of the real estate market in Russia allows landlords to recover most of the property related expenses from their tenants. For the subject properties all operating expenses apart from the non-recoverable running costs are assumed to be paid by the tenant at cost, and they are therefore cash-flow and VAT neutral. As the Client presented us rental rates which included operational expenses based on the analysis of all the details of all the tenancies and market information concerning the current market level of operational expenses we have deducted 2,000 rubles for class B properties.
PROPERTY TAX The current rate of Property Tax in Russia is 2.2% of the depreciated cost of the Property. Property Tax is included into operating expenses for all yielding Properties according to the detailed information provided to us by the Company.
PROJECTED SALE For the purposes of capitalizing the rental incomes at the end of the forecast period a sale of the yielding Properties is assumed at the end of 2017. This is a valuation assumption rather than any reflection of the actual intentions of the Properties’ owner. It is assumed that commercial space will be fully leased and the income stream from the Properties’ operation will stabilize.
DISCOUNT RATES AND EXIT YIELDS (TERMINAL CAPITALISATION RATES) We have considered the perceived and actual risks associated with the Properties, as there is a direct correlation between a property’s perceived risk and the expected rate of return to an investor (the discount rate). Generally, the yield or discount rate is the rate of return that would be required by an investor to purchase the stream of expected benefits (e.g., future cash flows), given the risk of achieving those benefits. Risk is generally defined as the degree of certainty or uncertainty as to the realization of expected future returns.
The term “discount rate” is a rate of return used to convert a monetary sum, payable or receivable in the future, into a present value. Thus the discount rate is used to determine the amount an investor would pay today (the present value) for the right to receive an anticipated stream of payments (e.g., cash-flows) in the future.
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The appropriate discount rate will be the rate of return that adequately compensates the investor for the risks taken. As risk rises, the required compensation for the level of risk should also rise, reflected in a rise in the discount rate. The discount rate (the target rate of return) is usually derived by reference to the return on an alternative form of perceived low-risk or riskless asset (frequently the benchmark is the gross redemption yield on government gilts or cash), plus appropriate additions for risk.
The level of rate may vary in different areas of a city or country for many reasons such as condition, desirability of location, which might be related to such factors as accessibility, visibility, reputation, etc. Investors expect larger returns when investing in high-risk income properties. High quality newer investment properties generally have lower yields and discount rates than older existing properties.
Based on our knowledge of required rates of return for various investments, in particular real estate, as well as through discussions with investors active in the real estate market in Russia, we have been able to estimate an appropriate discount rate which reflects the perceived risk and required rate of return for a project such as the subject property.
In determining this discount rate, we have used a number of factors to ensure that it is accurate, applicable, market derived and theoretically robust. Firstly, we have derived the discount rate both from our knowledge of the minimum hurdle rates of return (minimum IRR) required by actual developers and investors currently active in the Russian market (that is, from real market participants and the real rates of return required by our clients).
Secondly, we have used the cumulative method to rationalize and verify the market derived discount rate applied in a more quantitatively and economically robust context. The Cumulative Method assesses the likely return required by investors and developers based on the desired rate of return (also referred to as the discount rate or target rate) conventionally constructed from a risk-free rate and market risk premium; for real estate, investors may also choose to add specific risk premiums.
Finally, we have tested the reasonableness of the discount rates and exit yields applied to the discounted cash flow by considering the initial yield produced by our calculations at the date of valuation based on the current annual income and the Market Value produced by the DCF. This initial yield has been tested against current evidence and market sentiment as to initial yields in the particular property sector and macro-location considered.
THE DISCOUNT RATE DERIVED FROM THE CUMULATIVE METHOD While the construction of a discount rate using the cumulative or build-up method may seem to be a relatively straightforward process, actually determining the risk premium is more complex. Although some areas can be estimated quantitatively from historic data, a number of factors resist that kind of analysis. As a result, investors are required to make subjective or qualitative adjustments to discount rates. The positive interpretation of this is that being aware of a risk, even if one cannot quantify it exactly, is the first step in controlling it.
The following are examples of the sort of factors which may be used in deriving a property risk premium:
1. Risk-free rate of investment 2. Market risks a. Illiquidity upon sale (e.g. lot size, transaction times, availability of finance) b. Failure to meet market rental expectations (forecast rental growth) c. Failure to meet market yield expectations (forecast yield shift) d. Risk of locational, economic, physical and functional depreciation through structural change e. Risks associated with legislative change (e.g. planning/privity of contract, changes in fiscal policy) 3. Specific risks a. Permitting/Planning risk (for development land or properties) b. Construction risk (for development land or properties)
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c. Sales or market cycle risk (the risk of failure to let or sell the specific asset due to demand changes) d. Tenant default on rental payment (covenant risk) e. Risk of failure to re-let (void risks) f. Costs of ownership and management g. Differing lease structures (e.g. rent review structure, lease breaks). The risk-free return rate is normally taken to be the gross redemption yield on a medium-dated government gilt, preferably of the same duration as the assumed holding period of the investment. (Alternatively it is possible to adopt the real return of index-linked gilts, in which case this needs to be applied to cash flows expressed in real terms.) Equally, geared investors or property companies frequently have reference to debt costs or the weighted average cost of capital (WACC) as the core metric against which assets are assessed.
The second group – risks of structural change or market failure – is those that may affect the market as a whole, particular subsectors or groups of property. The structural impacts on the in-town retail market brought about by the introduction of out-of-town retailing and changes to property taxation such as value added tax (VAT) are good examples of this. As such, these risks could be called market or systemic risks.
The third group – property, non-market or ‘unsystemic’ risk factors – are, broadly speaking, risks associated with individual assets.
Based on our knowledge of required rates of return for various investments, in particular real estate, as well as through discussions with persons active in the real estate market in Moscow and St Petersburg, we have been able to estimate an appropriate discount rate that reflects the perceived risk and required rate of return for the subject properties. The capitalization rates / exit yields were derived from our analysis of recent market transactions, together with our market knowledge derived from C&W investment agency coverage.
The level of yield may vary in different areas for many reasons such as condition, desirability of location, which might be related to such factors as accessibility, visibility, reputation, etc. Investors expect larger returns when investing in high-risk income properties. High quality newer income properties generally have lower yields than older existing properties.
CURRENCY EXCHANGE RATE In accordance with the Central Bank of the Russian Federation, as at the valuation date the currency exchange rates were as follows:
1 USD=30.3727 RUR.
FOR THE PROPERTIES IN COURSE OF DEVELOPMENT:
CONSTRUCTION PERIOD All construction timetables have been assessed according to market date as communicated to us by our Development Consulting Department and based on our knowledge of typical construction timetables in similar projects. In most cases we have adopted the construction timetable presented to us by the client, but in those cases where the construction timetable was considered to be optimistic, we have applied our own timescale.
CONSTRUCTION PHASING All projects, unless specifically stated otherwise, have been assumed to be constructed in one phase according to the time schedule provided to us by the Company. Where longer term projects have several phases, we have adopted several phases where, after market testing information supplied to us by the Company, we have concluded that the proposed phasing is reasonable and achievable.
OUTSTANDING CONSTRUCTION COSTS / CONSTRUCTION COSTS Construction costs have been assessed in accordance with standard rates in the market that a third party developer / purchaser would expect to have to pay in the course of the development of each project. All costs
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were provided to us by the Client, a reliable and a well-known developer, and were then tested with a reference to current construction prices based on works completed in the current market by our Project Management Department, and double-checked by ourselves, based on the tables and construction costs guidance that we have got in-house as well as the data on other developments in Russia that we have from the information provided on other valuation projects. We have come to the conclusion that the construction costs supplied to us by the client fall into the range of appropriate construction costs which we would expect a third party developer to pay in the present market.
PREPAYMENT / HOLD BACK ON CONSTRUCTION We do not assume any advance or hold back payments on construction.
CONSTRUCTION COSTS GROWTH We do not assume construction costs growth as we assume that the construction costs will be set as the result of a competitive tender and, beyond the contingency for extra costs applied, will therefore do not grow costs over the construction period.
SALES PRICES Sales rates for apartments, parking spaces and first floor retail or office space have been derived having taken comparable sale evidence into consideration and also having taken the Company’s own recent sales evidence at their various schemes into consideration. Average primary market sales rates have been utilized in most cases, however, inflationary growth has been applied annually to these figures on the assumption that a rational vendor would attempt to maintain the purchasing power of sales receipts. This assumption is supported by the rate of sales price growth in 2012 and forecast for 2013 (see below).
SALES GROWTH We have applied a Russian CPI index according to the information from Ministry of Economic Development for projects in Moscow, Moscow Region, Saint-Petersburg, Leningradskiy Region. We have applied a Russian CPI divided by 2 as there is a relatively stable growth in Ekaterinburg.
INCOME DUE FROM SALES BEFORE THE DATE OF VALUATION In many cases the Company is due payment installments on residential sales made before the date of valuation, where these sums are receivable after the date of valuation we have assumed that a third party purchaser will inherit the right at law to receive these sums after purchase of the scheme/building and have explicitly modeled such sums in our DCFs.
SALES TIMETABLE In most cases C&W has applied its own sales timetable to the residential developments valued herein, in general we have assumed that sales only begin well into the construction period, become more frequent close to completion and terminate some time after completion, usually at least a year after completion. Car Parking is assumed to sell at a slower rate than residential apartments. Finally, retail and office space is only assumed to sell toward the end of the construction period and thereafter.
BROKERS’ FEES ON SALE We assume that the Developer will use agents in selling the residential space. Broker’s fees are assumed to be at the level of 3.00% and have been applied as a cost in our DCF calculation.
VAT RATE The VAT rate has been taken at the current rate of 18% introduced at the beginning of 2004. The VAT rate is of importance because although in theory VAT in Russia is immediately recoverable from the government the practice is slightly different. The VAT paid on construction and other development costs is considered a VAT credit account in favour of the landowner. VAT on future rents can be retained and offset against the VAT account until it is zeroed out. This has a significant effect on cash-flow. For the purchase of existing properties
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VAT is payable in respect of that part of the purchase price apportioned to building improvements. VAT is not payable in respect of the part (or whole) of the purchase price that relates to the land plot (or land lease).
It has been assumed that all of the costs in association with the development of residential projects will be subject to VAT and also that residential sales are not subject to VAT. Therefore, VAT on residential construction and materials are not reclaimed in our DCF models.
Commercial premises and car parking spaces are VAT neutral.
CURRENCY EXCHANGE RATE In accordance with the Central Bank of the Russian Federation, as at the valuation date the currency exchange rates were as follows:
1 USD=30.3727 RUR.
DISCOUNT RATES AND EXIT YIELDS (TERMINAL CAPITALISATION RATES) Generally, the discount rate is the rate of return that would be required by an investor to purchase the stream of expected benefits (e.g., future cash flows), given the risk of achieving those benefits.
Risk is generally defined as the degree of certainty or uncertainty as to the realization of expected future returns. In terms of a discounted cash flow projection, risk can be interpreted as the probability and extent to which the future projections will be realized.
Based on our knowledge of required rates of return for various investments, in particular real estate, as well as through discussions with persons active in the real estate market in Moscow and St Petersburg, we have been able to estimate an appropriate discount rate that reflects the perceived risk and required rate of return for the subject properties.
The capitalization rates/exit yields were derived from our analysis of recent market transactions, together with our market knowledge derived from C&W investment agency coverage.
The level of yield may vary in different areas for many reasons such as condition, desirability of location, which might be related to such factors as accessibility, visibility, reputation, etc. Investors expect larger returns when investing in high-risk income properties. High quality newer income properties generally have lower yields than older existing properties.
In the case of development projects, over and above country, investment and general economic risks, project specific risk is specifically related to planning, construction and sales/property market cycle risk. We have assessed these risks in respect of each property in deriving our opinion of the appropriate and applicable rate of return we believe a third party developer would require for entering into and completing a development project.
We have considered the perceived and actual risks associated with the development Property, as there is a direct correlation between a property’s perceived risk and the expected rate of return to an investor (the discount rate). Generally, the yield or discount rate is the rate of return that would be required by an investor to purchase the stream of expected benefits (e.g., future cash flows), given the risk of achieving those benefits. Risk is generally defined as the degree of certainty or uncertainty as to the realization of expected future returns.
The term “discount rate” is a rate of return used to convert a monetary sum, payable or receivable in the future, into a present value. Thus the discount rate is used to determine the amount an investor would pay today (the present value) for the right to receive an anticipated stream of payments (e.g., cash-flows) in the future.
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The appropriate discount rate will be the rate of return that adequately compensates the investor for the risks taken. As risk rises, the required compensation for the level of risk should also rise, reflected in a rise in the discount rate. The discount rate (the target rate of return) is usually derived by reference to the return on an alternative form of perceived low-risk or riskless asset (frequently the benchmark is the gross redemption yield on government gilts or cash), plus appropriate additions for risk.
The level of rate may vary in different areas of a city or country for many reasons such as condition, desirability of location, which might be related to such factors as accessibility, visibility, reputation, etc. Investors expect larger returns when investing in high-risk income properties. High quality newer investment properties generally have lower yields and discount rates than older existing properties.
Based on our knowledge of required rates of return for various investments, in particular real estate, as well as through discussions with investors active in the real estate market in Russia, we have been able to estimate an appropriate discount rate which reflects the perceived risk and required rate of return for a project such as the subject property.
In determining this discount rate, we have used a number of factors to ensure that it is accurate, applicable, market derived and theoretically robust. Firstly, we have derived the discount rate both from our knowledge of the minimum hurdle rates of return (minimum IRR) required by actual developers and investors currently active in the Russian market (that is, from real market participants and the real rates of return required by our clients).
Secondly, we have used the cumulative method to rationalize and verify the market derived discount rate applied in a more quantitatively and economically robust context. The Cumulative Method assesses the likely return required by investors and developers based on the desired rate of return (also referred to as the discount rate or target rate) conventionally constructed from a risk-free rate and market risk premium; for real estate, investors may also choose to add specific risk premiums.
Finally, we have tested the reasonableness of the discount rates and exit yields applied to the discounted cash flow by considering the initial yield produced by our calculations at the date of valuation based on the current annual income and the Market Value produced by the DCF. This initial yield has been tested against current evidence and market sentiment as to initial yields in the particular property sector and macro-location considered.
THE DISCOUNT RATE DERIVED FROM THE CUMULATIVE METHOD While the construction of a discount rate using the cumulative or build-up method may seem to be a relatively straightforward process, actually determining the risk premium is more complex. Although some areas can be estimated quantitatively from historic data, a number of factors resist that kind of analysis. As a result, investors are required to make subjective or qualitative adjustments to discount rates. The positive interpretation of this is that being aware of a risk, even if one cannot quantify it exactly, is the first step in controlling it.
The following are examples of the sort of factors which may be used in deriving a property risk premium:
1. Risk-free rate of investment 2. Market risks a. Illiquidity upon sale (e.g. lot size, transaction times, availability of finance) b. Failure to meet market rental expectations (forecast rental growth) c. Failure to meet market yield expectations (forecast yield shift) d. Risk of locational, economic, physical and functional depreciation through structural change e. Risks associated with legislative change (e.g. planning/privity of contract, changes in fiscal policy) 3. Specific risks a. Permitting/Planning risk (for development land or properties) b. Construction risk (for development land or properties)
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A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
c. Sales or market cycle risk (the risk of failure to let or sell the specific asset due to demand changes) d. Tenant default on rental payment (covenant risk) e. Risk of failure to re-let (void risks) f. Costs of ownership and management g. Differing lease structures (e.g. rent review structure, lease breaks). The risk-free return rate is normally taken to be the gross redemption yield on a medium-dated government gilt, preferably of the same duration as the assumed holding period of the investment. (Alternatively it is possible to adopt the real return of index-linked gilts, in which case this needs to be applied to cash flows expressed in real terms.) Equally, geared investors or property companies frequently have reference to debt costs or the weighted average cost of capital (WACC) as the core metric against which assets are assessed.
The second group – risks of structural change or market failure – is those that may affect the market as a whole, particular subsectors or groups of property. The structural impacts on the in-town retail market brought about by the introduction of out-of-town retailing and changes to property taxation such as value added tax(VAT) are good examples of this. As such, these risks could be called market or systemic risks.
The third group – property, non-market or ‘unsystemic’ risk factors – are, broadly speaking, risks associated with individual assets.
Based on our knowledge of required rates of return for various investments, in particular real estate, as well as through discussions with persons active in the real estate market in Moscow and St Petersburg, we have been able to estimate an appropriate discount rate that reflects the perceived risk and required rate of return for the properties such as the subject.
In the case of development projects, over and above country, investment and general economic risks, project specific risk is specifically related to planning, construction and sales/property market cycle risk. We have assessed these risks in respect of each property in deriving our opinion of the appropriate and applicable rate of return we believe a third party developer would require for entering into and completing a development project.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 92
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
D DESCRIPTION OF PROPERTIES
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 93
SUMMARY TABLE
Total area / Total Net leasable / Net Net leasable / Net saleable Valued interst, % Development Current stage of % of # Property Land plot area, ha Tenure Property type C&W MV, RUR Discount rate Capitalization rate construction area, sqm saleable area, sqm area (vacant/unsold), sqm (LSR Legal Share) strategy development completeness
Saint-Petersburg Properties
Properties held as investments Existing buildings 1 Gelios n/a Freehold Class B 3 909 3 073 400 300 000 12,00% 9,00% 100% Hold Existing buildings 100% 2 Litera 0,09 Freehold Class B 2 367 2 151 275 100 000 11,00% 9,00% 100% Hold Existing buildings 100% 3 Kazanskaya 36 0,25 Freehold Class B 6 823 4 889 711 900 000 12,00% 9,00% 100% Hold Existing buildings 100% 4 Zolotaya Kazanskaya 0,15 Leasehold Class B 3 078 2 572 379 300 000 12,00% 9,00% 100% Hold Existing buildings 100% 5 Paradniy Quarter 11 9,57 Freehold Class A 3 806 2 275 366 800 000 12,00% 8,50% 100% Hold Existing buildings 100% Total Market Value of existing buildings 2 133 400 000 Properties held for future development Commercial propeties held for future development 6 Salova 2,50 Freehold Class B 139 588 91 696 91 696 670 927 413 23,00% 9,50% 100% Build and hold Concept Development 0% Total Market Value of commercial properties held for future development 670 927 413 Residential propeties held for future development 7 Oktyabrskaya Embankment 55,80 Freehold Mass market 745 200 558 900 558 900 5 915 928 444 25,00% n/a 100% Build and sell Concept development 0% 8 Tsvetnoy gorod 453,90 Freehold Mass market 5 458 098 3 121 365 3 121 365 9 385 360 740 30,00% n/a 100% Build and sell Concept development 1% Total Market Value of residential properties held for future development 15 301 289 184 Properties in the course of development Elite class residential 9 Smolniy Park 8,65 Leasehold Elite 174 909 97 830 83 605 10 535 100 673 Smolniy Park Stage 1 33 636 26 366 13 826 2 358 194 041 18,00% n/a 100% Build and sell Completed 98% Smolniy Park Stage 2-3 105 236 53 080 51 395 6 611 944 304 20,00% n/a 100% Build and sell Construction 56% - 34% Smolniy Park Stage 4 36 037 18 383 18 383 1 564 962 328 22,00% n/a 100% Build and sell Concept development 32% 10 Nevskiy 1 0,22 Leasehold Elite 9 709 7 058 7 058 1 731 810 656 17,00% n/a 100% Build and sell Designing 24% 11 Paradniy Quarter 9,57 Investment contract Elite 117 821 65 391 28 684 5 795 620 617 16,00% n/a 100% Build and sell Construction Stage 3, bld. 6-7 60 463 33 493 8 724 16,00% n/a 100% Build and sell Completed 100% Stage 3, bld. 4-5-8 57 358 31 898 19 960 16,00% n/a 100% Build and sell Construction 59% 12 Radishcheva 39 0,85 Freehold Elite 31 958 20 802 17 542 2 641 860 244 19,00% n/a 100% Build and sell Construction 30% 13 Morskoy 0,36 Freehold Elite 18 327 10 684 10 684 1 043 182 796 22,00% n/a 100% Build and sell Concept development 29% 14 Venice 0,83 Freehold Elite 22 387 15 733 1 421 990 004 437 13,00% n/a 100% Build and sell Construction 97% 15 Kovenskiy 0,39 Leasehold Elite 12 870 5 882 4 944 473 816 145 20,00% n/a 100% Build and sell Construction 73% 16 Kuybysheva 13 (Dom na Dvoryanskoy) 0,19 Freehold Elite 8 787 6 386 6 386 475 947 372 19,00% n/a 100% Build and sell Construction 25% Total Market Value of elite class residential 23 687 342 940 Business class residential 17 Europe city 7,36 Freehold Business 179 980 117 419 117 419 5 079 220 514 20,00% n/a 100% Build and sell Construction Stage 1 27 404 19 318 19 318 n/a 100% Construction 49% Stage 2 18 064 12 879 12 879 n/a 100% Construction 38% Stage 3 69 427 43 268 43 268 n/a 100% Construction 35% Stage 4 65 085 41 954 41 954 n/a 100% Concept development 24% 18 Morskie bashni 3,05 Leasehold Business 110 819 62 134 62 134 2 005 141 831 24,00% n/a 100% Build and sell Concept development 17% 19 Smolenskaya 0,69 Freehold Business 34 352 23 090 23 090 422 314 459 22,00% n/a 100% Build and sell Concept development 10% Total Market Value of business class residential 7 506 676 804
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 94
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 95
Total area / Total Net leasable / Net Net leasable / Net saleable Valued interst, % Development Current stage of % of # Property Land plot area, ha Tenure Property type C&W MV, RUR Discount rate Capitalization rate construction area, sqm saleable area, sqm area (vacant/unsold), sqm (LSR Legal Share) strategy development completeness
Ekaterinburg Properties Properties held as investments Existing buildings Business class residential 45 Zeleniy Mys 1,18 Leasehold Business 47 814 26 913 2 160 300 050 842 12% n/a 100% Build and sell Completed 100% 46 Evropeyskiy 0,72 Freehold Business 14 248 - - 3 587 241 11% n/a 100% Build and sell Completed 100% Total Market Value of existing buildings business class 303 638 083 Mass market residential 47 Bakinskikh Komissarov parking 0,15 Leasehold Parking 3 225 - - 30 970 428 11% n/a 100% Build and sell Completed 100% 48 Furmanova parking n/a Freehold Parking 5 062 - - 12 552 882 13% n/a 100% Build and sell Completed 100% Total Market Value of existing buildings mass market 43 523 309 Properties in the course of development Mass market residential 49 Michurinskiy 51,88 Freehold Mass market 300 931 231 485 231 485 1 562 791 991 21% n/a 100% Build and sell Construction 6% 50 Kalinovskiy 8,91 Freehold Mass market 93 546 53 311 14 642 297 476 497 14% n/a 100% Build and sell Construction 53% 51 Tatischev 1,89 Leasehold Mass market 47 717 33 598 7 179 293 714 329 16% n/a 100% Build and sell Construction 54% 52 Residential building (KOSK) 0,88 Leasehold Mass market 17 738 12 485 12 485 191 502 187 19% n/a 100% Build and sell Construction 12% 53 Vonsovskogo (Berezovaya Roshcha) 4,68 Leasehold Mass market 107 149 65 622 62 647 626 738 620 22% n/a 100% Build and sell Construction 7% 54 Technicheskaya - Sortirovochnaya (Progress) 1,91 Leasehold Mass market 33 674 25 210 14 256 370 682 826 16% n/a 100% Build and sell Construction 49% Total Market Value of mass market in the course of development 3 342 906 450 Properties held for future development Mass market residential 55 40 let Komsomola 9,36 Freehold Mass market 258 580 182 000 182 000 790 516 639 25% n/a 100% Build and sell Concept Development 0% 56 Latviyskaya 11,60 Leasehold Mass market 233 091 174 828 174 828 795 099 101 25% n/a 100% Build and sell Concept Development 2% Total Market Value of mass market held for future development 1 585 615 740 Total Market Value on properties in Ekaterinburg 5 275 683 582 GRAND TOTAL PORTFOLIO 119 921 010 000
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 96
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Marata Street, 47-49 Name: Gelios
Inspected on: December 12, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The premises with a total area of 1,259.4 sqm are held freehold by CJSC “A Plus Estate” according to ownership certificate 78 AD 266050, dated July 30, 2009. • The premises with a total area of 75.1 sqm are held freehold by CJSC “A Plus Estate” according to ownership certificate 78 AD 991942, dated July 24, 2010. • The premises with a total area of 101.5 sqm are held freehold by CJSC “A Plus Estate” according to ownership certificate 78 AD 266059, dated July 30, 2009. • The premises with a total area of 25.2 sqm are held freehold by CJSC “A Plus Estate” according to ownership certificate 78 AD 266164, dated July 30, 2009. • The premises with a total area of 2.9 sqm are held freehold by CJSC “A Plus Estate” according to ownership certificate 78 AD 266058, dated July 30, 2009. • The premises with a total area of 300.9 sqm are held freehold by CJSC “A Plus Estate” according to ownership certificate 78 AD 266162, dated July 30, 2009.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 97
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
• The premises with a total area of 13.5 sqm are held freehold by CJSC “A Plus Estate” according to ownership certificate 78 AD 266161, dated July 30, 2009. • The premises with a total area of 13.1 sqm are held freehold by CJSC “A Plus Estate” according to ownership certificate 78 AD 266060, dated July 30, 2009. • The premises with a total area of 620.8 sqm are held freehold by CJSC “A Plus Estate” according to ownership certificate 78 AD 266052, dated July 30, 2009. • The premises with a total area of 513.1 sqm are held freehold by CJSC “A Plus Estate” according to ownership certificate 78 AD 266054, dated July 30, 2009. • The premises with a total area of 13.5 sqm are held freehold by CJSC “A Plus Estate” according to ownership certificate 78 AD 266055, dated July 30, 2009. • The premises with a total area of 517 sqm are held freehold by CJSC “A Plus Estate” according to ownership certificate 78 AD 266051, dated July 30, 2009. • The premises with a total area of 14.1 sqm are held freehold by CJSC “A Plus Estate” according to ownership certificate 78 AD 266056, dated July 30, 2009. • The premises with a total area of 49.2 sqm are held freehold by the CJSC “A Plus Estate” according to ownership certificate 78 AD 266057, dated July 30, 2009. • The premises with a total area of 450.8 sqm are held freehold by CJSC “A Plus Estate” according to ownership certificate 78 AD 266163, dated July 30, 2009.
PROPERTY DESCRIPTION
Site area: n/a
Property type: Class B office center
Gross build area: 3,909 sqm
Net leasable area: 3,073 sqm
Vacant area: 326.53 sqm
Underground parking: 16 parking spaces
Ground parking: n/a
Location / environment: The Subject Property is situated in the Central District in the quadrant formed by Marata St, Razyezhaya St, Dostoevskogo St And Svechnoy Lane. The property benefits from a central location.
Access / egress: The property can be accessed through Marata St. which leads to such major thoroughfares as Nevskiy Av. and Ligovskiy Propect. Mayakovskaya and Vladimirskaya metro stations are located within a 10-minute walk of the property.
Nearby amenities: Yamskoy Market, Galery Mall, Kuznechny Market.
Description: The property comprises a five floor, renovated, historical class B office building with underground parking. The office centre has one main entrance, one emergency exit and one entrance in the cafe on the ground floor. The property accommodates a cafe on the ground floor.
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 98
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 1. Façade Picture 2. Internal premises
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
# of tenants: 20
Annual income from current 27,087,158 RUR tenants:
Current stage of Completed development:
Readiness of development 100% stage:
Expiry void period: 30 days for currently let and 90 days for currently vacant premises
Average market rental rate: 11,800 RUR
Discount rate: 12.00%
Capitalization rate: 9.00%
Special assumption: n/a
Other: n/a
Market value: 400,300,000 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 99
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Galernaya St. 10 Name: Litera
Inspected on: December 12, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The building with a total area of 2,367 sqm is held freehold by CJSC “A Plus Estate” according to ownership certificate 78 AD 094541, dated August 24, 2009. • A land plot with a total area of 874 sqm (cadastral number 78:32:1090:6) is held freehold by CJSC “A Plus Estate” according to ownership certificate 78 AD 094380 dated August 24, 2009.
PROPERTY DESCRIPTION
Site area: 0.0874 hectares
Property type: Class B office manor
Gross build area: 2,367 sqm
Net leasable area: 2,150.6 sqm
Vacant area: 0 sqm
Underground parking: n/a
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 100
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Ground parking: 8 parking spaces
Location / environment: The Subject Property is situated in the Admiraltesyskiy District. The property benefits from a central location.
Access / egress: The property can be accessed through Galernaya St. which is a street parallel to Anglisyskaya Embankment. Nevskiy Av is located approximately 900 m to the East of the Subject Property. The Sadovaya metro station is located within a 15-minute walk of the property.
Nearby amenities: Senatskaya Square, Aleksandrobskiy Garden, Isaakiyevskiy Cathedral, Astoria and Angleterre hotels, The Hermitage Museum, New Holland Island.
Description: The property comprises two buildings: a two–floor office building with a retained historical facade and a 6-floor newly developed building (2007). The property has one pedestrian entrance and is accessed by vehicle from Galernaya St.
Source: Client’s information, Cushman & Wakefield
Picture 1. Façade Picture 2. Internal premises
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 101
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
# of tenants: 1
Annual income from current 14,740,489 RUR tenants:
Current stage of Completed development:
Readiness of development 100% stage:
Expiry void period: 120 days
Average market rental rate: 11,600 RUR
Discount rate: 11.00%
Capitalization rate: 9.00%
Special assumption: n/a
Other: n/a
Market value: 275,100,000 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 102
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Kazanskaya St. 36 Name: Kazanskaya 36
Inspected on: December 11, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The building with a total area of 6,823 sqm is held freehold by CJSC “Kazanskaya 36” according to ownership certificate 78 AV 519960. • The land plot with a total area of 2,526 sqm (cadastral number 78:1293:5) is held freehold by CJSC “Kazanskaya, 36” according to ownership certificate VL 138316 dated April 05, 1999.
PROPERTY DESCRIPTION
Site area: 0.2526 hectares
Property type: Class B office manor
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 103
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Gross build area: 6,823 sqm
Net leasable area: 4,889.3 sqm
Vacant area: 0 sqm
Underground parking: n/a
Ground parking: 21 parking spaces
Location / environment: The Subject Property is located in the Admiralteyskiy Administrative District of Saint-Petersburg within a 10-minute walk of Sadovaya, Spasskaya and Sennaya Ploschad metro stations.
Access / egress: Access to the Subject Property can be realized through Kazanskaya Street. The property is easily accessible from the main thoroughfares of the district – Nevskiy Avenue, Sadovaya Street and the Embankment of Fontanka River.
Nearby amenities: The following amenities are situated in close proximity to the Subject Property: Hermitage Museum, Palace Square, The Admiralty, Senatskaya Square, St. Kazanskiy Cathedral, Kazanskaya Square, Nikolskaya Square, Teatralnaya Square and etc. A great amount of restaurants, bars, boutiques and stores are located on Nevskiy Avenue. Bolshoy Gotinyi Dvor Shopping Centre is located within a 20-minute walk of the Subject Property.
Description: The Subject Property comprises an office scheme built around a square courtyard with vehicular access via the primary façade. The five- to eight- floor scheme retains its historic façade and provides partitioned class B office accommodation which is fully fitted out. There is internal parking for 6 parking spaces in the five-floor section. 15 open-air parking spaces are provided in the internal yard.
Source: Client’s information, Cushman & Wakefield
Picture 1. Façade Picture 2. Internal premises
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 104
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
# of tenants: 18
Annual income from current 38,846,002 RUR tenants:
Current stage of Completed development:
Readiness of development 100% stage:
Expiry void period: 0 days
Average market rental rate: 12,300 RUR
Discount rate: 12.00%
Capitalization rate: 9.00%
Special assumption: n/a
Other: n/a
Market value: 711,900,000 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 105
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Kazanskaya St. 44 Name: Zolotaya Kazanskaya
Inspected on: December 11, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 1,475 sqm (cadastral number 78:1293:2) is held leasehold by CJSC “Skanska Sankt-Peterburg Development” according to lease agreement # 11/ZD-00623 dated October 10, 1996 and expiring on July 10, 2045.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 106
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
PROPERTY DESCRIPTION
Site area: 0.15 hectares
Property type: Class B office center
Gross build area: 3,078 sqm
Net leasable area: 2,572 sqm
Vacant area: 0 sqm
Underground parking: n/a
Ground parking: n/a
Location / environment: The Subject Property is located in the Admiralteyskiy Administrative District of Saint-Petersburg within a 10-minute walk of Sadovaya, Spasskaya and Sennaya Ploschad metro stations.
Access / egress: Access to the Subject Property can be realized through Kazanskaya Street. The property is easily accessible from the main thoroughfares of the district – Nevskiy Avenue, Sadovaya Street and the Embankment of Fontanka River.
Nearby amenities: The following amenities are situated in close proximity to the Subject Property: the Hermitage Museum, Palace Square, The Admiralty, Senatskaya Square, St. Kazanskiy Cathedral, Kazanskaya Square, Nikolskaya Square andTeatralnaya Square. A great number of restaurants, bars, boutiques and stores are located on Nevskiy Avenue. Bolshoy Gotinyi Dvor Shopping Centre is located within a 20-minute walk of the Subject Property.
Description: The Subject Property comprises an office scheme built around a square courtyard with vehicular access via the primary façade. The five-floor scheme retains its historic façade and provides partitioned class B office accommodation fully fitted out. There is casual parking in the internal yard.
Source: Client’s information, Cushman & Wakefield
Picture 1. Façade Picture 2. Internal premises
Source: Cushman &Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 107
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
# of tenants: 6
Annual income from current 19,094,917 RUR tenants:
Current stage of Completed development:
Readiness of development 100% stage:
Expiry void period: 0 days
Average market rental rate: 12,500 RUR
Discount rate: 12.00%
Capitalization rate: 9.00%
Special assumption: n/a
Other: n/a
Market value: 379,300,000 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 108
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Paradnaya St. 1-3 Name: Paradniy Quarter, bld. 11
Inspected on: December 10, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The building with a total area of 3,806.3 sqm are held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 752758 dated September 20, 2012. • The land plot with a total area of 95,741 sqm (cadastral number 78:1210:12) is held freehold by “131 Kvartirno-ekspluatatsionnoe upravlenie Glavnogo Kvartirno-ekspluatatsionnogo upravleniya Ministerstva Oborony RF” according to ownership certificate 78 AV 540614 dated February 08, 2007. • Agreement on investment activity without number dated September 23, 2005 on the designing and construction of the Subject Property.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 109
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
PROPERTY DESCRIPTION
Site area: 9.57 hectares (total area of the land plot under all buildings of Paradniy Quarter mixed-use complex)
Property type: Class A office centre
Gross build area: 3,806.3 sqm
Net leasable area: 2,275.2 sqm
Vacant area: 0 sqm
Underground parking: n/a
Ground parking: n/a
Location / environment: The Subject Property is located in the Central District of Saint-Petersburg within a 10-minute walk of Chernyshevskaya metro station.
Access / egress: Access to the Subject Property can be realized through Paradnaya Street or Velenksiy Lane. The property is easily accessible from the main thoroughfares of the district – Suvorovskiy Avenue, Ligovskiy Avenue, Nevskiy Avenue and Robiespiera Embankment.
Nearby amenities: The following amenities are situated in a close proximity to the Subject Property: Tavricheskiy Garden, Tavricheskiy Palace, Ovalniy Park, Suvorov Museum, Smolniy Cathedral and educational facilities.
Paradniy Quarter is a mixed-use residential complex. It is planned that the residents will use the developing infrastructure of the mixed-use residential complex which includes stores, supermarkets and a fitness centre.
Description: The Subject Property comprises a brick-clad mansion-style office building featuring historical facades and state-of-art engineering systems. The building provides class A open-floor plate office space arranged over five floors and underground parking.
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 110
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 1. Façade Picture 2. Internal premises
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
# of tenants: Mostly owner-occupied, 1 tenant
Annual income from current 998,400 RUR tenants:
Current stage of Completed development:
Readiness of development 100% stage:
Expiry void period: 90 days
Average market rental rate: 13,000 RUR
Discount rate: 12.00%
Capitalization rate: 8.50%
Special assumption: n/a
Other: n/a
Market value: 366,800,000 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 111
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Paradnaya St. 1-3 Name: Paradniy Quarter, bld. 17-18
Inspected on: December 10, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area of 95,741 sqm (cadastral number 78:1210:12) is held freehold by “131 Kvartirno-ekspluatatsionnoe upravlenie Glavnogo Kvartirno-ekspluatatsionnogo upravleniya Ministerstva Oborony RF” according to ownership certificate 78 AV 540614 dated February 08, 2007. • Agreement on investment activity without number dated September 23, 2005 on designing and construction of the Subject Property.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 112
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
PROPERTY DESCRIPTION
Site area: 9.57 hectares (total area of the land plot under all buildings of Paradniy Quarter mixed-use complex)
Projected property type: Class A office center
Projected gross build area: 12,607 sqm
Projected net office area: 7,282 sqm
Projected net other area: 168 sqm
Underground parking: 59 parking places
Ground parking: n/a
Location / environment: The Subject Property is located in the Central District of Saint-Petersburg within a 10-minute walk of Chernyshevskaya metro station.
Access / egress: Access to the Subject Property can be realized through Paradnaya Street or Velenksiy Lane. The property is easily accessible from the main thoroughfares of the district – Suvorovskiy Avenue, Ligovskiy Avenue, Nevskiy Avenue and Robiespiera Embankment.
Nearby amenities: The following amenities are situated in close proximity to the Subject Property: Tavricheskiy Garden, Tavricheskiy Palace, Ovalniy Park, Suvorov Museum, Smolniy Cathedral and educational facilities. Paradniy Quarter is a mixed-use residential complex. It is planned that the residents will use the developing infrastructure of the mixed-use residential complex which includes stores, supermarkets and a fitness centre.
Description: The Subject Property comprises a brown-field site which currently accommodates buildings which are subject to demolition. Two-brick-clad mansion-style class A office buildings featuring replica historical facades and state-of-art engineering systems are planned to be constructed on the site. The buildings will be linked by a covered gallery and will provide class A open-floor plate office space and underground car parking.
Start of construction: October 2012
Projected completion: May 2014
Zoning and restrictions: The subject land plots have the following characteristic:
• Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 113
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 1. Territory of the Property Picture 2. Territory of the Property
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 456,694,543 RUR net of VAT construction costs:
Average market sale price 180,000 RUR per sqm net of VAT for commercial area:
Current stage of Construction development:
Readiness of development 8% stage:
Development strategy: Build and sell
Discount rate: 17.00%
Special assumption: n/a
Other: n/a
Market value: 1,246,511,717 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 114
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Salova St. 61 Name: Salova
Inspected on: December 11, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 23,258 sqm (cadastral number 78:13:7335Г:15) is held freehold by the LLC “Gruzovoe Avtotransportnoe Predpriyatie # 1” according to the ownership certificate 78 AZh 040756 dated October 20, 2010. • A land plot with a total area of 1,663 sqm (cadastral number 78:13:7335Г:1005) is held leasehold by LLC “Gruzovoe Avtotransportnoe Predpriyatie # 1” according to lease agreement # 21-ZK03487 dated December 31, 2008.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 115
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
PROPERTY DESCRIPTION
Site area: 2.5 hectares
Projected property type: Class B+ office centre
Projected gross build area: 139,588 sqm
Projected net office area: 83,020 sqm
Projected net retail area: 8,676 sqm
Underground parking: 1,207 parking spaces
Ground parking: n/a
Location / environment: The Subject Property is located in the Frunzenskiy District within a 2-minute walk of Bukharestskaya metro station.
Access / egress: The location of the Subject Property can be characterized as possessing good transport accessibility for cars. The Subject Property can be accessed both through Salova and Bukharestskaya Streets.
Nearby amenities: The following amenities are situated in close proximity to the Subject Property: Avtotransporntniy Mekhanicheskiy College, auto market at Salova, Bus park # 1and a number of industrial enterprises.
Description: The Subject Property is represented by a land plot with a total area of 24,921 sqm. As at the Valuation Date there are several buildings on the land plot which will be demolished. The Subject Property will provide a class B+ business centre with retail premises on the ground floor and underground parking.
Start of construction: January 2014
Projected completion: December 2015
Zoning and restrictions: The subject land plots have the following characteristic:
• Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 116
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 1. Land plot Picture 2. Land plot
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 4,444,585,602 RUR net of VAT construction costs:
Average market rental rate 9,900 RUR per sqm per annum net of VAT for office area:
Average market rental rate 7,500 RUR per sqm per annum net of VAT for retail area:
Average market rental rate 45,000 RUR per parking space per annum net of VAT for underground parking:
Indexation of rental rates: 3.00% - office area, 2.00% - retail area, 3.00% - underground parking
Current stage of Concept development development:
Readiness of development 0% stage:
Development strategy: Build and hold
Discount rate: 23.00%
Capitalization rate: 9.50%
Special assumption: n/a
Other: n/a
Market value: 670,927,413 RUR
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 117
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 118
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Kamennoostrovskoy Av. Name: Kamennoostrovskaya 58-60 Kollektsiya
Inspected on: December 10, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area of 8,294 sqm (cadastral number 78:7:3207A:12) is held leasehold by LLC “Sankt-Peterburgskiy gumanitarniy delovoy tsentr UNA” according to the lease agreement # 15/ZK-001516 dated July 08, 2009. • Investment agreement # 15-I001515 for redevelopment of the existing buildings dated July 08, 2009 and an order # 260 dated September 13, 2011 for prolongation of the investment agreement until November 25, 2012, was issued by city’s authorities.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 119
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
PROPERTY DESCRIPTION
Site area: 0.83 hectares
Projected property type: Class B office centre
Projected gross build area: 7,866 sqm
Projected office area: 5,852 sqm
Projected retail area: 901 sqm
Projected apartments’ area: 753
Underground parking: n/a
Ground parking: n/a
Location / environment: The Subject Property is located in the Petrogradskiy District of Saint- Petersburg within a 10-minute walk of Petrogradskaya metro station.
Access / egress: Access to the Subject Property is via Kamennoostrovskoy Avenue. The property is easily accessible from the main thoroughfares of the district – Kamennoostovskoy Avenue and Bolshoy Avenue.
Nearby amenities: The following amenities are situated in a close proximity to the Subject Property: Petropavlovskaya Krespost, Avrora, Botanicheskiy Garden and a great amount of shops, restaurants and cinema theaters at Kamennoostrovskoy and Bolshoy Avenues.
Description: The Property comprises a land plot with a total area of 8,294 sqm. The Subject Property comprises a land plot with three mansions of historical and cultural value which are planned to be redeveloped into high-quality business centers.
Start of construction: December 2013
Projected completion: May 2015
Zoning and restrictions: The subject land plots have the following characteristic:
• Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 120
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 1. Facade Picture 2. Land plot
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 536,706,932 RUR net of VAT construction costs:
Average market sale price 165,000 RUR per sqm net of VAT for commercial area:
Current stage of Designing development:
Readiness of development 25% stage:
Development strategy: Build and sell
Discount rate: 24.00%
Special assumption: n/a
Other: n/a
Market value: 476,469,966 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 121
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Oktyabrskaya Emb. 42 Name: Oktyabrskaya Embankment
Inspected on: December 11, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area of 204,710 sqm (cadastral number 78:12:6333:18) is held freehold by JSC “Proizvodstvennoe Ob’edinenie Barrikada” according to ownership certificate 78 AG 796248 dated November 01, 2008. • The land plot with a total area of 5,650 sqm (cadastral number 78:12:6331Б:649) is held freehold by JSC “Rudas” according to ownership certificate 78 AG 957038 dated March 04, 2009. • The land plot with a total area of 18,276 sqm (cadastral number 78:12:6331Б:651) is held freehold by JSC “Rudas” according to ownership certificate 78 AG 957040 dated March 04, 2009. • The land plots with a total area of 33,399 sqm (cadastral number 78:6331Д:1) and 234,023 (cadastral number 78:6331Б:64) are held leasehold by JSC “Sanktpeterbugskiy Rechnoy Port” according to the lease agreement # 13/ZD-02455 dated November 09, 2004 and additional agreement # 13/ZD-02455/1 dated January 27, 2006.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 122
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
• The land plot with a total area of 87,509 sqm (cadastral number 78:6331Б:65) is held leasehold by LLC “Aerok Sankt-Peterburg” according to the lease agreement # 13/ZD-04070 dated January 27, 2006 and additional agreement # 13/ZD-04070/1 dated September 20, 2006.
PROPERTY DESCRIPTION
Site area: 55.8 hectares
Projected property type: Mass-market residential complex
Projected gross build area: 745,200 sqm:
Phase 1 – 102,267 Phase 2 – 94,667 Phase 3 – 116,933 Phase 4 – 90,267 Phase 5 – 93,333 Phase 6 – 98,400 Phase 7 – 77,333 Phase 8 – 72,000
Net area of the unsold flats: 558,900 sqm:
Phase 1 – 76,700 Phase 2 – 71,000 Phase 3 – 87,700 Phase 4 – 67,700 Phase 5 – 70,000 Phase 6 – 73,800 Phase 7 – 58,000 Phase 8 – 54,000
Underground parking: n/a
Ground parking: n/a
Location / environment: The Subject Property is located in the Nevskiy District of Saint-Petersburg within a 20-minute walk of Ulitsa Dybenko metro station.
Access / egress: The property is easily accessible from Oktyabrskaya Embankment, which provides convenient access to all city districts and the KAD through Oktyabrskaya Embankment.
Nearby amenities: The following amenities are situated in close proximity to the Subject Property: Stroiteley Park, sporting and cultural centres – ice stadium, stadium of water sports Nevskaya Volna, retail centre Felichita, hypermarkets – Karusel, Lenta, Castorama, Leroy Merlin, fitness centre Olympic and Gazprom sporting club.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 123
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Description: The Property comprises several land plots with a total area of 58,357 sqm. However, the Client has informed us that the total area of the land plot for construction of 8 phases of the residential complex will amount to 55,800 sqm.
As at the Valuation Date the land plots are occupied with factories. However these factories will be relocated in the near future.
The project development scheme consists of 8 phases.
The buildings will be of monolith concrete and will provide fitted-out or shell & core residential accommodation.
Start of construction: Phase 1 – February 2015 Phase 2 – February 2016 Phase 3 – February 2017 Phase 4 – February 2018 Phase 5 – February 2019 Phase 6 – February 2020 Phase 7 – February 2020 Phase 8 – February 2021
Projected completion: Phase 1 – December 2018 Phase 2 – December 2019 Phase 3 – December 2020 Phase 4 – December 2021 Phase 5 – December 2022 Phase 6 – December 2023 Phase 7 – December 2023 Phase 8 – December 2024
Zoning and restrictions: The subject land plots have the following characteristic:
• Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 124
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 1. Façade Picture 2. Territory of the Property
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 25,709,400,000 RUR construction costs:
Average market sale price 75,000 RUR per sqm for residential area:
Current stage of Concept development development:
Readiness of development 0% stage:
Development strategy: Build and sell
Discount rate: 25.00%
Special assumption: n/a
Other: n/a
Market value: 5,915,928,444 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 125
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Nevskiy Av. 1/4, Lit. A Name: Nevskiy 1
Inspected on: December 10, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area of 2,197 sqm (cadastral number 78:31:1095:3) is held freehold by JSC “Stoitelnaya Korporatsia Vozrozhdenie Sankt-Peterburga” according to ownership certificate # 78- АЖ678614 dated July 07, 2012.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 126
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
PROPERTY DESCRIPTION
Site area: 0.22 hectares
Projected property type: Elite residential complex
Projected gross build area: 9,709 sqm
Net commercial area: Retail – 2,109 sqm
Apartments – 4,949 sqm
Underground parking: n/a
Ground parking: 21 parking spaces
Location / environment: The Subject Property is located in the Central District of Saint-Petersburg within a 10-minute walk of Nevskiy Prospekt and Gostinyi Dvor metro stations.
Access / egress: Access to the Subject Property can be realized through Admiralteyskiy Avenue and Nevskiy Avenue. The car entrance is located at Admiralteyskiy Avenue.
Nearby amenities: The following amenities are situated in close proximity to the Subject Property: Hermitage Museum, Palace Square, The Admiralty, Senatskaya Square, St. Isaac’s Cathedral. A great amount of restaurants, bars, boutiques and stores are located on Nevskiy Avenue. Bolshoy Gotinyi Dvor Shopping Center is located within a 15-minute walk of the Subject Property.
Description: The Property comprises a land plot with a total area of 2,197 sqm and a building of a historical interest. According to the project development scheme it is planned to internally refurbish the premises only and renovate the façade. It is forbidden to demolish the building due to its’ historical interest. As at the Valuation Date the premises are leased to several tenants. The redeveloped brick / monolith-concrete building will comprise apartments, retail premises on the ground floor and parking for 21 cars.
Start of construction: January 2014
Projected completion: December 2016
Zoning and restrictions: The subject land plots have the following characteristic:
• Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 127
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 1. Façade Picture 2. Internal premises
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 1,057,964,415 RUR net of VAT construction costs:
Average market sale price Apartments – 636,970 RUR per sqm net of VAT for commercial area: Retail – 283,113 RUR per sqm net of VAT
Average market sale price 2,966,102 RUR net of VAT for parking space:
Current stage of Designing development:
Readiness of development 24% stage:
Development strategy: Build and sell
Discount rate: 17.00%
Special assumption: n/a
Other: n/a
Market value: 1,731,810,656 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 128
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Nesvskiy Av. 68 Name: Nevskiy 68
Inspected on: December 10, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area of 1,530 sqm (cadastral number 78:1283:21)is held leasehold by LLC “AvtoKomBalt” according to the lease agreement # 10/ZK-0006020 dated February 16, 2009 and additional agreement without number dated July 14, 2010 and expiring on April 30, 2013. • The land plot with a total area of 635 sqm (cadastral number 78:31:1283:1017) is held leasehold by LLC “AvtoKomBalt” according to the lease agreement # 0003/ZK-006137 dated October 19, 2010 and expiring on April 13, 2013. • Investment agreement # 10-(I) 006020 dated August 12, 2005 and additional agreement without number dated July 13, 2010.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 129
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
PROPERTY DESCRIPTION
Site area: 0.15 hectares
Projected property type: Elite residential complex
Projected gross build area: 8,614.1 sqm
Net area of the unsold flats: 0 sqm
Net commercial area: Apartments – 5,450 sqm
Vacant area: 0 sqm
Underground parking: 26 parking spaces
Ground parking: n/a
Location / environment: The Subject Property is located in the Central District of Saint-Petersburg within a 5-minute walk of Mayakovskaya and Gostinyi Dvor metro stations.
Access / egress: Access to the Subject Property can be realized through the Embankment of the Fontanka River and Nevskiy Avenue.
Nearby amenities: The following amenities are situated in a close proximity to the Subject Property: Kazanskiy Cathedral, Vosstaniya Square, educational and health facilities. A great amount of restaurants, bars, boutiques and stores are located on Nevskiy Avenue. The following retail centres are located in close proximity to the Subject Property: Nevskiy Centre, Galereya, Nevskiy Atrium, Gostinyi Dvor, Perinnye Ryady, and Passage.
Description: The Property comprises a land plot with a total area of 1,530 sqm. According to the project development scheme it is planned to construct a building with apartments, retail premises on the first and second floors and underground parking for 26 cars.
Start of construction: December 2011
Projected completion: December 2012
Zoning and restrictions: The subject land plots have the following characteristic:
• Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 130
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 2. Façade Picture 3. Façade
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 568,964,565 RUR net of VAT construction costs:
Average market sale price n/a for residential area:
Average market sale price Apartments – 525,424 RUR per sqm net of VAT for commercial area:
Average market sale price 2,542,373 RUR net of VAT for parking space:
Current stage of Commissioning development:
Readiness of development 72% stage:
Development strategy: Build and sell
Discount rate: 15.00%
Special assumption: n/a
Other: n/a
Market value: 2,107,379,216 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 131
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Smolnogo St. 4 Name: Smolniy Quarter
Inspected on: December 10, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 86,498 sqm (cadastral number 78:31:1030A:4) is held leasehold by LLC “Smolniy Quarter” according to the lease agreement on investment terms # 20/ZK-02037 dated June 24, 2004 and expiring on January 01, 2014.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 132
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
PROPERTY DESCRIPTION
Site area: 8,65 hectares
Projected property type: Elite residential complex
Projected gross build area: 174,909 sqm:
Phase 1 – 33,636 Phase 2 – 44,781 Phase 3 – 60,455 Phase 4 – 36,037 Net area of the unsold flats: 72,157 sqm:
Phase 1 – 11,267 Phase 2 – 20,730 Phase 3 – 22,747 Phase 4 – 17,414 Net commercial area: 11,447 sqm:
Phase 1 – 2,559 Phase 2 – 1,819 Phase 3 – 6,100 Phase 4 – 969
Underground parking: 1,048 parking spaces:
Phase 1 – 123 Phase 2 – 246 Phase 3 – 485 Phase 4 – 194
Ground parking: n/a
Location / environment: The Subject Property is located in the Central District of Saint-Petersburg within a 25-minute walk from Chernyshevskaya metro station.
Access / egress: The property is easily accessible from the main thoroughfares of the district – Smolnaya Embankment, Shpalernaya Street and Suvorovskiy Avenue.
Nearby amenities: The following amenities are situated in close proximity to the Subject Property: Smolniy Cathedral, Aleksandrovskiy institute, Parter garden with fountains. The infrastructure to the North of Tvesrkaya Street is not developed. However it is planned to create retail infrastructure on the ground floors of the Smolniy Park buildings and in the business centre Basel, where supermarket and fitness-centre are planned.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 133
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
The Property comprises a land plot with a total area of 86,498 sqm which is in the process of residential complex development. The project development Description: scheme consists of 4 phases which will include 14 blocks (10 newly constructed block and 4 redeveloped blocks). The buildings are of monolith columns and have brick walls and provide shell & core residential accommodation.
Start of construction: Phase 1 – June 2010 Phase 2 – March 2012 Phase 3 – November 2012 Phase 4 – November 2013
Projected completion: Phase 1 – July 2012 Phase 2 – December 2014 Phase 3 – December 2015 Phase 4 – December 2016
Zoning and restrictions: The subject land plots have the following characteristic:
• Category: settlement land. Source: Client’s information, Cushman & Wakefield
Picture 1. Façade Picture 2. Façade
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 4,280,136,445 RUR: construction costs: Phase 1 – 50,772,000 Phase 2 – 1,088,381,000 Phase 3 – 1,961,789,000 Phase 4 – 1,179,194,000
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 134
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Average market sale price Phase 1 – 178,000 RUR per sqm for residential area: Phase 2 – 245,000 RUR per sqm
Phase 3 – 215,000 RUR per sqm
Phase 4 – 215,000 RUR per sqm
Average market sale price Phase 1 – 128,814 RUR per sqm net of VAT for commercial area: Phase 2 – 135,593 RUR per sqm net of VAT
Phase 3 – 135,593 RUR per sqm net of VAT
Phase 4 – 135,593 RUR per sqm net of VAT
Average market sale price Phase 1 – 1,760,648 RUR net of VAT for parking space: Phase 2 – 1,779,661 RUR net of VAT
Phase 3 – 1,779,661 RUR net of VAT
Phase 4 – 1,779,661 RUR net of VAT
Current stage of Phase 1 – Completed development: Phase 2-3 – Construction
Phase 4 – Concept Development
Readiness of development Phase 1 – 98% stage: Phase 2-3 – 56% - 34%
Phase 4 – 32%
Development strategy: Build and sell
Discount rate: Phase 1 – 18.00%
Phase 2-3 – 20.00%
Phase 4 – 22.00%
Special assumption: n/a
Other: n/a
Market value: 10,535,100,673 RUR
Phase 1 – 2,358,194,041 RUR
Phase 2-3 – 6,611,944,304 RUR
Phase 4 – 1,564,962,328 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 135
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Paradnaya St. 1-3 Name: Paradniy Quarter
Inspected on: December 10, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area of 95,741 sqm (cadastral number 78:1210:12) is held freehold by “131 Kvartirno-ekspluatatsionnoe upravlenie Glavnogo Kvartirno-ekspluatatsionnogo upravleniya Ministerstva Oborony RF” according to ownership certificate 78 AV 540614 dated February 08, 2007. • Agreement on investment activity without number dated September 23, 2005 on designing and construction of the Subject Property.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 136
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
PROPERTY DESCRIPTION
Site area: 9.57 hectares
Projected property type: Elite residential complex
Projected gross build area: 117,821 sqm:
Phase 3 (bld. 6, 7) – 60,463 sqm
Phase 3 (bld. 4, 5, 8) – 57,358 sqm
Net area of the unsold flats: 24,345 sqm:
Phase 1 (bld. 6, 7) – 7,616 sqm
Phase 2 (bld. 4, 5, 8) – 16,729 sqm
Net commercial area: 4,339 sqm:
Phase 1 (bld. 6, 7) – 1,108 sqm
Phase 2 (bld. 4, 5, 8) – 3,231 sqm
Underground parking: 671 parking spaces:
Phase 1 (bld. 6, 7) – 247 parking spaces
Phase 2 (bld. 4, 5, 8) – 424 parking spaces
Ground parking: n/a
Location / environment: The Subject Property is located in the Central District of Saint-Petersburg within a 10-minute walk from Chernyshevskaya metro station.
Access / egress: Access to the Subject Property can be realized through Paradnaya Street or Velenksiy Lane. The property is easily accessible from the main thoroughfares of the district – Suvorovskiy Avenue, Ligovskiy Avenue, Nevskiy Avenue and Robiespiera Embankment.
Nearby amenities: The following amenities are situated in close proximity to the Subject Property: Tavricheskiy Garden, Tavricheskiy Palace, Ovalniy Park, Suvorov Museum, Smolniy Cathedral and a number of educational facilities. The Paradniy Quarter is a mixed-use residential complex. It is planned that the residents can use the developing infrastructure of mixed-use residential complex which includes stores, supermarkets and a fitness centre.
Description: The Property comprisesa land plot with a total area of 95,741 sqm. According to the initial concept of the development of the district it was planned to construct a great mixed-use complex. Two phases of the residential concept have already been built as well as several office buildings.
Start of construction: Phase 1 (bld. 6, 7) – July 2010
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 137
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Phase 2 (bld. 4, 5, 8) – August 2011
Projected completion: Phase 1 (bld. 6, 7) – October 2012
Phase 2 (bld. 4, 5, 8) – November 2013
Zoning and restrictions: The subject land plots have the following characteristic:
• Category: settlement land. Source: Client’s information, Cushman & Wakefield
Picture 1. Façade Picture 2. Façade
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 138
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 1,346,826,000 RUR: construction costs: Phase 1 (bld. 6, 7) – 0 RUR
Phase 2 (bld. 4, 5, 8) – 1,346,826,000 RUR
Average market sale price Phase 1 (bld. 6, 7) – 200,000 RUR per sqm for residential area: Phase 2 (bld. 4, 5, 8) – 193,000 RUR per sqm
Average market sale price Phase 1 (bld. 6, 7) – 122,034 RUR per sqm net of VAT for commercial area: Phase 2 (bld. 4, 5, 8) – 144,068 RUR per sqm net of VAT
Average market sale price Phase 1 (bld. 6, 7) – 1,694,915 RUR net of VAT for parking space: Phase 2 (bld. 4, 5, 8) – 1,525,424 RUR net of VAT
Current stage of Phase 1 (bld. 6, 7) – Completed development: Phase 2 (bld. 4, 5, 8) – Construction
Readiness of development Phase 1 (bld. 6, 7) – 100% stage: Phase 2 (bld. 4, 5, 8) – 59%
Development strategy: Build and sell
Discount rate: 16.00%
Special assumption: n/a
Other: n/a
Market value: 5,795,620,617 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 139
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Deputatskaya St. 34 Name: Venice
Inspected on: December 10, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area of 8,305 sqm (cadastral number 78:3271:1) is held freehold by JSC «Stoitelnaya Korporatsia Vozrozhdenie Sankt-Peterburga» according to the ownership certificate # 78 AV 622295 dated June 25, 2007.
PROPERTY DESCRIPTION
Site area: 0.83 hectares
Projected property type: Elite residential complex
Projected gross build area: 22,387 sqm
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 140
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Net area of the unsold flats: 1,050 sqm
Net commercial area: 371 sqm
Underground parking: 35 parking spaces
Ground parking: n/a
Location / environment: The Subject Property is located in the Petrogradskiy District of Saint- Petersburg in the northern part of Krestovskiy Island and is within a 10- minute walk of Krestovskiy Ostrov metro station.
Access / egress: The property is easily accessible from the main thoroughfares of the district – Krestovskiy Avenue, Morskoy Avenue and Petrogradskaya Street.
Nearby amenities: The following amenities are situated in close proximity to the Subject Property: Elagin Palace, amusement park Divo-Ostrov, restaurants, sporting and educational facilities and two yacht-clubs. In the Eastern part of Krestovskiy Island the construction of Zenit football team’s new stadium is being realized. It is planned to redevelop Dinamo stadium also.
Description: The Property comprises a land plot with a total area of 8,305 sqm which is in the process of residential complex development. The land plot is located near Srednaya Nevka river. The project development scheme consists of a building with residential premises, commercial areas and underground parking. The building is of monolith concrete and has brick walls and provides shell & core residential accommodation.
Start of construction: March 2010
Projected completion: October 2012
Zoning and restrictions: The subject land plots have the following characteristic:
• Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 141
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 1. Façade Picture 2. Façade
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 72,840,709 RUR construction costs:
Average market sale price 504,000 RUR per sqm for residential area:
Average market sale price 42,373 RUR per sqm net of VAT for commercial area:
Average market sale price 2,414,602 RUR net of VAT for parking space:
Current stage of Completed development:
Readiness of development 97% stage:
Development strategy: Build and sell
Discount rate: 13.00%
Special assumption: n/a
Other: n/a
Market value: 990,004,437 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 142
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Morskoy Av. 29 Name: Morskoy
Inspected on: December 10, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 3,572 sqm (cadastral number 78:7:3282:6) is held freehold by JSC “Stroitelnaya korporatsiya Vozrozhdenie Sankt-Peterburga” according to the ownership certificate 78 AZh 029869 dated November 18, 2010.
PROPERTY DESCRIPTION
Site area: 0.36 hectares
Projected property type: Elite residential complex
Projected gross build area: 18,327 sqm
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 143
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Net area of the unsold flats: 9,893 sqm
Net commercial area: Office – 616 sqm
Other – 176 sqm
Underground parking: 108 parking spaces
Ground parking: n/a
Location / environment: The Subject Property is located in the Petrogradskiy District of Saint- Petersburg in the central part of Kresotvskiy Island and is within a 5-minute walk of Krestovskiy Ostrov metro station.
Access / egress: The property is easily accessible from the main thoroughfares of the district – Krestovskiy Avenue, Morskoy Avenue and Petrogradskaya Street.
Nearby amenities: The following amenities are situated in a close proximity to the Subject Property: Elagin Palace, amusement park Divo-Ostrov, restaurants, sporting and educational facilities and 2 yacht-clubs. In the Eastern part of Krestovskiy Island the construction of the new Zenit football team stadium is underway. It is also planned to redevelop the Dinamo stadium.
Description: The Property comprises a land plot with a total area of 3,572 sqm. The old building located on the land plot as at the Valuation Date is to be demolished. The newly constructed residential building will comprise residential premises, commercial areas and underground parking.
Start of construction: January 2014
Projected completion: August 2016
Zoning and restrictions: The subject land plots have the following characteristic:
• Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 144
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 1. Façade Picture 2. Façade
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 806,283,787 RUR construction costs:
Average market sale price 200,000 RUR per sqm for residential area:
Average market sale price Offices – 127,119 RUR per sqm net of VAT for commercial area: Other – 42,373 RUR per sqm net of VAT
Average market sale price 2,118,644 RUR net of VAT for parking space:
Current stage of Concept Development development:
Readiness of development 29% stage:
Development strategy: Build and sell
Discount rate: 22.00%
Special assumption: n/a
Other: n/a
Market value: 1,043,182,796 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 145
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Radishcheva St. 39, Lit. M Name: Radishcheva
Inspected on: December 10, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 8,500 sqm (share of the land plot – ¼) (cadastral number 78:31:1210:14) is held freehold by JSC “Stroitelnaya Korporatsiya Vozrozhdenie Sankt-Peterburga” according to the ownership certificate 78 AV 114353 dated August 31, 2006. • A land plot with a total area of 8,500 sqm (share of the land plot – ¼) (cadastral number 78:31:1210:14) is held freehold by JSC “Stroitelnaya Korporatsiya Vozrozhdenie Sankt-Peterburga” according to the ownership certificate 78 AV 114354 dated August 31, 2006. • A land plot with a total area of 8,500 sqm (share of the land plot – ¼) (cadastral number 78:31:1210:14) is held freehold by JSC “Stroitelnaya Korporatsiya Vozrozhdenie Sankt-Peterburga” according to the ownership certificate 78 AV 114355 dated August 31, 2006. • A land plot with a total area of 8,500 sqm (share of the land plot – ¼) (cadastral number 78:31:1210:14) is held freehold by JSC “Stroitelnaya Korporatsiya Vozrozhdenie Sankt-Peterburga” according to the ownership certificate 78 AV 114356 dated August 31, 2006.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 146
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
PROPERTY DESCRIPTION
Site area: 0.85 hectares
Projected property type: Elite residential complex
Projected gross build area: 31,923 sqm
Net area of the unsold flats: 15,561 sqm
Net commercial area: Office – 1,594 sqm
Other – 386 sqm
Underground parking: 166 parking spaces
Ground parking: n/a
Location / environment: The Subject Property is located in the Central District of Saint-Petersburg within a 10-minute walk of Chernyshevskaya metro station.
Access / egress: The Subject Property can be accessed by the city’s main arteries, including Nevskiy Avenue, Liteyniy Avenue and Suvorovskiy Avenue. Access to the Subject Property can be realized through Radishcheva Street.
Nearby amenities: The following amenities are situated in close proximity to the Subject Property: Tavricheskiy Garden, Tavricheskiy Palace, Ovalniy Park, Suvorov Museum, Smolniy Cathedral and educational facilities. The Paradniy Quarter mixed-use residential complex is located in close vicinity to the Subject Property. It is planned that the residents can use the developing infrastructure of this mixed-use residential complex which includes stores, supermarkets and a fitness centre.
Description: The Property comprises a brown-field land plot with a total area of 8,500 sqm. The territory of the land plot is fenced. The newly constructed residential building will comprise residential premises, commercial areas and underground parking.
Start of construction: February 2013
Projected completion: August 2015
Zoning and restrictions: The subject land plots have the following characteristic:
• Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 147
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 1. Land plot Picture 2. Land plot
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 1,269,711,577 RUR construction costs:
Average market sale price 201,000 RUR per sqm for residential area:
Average market sale price Office – 144,068 RUR per sqm net of VAT for commercial area: Other – 33,898 RUR per sqm net of VAT
Average market sale price 1,525,424 RUR net of VAT for parking space:
Current stage of Construction development:
Readiness of development 30% stage:
Development strategy: Build and sell
Discount rate: 19.00%
Special assumption: n/a
Other: n/a
Market value: 2,641,860,244 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 148
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Kuybysheva St. 13 Name: Dom na Dvoryanskoy
Inspected on: December 10, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot (cadastral number 78:7:3008:11) with a total area of 1,864 sqm is held freehold by JSC “Stroitelnaya Korporatsiya Vozrozhdenie Sankt-Peterburga” according to the ownership certificate 78 AG 953380 dated March 05, 2009.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 149
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
PROPERTY DESCRIPTION
Site area: 0.19 hectares
Projected property type: Elite residential complex
Projected gross build area: 8,787 sqm
Net area of the unsold flats: 5,633 sqm
Net commercial area: 753 sqm
Underground parking: 35 parking spaces
Ground parking: n/a
Location / environment: The Subject Property is located in the Petrogradskiy District of Saint- Petersburg within a 15-minute walk of Gorkovskaya metro station.
Access / egress: The Subject Property can be easily accessed from Kuybysheva Street.
Nearby amenities: The following amenities are situated in a close proximity to the Subject Property: Petropavlovskaya Krespost, Avrora, Botanicheskiy Garden and a great amount of shops, restaurants and cinema theaters at Kamennoostrovskoy and Bolshoy Avenues.
Description: The Property comprises a land plot with a total area of 1,864 sqm. The newly constructed building will have 8-storeys of mainly residential premises with commercial premises on the first and second floors, the property will also possess underground parking. The building will provide shell & core residential accommodation.
Start of construction: December 2012
Projected completion: March 2015
Zoning and restrictions: The subject land plots have the following characteristic:
• Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 150
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 1. Façade Picture 2. Façade
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 337,607,193 RUR construction costs:
Average market sale price 140,000 RUR per sqm for residential area:
Average market sale price 110,169 RUR per sqm net of VAT for commercial area:
Average market sale price 1,440,678 RUR net of VAT for parking space:
Current stage of Construction development:
Readiness of development 25% stage:
Development strategy: Build and sell
Discount rate: 19.00%
Special assumption: n/a
Other: n/a
Market value: 475,947,372 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 151
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Kovenskiy Lane 5 Name: Kovenskiy
Inspected on: December 10, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • Land plot (cadastral number 78:1218:2) with a total area of 3,866 sqm is held leasehold by JSC “Stroitelnaya Korporatsiya Vozrozhdenie Sankt-Petersburg” according to lease agreement #2A-K5 dated July 27, 2010 and expiring on December 31, 2013.
PROPERTY DESCRIPTION
Site area: 0.39 hectares
Projected property type: Mixed-use complex
Projected gross build area: 12,870 sqm
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 152
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Net area of the unsold flats: 653 sqm
Net commercial area: 4,290 sqm
Underground parking: 41 parking spaces
Ground parking: n/a
Location / environment: The Subject Property is located in the Central District of Saint-Petersburg within a 10-minute walk of Mayakovskaya, Ploshchad Vosstaniya and Chernischevskaya metro stations.
Access / egress: Access to the Subject Property can be realized through Kovenskiy Lane.
Nearby amenities: The following amenities are situated in close proximity to the Subject Property: historical buildings such as church of Madonna and the first garage of the Krummel automobile company. Nevskiy Avenue. St Petersburg’s prime street retail is located in close proximity to the Subject Property where a plethora of restaurants, bars, boutiques and stores are situated. In addition, retail centre Galereya is situated within a 20-minute walk of the Subject Property.
Description: The Property comprises a land plot with a total area of 3,866 sqm. The newly constructed building will comprise a 5-storey residential and 7-storey office development. The ground floor will be occupied by parking and technical premises.
Start of construction: June 2011
Projected completion: April 2013
Zoning and restrictions: The subject land plots have the following characteristic:
• Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 153
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 1. Façade Picture 2. Façade
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining Residential – 36,413,656 RUR construction costs: Commercial – 113,037,971 RUR net of VAT
Average market sale price 228,000 RUR per sqm for residential area:
Average market sale price 113,559 RUR per sqm net of VAT for commercial area:
Average market sale price 1,694,915 RUR net of VAT for parking space:
Current stage of Construction development:
Readiness of development 73% stage:
Development strategy: Build and sell
Discount rate: 20.00%
Special assumption: n/a
Other: n/a
Market value: 473,816,145 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 154
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Medikov Av. 10 Name: Europa City
Inspected on: December 10, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area of 73,576 sqm (cadastral number 78:7:3170:63) is held freehold by JSC “Stroitelnaya Korporatsia Sankt-Peterburga” according to the ownership certificate 78-АЖ 570124 dated June 26, 2012.
PROPERTY DESCRIPTION
Site area: 7.36 hectares
Projected property type: Business-class residential complex
Projected gross build area: 179,980 sqm:
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 155
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Phase 1 – 27,404 sqm
Phase 2 – 18,064 sqm
Phase 3 – 69,427 sqm
Phase 4 – 65,085 sqm
Net area of the unsold flats: 103,349 sqm:
Phase 1 – 18,828 sqm
Phase 2 – 12,552 sqm
Phase 3 – 36,993 sqm
Phase 4 – 34,976 sqm
Net commercial area: 14,070 sqm:
Phase 1 – 490 sqm
Phase 2 – 327 sqm
Phase 3 – 6,275 sqm
Phase 4 – 6,978 sqm
Underground parking: 492 sqm:
Phase 3 – 303 parking places
Phase 4 – 189 parking places
Ground parking: n/a
Location / environment: The Subject Property is located in the Petrogradskiy District of Saint- Petersburg within a 10-minute walk of Petrogradskaya metro station.
Access / egress: The property can be accessed either from Medikov Avenue or Akademika Pavlova Street. The Subject Property can be easily accessed from the main thoroughfares of the district – Medikov Avenue, Kamennoostrovskoy Avenue, Bolshoy Avenue and Aptekarskaya Embankment.
Nearby amenities: The following amenities are situated in a close proximity to the Subject Property: Petropavlovskaya Krespost, Avrora, Botanicheskiy Garden and a great amount of shops, restaurants and cinema theaters at Kamennoostrovskoy and Bolshoy Avenues.
Description: The Property comprises a land plot with a total area of 73,576 sqm. The project development scheme consists of 4 phases. The complex will consist of 17 buildings. The buildings will be of monolith concrete and will provide shell & core residential accommodation.
Start of construction: Phase 1 – March 2012
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 156
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Phase 2 – March 2012
Phase 3 – March 2012
Phase 4 – April 2013
Projected completion: Phase 1 – March 2014
Phase 2 – June 2014
Phase 3 – November 2015
Phase 4 – November 2016
Zoning and restrictions: The subject land plots have the following characteristic:
• Category: settlement land. Source: Client’s information, Cushman & Wakefield
Picture 1. Site Picture 2. Site 2
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 5,811,975,744 RUR: construction costs: Phase 1 – 633,666,402 RUR
Phase 2 – 514,928,791 RUR
Phase 3 – 2,221,728,793 RUR
Phase 4 – 2,441,651,757 RUR
Average market sale price 110,000 RUR per sqm for residential area:
Average market sale price 110,169 RUR per sqm net of VAT for commercial area:
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 157
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Average market sale price 847,458 RUR net of VAT for parking space:
Current stage of Construction/Concept development development:
Readiness of development Phase 1 – 49% stage: Phase 2 – 38%
Phase 3 – 35%
Phase 4 – 24%
Development strategy: Build and sell
Discount rate: 20.00%
Special assumption: n/a
Other: n/a
Market value: 5,079,220,514 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 158
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Savushkina St. 151 Name: Morskie Bashni
Inspected on: December 10, 2012 Inspected by: Polina Mitina
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 35,000 sqm is held leasehold by LLC “GDSK” according to the lease agreement # 04/03-05/1 dated January 20, 2003 and additional agreement dated September 19, 2011.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 159
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
PROPERTY DESCRIPTION
Site area: 3.05 hectares
Projected property type: Business-class residential complex
Projected gross build area: 110,819 sqm
Net area of the unsold flats: 59,602 sqm
Net commercial area: 2,532 sqm
Underground parking: 703 parking spaces
Ground parking: n/a
Location / environment: The Subject Property is located in the Primorskiy District of Saint-Petersburg within a 20-minute walk of Staraya Derevnya metro station.
Access / egress: The property can be accessed either from Primorskiy Avenue or from Yakhtennaya Street. Public transport is very developed in the Primorskiy District.
Nearby amenities: The following amenities are situated in close proximity to the Subject Property: Piterland retail and leisure centre, office and retail infrastructure, educational and sporting facilities, hospitals and clinics.
Description: The Property comprises a land plot with a total area of 30,488 sqm. The project development scheme consists of 2 phase. The buildings will be of concrete and will provide shell & core residential accommodation.
Start of construction: June 2013
Projected completion: December 2016
Zoning and restrictions: The subject land plots have the following characteristic:
• Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 160
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 1. Land plot Picture 2. Land plot
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 3,071,125,184 RUR construction costs:
Average market sale price 105,000 RUR per sqm for residential area:
Average market sale price 100,000 RUR per sqm net of VAT for commercial area:
Average market sale price 338,983 RUR net of VAT for parking space:
Current stage of Concept development development:
Readiness of development 17% stage:
Development strategy: Build and sell
Discount rate: 24.00%
Special assumption: n/a
Other: n/a
Market value: 2,005,141,831 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 161
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Smolenskaya St. 14 Name: Smolenskaya
Inspected on: December10, 2012 Inspected by: Josh Askew MRICS
Fedor Zavileysky MRICS
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The non-completed building located on the land plots stated below. • A land plot with a total area of 2,085 sqm (cadastral number 78:14:7519:23) is held freehold by LLC “GDSK” according to the ownership certificate #78 AZh 794378 dated December 13, 2012. • A land plot with a total area of 2,785 sqm (cadastral number 78:14:7519:1) is held freehold by LLC “GDSK” according to the ownership certificate #78 AZh 794379 dated December 13, 2012. • A land plot with a total area of 2,001 sqm (cadastral number 78:14:7519:22) is held freehold by LLC “GDSK” according to the ownership certificate #78 AZh 794382 dated December 13, 2012.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 162
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
PROPERTY DESCRIPTION
Site area: 0.69 hectares
Projected property type: Business-class residential complex
Projected gross build area: 34,352 sqm
Net area of the unsold flats: 22,440 sqm
Net commercial area: 650 sqm
Underground parking: 251 parking spaces
Ground parking: n/a
Location / environment: The Subject Property is situated in close proximity to the central part of the city. The Property benefits from a close proximity to Moskovskiy avenue (250 m) with developed infrastructure. The future residential complex will be surrounded with newly constructed residential buildings.
Access / egress: The property can be accessed through Smolenskaya Street. Frunzenskaya metro station is located within a 7-minute walk from the property.
Nearby amenities: Retail Center Varshavskiy Ekspress with cinema theater, shops, restaraunts and fitness center.
Description: The Subject Property represented 3 land plots with uncompleted building which is planned to be demolished.
Start of construction: April 2015
Projected completion: September 2017
Zoning and restrictions: The subject land plots have the following characteristic:
• Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 163
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 1. Façade Picture 2. Façade
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 1,642,605,100 RUR construction costs:
Average market sale price 95,000 RUR per sqm for residential area:
Average market sale price 84,746 RUR per sqm net of VAT for commercial area:
Average market sale price 847,458 RUR net of VAT for parking space:
Current stage of Concept development development:
Readiness of development 10% stage:
Development strategy: Build and sell
Discount rate: 22.00%
Special assumption: n/a
Other: n/a
Market value: 422,314,459 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 164
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Moskovskiy district, Name: Residential complex Prospekt Kosmonavtov “Antey”
Inspected on: December 11, 2012 Inspected by: Polina Mitina
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 70,819 sqm (cadastral number 78:14:7680:6) is held freehold by LLC “GDSK” according to the ownership certificate 78-AG 324950 dated December 28, 2007.
PROPERTY DESCRIPTION
Site area: 7.08 hectares
Projected property type: Mass-market residential complex
Projected gross build area: • Phase 3-2: 19,841 sqm • Phase 4: 31,844 sqm
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 165
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Total: 51,685 sqm
Net area of the unsold flats: • Phase 3-2: 9,403 sqm • Phase 4: 212 sqm Total: 9,615 sqm
Net commercial area • Phase 3-2: 579 sqm (unsold): • Phase 4: 0 sqm Total: 579 sqm
Ground parking (unsold): 302 parking spaces
Location / environment: The Subject Property is located in the Moskovskiy District of St-Petersburg, a 5-minute walk from Zvezdnaya metro station.
Access / egress: The property is easily accessible from the main thoroughfares of the district – Kosmonavtov Prospekt, Pulkovskoe Highway and the St-Petersburg Ring Road (the KAD). Pulkovo airport is slightly over 3 km to the south of the Subject Property.
Nearby amenities: The Property is situated in an emerging residential development, begun in 2002, with both retail and social amenities. A 10-minute drive from the property there is a large retail park with hypermarkets (Lenta, O’Key, METRO Cash & Carry, Karousel, Castorama and Pulkovo-3) and an entertainment zone. Less than 2 km away, to the west of the Subject Property, are the Zvezdny retail centre, several car showrooms, sports and leisure centre, and the Gorod Geroev park, a large green area with a pond. Description: The Property represented by the land plot with a total area of 70 819 sqm which is in the process of development of mass-market residential complex. The complex consists of 11 buildings of different number of stories (12-16 floors). In the common courtyard there is underground and above-ground parking extending to 2 floors, the roof of which is used as a playground. The buildings are of reinforced concrete construction and provide fully fitted out or shell & residential accommodation. As of date of valuation, 9 buildings within the complex have been completed, put into operation and sold. The final phases of the complex, with a total area of 51 685 sqm, should be delivered in the coming years. Start of construction: • Phase 3-2: August 2008 • Phase 4: March 2008 Projected completion: • Phase 3-2: December 2014 • Phase 4: December 2014 Zoning and restrictions: The subject land plots have the following characteristic:
• Permitted use: for the allocation of residential buildings; • Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 166
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 1. Façade Picture 2. Façade
Source: Cushman &Wakefield Source: Cushman &Wakefield Picture 3. Internal premises Picture 4. Standard fitted-out flat
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 768,585 272 RUR construction costs:
Average market sale price 75,000 RUR per sqm for residential area:
Average market sale price 90,000 RUR per sqm for commercial area:
Average market sale price 300,000 RUR for parking space:
Current stage of • Phase 3-2 (building #10): use permit is received development: • Phase 4 (building and parking #9): construction and sales
Readiness of development • Phase 3-2: 25% stage: • Phase 4: 76%
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 167
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Development strategy: Build and sell
Discount rate: 14%
Special assumption: No
Other: No
Market value: 426,493,831 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 168
City: Saint Petersburg
Address: Nevskiy District, Name: Residential complex Belisheva Street “Avrora”
Inspected on: December 10, 2012 Inspected by: Polina Mitina
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS A land plot with a total area of 150,000 sqm is held leasehold by LLC “GDSK” according to the lease agreement #858 dated May 05, 2008 and expiring on December 31, 2014: • Land plot with a total area of 8,480 sqm (cadastral number 78:6309A:5), located at address: Belisheva street, land plot 1; • Land plot with a total area of 10,400 sqm (cadastral number 78:6309A:12), located at address: Belisheva street, land plot 2; • Land plot with a total area of 13,900 sqm (cadastral number 78:6309A:4), located at address: Belisheva street, land plot 3; • Land plot with a total area of 13,900 sqm (cadastral number 78:6309A:3), located at address: Belisheva street, land plot 4;
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 169
• Land plot with a total area of 9,300 sqm (cadastral number 78:6309A:2), located at address: Belisheva street, land plot 5; • Land plot with a total area of 9,300 sqm (cadastral number 78:6309A:10), located at address: Belisheva street, land plot 6; • Land plot with a total area of 9,060 sqm (cadastral number 78:6309A:6), located at address: Belisheva street, land plot 7; • Land plot with a total area of 7,900 sqm (cadastral number 78:6309A:8), located at address: Belisheva street, land plot 8; • Land plot with a total area of 10,400 sqm (cadastral number 78:6309A:11), located at address: Belisheva street, land plot 9; • Land plot with a total area of 13,900 sqm (cadastral number 78:6309A:9), located at address: Belisheva street, land plot 10; • Land plot with a total area of 13,900 sqm (cadastral number 78:6309A:7), located at address: Belisheva street, land plot 11; • Land plot with a total area of 29,530 sqm (cadastral number 78:6309A:13), located at address: Belisheva street, land plot 12; • Land plot with a total area of 8,035 sqm (cadastral number 78:6309A:10), located at address: Badaeva street, land plot 7; • Land plot with a total area of 7,775 sqm (cadastral number 78:6319A:11), located at address: Badaeva street, land plot 8;
PROPERTY DESCRIPTION
Site area: 15 hectares
Projected property type: Mass-market residential complex
Projected gross build area: 415,033 sqm
Net area of the unsold flats: 88,452 sqm
Net commercial area 2,358 sqm (unsold):
Ground parking (unsold): 3,287 parking spaces
Location / environment: The subject land plot is situated in the Nevskiy District of St. Petersburg, at the intersection of Kollontay and Belysheva Streets.
Access / egress: The property has convenient access to the city centre: Nevsky Avenue is circa 5 km to the north-west of the property, accessible via Dalnevostochny Avenue, which becomes Zanevsky Avenue via the Alexander Nevsky bridge. Dalnevostochny Avenue also provides access to the St. Petersburg Ring Road (approximately 8 km to the south-east of the property). The nearest metro station, Bolshevikov Avenue, is within 1 km of the Subject Property.
Nearby amenities: The property is located a short distance from the Felichita retail and entertainment complex, the hypermarkets Karusel and Castorama, and the Ledovy Dvorets sports centre. The immediate environs comprise an established residential area with social amenities.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 170
Description: The Subject Property comprises a land plot with a total area of 15 hectares zoned as settlement land. In accordance with the information provided, the project represents a residential complex with a total area of 390 270 sqm consisting of 16 residential buildings of 14 – 25 floors with integrated commercial space and underground parking. Both the residential and commercial space will be offered in fitted-out condition. As of date of valuation, 4 buildings within the complex have been completed, put into operation and sold. The second phase of the complex, with a total area of 415 044 sqm, should be delivered in the coming years. Start of construction: July 2011
Projected completion: December 2015
Zoning and restrictions: The subject land plots have the following characteristic:
• Permitted use: for developing of town planning documentation and construction documentation for building development and for determine of the construction possibility; • Category: settlement land. Source: Client’s information, Cushman & Wakefield
Picture 1. Façade Picture 2. Façade
Source: Cushman &Wakefield Source: Cushman &Wakefield Picture 3. Internal premises Picture 4. Standard fitted-out flat
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 171
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 5,400,401 RUR construction costs:
Average market sale price 73,000 RUR per sqm for residential area:
Average market sale price 100,000 RUR per sqm for commercial area:
Average market sale price 600,000 RUR for parking space:
Current stage of Land plot #14: development: • 1st phase: buildings 1-4 – put into operation • 2nd phase: buildings 5-8 – construction and sales Land plot #15: • 2nd phase: buildings 1-8 – construction and sales Readiness of development 64% stage:
Development strategy: Build and sell
Discount rate: 17%
Special assumption: No
Other: No
Market value: 3,606,187,526 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 172
City: Saint Petersburg
Address: Nevskiy District, Badaeva Name: Residential complex Street “Vostok”
Inspected on: December 10, 2012 Inspected by: Polina Mitina
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 8,035 sqm (cadastral number 78:6319A:10) is provided for the development of town planning and construction documentation to LLC “Sintez Development” (agreement on the cession of rights and obligations in favor of LLC “GDSK”, dated 06.04.2009) and is held leasehold according to the lease agreement # 13/ZKS-03979 dated September 27, 2005 and expiring on September 27, 2011. • A land plot with a total area of 7,775 sqm (cadastral number 78:6319A:11) is provided for the development of town planning and construction documentation to LLC “Sintez Development” (agreement on the cession of rights and obligations in favor to LLC “GDSK”, dated April 06, 2009) and is held leasehold according to the lease agreement # 13/ZKS-03980 dated September 27, 2005 and expiring on September 27, 2011.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 173
PROPERTY DESCRIPTION
Site area: 1,58 hectares
Projected property type: Mass-market residential complex
Projected gross build area: 40,977 sqm
Net area of the unsold flats: 572 sqm
Ground parking: 50 parking spaces
Location / environment: The subject site is situated in the Nevskiy District of St. Petersburg, at the corner of Kollontay and Badayeva Streets.
Access / egress: The property has convenient access to the city centre: Nevsky Avenue is circa 5 km to the north-west of the property, accessible via Dalnevostochny Avenue, which becomes Zanevsky Avenue via the Alexander Nevsky bridge. Dalnevostochny Avenue also provides access to the St. Petersburg Ring Road (approximately 8 km to the south-east of the property). The nearest metro station, Bolshevikov Avenue, is within 1 km of the Subject Property.
Nearby amenities: The property is located a short distance from the Felichita retail and entertainment complex, the hypermarkets Karusel and Castorama, and the Ledovy Dvorets sports centre. The Subject Property’s immediate environs comprise an established residential area with social amenities.
Description: The Subject Property comprises a land plot with a total area of 1.58 hectares zoned as settlement land. As at the date valuation the land plot is in the course of construction. On completion the development will comprise a residential complex with a total area of 59 655 sqm consisting of two residential buildings of 12 and 22 floors with integrated commercial premises and parking. The flats will be offered for sale fully fitted out. At present the site is fenced, the construction works are on the final stage. Start of construction: March 2011
Projected completion: June 2013
Zoning and restrictions: The subject land plots have the following characteristic:
• Permitted use: for developing of town planning documentation and construction documentation for building development and for determine of the construction possibility; • Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 174
Picture 1. Façade Picture 2. Façade
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 294,421,889 RUR construction costs:
Average market sale price 82,000 RUR per sqm for residential area:
Average market sale price 600,000 RUR for parking space:
Current stage of Land plot #7: put into operation development: Land plot #8: construction and sales
Readiness of development 74% stage:
Development strategy: Build and sell
Discount rate: 12%
Special assumption: No
Other: No
Market value: 2,007,585 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 175
City: Saint Petersburg
Address: Moskovskiy District, Name: Residential complex Dunayskiy Prospect, 27
Inspected on: December 10, 2012 Inspected by: Polina Mitina
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 9,494 sqm (cadastral number 78:14:769203:70), located at: Saint Petersburg, Dunayskiy Prospect, 27, bldg.1 is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 543542 dated March 03, 2012. • A land plot with a total area of 11,725 sqm (cadastral number 78:14:769203:72), located at: Saint Petersburg, Dunayskiy Prospect, 2 is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 543548 dated March 03, 2012. • A land plot with a total area of 15,239 sqm (cadastral number 78:14:769203:69), located at: Saint Petersburg, Dunayskiy Prospect, 27, bldg. 4 is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 543544 dated March 03, 2012. • A land plot with a total area of 20,086 sqm (cadastral number 78:14:769203:75), located at: Saint Petersburg, Dunayskiy Prospect, 27, bldg. 7 is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 543546 dated March 03, 2012.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 176
• A land plot with a total area of 2,267 sqm (cadastral number 78:14:769203:74), located at: Saint Petersburg, Dunayskiy Prospect, 27, bldg. 3 is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 543543 dated March 03, 2012. • A land plot with a total area of 144 sqm (cadastral number 78:14:769203:71), located at: Saint Petersburg, Dunayskiy Prospect, 27, bldg. 5 is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 543547 dated March 03, 2012. • A land plot with a total area of 2,807 sqm (cadastral number 78:14:769203:73), located at: Saint Petersburg, Dunayskiy Prospect, 27, bldg. 6 is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 543550 dated March 03, 2012.
PROPERTY DESCRIPTION
Site area: 6,17 hectares
Projected property type: Mass-market residential complex
Projected gross build area: 150,354 sqm
Net area of the flats: • Land plot 1: 19,490 sqm • Land plot 2: 22,184.5 sqm • Land plot 4: 29,136.8 sqm • Land plot 7: 34,914.7 sqm Total: 105,726 sqm
Net commercial area: • Land plot 4: 613.8 sqm • Land plot 7: 570.7 sqm Total: 1,185 sqm Ground parking: • Land plot 1: 99 • Land plot 2: 99 • Land plot 4: 160 • Land plot 7: 200 558 parking spaces
Location / environment: The Subject Property is located in the Moskovskiy District of St-Petersburg, along Dunayskiy Prospect.
Access / egress: The Property is located within a 5 minute walk of Kupchino metro station and 7 minutes by transport from Zvezdnaya metro station. The land plot is located in close proximity to the 3 main transport routes of the city: Vitebskiy Prospect, Dunayskiy Prospect and Prospect Kosmonavtov. Moskovskoe Shosse and St-Petersburg ring road (the KAD) are located at a distance of 5 minutes by transport, which provides easy and direct access both to the city centre and to the areas beyond the south of the city.
Nearby amenities: The Property benefits from the well developed business, retail and social infrastructure in the zones of metro stations Zvezdnaya and Kupchino. The Gorod Geroev park, a large green area with a pond, is located in 2 km from the Property. Description: The Subject Property comprises a land plot with a total area of 5.65 hectares zoned as settlement land. As of date of valuation the land plot is free of any buildings and is fenced.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 177
In accordance with information received from the Client, the land plot is intended for future development for a residential complex with a total area of 150 354 sqm. The complex is to comprise several residential buildings with integrated commercial premises and underground parking. The residential buildings are to be of reinforced concrete construction and provide fully fitted-out residential accommodation. Start of construction: November 2012
Projected completion: December 2017
Zoning and restrictions: The subject land plots have the following characteristic:
• Permitted use: for the allocation warehouse facilities; • Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 178
Picture 1. Land plot Picture 2. Land plot
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 5 135 525 713 RUR construction costs:
Average market sale price 70 000 RUR per sqm for residential area:
Average market sale price 85 000 RUR per sqm for commercial area:
Average market sale price 300 000 RUR for parking space:
Current stage of Land plot 1: receipt of project documentation development:
Readiness of development 2% stage:
Development strategy: Build and sell
Discount rate: 20%
Special assumption: No
Other: No
Market value: 1,795,641,053 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 179
City: Saint Petersburg
Address: Moskovskiy ditrict, Name: Residential complex Moskovskoe shosse “Viva”
Inspected on: December 11, 2012 Inspected by: Polina Mitina
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 80,001 sqm (cadastral number 78:14:7686:6), located at: Saint Petersburg, Moskovskoe shosse, 3, litera Z, is held freehold by LLC “GDSK” according to the ownership certificate 78- AZH 137100 dated January 21, 2011. • A land plot with a total area of 11,500 sqm (cadastral number 78:14:7686:7), located at: Saint Petersburg, Moskovskoe shosse, 3, litera D, is held freehold by LLC “GDSK” according to the ownership certificate 78- AZH 137107 dated January 21, 2011.
PROPERTY DESCRIPTION
Site area: 9.15 hectares
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 180
Projected property type: Mass-market/ business residential complex
Projected gross build area: 175,691 sqm
Net area of the flats: 101,386 sqm
Net commercial area: 1,532 sqm
Ground parking: 599 parking spaces
Location / environment: The Subject Property is located in the Moskovskiy District of St-Petersburg, at the intersection of Moscovskoe Highway and Dunaisky Avenue.
Access / egress: The Property is located approximately in 15 minutes walk from Zvezdnaya and Moskovskaya metro stations. Pulkovskoye Highway, located approximately 1 km to the west of the subject site, provides easy and direct access both to the city centre and to the areas beyond the St-Petersburg ring road (the KAD) south of the city.
Nearby amenities: Within walking distance of the Subject Property is a large retail park with hypermarkets (Lenta, O’Key, METRO Cash & Carry, Karusel, Castorama and Pulkovo-3) and an entertainment zone. Several car showrooms and a sports and leisure centre are also situated nearby. The Gorod Geroev park, a large green area with a pond, is only 100 m from the property Description: The Subject Property comprises a land plot with a total area of 9.15 hectares zoned as settlement land. As of the date of valuation the land plot is fenced and free of any buildings. In accordance with information received from the Client, the land plot is intended for future development of a residential complex with a total area of 175,691 sqm. The complex is to consist of several residential buildings of 14 - 16 floors with integrated commercial premises and underground parking. The residential buildings are to be of reinforced concrete panel construction and provide fully fitted-out residential accommodation. Start of construction: May 2012
Projected completion: March 2016
Zoning and restrictions: The subject land plots have the following characteristic:
• Permitted use: for allocation and construction of residential buildings; • Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 181
Picture 1. Land plot Picture 2. Land plot
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 4,875,974,202 RUR construction costs:
Average market sale price 80,000 RUR per sqm for residential area:
Average market sale price 85,000 RUR per sqm for commercial area:
Average market sale price 600,000 RUR for parking space:
Current stage of 1st phase (1 and 2 stages of construction): construction permit is received, development: construction and sales
Current stage of 24% development:
Development strategy: Build and sell
Discount rate: 19%
Special assumption: No
Other: No
Market value: 2,974,747,885 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 182
City: Saint Petersburg
Address: Krasnoselskiy District, Name: Residential complex Leninskiy Prospect and “Yuzhnaya Aquatoriya Doblesti Street
Inspected on: December 11, 2012 Inspected by: Polina Mitina
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 172,643 sqm (cadastral number 78:40:8341:14) and land plot with a total area of 66,397 sqm (cadastral number 78:40:8341:15), are held leasehold by LLC “GDSK” according to the land lease agreement 08/ZKS-000069 dated June 08, 2007 and expiring on May 14, 2014.
PROPERTY DESCRIPTION
Site area: 23.90 hectares
Projected property type: Mass-market residential complex
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 183
Projected gross build area: 523,065 sqm
Net area of the unsold flats: • Land plot 13: 38,763 sqm • Land plot 14: 22,805 sqm • Land plot 24: 25,000 sqm • Land plot 9: 52,696 sqm • Land plot 1: 11,035 sqm • Land plot 2: 72,655 sqm • Land plot 6: 31,868 sqm Total: 254,822 Net commercial area • Land plot 13: 245 sqm (unsold): • Land plot 14: 2,027 sqm • Land plot 24: 0 sqm • Land plot 9: 2,100 sqm • Land plot 1: 1,000 sqm • Land plot 2: 11,175 sqm • Land plot 6: 120 sqm Total: 16,677 Ground parking (unsold): • Land plot 13: 300 • Land plot 14: 600 • Land plot 24: 300 • Land plot 9: 330 • Land plot 1: 70 • Land plot 2: 600 • Land plot 6: 300 Total: 2,500 Location / environment: The Subject Property is located in the southwestern part of the Krasnoselskiy District of St-Petersburg, to the south-west of the intersection of Doblesti and Marshala Zakharova Streets, in close proximity to the Gulf of Finland.
Access / egress: The road system around the property is under development, with additional highways planned for construction. The nearest metro station Leninsky Avenue - is located within 20 minute drive from the Property. The 2 new metro stations: Yugo-zapadnaya and Finskiy Zaliv – are planned to be ready to 2020.
Nearby amenities: The Property benefits from the close proximity to the Gulf of Finland.
Description: The Subject Property comprises a land plot with a total area of 23.90 hectares zoned as settlement land. As at the date of valuation the land plot is free of any buildings, and is fenced. In accordance with information received from the Client, the land plot is intended for future development for a residential complex with a total area of 523,065 sqm. The complex is to consist of several residential buildings of 7 - 25 floors with integrated commercial premises and parking. The residential buildings are to be of reinforced concrete construction and
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 184
provide fully fitted-out residential accommodation. Start of construction: November 2012
Projected completion: December 2017
Zoning and restrictions: The subject land plots have the following characteristic:
• Permitted use: for the allocation of the residential buildings; • Category: settlement land. Source: Client’s information, Cushman & Wakefield
Picture 1. Land plot Picture 2. Land plot
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 15,988,381,662 RUR construction costs:
Average market sale price 68,000 RUR per sqm for residential area:
Average market sale price 68,000 RUR per sqm for commercial area:
Average market sale price 300,000 RUR for parking space:
Current stage of Development plan and boundary setting plan are confirmed by city development: government (#1282 as of September 23, 2010).
Land plots #13 and 14 – full-scale development
Land plots # 1, 2, 6, 9 – receipt of documentation
Readiness of development 8% stage:
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 185
Development strategy: Build and sell
Discount rate: 21%
Special assumption: No
Other: No
Market value: 4,698,547,349 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 186
City: Saint Petersburg
Address: Frunzenskiy District, Name: Residential complex Yuzhnoe Shosse, 55 “Sophia”
Inspected on: December 11, 2012 Inspected by: Polina Mitina
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 100 sqm (cadastral number 78:13:7420:64), located at: Saint Petersburg, Yuzhnoe shosse, land plot 4, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 545686 dated March 17, 2012. • A land plot with a total area of 100 sqm (cadastral number 78:13:7420:60), located at: Saint Petersburg, Yuzhnoe shosse, land plot 6, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 545687 dated March 17, 2012. • A land plot with a total area of 2,812 sqm (cadastral number 78:13:5125:21), located at: Saint Petersburg, Yuzhnoe shosse, 12, litera BF is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 466905 dated January 24, 2012. • A land plot with a total area of 11,419 sqm (cadastral number 78:13:7420:58), located at: Saint Petersburg, Yuzhnoe shosse, land plot 5, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 599698 dated June 25, 2012.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 187
• A land plot with a total area of 10,740 sqm (cadastral number 78:13:7420:67), located at: Saint Petersburg, Yuzhnoe shosse, land plot 7, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 599699 dated June 25, 2012. • A land plot with a total area of 4,756 sqm (cadastral number 78:13:7420:66), located at: Saint Petersburg, Yuzhnoe shosse, land plot 8, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 447353 dated December 30, 2011. • A land plot with a total area of 27,224 sqm (cadastral number 78:13:7420:69), located at: Saint Petersburg, Yuzhnoe shosse, land plot 9, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 545689 dated March 17, 2012. • A land plot with a total area of 100 sqm (cadastral number 78:13:7420:70), located at: Saint Petersburg, Yuzhnoe shosse, land plot 10, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 545690 dated March 17, 2012. • A land plot with a total area of 200 sqm (cadastral number 78:13:7420:61), located at: Saint Petersburg, Yuzhnoe shosse, land plot 11, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 545901 dated March 17, 2012. • A land plot with a total area of 13,587 sqm (cadastral number 78:13:7420:68), located at: Saint Petersburg, Yuzhnoe shosse, land plot 12, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 447354 dated December 30, 2011. • A land plot with a total area of 7,152 sqm (cadastral number 78:13:7420:57), located at: Saint Petersburg, Yuzhnoe shosse, land plot 14, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 545905 dated March 17, 2012. • A land plot with a total area of 15,781 sqm (cadastral number 78:13:7420:71), located at: Saint Petersburg, Yuzhnoe shosse, land plot 15, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 545685 dated March 17, 2012. • A land plot with a total area of 4,304 sqm (cadastral number 78:13:7420:52), located at: Saint Petersburg, Yuzhnoe shosse, land plot 1, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 393443 dated November 17, 2011. • A land plot with a total area of 100 sqm (cadastral number 78:13:7420:53), located at: Saint Petersburg, Yuzhnoe shosse, land plot 2, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 393444 dated November 17, 2011. • A land plot with a total area of 7,780 sqm (cadastral number 78:13:7420:54), located at: Saint Petersburg, Yuzhnoe shosse, land plot 3, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 393445 dated November 17, 2011. • A land plot with a total area of 232 sqm (cadastral number 78:13:7420:56), located at: Saint Petersburg, Yuzhnoe shosse, land plot 5, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 393447 dated November 17, 2011. • A land plot with a total area of 200 sqm (cadastral number 78:13:7420:88), located at: Saint Petersburg, Yuzhnoe shosse, 9, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 599707 dated June 27, 2012. • A land plot with a total area of 8,134 sqm (cadastral number 78:13:7420:87), located at: Saint Petersburg, Yuzhnoe shosse, 8, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 691710 dated September 04, 2012. • A land plot with a total area of 1,248 sqm (cadastral number 78:13:7420:80), located at: Saint Petersburg, Yuzhnoe shosse, 2, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 599702 dated June 27, 2012. • A land plot with a total area of 13,794 sqm (cadastral number 78:13:7420:79), located at: Saint Petersburg, Yuzhnoe shosse, 1, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 599701 dated June 27, 2012. • A land plot with a total area of 12,806 sqm (cadastral number 78:13:7420:84), located at: Saint Petersburg, Yuzhnoe shosse, 6, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 691708 dated September 04, 2012.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 188
• A land plot with a total area of 2,904 sqm (cadastral number 78:13:7420:83), located at: Saint Petersburg, Yuzhnoe shosse, 5, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 699705 dated June 27, 2012. • A land plot with a total area of 208 sqm (cadastral number 78:13:7420:82), located at: Saint Petersburg, Yuzhnoe shosse, 4, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 599704 dated June 27, 2012. • A land plot with a total area of 7,152 sqm (cadastral number 78:13:7420:57), located at: Saint Petersburg, Yuzhnoe shosse, 14, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 545705 dated March 17, 2012. • A land plot with a total area of 15,167 sqm (cadastral number 78:13:7420:85), located at: Saint Petersburg, Yuzhnoe shosse, 49, litera F is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 691706 dated September 04, 2012.
PROPERTY DESCRIPTION
Site area: 20.86 hectares
Projected property type: Mass-market residential complex
Projected gross build area: 466,416 sqm
Net area of the flats: 304,582 sqm
Net commercial area: 2,264 sqm
Ground parking: 1,677 parking spaces
Location / environment: The subject land plot is located in the Frunzensky District, to the south of St- Petersburg, in the quadrant formed by Sofyskaya Street, Dimitrova Street, Bukharestskaya Street and Yuzhnoye Highway.
Access / egress: Bukharestskaya Street provides direct access to the city centre via Ligovsky Avenue. Sofyskaya Street provides direct access to the St-Petersburg’s Ring Road (the KAD) circa 3.3 km from the Subject Property. The nearest metro station, Kupchino, is a 15 minute ride by public transport. Another metro station, Slavy Avenue, within a short walking distance from the Subject Property, is planned for delivery in 2015.
Nearby amenities: On the northern and southern borders of the Subject Property are vast green areas with large ponds. The surrounding buildings to the west, north and south (beyond the green zones) are mostly mass market residential with accompanying amenities. A large industrial zone lies to the east of the Subject Property. Two modern retail schemes – the Yuzhny Polus retail centre and the Lenta hypermarket – are within 500 m of the subject site, on the corner of Slavy Avenue and Prazhskaya Street and Bukharestskaya Street, respectively. Description: The Subject Property is a brown-field land plot with a total area of 21 hectares. As of date of valuation the redevelopment project is in the planning stage. The project represents a residential complex of several residential buildings of 17 to 25 floors.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 189
The ground floors of these buildings will be occupied by commercial premises (retail and offices) as well as two schools and two nursery schools. When construction is completed the grounds will be landscaped to create an attractive park for residents. Start of construction: June 2012
Projected completion: December 2017
Zoning and restrictions: The subject land plots have the following characteristic:
• Permitted use: for allocation and construction of industrial facilities/ residential buildings/ communal facilities/ educational facilities/ transport infrastructure; • Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 190
Picture 1. Land plot Picture 2. Land plot
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 17,160,451,190 RUR construction costs:
Average market sale price 80,000 RUR per sqm for residential area:
Average market sale price 68,000 RUR per sqm for commercial area:
Average market sale price 400,000 RUR for parking space:
Current stage of Development plan and boundary setting plan are confirmed by city development: government (#1287 as of September 23, 2010).
Readiness of development 13% stage:
Development strategy: Build and sell
Discount rate: 22%
Special assumption: No
Other: No
Market value: 5,947,565,269 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 191
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Saint Petersburg
Address: Kalininskiy District, Name: Residential complex Marshala Blukhera “Kalina Park” Prospect
Inspected on: December 11, 2012 Inspected by: Polina Mitina
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 29,627 sqm (cadastral number 78:10:5125:18), located at: Saint Petersburg, Marshala Blukhera prospect, 12, litera BSch, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 160248 dated March 15, 2011. • A land plot with a total area of 21,006 sqm (cadastral number 78:10:5125:18), located at: Saint Petersburg, Marshala Blukhera prospect, 12, litera ACH, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 160250 dated March 15, 2011. • A land plot with a total area of 16,974 sqm (cadastral number 78:10:5125:47), located at: Saint Petersburg, Marshala Blukhera prospect, 12, litera BE, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 160246 dated March 15, 2011. • A land plot with a total area of 11,865 sqm (cadastral number 78:10:5125:26), located at: Saint Petersburg, Marshala Blukhera prospect, 12, litera BS, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 228181 dated April 22, 2011.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 192
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
• A land plot with a total area of 5,673 sqm (cadastral number 78:10:5125:25), located at: Saint Petersburg, Marshala Blukhera prospect, 12, litera E, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 228179 dated April 22, 2011. • A land plot with a total area of 18,701 sqm (cadastral number 78:10:5125:45), located at: Saint Petersburg, Marshala Blukhera prospect, 12, litera L, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 228178 dated April 22, 2011. • A land plot with a total area of 10,332 sqm (cadastral number 78:10:5125:41), located at: Saint Petersburg, Marshala Blukhera prospect, 12, litera ZH, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 228182 dated April 22, 2011. • A land plot with a total area of 21,673 sqm (cadastral number 78:10:0005125:40), located at: Saint Petersburg, Marshala Blukhera prospect, 12, litera GO, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 467064 dated December 12, 2011. • A land plot with a total area of 25,070 sqm (cadastral number 78:10:0005125:28), located at: Saint Petersburg, Marshala Blukhera prospect, 12, litera AY, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 467999 dated December 12, 2011. • A land plot with a total area of 3,450 sqm (cadastral number 78:10:0005125:20), located at: Saint Petersburg, Marshala Blukhera prospect, 12, litera GK, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 467065 dated December 12, 2011. • A land plot with a total area of 2,812 sqm (cadastral number 78:10:0005125:21), located at: Saint Petersburg, Marshala Blukhera prospect, 12, litera BF, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 467905 dated January 24, 2012. • A land plot with a total area of 21,723 sqm (cadastral number 78:10:0005125:68), located at: Saint Petersburg, Marshala Blukhera prospect, 12, litera BV, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 620112 dated June 06, 2012. • A land plot with a total area of 89,056 sqm (cadastral number 78:10:0005125:70), located at: Saint Petersburg, Marshala Blukhera prospect, 12, litera AE, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 620113 dated May 26, 2012. • A land plot with a total area of 55,908 sqm (cadastral number 78:10:0005125:69), located at: Saint Petersburg, Marshala Blukhera prospect, 12, litera H, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 620111 dated June 04, 2012. • A land plot with a total area of 10,708 sqm (cadastral number 78:10:0005125:67), located at: Saint Petersburg, Marshala Blukhera prospect, 12, litera AE, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 620110 dated June 04, 2012.
PROPERTY DESCRIPTION
Site area: 34.45 hectares
Projected property type: Mass-market residential complex
Projected gross build area: 544,700 sqm
Net area of the flats: 339,678 sqm
Net commercial area: 7,597 sqm
Ground parking: 1,200 parking spaces
Location / environment: The subject site is situated in the Kalininskiy District of St. Petersburg, in the quarter formed by Marshala Blukhera Avenue, Laboratorniy Avenue and Bestuzhevskaya Street.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 193
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Access / egress: The property has good accessibility. All types of public transport are well developed in the subject district. The metro stations Lesnaya and Ploshad Muzhestva are located 3 and 5 km from the subject site, respectively.
Nearby amenities: The immediate environs comprise an established residential area with social amenities. Description: The Subject Property represents a land plot with a total area of 34.45 hectares zoned as settlement land. As at the date of valuation the land plot is free of any buildings and is fenced. In accordance with information received from the Client, the development project will comprise the construction of a residential complex with a total area of 544,700 sqm consisting of several residential buildings of 17 – 25 floors with integrated commercial space and underground parking. Start of construction: June 2012
Projected completion: October 2018
Zoning and restrictions: The subject land plots have the following characteristic:
• Permitted use: for allocation of industrial and warehouse facilities; • Category: settlement land. Source: Client’s information, Cushman & Wakefield
Picture 1. Land plot Picture 2. Land plot
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 16,058,746,302 RUR construction costs:
Average market sale price 68,000 RUR per sqm for residential area:
Average market sale price 68,000 RUR per sqm
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 194
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
for commercial area:
Average market sale price 300,000 RUR for parking space:
Current stage of 1st stage: construction permit is received, construction and sales development: 2nd stage: project development
Readiness of development 11% stage:
Development strategy: Build and sell
Discount rate: 21%
Special assumption: No
Other: No
Market value: 4,322,985,474 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 195
City: Saint Petersburg
Address: Primorskiy District, Name: Residential complex Parashutnaya Street “Shuvalosvkiy Kar’er”
Inspected on: December 11, 2012 Inspected by: Polina Mitina
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 309,448 sqm (cadastral number 78:34:4281:121), located at: Saint Petersburg, Prigorodniy, land plot 208, is held freehold by private individual – Berezin D.K. Type of the right: ownership in common - 50% of interest. • A land plot with a total area of 309,448 sqm (cadastral number 78:34:4281:121), located at: Saint Petersburg, Prigorodniy, land plot 208, is held freehold by private individual – Zhorov V.A. Type of the right: ownership in common - 50% of interest.
PROPERTY DESCRIPTION
Site area: 30.9 hectares
Projected property type: Mass-market residential complex
Projected gross build area: 592,170 sqm
Net area of the unsold flats: 418,450 sqm
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 196
Net commercial area 3,653 sqm (unsold):
Ground parking (unsold): 2,520 parking spaces
Location / environment: The Subject Property is situated in the Primorskiy District of St-Petersburg, on Parashutnaya Street. Access / egress: The Property is located within a 20-minute drive of Pionerskaya and Komendantskaya Plostchad metro stations. The Property is close to main roads, is also well served by public transportation. Nearby amenities: The Property benefits from a number of nearby leisure, retail and social amenities. There is a nature reserve, Yuntolovskaya Dacha, in close proximity to the Subject Property which features an artificial lake, playgrounds and walking paths. Description: The Subject Property comprises land plots with a total area of 64 hectares zoned as settlement land. As at date of valuation the land plot is free of any buildings. A protection zone related to the overhead electricity lines (5,234 sqm), a coastal/embankment protection zone for water bodies (4,674 sqm) and a water conservation district of water bodies (23,478 sqm) spread through the territory of the Property. In accordance with information received from the Client the land plot is intended for future development of a mass market residential complex with a total area of 592,170 sqm. The complex is to comprise several residential buildings of 15 - 25 floors with integrated commercial premises and underground parking. Currently the development project is in planning process. Start of construction: July 2013
Projected completion: December 2019
Zoning and restrictions: The subject land plots have the following characteristic:
• Permitted use: for agricultural uses; • Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 197
Picture 1. Land plot Picture 2. Land plot
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 23,276,091,538 RUR construction costs:
Average market sale price 68,000 RUR per sqm for residential area:
Average market sale price 68,000 RUR per sqm for commercial area:
Average market sale price 200,000 RUR for parking space:
Current stage of Developing of project development and land survey. development:
Readiness of development 0% stage:
Development strategy: Build and sell
Discount rate: 25%
Special assumption: No
Other: No
Market value: 3,526,003,500 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 198
City: Saint Petersburg
Address: Krasnogvardeyskiy Name: Residential complex District, north-east “Murinskiy kvartal” border of the city
Inspected on: December 10, 2012 Inspected by: Polina Mitina
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 605,611 sqm (cadastral number 78:11:5606:67), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 11, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 234621 dated May 31, 2011. • A land plot with a total area of 8,556 sqm (cadastral number 78:11:5608:68), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 12, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 234735 dated June 01, 2011. • A land plot with a total area of 249,666 sqm (cadastral number 78:11:5609:13), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 116, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 664904 dated August 21, 2012. • A land plot with a total area of 43,660 sqm (cadastral number 78:11:5609:14), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 117, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 664903 dated August 21, 2012.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 199
• A land plot with a total area of 11,030 sqm (cadastral number 78:11:5609:15), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 118, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 664905 dated August 21, 2012. • A land plot with a total area of 186,682 sqm (cadastral number 78:11:5608:66), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 36, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 234439 dated May 31, 2011.
PROPERTY DESCRIPTION
Site area: 110,52 hectares
Projected property type: Mass-market residential complex
Projected gross build area: 1,104,867 sqm
Net area of the unsold flats: 796,380 sqm
Net commercial area 10,054 (unsold):
Ground parking (unsold): 7,746 parking spaces
Location / environment: The Subject Property is located along Piskarevskiy Prospect, near the St- Petersburg Ring Road (the KAD), in the Krasnogvardeyskiy District of St- Petersburg. Access / egress: The area is well connected to the city centre by Sverdlovskaya Embankment and the Orlovsky Tunnel, which is currently under construction. The nearby KAD provides highway access to the southern and northern parts of the city. The closest metro stations: Devyatkino, Grazhdanskiy Prospect and Plowad Muzhestva – are located at a distance of 10-15 minutes by car to the north of the property. A new metro station, Ruchyi, is planned to be built by 2020 in close proximity to the Subject Property. Nearby amenities: The Subject Property is surrounded by agricultural fields, parkland and the Okhta River and development project “Tsvetnoy Gorod”. Description: The Subject comprises a land plot with a total area of 110.52 hectares intended for future development as a residential complex with a total area of 1,500,000 sqm. As of the date of valuation the land plot is free of any buildings, and isunfenced. The future complex is to consist of residential buildings of different number of floors with integrated commercial premises and underground parking, and social facilities: 3 schools, 5 nursery schools and 2 clinics. Currently this development project is in the process of planning. Start of construction: September 2012
Projected completion: December 2017
Zoning and restrictions: The subject land plots have the following characteristic:
• Permitted use: for agricultural use; • Category: settlement land.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 200
Source: Client’s information, Cushman & Wakefield
Picture 2. Land plot Picture 2. Land plot
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 40,487,995,200 RUR construction costs:
Average market sale price 65,000 RUR per sqm for residential area:
Average market sale price 68,000 RUR per sqm for commercial area:
Average market sale price 300,000 RUR for parking space:
Current stage of Development plan and boundary setting plan is in process of confirmation by development: city government; construction projects is on expertise.
Readiness of development 10% stage:
Development strategy: Build and sell
Discount rate: 26%
Special assumption: No
Other: No
Market value: 4,635,345,651 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 201
City: Saint Petersburg
Address: Krasnogvardeyskiy Name: Residential complex District, Piskarevskiy “Ruch’i” Prospect, 145
Inspected on: December 10, 2012 Inspected by: Polina Mitina
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 89,793 sqm (cadastral number 78:11:5606:98), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 111, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 206715 dated April 26, 2011. • A land plot with a total area of 15,510 sqm (cadastral number 78:11:5606:99), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 112, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 206714 dated April 26, 2011. • A land plot with a total area of 43,266 sqm (cadastral number 78:11:5606:104), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 114, is held freehold by LLC “GDSK”according to the ownership certificate 78 AZh 206872 dated April 26, 2011. • A land plot with a total area of 21,749 sqm (cadastral number 78:11:5606:106), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 115, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 206875 dated April 27, 2011.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 202
• A land plot with a total area of 66,307 sqm (cadastral number 78:11:5606:105), located at: Saint Petersburg, Pickarevskiy Prospect, 145, bldg. 3, litera A, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 206874 dated April 27, 2011.
PROPERTY DESCRIPTION
Site area: 23.66 hectares
Projected property type: Mass-market residential complex
Projected gross build area: 282,321 sqm
Net area of the unsold flats: 209,435 sqm
Net commercial area 1,986 sqm (unsold):
Ground parking (unsold): 2,495 parking spaces
Location / environment: The Subject Property is located along Piskarevskiy Prospect, near the St- Petersburg Ring Road (the KAD), in the Krasnogvardeyskiy District of St- Petersburg.
Access / egress: The area is well connected to the city centre by Sverdlovskaya Embankment and the Orlovsky Tunnel, which is currently under construction. The nearby KAD provides highway access to the southern and northern parts of the city. The closest metro stations: Devyatkino, Grazhdanskiy Prospect and Plowad Muzhestva – are located at a distance of 15-20 minutes by car to the north of the property. A new metro station, Ruchyi, is planned to be built by 2020 in close proximity to the Subject Property.
Nearby amenities: The Subject Property is surrounded by agricultural fields, parkland, the Okhta River and development project “Tsvetnoy Gorod”. Description: The Subject Property comprises a land plot with a total area of 236,625 sqm intended for future development of a residential complex with a total area of 282,321 sqm. As of date of valuation the land plot is free of any buildings, and is not fenced. The future complex is to consist of residential buildings of different number of floors with integrated commercial premises and underground parking, and social facilities: a school and a nursery school. Currently the development project is in the process of planning. Start of construction: June 2015
Projected completion: December 2017
Zoning and restrictions: The subject land plots have the following characteristic:
• Permitted use: for agricultural use; • Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 203
Picture 1. Land plot Picture 2. Land plot
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 11,023,809,868 RUR construction costs:
Average market sale price 65,000 RUR per sqm for residential area:
Average market sale price 68,000 RUR per sqm for commercial area:
Average market sale price 300,000 RUR for parking space:
Current stage of The process of project development of the future residential complex development:
Readiness of development 4% stage:
Development strategy: Build and sell
Discount rate: 22%
Special assumption: No
Other: No
Market value: 2,375,762,069 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 204
City: Saint Petersburg
Address: Krasnogvardeyskiy Name: Residential complex District, Piskarevskiy “Tsvetnoy Gorod” Prospect, 145
Inspected on: December 11, 2012 Inspected by: Polina Mitina
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 369,674 sqm (cadastral number 78:11:5606:73), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 8, is held freehold by LLC “GDSK” according to the ownership certificate 78-AD 236622 dated May 31, 2011. • A land plot with a total area of 644,530 sqm (cadastral number 78:11:5606:68), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 9, is held freehold by LLC “GDSK” according to the ownership certificate 78-AD 207472 dated May 13, 2011. • A land plot with a total area of 523,405 sqm (cadastral number 78:11:5606:75), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 15, is held freehold by LLC “GDSK” according to the ownership certificate 78-AZh 235186 dated June 06, 2011. • A land plot with a total area of 37,635 sqm (cadastral number 78:11:5606:62), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 16, is held freehold by LLC “GDSK” according to the ownership certificate 78-AZh 664909 dated August 21, 2012.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 205
• A land plot with a total area of 130,653 sqm (cadastral number 78:11:5606:91), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 17, is held freehold by LLC “GDSK” according to the ownership certificate 78-AЖ 327799 dated September 13, 2011. • A land plot with a total area of 97,233 sqm (cadastral number 78:11:5606:66), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 38, is held freehold by LLC “GDSK” according to the ownership certificate 78-AZh 664908 dated August 21, 2012. • A land plot with a total area of 315,381 sqm (cadastral number 78:11:5606:83), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 39, is held freehold by LLC “GDSK” according to the ownership certificate 78-AZh 234437 dated February 28, 2011. • A land plot with a total area of 576,674 sqm (cadastral number 78:11:5606:82), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 40, is held freehold by LLC “GDSK” according to the ownership certificate 78-AZh 234438 dated May 31, 2011. • A land plot with a total area of 180,004 sqm (cadastral number 78:11:5606:86), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 43, is held freehold by LLC “GDSK” according to the ownership certificate 78-AZh 234734 dated June 01, 2011. • A land plot with a total area of 174,362 sqm (cadastral number 78:11:5606:87), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 44, is held freehold by LLC “GDSK” according to the ownership certificate 78-AZh 234732 dated June 01, 2011. • A land plot with a total area of 6,281 sqm (cadastral number 78:11:5606:67), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 45, is held freehold by LLC “GDSK” according to the ownership certificate 78-AZh 234623 dated June 01, 2011. • A land plot with a total area of 205,392 sqm (cadastral number 78:11:5606:88), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 67, is held freehold by LLC “GDSK” according to the ownership certificate 78-AZh 327800 dated September 13, 2011. • A land plot with a total area of 79,041 sqm (cadastral number 78:11:5606:81), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 71, is held freehold by LLC “GDSK” according to the ownership certificate 78-AZh 541671 dated June 01, 2011. • A land plot with a total area of 255,004 sqm (cadastral number 78:11:5606:84), located at: Saint Petersburg, Piskarevskiy Prospect, 171, bldg.3, litera A, is held freehold by LLC “GDSK” according to the ownership certificate 78-AZh 327802 dated September 13, 2011. • A land plot with a total area of 191,812 sqm (cadastral number 78:11:5607:97), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 108, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 625799 dated June 08, 2012. • A land plot with a total area of 307,929 sqm (cadastral number 78:11:5607:93), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 104, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 664907 dated August 21, 2012. • A land plot with a total area of 253,751 sqm (cadastral number 78:11:5607:94), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 105, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 664906 dated August 21, 2012. • A land plot with a total area of 22,279 sqm (cadastral number 78:11:5607:95), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 106, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 664902 dated August 21, 2012. • A land plot with a total area of 39,251 sqm (cadastral number 78:11:5606:71), located at: Saint Petersburg, Piskarevskiy Prospect, 177, litera A is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 663894 dated August 01, 2012. • A land plot with a total area of 50,056 sqm (cadastral number 78:11:5606:72), located at: Saint Petersburg, Piskarevskiy Prospect, 175, litera A is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 663895 dated August 01, 2012. • A land plot with a total area of 3,100 sqm (cadastral number 78:11:5607:99), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 110, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 625798 dated June 08, 2012. • A land plot with a total area of 34,114 sqm (cadastral number 78:11:5607:98), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 109, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 625797 dated June 08, 2012.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 206
• A land plot with a total area of 54,242 sqm (cadastral number 78:11:005607:96), located at: Saint Petersburg, territory of the enterprise “Ruch’i”, land plot 107, is held freehold by LLC “GDSK” according to the ownership certificate 78 AZh 625800 dated June 20, 2012.
PROPERTY DESCRIPTION
Site area: 453.90 hectares
Projected property type: Mass-market residential complex
Projected gross build area: 5,458,098 sqm
Net area of the unsold flats: 2,470,215 sqm
Net commercial area 651,150 sqm (unsold):
Ground parking (unsold): 25,413 parking spaces
Location / environment: The Subject Property is locatedalong Piskarevskiy Prospect, near the St- Petersburg Ring Road (the KAD), in the Krasnogvardeyskiy District of St- Petersburg.
Access / egress: The area is well connected to the city centre by Sverdlovskaya Embankment and the Orlovsky Tunnel, which is currently under construction. The nearby KAD provides highway access to the southern and northern parts of the city. The closest metro stations: Devyatkino and Grazhdanskiy Prospect and Plowad Muzhestva – are located in a distance of 15-20 minutes by car to the north of the property. A new metro station, Ruchyi, has been planned to be built by 2020 in close proximity to the Subject Property.
Nearby amenities: The Subject Property is surrounded by agricultural fields, parkland and the Okhta River. Description: The Subject Property is represented by land plots with a total area of 453.90 hectares intended for future development of a residential complex with a total area of 5,458,098 sqm. As of date of valuation the land plots are free of any buildings, and are unfenced. The future complex is to consist of residential buildings of different number of floors with integrated commercial premises, underground parking, and social facilities: 12 schools, 15 nursery schools and 4 clinics. Currently the development project is in the planning process. Start of construction: January 2016
Projected completion: December 2025
Zoning and restrictions: The subject land plots have the following characteristic:
• Permitted use: for agricultural use; • Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 207
Picture 1. Land plot Picture 2. Land plot
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 208
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 160,367,807,216 RUR construction costs:
Average market sale price 65,000 RUR per sqm for residential area:
Average market sale price 68,000 RUR per sqm for commercial area:
Average market sale price 300,000 RUR for parking space:
Current stage of Development plan and boundary setting plan is in process of confirmation by development: city government, 1st stage and development design are confirmed, 2nd stage is developing.
Readiness of development 1% stage:
Development strategy: Build and sell
Discount rate: 30%
Special assumption: No
Other: No
Market value: 9,385,360,740 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 209
City: Leningrad Region
Address: Vyborgskiy District, Name: Cottage village “Leninskoe” Village “Dachnoe”
Inspected on: December 12, 2012 Inspected by: Polina Mitina
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 299,700 sqm (cadastral number 47:01:17-06-001:0430), located at: Leningrad Region, Vyborgskiy District, municipal entity “Pervomayskoe rural settlement”, land plot # 7 and 8, is held freehold by LLC “Osobnyak” according to the ownership certificate 47-AB 007371 dated January 21, 2011.
PROPERTY DESCRIPTION
Site area: 29.97 hectares
Projected property type: Individual land plots intended for further cottage development
Net area of the unsold land 299,700 sqm plots:
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 210
Quantity of the unsold land 125 plots:
Location / environment: The Subject Property is located approximately 50 km north of St-Petersburg in the Vyborgskiy District, the most prestigious district of the northern Leningrad Region for out-of-town residential development.
Access / egress: The Property benefits from easy access to St. Petersburg via the Scandinavia federal highway. The railway station “Repino” is located within a 10 minutes drive of the Property.
Nearby amenities: The Property is situated in a zone of completed cottages and development projects in the final stages of construction (Akhmatovo, Repinskaya usadba). It is situated 5-7 km to the east of the Gulf of Finland. Description: The Subject Property comprises development land with a total area of 29.97 hectares intended for the further development of the individual land plots. In accordance with information received from the Client, the land plot will be marketed “as serviced”. Start of construction: July 2011
Projected completion: December 2014
Zoning and restrictions: The subject land plots have the following characteristic:
• Permitted use: for country house/cottage development; • Category: agricultural land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 211
Picture 2. Land plot Picture 3. Land plot
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 5,782,656 RUR construction costs:
Average market sale price 600 RUR per sqm for the land plot:
Current stage of Conceptual design development:
Readiness of development 98% stage:
Development strategy: Build and sell
Discount rate: 20%
Special assumption: No
Other: No
Market value: 147,550,924 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 212
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Leningrad Region
Address: Vyborgskiy District, Name: Land plots “Bolshoy “Leninskoe” Village Alakul”
Inspected on: December 12, 2012 Inspected by: Polina Mitina
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 467,346 sqm (cadastral number 47:01:17-06-001:0879), located at: Leningrad Region, Vyborgskiy District, municipal entity “Pervomayskoe rural settlement”, land plot # 1, is held freehold by LLC “Osobnyak” according to the ownership certificate 47-AV 073735 dated January 01, 2011. • A land plot with a total area of 127,715 sqm (cadastral number 47:01:17-06-001:0878), located at: Leningrad Region, Vyborgskiy District, municipal entity “Pervomayskoe rural settlement”, land plot # 2, is held freehold by LLC “Osobnyak” according to the ownership certificate 47-AV 007372 dated January 21, 2011. • A land plot with a total area of 37,674 sqm (cadastral number 47:01:17-06-001:0160), located at: Leningrad Region, Vyborgskiy District, municipal entity “Pervomayskoe rural settlement”, land plot # 11, is held freehold by LLC “Osobnyak” according to the ownership certificate 47-AV 007369 dated January 21, 2011. • A land plot with a total area of 125,685 sqm (cadastral number 47:01:17-06-001:0162), located at: Leningrad Region, Vyborgskiy District, municipal entity “Pervomayskoe rural settlement”, village “Leninskoe”, is held freehold by LLC “Osobnyak” according to the ownership certificate 47-AV 007370 dated January 21, 2011.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 213
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
PROPERTY DESCRIPTION
Site area: 75.84 hectares
Projected property type: Individual land plots intended for further cottage development
Net area of the unsold land 758,417 sqm plots:
Quantity of the unsold land 300 plots:
Location / environment: The Subject Property is located approximately 40-45 km north of St- Petersburg in the Vyborgskiy District, the most prestigious district of the northern Leningrad Region for out-of-town residential development.
Access / egress: The Property benefits from easy access to St. Petersburg via the Scandinavia federal highway. The railway station “Repino” is located within a 10 minute drive from the Property.
Nearby amenities: The Property is situated in a zone of development projects in their final stages (Noviy Mir, ParkWay, Akhmatovo, Repinskaya Usadba). Description: The Subject Property comprises development land with a total area of 75.84 hectares intended for the development of individual land plots. In accordance with information received from the Client, the land plots will be on the market “as serviced”. Start of construction: February 2011
Projected completion: December 2014
Zoning and restrictions: The subject land plots have the following characteristic:
• Permitted use: for country house/cottage development; • Category: agricultural land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 214
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 2. Land plot Picture 3. Land plot
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 72,655,979 RUR construction costs:
Average market sale price 500 RUR per sqm for the land plot:
Current stage of Conceptual design development:
Readiness of development 85% stage:
Development strategy: Build and sell
Discount rate: 25%
Special assumption: No
Other: No
Market value: 221,972,616 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 215
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Moscow
Address: Davydkovskaya Street, 16 Name: Davydkovskaya
Inspected on: January 11, 2013 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area of 1.14 ha (cadastral number 770709004052) is held freehold. The land plot is held on a common hold collective basis by the flat owners. • The premises with a total area of 1,737 sqm are held freehold by CJSC "LSR. Nedvizhimost-M" in accordance with the Ownership Certificates: • Ownership certificate for the premise of 3.7 sqm (77-AZh 620171 dated 22.08.2008); • Ownership certificate for the premise of 273.3 sqm (77-AZh 495711 dated 14.05.2008); • Ownership certificate for the premise of 406.1 sqm (77-AZh 438017 dated 25.04.2008); • Ownership certificate for the premise of 342.2 sqm (77-AZh 495712 dated 14.05.2008); • Ownership certificate for the premise of 308.4 sqm (77-AZh 437607 dated 28.03.2008); • Ownership certificate for the premise of 403.5 sqm (77-AZh 438018 dated 25.04.2008).
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 216
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
• 6 parking spaces are held freehold by CJSC "LSR. Nedvizhimost-M" in accordance with the Ownership Certificates: • Ownership certificate for the parking space of 11.9 sqm (77-AZh 541948 dated 30.04.2008); • Ownership certificate for the parking space of 11.8 sqm (77-AZh 541812 dated 23.04.2008); • Ownership certificate for the parking space of 11.7 sqm (77-AZh 541749 dated 18.04.2008); • Ownership certificate for the parking space of 11.9 sqm (77-AZh 541949 dated 30.04.2008); • Ownership certificate for the parking space of 11.8 sqm (77-AZh 541900 dated 29.04.2008); • Ownership certificate for the parking space of 11.9 sqm (77-AZh 541811 dated 23.04.2008).
PROPERTY DESCRIPTION
Site area: 1.14 hectares
Property type: Commercial premises situated in the residential building of business class
Gross build area: 41,819 sqm
Net leasable area: 1,737 sqm
Vacant area: n/a
Underground parking: 6 parking spaces
Ground parking: The adjacent territory allows the allocation of more than 10 car parking spaces.
Location / environment: The Property is located in the Western Administrative District of Moscow, Davydkovo Microdistrict, in close proximity to Kutuzovskiy Avenue (within 600 meters).
Access / egress: The Property is situated at a small distance from Kutuzovskiy Avenue (approximately 600 meters) and within 2 kilometers from Slavyanskiy Boulevard metro station. It also has an access to two major city thoroughfares – Rublevskoe Highway and Amin’evskoe Highway.
Nearby amenities: The Western Administrative District of Moscow is one of the most prestigious residential areas in the city due to its favorable ecological environment. The Property is surrounded by parkland and the river Setun from the south and residential buildings from the north, west and east. There are also some industrial facilities in the district.
The Property is surrounded by well developed infrastructure objects – in close proximity are several large retail properties - «Perekrestok», «Sportmaster», «M-Video», retail complex «Mozhayskiy», retail complex de- lux class «Vremena Goda». A large business-centre «Vereyskaya Plaza» is situated within 5 min by car.
Description: The Property comprises commercial premises with a total area of 1,737 sqm situated in a semi-basement and two above-ground floors of the business class residential building. The external and internal condition may be characterized as excellent.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 217
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Source: Client’s information, Cushman & Wakefield
Picture 2. Façade Picture 3. Internal premises
Source: Cushman &Wakefield Source: Cushman &Wakefield Picture 4. Internal premises Picture 5. Internal premises
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
# of tenants: Owner occupied
Annual income from current 37,555,418 RUR tenants:
Expiry void period: 30 days
Average market rental rate: Office premises 21,260.89 RUR
Parking spaces 103,500.00 RUR
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 218
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Discount rate: 12%
Capitalization rate: 11%
Special assumption: n/a
Other: n/a
Market value: 344,900,000 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 219
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Moscow
Address: Tverskoy Boulevard, 16 Name: Tverskoy, 16
Inspected on: January 18, 2013 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The building with a total area of 4,903.8 sqm belongs to JSC MTO “Arkhproekt” at around 74.4% (3,647.8 sqm) and the Moscow city at around 25.6% (1,256 sqm). Part of the building, witha total area of 3,647.8 sqm belongs to JSC MTO “Arkhproekt” in accordance with the following documents: • Ownership certificate for the premise 1,176.8 sqm, share in the right 7/10 (823.76 sqm), #77AD 078696 dated 02.03.2007; • Ownership certificate for the premise 1,016 sqm, share in the right 85/100 (863.6 sqm), #77AD 078697 dated 02.03.2007; • Ownership certificate for the premise 338.5 sqm, #77AD 076823 dated 26.12.2006; • Ownership certificate for the premise 1,621.9 sqm, #77AD 076822 dated 26.12.2006.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 220
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
• The land plot, with a total area of 0.14 ha (cadastral number 770101069074) is held on a short-term leasehold according to Land Lease Agreement # M-01-507584 dated 24.04.2001. We were informed by the Client that the Land Lease Agreement expired and the Client is in the process of registration of land lease rights.
PROPERTY DESCRIPTION
Site area: 0.14 hectares
Property type: Office building
Gross build area: 4,903.8 sqm
Net leasable area: 1,644.9 sqm
Vacant area: 557.8 sqm
Underground parking: 30 parking spaces
Ground parking: n/a
Location / environment: The Subject Property is located in the Central Administrative District of Moscow, right on the Boulevard Ring at Tverskoy Boulevard, 16.
Access / egress: The Property is situated in close proximity to the Pushkinskaya, Tverskaya and Chekhovskaya metro stations. Access to the Property is easy and convenient.
Nearby amenities: The Property is situated in a mixed area and surrounded by residential buildings, office and business objects, as well as by cultural and social properties.
Description: The Subject Property comprises an office building with a total area of 4,903.8 sqm (the area belong to the Client comprises 3,647.8 sqm). Number of floors – 2 underground and 4 above ground. A renovation of the building was conducted in 2005. The external and internal condition may be characterized as excellent.
The property is occupied by the Client.
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 221
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 2. Façade Picture 3. Internal premises
Source: Cushman &Wakefield Source: Cushman &Wakefield Picture 4. Internal premises Picture 5. Underground parking
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)/The Sales Comparison Approach
# of tenants: Owner occupied
Annual income from current n/a tenants:
Expiry void period: n/a
Average market sale price 328,088 RUR per sqm:
Discount rate: n/a
Capitalization rate: n/a
Special assumption: n/a
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 222
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Other: n/a
Market value: 1,196,785,000 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 223
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Moscow
Address: Sadovnicheskaya Street, 9, Name: Noviy Balchug bld.1, 2, 3
Inspected on: January 15, 2013 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area of 0.42 ha belongs to the city of Moscow. • Investment contract #2-2148/p-2 dated 13.07.2003 between the Government of Moscow and LLC “Velikan- XXI vek” (Investor) is currently expired. • Additional agreement #4 to the investment contract #2-2148/p-2 dated 26 June 2012. • The Moscow Governmenr Order dated 22 May 2012 # 251-РП “Concerning further realization of the investment project at the address: Sadovnicheskaya street, 9, buildings 1, 2, 3”.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 224
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
PROPERTY DESCRIPTION
Site area: 0.42 hectares
Projected property type: Land plot designed for construction of an A class multifunctional complex with office and retail premises, apartments and underground car park.
Projected gross build area: 24,815 sqm
Net area of the unsold flats: 7,731 sqm
Net commercial area 4,368 sqm (unsold):
Ground parking (unsold): 170 parking spaces
Location / environment: The Subject Property is located in the Central Administrative District of Moscow, at Sadovnicheskaya Street, 9, within 0.5 km from the Kremlin and Red Square, surrounded by Raushskaya and Sadovnicheskaya embankments.
Access / egress: Property location is a well established business centree which can be accessed via both major transport road and by metro.
Excellent transport accessibility is provided by the Garden Ring and Boulevard Ring. Nearest metro stations are Novokuznetskaya and Tret’yakovskaya.
Nearby amenities: The following properties are situated near the Subject Property: Balchug- Kempinsky Hotel, Bank of Russia office and RosNeft office, The English Embassy.
The Property is situated close to the planned district “Zolotoy Ostrov” which will include elite residential quarters, office, retail and entertainment complexes, high class hotels and historical and architectural monuments.
Property location may be described as excellent due to its position in the centre of Moscow, proximity to the Red Square and the Cathedral of Christ the Savior.
Description: The Subject Property comprises a land plot with a total area 0.42 ha with existing old residential buildings which are projected to be renovated and reconstructed into A class multifunctional complex with office, retail premises, apartments and underground car park. Total area of the complex will comprise 24,815 sqm.
The Client is planning to start construction in Q1 2014.
Start of construction: February 2014
Projected completion: December 2017
Zoning and restrictions: The subject land plots have the following characteristics: • Category: settlement land. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 225
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 2. Façade Picture 3. Façade
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 1,592,828,544 RUR construction costs:
Average market sale price 480,000 RUR per sqm for residential area:
Average market sale price 400,000 – 450,000 RUR per sqm for commercial area:
Average market sale price 4,800,000 RUR for parking space:
Current stage of The current status of the project if the following: - all former residents are development: resettles except for one flat; - project documentation is completed; - MosGosExpertisa conclusion is received; Act of permitted use is received; technical and economic performances for the project are received. Readiness of development 54% stage:
Development strategy: Build and sell
Discount rate: 22%
Special assumption: No
Other: No
Market value: 2,285,181,061 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 226
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Moscow Region
Address: Odintsovskiy District, Name: Grunvald Zarech’e Settlement, Vesennyaya Street, 1, k.1- 8, 5, k.1-5, 3, k.1-3, 7
Inspected on: January 11, 2013 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The Land Plot, with a total area of 4.1 ha (cadastral number 50:20:002 02 02:0114) belongs to the Federal Security Service of the Russian Federation in accordance with ownership certificate 50 AD 655402 dated 20.10.2003. • Investment contract #F504/03 dated 17.12.2003 is concluded between the Federal Security Service of the Russian Federation and CJSC "LSR. Nedvizhimost-M". According to the investment contract shares of the participants are as follows: the Federal Security Service of the Russian Federation (Developer) – 30%, CJSC "LSR. Nedvizhimost-M" (Investor) – 70%.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 227
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
PROPERTY DESCRIPTION
Site area: 4.1 hectares
Projected property type: Business class residential complex
Projected gross build area: 58,330.60 sqm
Net area of the unsold flats: 3,113 sqm
Net commercial area 2,574 sqm (unsold):
Ground parking (unsold): 143 parking spaces
Location / environment: The Subject Property is located in the Moscow Region, within 1.5 kilometer of the MKAD and 0.4 kilometer to the Zarech’e Settlement. It is linked with the city centre via Skolkovskoe Highway.
Access / egress: The Subject Property is easy to access via Skolkovskoe Highway and through Zarech’e Settlement using road interchange ‘50th km of the MKAD’.
There are also several public transport routes – buses № 205, 818 and mini- buses № 818 from Kievskaya metro station and Park Pobedy metro station. Travel time comprises 15-20 minutes.
The location of the property may be characterized as very successful due to its situation in the prestigious Western district, its close proximity to Moscow, convenient access to major thoroughfares (Kutuzovskiy Avenue) and situation in an ecologically favorable green zone, which are all locationaly advantageous.
Nearby amenities: The boundaries of the site from the north-east, north-west and south-east, are the land plots of LLC “Zarech’e S.A.Kushnareva”, from the south-west – land plots of the NPO "Economika", in the north - the river Setun. In close proximity is an elite class country houses development. The distance of the area from the residential development is about 100 meters. The site is accessed via a good asphalt road that passes through the Zarech’e Settlement.
Description: The Property comprises a business class complex of 13 detached low-rise residential buildings, custom designed to modern specifications. The complex also includes underground parking for 269 parking spaces (143 are unsold) and commercial premises, including a fitness-centre. All the apartments are ready for internal fit-out works.
Start of construction: March 2005
Projected completion: • August 2010 – residential complex • 2013 – FOK and landscaping Zoning and restrictions: The subject land plots have the following characteristics: • Land category: settlement land • Permitted use: for residential construction.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 228
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Source: Client’s information, Cushman & Wakefield
Picture 2. Territory of the complex Picture 3. Territory of the complex
Source: Cushman &Wakefield Source: Cushman &Wakefield Picture 4. Internal premises Picture 5. FOK
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 101,206,632 RUR construction costs:
Average market sale price 205,553 RUR per sqm for residential area:
Average market sale price 115,000 RUR per sqm for commercial area:
Average market sale price 1,775,362 RUR for parking space:
Current stage of Residential complex – completed and put into operation development:
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 229
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Readiness of development FOK – 90% of completeness stage:
Development strategy: Build and sell
Discount rate: 10%
Special assumption: No
Other: No
Market value: 1,065,896,632 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 230
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Moscow
Address: Leningradskoe Highway, Name: Leningradskoe Shosse 58, bld.14, 21
Inspected on: January 14, 2013 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area 1.766 ha consists of two land plots of 0.96 ha and 0.806 ha. • The land plot of 0.96 ha (cadastral number 77:09:0001020:71), located at the address Leningradskoe Highway, 58, bld.14, belongs to CJSC "LSR. Nedvizhimost-M" on freehold in accordance with the sale contract #M-09-C00170 dated 23.06.2009. • The land plot of 0.806 ha (cadastral number 77:09:0001020:73), located at the address Leningradskoe Highway, 58, bld.21, is held freehold by LLC “Kentavr management” on the basis of ownership certificate 77- AO 379639 dated 21.09.2012.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 231
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
PROPERTY DESCRIPTION
Site area: 1.766 (0.96 + 0.806) hectares
Projected property type: Business class residential complex
Projected gross build area: 96,520 sqm
Net area of the unsold flats: 46,079 sqm
Net commercial area 3,310 sqm (unsold):
Ground parking (unsold): 989 parking spaces
Location / environment: The Subject Property is located in the North Administrative District of Moscow in close proximity to Leningraskoe Highway (second line) and Vodniy Stadion metro station.
Access / egress: The Subject Property is well situated: Vodniy Stadion is located within 500 meters; the distance between the Property and the city centre is about 12 km; Sheremet’evo airport is located at a distance of 15 km from the site.
The site is situated in close proximity to the largest transport thoroughfares – Leningradskoe Highway, Golovinskoe Highway and Pulkovskaya Street.
Construction works are taking place on the interchanges for the Leningraskoe and Golovinskoe Highways, which will provide adequate vehicular access to the Property.
Nearby amenities: The Subject Property is situated on the territory of the Scientific and Research Institute of Machinery Manufacturing, which will be actively developed into residential and social properties in the nearest future.
From the north the Property borders with new a residential area, from the south with two retail centres, from the east – a former industrial area under residential development and from the west – Leningradskoe Highway and the recreational area of the river port.
The location of the Property is characterized by well developed social and business infrastructure. Prestigious surrounding of the Property is represented by an elite residential complex “Gorod Yakht” recreational area of the river port. A modern fitness-centre is being constructed in close proximity.
Description: The Subject Property is designed for construction of a business class residential complex with a total area of 96,520 sqm; the complex will include commercial premises as well as underground parking.
Start of construction: February 2014
Projected completion: December 2017
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 232
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Zoning and restrictions: • Land plot of 0.96 ha: category – settlement land; permitted use – for operation of administrative and industrial building. Encumbrances: there is ban on construction and renovation works for the land plot of a total area 0.96 ha. • Land plot of 0.85 ha: category - settlement land; permitted use – for operation of administrative and building. Source: Client’s information, Cushman & Wakefield
Picture 2. Territory of the property Picture 3. Territory of the property
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 4,625,701,418 RUR construction costs:
Average market sale price 160,000 RUR per sqm for residential area:
Average market sale price 140,000 RUR per sqm for commercial area:
Average market sale price 1,450,000 RUR for parking space:
Current stage of Currently the project is going through the stage of architectural and urban development: decisions. The Client is planning to obtain a construction permit by February 2014.
Readiness of development 17% stage:
Development strategy: Build and sell
Discount rate: 25%
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 233
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Special assumption: No
Other: No
Market value: 1,812,986,910 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 234
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Moscow
Address: Serpukhovskiy Val, 19 Name: Donskoy Olymp
Inspected on: January 14, 2013 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • Investment contract #15-03/2011-MK9 dated 06.04.2011 between CJSC "LSR. Nedvizhimost-M" (Developer) and JSC “MZOTsM” (Investor). Currently the land plot (cadastral number 77:05:0001011:8) is held on long-term leasehold by JSC “MZOTsM”. According to the investment contract, the land plot with a total area of 4.72 ha will be held by CJSC "LSR. Nedvizhimost-M" in the long-term leasehold. The participants determine their shares in the project in the following way: CJSC "LSR. Nedvizhimost-M" share – 71.45%, JSC “MZOTsM” share – 28.55%.
PROPERTY DESCRIPTION
Site area: 4.72 hectares
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 235
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Projected property type: Business class residential complex
Projected gross build area: 239,160 sqm
Net area of the unsold flats: 75,023 sqm
Net commercial area 6,288 sqm (unsold):
Ground parking (unsold): 1,329 parking spaces
Location / environment: The Subject Property is located in one of the central and prestigious districts of Moscow – Danilovskiy Microdistrict of the South Administrative District of the city.
Access / egress: The Property is situated 900 meters from Shabolovskaya metro station, not far from the Third Transport Ring (within 1 km). The unconstructed area of the site is a pedestrian and park zone isolated traffic flows and vehicles.
Nearby amenities: The Property is surrounded by residential buildings with accompanying amenities from the north, south, east and west. There are also several industrial micro-zones and Donskoy Monastery in close proximity to the site.
Description: The Subject Property currently comprises a brown-field site with existing industrial plant. The territory is designed for the development and the construction of a business class residential complex with a total area of 239,160 sqm. The complex will include 9 residential buildings, a 3-level underground car park, restaurants and retail premises and a fitness-centre.
Start of construction: March 2013
Projected completion: October 2017
Zoning and restrictions: According to the provided information the category of the land plot is settlement land, permitted use - operation of plant for the production of flat- rolled products of non-ferrous metals. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 236
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 1. Territory of the property Picture 2. Territory of the property
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 10,370,783 589 RUR construction costs:
Average market sale price 215,000 RUR per sqm for residential area:
Average market sale price 160,000 RUR per sqm for commercial area:
Average market sale price 1,900,000 RUR for parking space:
Current stage of As of the date of valuation the project documentation is under consideration development: at GAU “Moskovskaya gosudarstvennaya ekspertiza”. The Client also started demolition works at the site. The Client plans to start on site instruction in 1st quarter 2013.
Readiness of development 5% stage:
Development strategy: Build and sell
Discount rate: 22%
Special assumption: No
Other: No
Market value: 5,905,211,874 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 237
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Moscow Region
Address: Istrinskiy District, Pavlo- Name: Novoe Nakhabino Slobodskoe Settlement, Chernaya Village
Inspected on: January 15, 2013 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area 44.35 ha (cadastral numbers 50: 08:050204:24; 50: 08:050204:25; 50: 08:050204:26; 50: 08:050204:27; 50: 08:050204:35; 50: 08:050209:35; 50: 08:050204:36; 50: 08:050204:37; 50: 08:050204:38; 50: 08:050204:39) is held freehold by CJSC "LSR. Nedvizhimost-M" in accordance with purchase agreements #ZU-PZ-24/04/12-1 dated 24.04.2012 and № LSRN/ZU/7N dated 09.11.2012.
PROPERTY DESCRIPTION
Site area: 44.35 hectares:
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 238
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Phase 1 - 15.30 hectares
Phase 2 - 29.05 hectares
Projected property type: Low-rise residential development of economy class
Projected gross build area: Phase 1 – 61,690 sqm
Phase 2 – 175,626 sqm
Net area of the unsold flats: Phase 1 – 2,557 sqm
Phase 2 – 139,756 sqm
Net commercial area Phase 1 - 274 sqm (unsold): Phase 2 – n/a
Ground parking (unsold): n/a
Location / environment: The Subject Property is located in the North-West of the Moscow Region, in the Istrinsky District near Nahabino Village, at a distance of around 20 km from the MKAD, 5 km from Pavlovskaya Sloboda Village and within 4 km of Dedovsk town.
Access / egress: The property is linked with the centre of Moscow by two Highways – the fast Novorizhskoe Highway (on average a 20 minute drive to the centre of Moscow) and Volokolamskoe Highway (about 40 minutes of driving).
Residential complex “New Nakhabino” also can be reached by public transport – by train (to “Nakhabino” train station, then 5-10 minutes by car to the neighborhood) or by bus. In the near future it is expected that new lines in connection with the opening of metro stations “Mitinskaya”, “Volokolamskaya”, “Myakininskaya” will be constructed.
Nearby amenities: The site borders a large forest area, Nakhabino settlement and quarter “Noviy gorodok”, which has a well-developed infrastructure including a public school, two kindergartens, a fitness centre, bowling club, supermarket, church, nature park, beauty salon, entertainment centre and restaurant. Approximately 4 km from the Property the private school “Pavlovskaya Gymnaziya” and a retail centre “Pavlovskoe Podvor’e” which includes a supermarket, fitness centre, dry cleaning, restaurants are situated.
Description: The Subject Property comprises a land plot with a total area of 44.35 ha, consisting of two land plots of 15.30 ha and 29.05 ha, with an economy low- rise residential complex under construction. The complex includes two phases. The first phase is 93% completed. Construction of the second phase has been recently started.
Flats from 41 to 68 sqm m will be sold with full finishings.
Start of construction: Phase 1 – October 2010
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 239
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Phase 2 – December 2012
Projected completion: Phase 1 – December 2013
Phase 2 – December 2016
Zoning and restrictions: The subject land plots have the following characteristic: • Land category: settlement land • Permitted use: for residential construction. Source: Client’s information, Cushman & Wakefield
Picture 2. 1 phase Picture 3. 1 phase
Source: Cushman &Wakefield Source: Cushman &Wakefield Picture 4. 2 phase Picture 5. 2 phase
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 1 phase – 131,897,095 RUR construction costs: 2 phase – 6,541,064,274 RUR
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 240
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Average market sale price 66,166 RUR per sqm for residential area:
Average market sale price 51,700 RUR per sqm for commercial area:
Average market sale price n/a for parking space:
Current stage of 1 phase – under construction development: 2 phase – under constriction
Readiness of development 1 phase – 93% of completeness stage: 2 phase – 15%
Development strategy: Build and sell
Discount rate: 14%
Special assumption: No
Other: No
Market value: 2,060,447,434 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 241
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Moscow
Address: Leninskiy Municipal Name: iBitsa District, Sosenskoe Settlement, Bachurino Village
Inspected on: December 26, 2012 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area of 59.85 ha (cadastral number 50:21:12 03 16:0087) is held by LLC “Verkros” on a long-term leasehold (49 years). • Investment contract #1-11/2010-INP dated 18.11.2010 is signed between CJSC "LSR. Nedvizhimost-M" (Contractor) and LLC “Verkros“ (Investor-1) and LLC “Lesnaya Kompaniya” (Investor-2). The participants determine their shares in the project in the following way: CJSC "LSR. Nedvizhimost-M" share – 85%, LLC “Verkros“ and LLC “Lesnaya Kompaniya” share – 15% in total.
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A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
PROPERTY DESCRIPTION
Site area: 59.85 hectares
Projected property type: Economy class residential complex
Projected gross build area: 543,334.00 sqm, including:
1 phase – 41,255.00 sqm
2 phase – 166,073.00 sqm
3 phase – 102,715.00 sqm
4 phase – 133,291.00 sqm
5 phase - Retail&entertainment center – 100,000 sqm.
Net area of the unsold flats: 1 phase – 26,151.95 sqm
2 phase – 67,582.65 sqm
3 phase – 64,407.90 sqm
4 phase – 49,032.25 sqm.
Net commercial area 1 phase – 325.47 sqm (unsold): 2 phase – 1,301.01 sqm
3 phase – 1,245.93 sqm
4 phase – 1,188.56 sqm
5 phase - Retail&entertainment center – 68,000 sqm.
Ground parking (unsold): 3,086 parking spaces
Location / environment: The Subject Property is located in the Leninskiy District of the Moscow Region, in the nature park “Bitsevskiy Forest”.
Access / egress: The Property has convenient access. Entry into the territory of the Property is from the MKAD in the north-western part of the site, exit to the MKAD is via the north-eastern part of the site.
There is also a bus stop on the MKAD in the close proximity to the site.
Nearby amenities: The Subject Property borders the MKAD (36th km) and the Severnoe Butovo Microdistrict of the South-West Administrative District of Moscow. In the east, the Property borders with the territory of “Usadba Znamenskoe Sadki”.
The Bitsa River is situated in the north of the Property; the river runs from the west to the east. Wooded areas and brush woods are located on part of the land plot.
Description: The Subject Property is designed for the construction of a residential
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 243
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
complex with infrastructure amenities, retail & an entertainment centre. The total area of the complex will comprise 461,833.90 sqm.
Start of construction: 1 phase – March 2013
2 phase – December 2013
3 phase – October 2014
4 phase – October 2015
5 phase – March 2015.
Projected completion: 1 phase – December 2014
2 phase – December 2015
3 phase – December 2016
4 phase – December 2017
5 phase – December 2017.
Zoning and restrictions: The subject land plots have the following characteristics: • Land category: settlement land. • Permitted use: for residential construction with developed infrastructure. Source: Client’s information, Cushman & Wakefield
Picture 1. Territory of the property Picture 2. Territory of the property
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 18,755,836,097 RUR construction costs:
Average market sale price 100,000 RUR per sqm for residential area:
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 244
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Average market sale price 80,000 RUR per sqm for commercial area:
Average market sale price 800,000 RUR for parking space:
Current stage of MosGosEkspertiza Conclusion is obtained. The Client plans to receive development: construction permit by the end of march 2013.
Readiness of development 2% stage:
Development strategy: Build and sell
Discount rate: 23%
Special assumption: No
Other: No
Market value: 5,903,620,350 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 245
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Moscow Region
Address: Domodedovo, Central Name: Novoe Domodedovo: District, Yuzhniy Microdistrict New Domodedovo 1 New Domodedovo 2
Inspected on: December 25, 2012 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • Investment contract №01-02/2011-MKYu dated 01.02.2011 is signed between CJSC "LSR. Nedvizhimost-M" (Contractor) and LLC “Bolshoe Domodedovo” (Investor). It determines shares of participants in the project in the following way: Investor’s share – 21.5%, Contractor’s share – 78.5%. • The land plot with a total area 39.34 ha consisted of two land plots of 8.95 ha (cadastral number 50:28:0060113:76) and 30.38 ha (cadastral number 50:28:0000000:361). The land plot intended for construction of the 2nd phase comprises 45.3165 hectares (cadastral number 50:28:00 00 000:360).
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 246
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
• According to the provided documents – sales contracts #1 dated 14.10.2011 and #2 dated 14.10.2011 signed between CJSC "LSR. Nedvizhimost-M" and LLC “Bolshoe Domodedovo” the owner of the land plots is CJSC "LSR. Nedvizhimost-M". • Investment contract #09-07/2012-MKYu dated 09.07.2012.
PROPERTY DESCRIPTION
Site area: 84.66 hectares, including:
1 phase - 39.34 hectares
2 phase – 45.3165 hectares
Projected property type: Economy class residential complex
Projected gross build area: 1 phase – 441,000 sqm
2 phase – 381,690 sqm.
Net area of the unsold flats: 1 phase – 216,296 sqm
2 phase – 301,678 sqm.
Net commercial area 1 phase – 6,516 sqm (unsold): 2 phase – 10,593 sqm.
Ground parking (unsold): n/a
Location / environment: The area of residential construction of “Novoe Domodedovo” is situated in close proximity to the Federal Highway M-4 “Don”, at a distance of 18 km from the MKAD, 10 km from Domodedovo Airport and 3 km from railway stations “Vostryakovskaya” and “Vzlentaya” of Paveletskaya Railway Station.
Access / egress: The easiest way to get to the Property is by car. It takes about 20 minutes of driving by car.
There also will be additional public transport routes to the platform “Vzlentaya” after construction completion.
Nearby amenities: The reserved areas of Barybinskoe forestry, Bortnevsky, Stepyginsky and Akulinsky parks are located within walking distance from the property.
Description: The Subject Property represents the land plot with a total area 39.34 ha intended for construction of an economy class residential quarter. It will consist of 26 multi-storeys (from 9 to 17 floors) residential buildings, 2 schools, 3 kindergartens, clinics, children’s playgrounds, landscaped recreation areas, stadiums and sport complexes and three eight-storeys car parks. The initial parameters of social properties are not determined yet. Total area of the complex is 611,831sqm.
Construction of the Property (phase I) was started in October 2011.
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 247
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Start of construction: 1 phase – August 2011
2 phase – July 2013 Projected completion: 1 phase – December 2018
2 phase – August 2017 Zoning and restrictions: The subject land plots have the following characteristics: • Land plot category: settlement land. • Permitted use: complex residential development. Source: Client’s information, Cushman & Wakefield
Picture 2. 1 phase Picture 3. 1 phase
Source: Cushman &Wakefield Source: Cushman &Wakefield Picture 4. I phase Picture 5. 2 phase
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 1 phase – 10,385,351,435 RUR construction costs: 2 phase – 14,745,258,756 RUR
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 248
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Average market sale price 1 phase – 60,000 RUR per sqm for residential area: 2 phase – 60,992 RUR per sqm
Average market sale price 1 phase – 61,000 RUR per sqm for commercial area: 2 phase – 60,867 RUR per sqm
Average market sale price n/a for parking space:
Current stage of 1 phase – construction development: 2 phase – development of project documentation
Readiness of development 1 phase – 22% stage: 2 phase – 0,4%
Development strategy: Build and sell
Discount rate: 1 phase – 16%
2 phase – 20%
Special assumption: No
Other: No
Market value: 1 phase – 3,809,591,542 RUR
2 phase – 2,449,897,152 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 249
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Yekaterinburg
Address: Sukhodolskaya Street Name: Michurinskiy
Inspected on: December 19, 2012 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area 51.88 ha (cadastral numbers 66:41:03 06 109:11; 66:41:03 06 109:10; 66:41:03 06 109:8; 66:41:03 06 109:5; 66:41:03 06 109:7; 66:41:03 06 109:9; 66:41:03 13 009:17; 66:41:03 13 009:18; 66:41:03 13 009:19) is held on freehold in accordance with the following ownership certificates: 66 AG № 566314 dated 10.02.2009; 66 AG № 566313 dated 10.02.2009; 66 AG № 566312 dated 10.02.2009; 66 AG № 638904 dated 09.04.2009; 66 AG № 638905 dated 09.04.2009; 66 AG № 566311 dated 10.02.2009; 66 AG № 566315 dated 10.02.2009; 66 AG № 638923 dated 09.04.2009; 66 AG № 638903 dated 09.04.2009.
PROPERTY DESCRIPTION
Site area: 51.88 hectares
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 250
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Projected property type: Comfort class country houses residential development
Projected gross build area: 300,931sqm
Net area of the unsold flats: 231,485 sqm
Net commercial area n/a (unsold):
Ground parking (unsold): n/a
Location / environment: The Subject Property is located in the south-west outskirts of Yekaterinburg, close to the rural settlement of Michurinsky.
Access / egress: The Subject Property is accessible by a well-maintained asphalted one-lane road. The general plan of the city envisages the construction of a direct access road to the EKAD and construction of roads connecting the Property and Seraphimy Deryabinoy Street., which will be one of the main thoroughfares of the Akademichesky residential district.
Nearby amenities: Mainly the Subject Property is surrounded by one-floor private houses.
Description: The Subject Property represents a green-field land plot with a total area 51.88 ha intended for construction of a comfort class country houses residential development.
Start of construction: January 2013
Projected completion: September 2017
Zoning and restrictions: The subject land plots have the following characteristics: • Land plot category: Settlement land. • Permitted Use: for agricultural use. Source: Client’s information, Cushman & Wakefield
Picture 2. Territory of the property Picture 3. Territory of the property
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 251
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 7,750,952,672 RUR construction costs:
Average market sale price 49,000 RUR per sqm for residential area:
Average market sale price n/a for commercial area:
Average market sale price n/a for parking space:
Current stage of Beginning of construction development:
Readiness of development 6% stage:
Development strategy: Build and sell
Discount rate: 21%
Special assumption: No
Other: No
Market value: 1,562,791,991 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 252
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Yekaterinburg
Address: Shefskaya, Sovkhoznaya Name: Kalinovskiy and Taganskaya Streets
Inspected on: December 19, 2012 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area 8.91 ha (cadastral numbers 66:41:0108027:50; 66:41:0108027:51; 66:41:0108027:52; 66:41:0108027:53; 66:41:0108027:55; 66:41:0108027:57; 66:41:0108027:58; 66:41:0108027:59; 66:41:0108027:60; 66:41:0108027:61; 66:41:0108027:62; 66:41:0108027:63; 66:41:0108027:64; 66:41:0108027:65; 66:41:0108027:66; 66:41:0108027:67) is held freehold in accordance with the following ownership certificates: 66 AG 798978 dated 17.08.2009; 66 AG 798977 dated 17.08.2009; 66 AG 798979 dated 17.08.2009; 66 AG 798980 dated 17.08.2009; 66 AG 798982 dated 17.08.2009; 66 AG 798984; 66 AG 798985 dated 17.08.2009; 66 AG 798986 dated 17.08.2009; 66 AG 798987; 66 AG 798988 dated 17.08.2009; 66 AG 798989 dated 17.08.2009; 66 AG 798990; 66 AG 798991; 66 AG 798595; 66 AG 798596; 66 AG 798594.
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A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
PROPERTY DESCRIPTION
Site area: 3.92 hectares
Projected property type: Economy class residential complex
Projected gross build area: 93,546 sqm
Net area of the unsold flats: 11,829 sqm
Net commercial area 2,814 sqm (unsold):
Ground parking (unsold): 545 parking spaces
Location / environment: The Subject Property is located in the northern part of Yekaterinburg, in the Elmash District in the quadrant formed by Shefskaya, Sovhoznaya and Taganskaya Streets.
Access / egress: Access to the Subject Property can be realized through Shefskaya Street and Kosmonavtov Avenue which provide easy access onto the EKAD.
Nearby amenities: The following amenities are situated in a close proximity to the Subject Property: Kalinovskie Razrezy – a forest/park with bodies of water. Also in the district there are several kindergartens and schools, medical institution, “METRO Cash and Carry” and “Megamart” retail centres.
Description: The Subject Property represents the land plot with a total area 3.92 ha with residential complex with a total area 93,546 sqm under construction. The complex is completed by 80%.
Start of construction: October 2008
Projected completion: June 2015
Zoning and restrictions: The subject land plots have the following characteristics: • Land plot category: settlement land. • Permitted use: lands for residential construction. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 254
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 2. Territory of the property Picture 3. Territory of the property
Source: Cushman &Wakefield Source: Cushman &Wakefield Picture 4. Territory of the property Picture 5. Territory of the property
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 1,151,722,009 RUR construction costs:
Average market sale price 51,197 – 56,560 RUR per sqm for residential area:
Average market sale price 50,000 – 55,490 RUR per sqm for commercial area:
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 255
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Average market sale price 450,000 RUR for parking space:
Current stage of Constriction development:
Readiness of development 53% stage:
Development strategy: Build and sell
Discount rate: 14%
Special assumption: No
Other: No
Market value: 297,476,497 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 256
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Yekaterinburg
Address: 40-Letiya Komsomola Name: 40-Letiya Komsomola Street, 2B
Inspected on: December 19, 2012 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area 9.36 ha (cadastral number 66:41:07 05 005:182) is held freehold on the basis of Ownership Certificate 66AD 669155 dated 29.12.2010.
PROPERTY DESCRIPTION
Site area: 9.36 hectares
Projected property type: Economy class residential complex
Projected gross build area: 258,580 sqm
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 257
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Net area of the unsold flats: 182,000 sqm
Net commercial area n/a (unsold):
Ground parking (unsold): n/a
Location / environment: The Subject Property is located in the Kirovsky District of Yekaterinburg within the boundaries of Syromolotova – Rassvetnaya - Sorokoletiya Komsomola streets. This district refers to the first price zone.
Access / egress: The access to the Subject Property can be realized through Syromolotova, Rassvetnaya or 40-letiya Komsomola Streets.
The district is connected with the town by the main thoroughfares: Malisheva, Komsomolskaya, Shefskaya Sterets and EKAD.
Nearby amenities: The following amenities are situated in a close proximity to the Subject Property: “Sibirskiy trakt” shopping centers, “KOR”, “Stroy-Arsenal” hypermarket and “Komsomol” shopping and entertainment centre.
“KOR” is the largest complex in the Ural Region of the DIY and construction materials (about 10,000 sqm).
Description: The Subject Property represents a brown-field land plot with a total area 9.36 ha intended for construction of an economy class residential complex with a total area of 258,580 sqm. Currently the site is occupied by industrial buildings and storage facilities.
The Client develops a project concept.
Start of construction: January 2014
Projected completion: June 2019
Zoning and restrictions: The subject land plots have the following characteristics: • Land plot category: settlement land. • Permitted use: for complex of buildings of industrial use. Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 258
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 2. Territory of the property Picture 3. Territory of the property
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 7,785,564,564 RUR construction costs:
Average market sale price 54,000 RUR per sqm for residential area:
Average market sale price n/a for commercial area:
Average market sale price n/a for parking space:
Current stage of Concept development development:
Readiness of development 0% stage:
Development strategy: Build and sell
Discount rate: 25%
Special assumption: No
Other: No
Market value: 790,516,639 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 259
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Yekaterinburg
Address: Aviatsionnaya Street, 8 Name: Zeleniy Mys Marta Street, 194
Inspected on: December 19, 2012 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area 1.46 ha (cadastral number 66:41:00 00 000: 0326) is held on short-term leasehold on the basis of the land lease Agreement #5-1257 dated 27.06.2006.
PROPERTY DESCRIPTION
Site area: 1.18 hectares
Projected property type: Business class residential complex
Projected gross build area: 47,814 sqm
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 260
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Net area of the unsold flats: 282 sqm
Net commercial area 1,878 sqm (unsold):
Ground parking (unsold): 237 parking spaces
Location / environment: The Subject Property is located in the quadrant formed by 8th Marta, Ostrovskogo, Moskovskaya and Shorsa Streets – the district’s main arterial routs.
Access / egress: A well-developed system of public transportation and close proximity to the main traffic arteries provides easy and convenient access to the city centre and other districts of Yekaterinburg.
Nearby amenities: The following amenities are situated in a close proximity to the Subject Property: South Bus Station, park with amusements, “Megapolis” and “Dirigabl” shopping centres.
Description: The Subject Property represents a business class residential complex with a total area 47,814 sqm 100% completed.
Start of construction: July 2006
Projected completion: December 2012
Zoning and restrictions: The subject land plots have the following characteristic: • Land plot category: settlement land. • Permitted use: for construction of multi-section residential building with built-in social, retail, office premises and underground car park. Source: Client’s information, Cushman & Wakefield
Picture 2. Façade Picture 3. Façade
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 261
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining n/a construction costs:
Average market sale price 56,902 RUR per sqm for residential area:
Average market sale price 71,457 RUR per sqm for commercial area:
Average market sale price 570,000 RUR for parking space:
Current stage of Completed development:
Readiness of development 100% stage:
Development strategy: Build and sell
Discount rate: 12%
Special assumption: No
Other: No
Market value: 300,050,842 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 262
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Yekaterinburg
Address: Tokarey Street, Tatisheva Name: Tatischeva Street, Suhorukova Street, Nagornaya Street
Inspected on: December 19, 2012 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area of 1.89 ha (cadastral number 66:41:0303040:002) is held on long-term leasehold (30 years) according to land lease agreement № Т-244/1132 dated 15.12.2002.
PROPERTY DESCRIPTION
Site area: 1.89 hectares
Projected property type: Economy class residential complex
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 263
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Projected gross build area: 47,717 sqm
Net area of the unsold flats: 7,179 sqm
Net commercial area n/a (unsold):
Ground parking (unsold): 88 parking spaces
Location / environment: The Subject Property is located in the West of Yekaterinburg in the Verhh- Isetsky District in the quadrant formed by Tokarei, Tatisheva, Sukhorukova and Nagornaya Streets.The district is close to the centre of the town, which provides a fast and easy access to the town centre.
Access / egress: Access to the Subject Property can be realized through Tokarei, Tatisheva, Sukhorukova and Nagornaya Streets.
Tatishevskaya metro station is planned to be constructed soon; it will be situated within a short walking distance from the Subject Property.
Nearby amenities: The following amenities are situated in a close proximity to the Subject Property: Verkh Isetsky pond, one of the city’s largest bodies of water is situated within one km of the property.
Description: The Subject Property represents the land plot with a total area 1.89 ha with residential complex with a total area of 47,717 sqm under construction. The complex is 20% completed. According to the information provided it will be completed in the end of 2013.
Start of construction: September 2010
Projected completion: December 2013
Zoning and restrictions: The subject land plots have the following characteristic: • Land plot category: settlement land. • Permitted use: for residential construction. Source: Client’s information, Cushman & Wakefield
Picture 2. Territory of the property Picture 3. Territory of the property
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 264
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Source: Cushman &Wakefield Source: Cushman &Wakefield Picture 4. Territory of the property Picture 5. Territory of the property
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 855,557,732 RUR construction costs:
Average market sale price 68,417 RUR per sqm for residential area:
Average market sale price n/a for commercial area:
Average market sale price 807,887 RUR for parking space:
Current stage of Construction development:
Readiness of development 54% stage:
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 265
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Development strategy: Build and sell
Discount rate: 16%
Special assumption: No
Other: No
Market value: 293,714,329 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 266
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Yekaterinburg
Address: Bakinskikh Komissarov Name: Bakinskikh Komissarov_parking Street, 109 and Vosstaniya Street, 99
Inspected on: December 19, 2012 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area 0.15 ha is a part of a land plot with a total area 1.8 ha (cadastral number 66:41:00 00 000:0180) is held on short-term leasehold on the basis of Land Lease Agreement #1-685 dated 19.09.2005.
PROPERTY DESCRIPTION
Site area: 0.15 hectares
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 267
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Projected property type: Underground car park
Projected gross build area: 3,225 sqm
Net area of the unsold flats: n/a
Net commercial area n/a (unsold):
Parking (unsold): 36 parking spaces
Location / environment: The Subject Property is located in the northern part of the city, in the Uralmash residential area.
Access / egress: A well-developed system of public transportation provides easy and convenient access to the town centre and other districts of Yekaterinburg via the Serovskiy, Verkhnepyshminskiy and Rzhevkiy tracts.
Nearby amenities: The district is characterized be well- developed infrastructure including 3 schools and 2 kindergartens, and one of the main sport complexes. There are a few bus stops not far from the Property.
Description: The Subject Property represents an underground car park for 94 parking spaces under construction. Projected completion date Q4 2012.
Start of construction: May 2008
Projected completion: December 2012
Zoning and restrictions: The subject land plots have the following characteristic: • Land category: settlement land. • Permitted use: for residential complex with social objects and underground car parks. Source: Client’s information, Cushman & Wakefield
Picture 2. External view Picture 3. Internal view
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 268
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining n/a construction costs:
Average market sale price n/a for residential area:
Average market sale price n/a for commercial area:
Average market sale price 490,000 RUR for parking space:
Current stage of Completed development:
Readiness of development 100% stage:
Development strategy: Build and sell
Discount rate: 11%
Special assumption: No
Other: No
Market value: 30,970,428 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 269
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Yekaterinburg
Address: Furmanova Street, 123- Name: Furmanova_parking A
Inspected on: December 19, 2012 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with cadastral number 66:41:0403002:0070 is held freehold.
PROPERTY DESCRIPTION
Site area: n/a
Projected property type: Underground parking for 146 parking spaces
Projected gross build area: 5,062 sqm
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 270
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Net area of the unsold flats: n/a
Net commercial area n/a (unsold):
Parking (unsold): 30 parking spaces
Location / environment: The Subject Property is located in the Yugo-Zapadny residential district of the town.
Access / egress: Location of the Subject Property has excellent transport accessibility.
Nearby amenities: The following amenities are situated in a close proximity to the Subject Property: recently opened shopping centre “Fan-Fan”, a sports complex and 2 parks.
Description: The subject Property represents a single-level underground car park adjoining to a residential building.
Start of construction: January 2005
Projected completion: December 2007
Zoning and restrictions: The subject land plots have the following characteristic: • Land plot category: settlement land. Source: Client’s information, Cushman & Wakefield
Picture 2. External view Picture 3. Internal view
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining n/a construction costs:
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 271
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Average market sale price n/a for residential area:
Average market sale price n/a for commercial area:
Average market sale price 495,902 RUR for parking space:
Current stage of Completed development:
Readiness of development 100% stage:
Development strategy: Build and sell
Discount rate: 13%
Special assumption: No
Other: No
Market value: 12,552,882 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 272
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Yekaterinburg
Address: Gotvalda Street, 14A Name: Evropeyskiy
Inspected on: December 19, 2012 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area 0.72 ha (cadastral number 66:41:02 06:019:0025) is held on a common hold collective basis by the flat owners.
PROPERTY DESCRIPTION
Site area: 0.72 hectares
Projected property type: Business class residential building
Projected gross build area: 14,248 sqm
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 273
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Net area of the unsold flats: n/a
Net commercial area n/a (unsold):
Underground parking 7 parking spaces (unsold):
Location / environment: The Subject Property is located in the west of Yekaterinburg, on the border between 2 residential districts – Vokzalniy and Zarechniy, at the intersection of Gotvalda and Mashinistov Streets in close proximity to the nearly completed Evropeyskiy Avenue. It that will connect Cherepanova, Strelochnikov and Cheliuskintzev Streets, which will provide convenient and quick access from the subject site to the city centre.
Access / egress: The district is characterized by developed infrastructure with well-developed transport system. Alternatively the Subject Property is accessible from the city centre by railway service – the VIZ railway station is situated close by.
Nearby amenities: The following amenities are situated in a close proximity to the Subject Property: newly built residential buildings, retail, warehouse objects, pond and park.
Description: The Property comprises a completed business class residential building which was put into operation in 2008. 7 parking spaces are unsold at the date of valuation.
Start of construction: July 2003
Projected completion: September 2008
Zoning and restrictions: The subject land plots have the following characteristic: • Land plot category: settlement land. Source: Client’s information, Cushman & Wakefield
Picture 2. Façade Picture 3. Parking
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 274
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining n/a construction costs:
Average market sale price n/a for residential area:
Average market sale price n/a for commercial area:
Average market sale price 558,806 RUR for parking space:
Current stage of Completed development:
Readiness of development 100% stage:
Development strategy: Build and sell
Discount rate: 11%
Special assumption: No
Other: No
Market value: 3,587,241RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 275
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Yekaterinburg
Address: Novgorodtsevoy Street, 25 Name: KOSK
Inspected on: December 19, 2012 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area 0.88 ha (cadastral number 66:41:07 05 001:0106) is held on a short-term leasehold until January 2013 on the basis of Land Lease Agreement #7-1041 dated 26.02.2007 and Additional Agreement #1 dated 11.08.2010.
PROPERTY DESCRIPTION
Site area: 0.88 hectares
Projected property type: Residential building of economy class
Projected gross build area: 17,738 sqm
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 276
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Net area of the unsold flats: 12,485 sqm
Net commercial area n/a (unsold):
Ground parking (unsold): n/a
Location / environment: The Subject Property is located in a large microdistrict to the east of Yekaterinburg - ZhBI.
Access / egress: The Subject Property is linked with the town centre via EKAD, Malysheva and Komsomolskaya Streets, or the alternative route of the Sibirsky Highway with average commuting time of between 10 – 15 minutes.
Nearby amenities: The microdistrict includes the Kameniye Palatki park, where the typical Ural landscape has been maintained: mountain fragments and a pine forest. The park also includes the Shartash Lake – the favorite recreation zone for local residents. There is also recently opened a retail centre “Komsomol” in the district.
The Property is mainly surrounded by residential buildings.
Description: The Subject Property represents a land plot with a total area 0.88 ha intended for construction of office premises and further re-construction into residential building with a total area 17,738 sqm.
Start of construction: September 2012
Projected completion: October 2014
Zoning and restrictions: The subject land plots have the following characteristic: • Land plot category: settlement land. • Permitted Use: for construction office and retail building and their further operation. Source: Client’s information, Cushman & Wakefield
Picture 1. Territory of the property Picture 2. Territory of the property
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 277
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 448,253,489 RUR construction costs:
Average market sale price 56,000 RUR per sqm for residential area:
Average market sale price n/a for commercial area:
Average market sale price n/a for parking space:
Current stage of Construction development:
Readiness of development 12% stage:
Development strategy: Build and sell
Discount rate: 19%
Special assumption: No
Other: No
Market value: 191,502,187 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 278
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Yekaterinburg
Address: Leninskiy District, Name: Vonsovskogo Akademika Vonsovskogo (Berezovaya Roshcha) Street - Krasnoles'ya - Shirokorechenskaya
Inspected on: December 19, 2012 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • The land plot with a total area 4.69 ha (cadastral numbers 66:41:0313004:8; 66:41:0313004:9) is held on a short-term lease according to the land lease agreement #3-1764-T dated 26.09.2011.
PROPERTY DESCRIPTION
Site area: 4.69 hectares
Projected property type: Economy class residential complex
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 279
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Projected gross build area: 107,149 sqm
Net area of the unsold flats: 62,647 sqm
Net commercial area n/a (unsold):
Ground parking (unsold): 288
Location / environment: The Subject Property is located in the south-western part of Yekaterinburg in the Leninsky Administrative District in residential micro-district “Akademichesky”.
Access / egress: Access to the Subject Property can be realized through Akademika Vonsovskogo, Krasnolesya and Shirokorechenskaya Streets.
Nearby amenities: At the date of valuation local infrastructure wasn’t well-developed, but in the future it is planned that several schools, kindergartens, hospitals, objects of retail and commercial real estate will be built.
Description: The Subject Property represents a development site with a total area of 4.68 ha intended for the construction of an economy class residential development.
Start of construction: November 2012
Projected completion: June 2015
Zoning and restrictions: The subject land plots have the following characteristic: • Land plot category: settlement land. • Permitted use: for complex residential construction. Source: Client’s information, Cushman & Wakefield
Picture 2. Territory of the property Picture 3. Territory of the property
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 280
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 2,563,460,368 RUR construction costs:
Average market sale price 53,518 RUR per sqm for residential area:
Average market sale price n/a for commercial area:
Average market sale price 280,000 RUR for parking space:
Current stage of Construction development:
Readiness of development 7% stage:
Development strategy: Build and sell
Discount rate: 22%
Special assumption: No
Other: No
Market value: 626,738,620 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 281
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Yekaterinburg
Address: Tekhnicheskaya Street – Name: Tekhnicheskaya – Sortirovochnaya Street – Sortirovochnaya Kourovskaya Street (Progress)
Inspected on: December 19, 2012 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS • A land plot with a total area of 1.99 ha consists of two land plots: land plot of 0.08 ha with cadastral number 66:41:0204023:6 is held freehold by CJSC “LSR. Nedvizhimost-Ural” in accordance with the ownership certificate 66 АЕ 071415; land plot of 1.91 ha with cadastral number 66:41:0204023:22 is held leasehold by ZAO “NOVA-Stroy” according to the land lease agreement №2-1071-Т dated 21.02.2012.
PROPERTY DESCRIPTION
Site area: 1.99 hectares
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 282
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Projected property type: Economy class residential complex
Projected gross build area: 33,674 sqm
Net area of the unsold flats: 14,256 sqm
Net commercial area n/a (unsold):
Ground parking (unsold): n/a
Location / environment: The Property is located in the Zheleznodorozhniy administrative district, S.Sortirovka residential micro-district, within Tekhnicheskaya Street, Sortirovocnaya Street and Kourovskaya Street.
Access / egress: The road network is well developed. Reconstructed Street Tavatuyskaya provides quick and easy access to the Bebelya Street, which is part of the Middle Ring Road. In addition, the new interchange provides access to Serovsky tract.
Nearby amenities: There are several schools and kindergartens, medical and health facilities, “Lokomotiv” stadium in the district. A number of fitness-centers and large retail centers “Sem’ Klyuchey” and “Megamart” are situated in the close proximity.
Description: The property is represented by a development land with a total area 1.91 ha designed for construction of economy class residential complex with a total area 33,674 sqm.
Start of construction: July 2011
Projected completion: Novemver 2013
Zoning and restrictions: Settlemen land
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 283
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Picture 2. Façade Picture 3. Façade
Source: Cushman &Wakefield
Source: Cushman &Wakefield Picture 4. Territory of the property Picture 5. Territory of the property
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 507,848,604 RUR construction costs:
Average market sale price 52,740 RUR per sqm for residential area:
Average market sale price n/a for commercial area:
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 284
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Average market sale price n/a for parking space:
Current stage of Construction development:
Readiness of development 49% stage:
Development strategy: Build and sell
Discount rate: 16%
Special assumption: No
Other: No
Market value: 370,682,826 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 285
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
City: Yekaterinburg
Address: Latviyskaya Street Name: Latviyskaya
Inspected on: December 11, 2012 Inspected by: Irina Doshchenko
Picture 1. City map with location of the property
Source: Google Maps
OWNERSHIP RIGHTS A land plot with a total area of 11.6 ha (cadastral number 66:41:0609018:10 and 66:41:0000000:1178) is held leasehold by ZAO “NOVA-Stroy” according to the land lease agreement №6-1307-Т dated 25.05.2012.
PROPERTY DESCRIPTION
Site area: 11.60 hectares
Projected property type: Residential buildings of economy class
Projected gross build area: 233,091 sqm
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 286
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Net area of the unsold flats: 174,828 sqm
Net commercial area n/a (unsold):
Ground parking (unsold): n/a
Location / environment: The Property is located in Oktyabrskiy administrative district, Kompressorny residential micro-district at Latviyskaya Street.
Access / egress: Kompressorny residential micro-district is a prospective district, linked with Yekaterinburg center by Sibirskiy, Tyumenskiy and Novokoltsovskiy trakts.
Kompressorny residential micro-district may be reached from Yekaterinburg center by aeroexpress and commuter trains (20 minutes to Lenina Avenue). 3 route buses ans 3 buses may also be used to get to the city center.
Nearby amenities: The largest enterprise of the district - JSC "Ural Compressor Plant", OJSC "NPP "Start ", LLC " Gazprom Transgas Ekaterinburg ".
The area is represented by all necessary infrastructures: 3 schools, several kindergartens, a music school, a clinic, shops, banks, post offices, driving school, grocery stores, cafes, restaurants and a cinema.
Description: The property is represented by a development land with a total area 11.6 ha designed for construction of economy class residential complex with a total area 233,091 sqm.
Start of construction: January 2014
Projected completion: June 2019
Zoning and restrictions: Settlement land
Source: Client’s information, Cushman & Wakefield
Picture 2. Property Picture 3. Property
Source: Cushman &Wakefield Source: Cushman &Wakefield Picture 4. Surroundings Picture 5. Surroundings
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 287
A PROPOSAL FOR VALUATION REPORT # 12-MOSC-900262 PREPARED FOR JSC GROUP LSR LSR GROUP PORTFOLIO OF PROPERTIES LOCATED IN SAINT-PETERSBURG, MOSCOW, EKATERINBURG, AS AT DECEMBER 31, 2012
Source: Cushman &Wakefield Source: Cushman &Wakefield
VALUATION CONSIDERATIONS
Methodology: The Income Approach (DCF)
Estimated remaining 6,528,893,743 RUR construction costs:
Average market sale price 47,000 RUR per sqm for residential area:
Average market sale price n/a for commercial area:
Average market sale price n/a for parking space:
Current stage of Concept development development:
Readiness of development 2% stage:
Development strategy: Build and sell
Discount rate: 25%
Special assumption: No
Other: No
Market value: 795,099,101 RUR
Source: Client’s information, Cushman & Wakefield
VALUATION & ADVISORY CUSHMAN & WAKEFIELD 288
E APENDICES
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APPENDIX I PRINCIPAL TERMS AND CONDITIONS OF APPOINTMENT AS VALUERS 1. PRELIMINARY 1.1. These terms and conditions (the "Terms of Business") shall apply to all valuation services (excluding agency services and other forms of professional services, to which separate terms will apply) provided by LLC “Cushman & Wakefield OOO”, a limited liability company having its registered office at Gasheka str., bld. 6, Moscow, Russia, 125047 (“C&W”, “we” or “us”) to the client to whom a real estate valuation agreement (the “Agreement”) is sent (“you”). They shall apply separately to each service subsequently provided to you. 1.2. The Terms of Business are to be read in conjunction with the relevant Agreement and general valuation principles (“Valuation Principles”) attached thereto. In the event of any ambiguity or conflict between the relevant Agreement, the Valuation Principles and these Terms of Business, the provisions in the relevant Agreement shall prevail. These Terms of Business and the relevant Agreement may only be varied in writing by agreement between the parties. It is our practice to review and upgrade our Terms of Business frequently and new versions will be sent to you and agreed with you. 2. PERFORMANCE OF THE SERVICES 2.1. We undertake to use all reasonable skill and care in providing the services and advice described in the relevant Agreement, based on the instructions given by you (the "Services"). We will inform you if it becomes apparent that the Services need to be varied or external third party advice is required. Any variation is to be confirmed in writing and agreed between the parties. 2.2. We may need to appoint third party providers to perform all or part of the Services and we shall agree this with you in advance. 3. BASIS OF FEES 3.1. The basis of our fees for our Services is set out in the relevant Agreement. 3.2. You shall pay all applicable VAT in addition to any fees and disbursements at the applicable rate. 3.3. You shall pay our fees on completion of our Services (whether or not additional work is still to be carried out by third parties) or, where the fees are in relation to an ongoing instruction or an instruction of a duration of more than three months, at least quarterly in arrears upon submission by us of quarterly invoices. Payment is due within 10 working days of the invoice date. 3.4. Where valuations are undertaken for a lender for loan security purposes and it is agreed that a borrower will pay our fee, you shall remain primarily liable to pay our fee should such borrower fail to meet its liabilities to us in full. Payment of our fees is not conditional upon the loan being drawn down or any of the conditions of the loan being met. 3.5. If you do not dispute with us an invoice or any part thereof within 15 days of the date of such invoice, you shall be deemed to have accepted the invoice in its entirety. 3.6. If we are required by you to undertake any additional work in relation to an instruction, you shall pay additional fees based upon our usual rates. We will notify you of the amount of such additional fees. This also applies where we are asked to review a legal report or Certificate of Title provided to us more than 8 weeks after we have submitted our Report (either draft or final). 3.7. Where there is a change to the stated purpose for which our valuation is being commissioned and in our sole opinion we deem this to result in an increase in our liability (for example a valuation for annual accounts being used for loan security purposes), we reserve the right to charge an additional fee. 3.8. If you subsequently request our invoice to be re-addressed to a party other than that originally agreed, we reserve the right to make an administration charge of $170. Payment will still be due within 10 working days of the original invoice date. 3.9. In the event that you withdraw our instructions prior to completion of a valuation, you shall be liable to pay us for a fair and reasonable proportion of our fees and any agreed disbursements. If we have sent you draft valuation figures, such fees shall be subject to 50% of the fee originally agreed between us and if we have sent you a draft valuation report, such fees shall be subject to 75% of the fee originally agreed between us.
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3.10. We will advise you in advance if it is necessary or convenient to instruct a third party to provide advice or to act as an expert or arbitrator and provide an estimate of the likely cost. 3.11. Where we are instructed to provide Services to one of your subsidiaries or associated / related entities or should you subsequently request that another entity be substituted for you at a later stage and we are unable to seek or obtain payment of any outstanding monies for whatever reason, you shall remain primarily liable to pay those outstanding monies if the subsidiary, associated / related or other entity does not meet its liabilities in relation to payment for the Services provided by us. 4. INTEREST You shall pay interest on the amount of any invoice for fees or other disbursements that remains unpaid for 10 working days after the date of the invoice in amount of 0,1 per cent for each day but no more than 10 per cent in total. 5. DISBURSEMENTS You shall pay all disbursements incurred by us in the provision of the Services. Disbursements include, but are not limited to: travel and subsistence expenses at their actual cost. 6. INFORMATION RECEIVED FROM THE CLIENT We will take all reasonable steps to ensure that property information is accurate where we are responsible for its preparation. Where you provide us with any information on a property that is necessary or convenient to enable us to provide the Services properly, you acknowledge that we will rely on the accuracy, completeness and consistency of any information supplied by you or on your behalf and, unless specifically instructed otherwise in writing, we will not carry out any investigation to verify such information. We accept no liability for any inaccuracy or omission contained in information disclosed by you or on your behalf, whether prepared directly by you or by a third party, and whether or not supplied directly to us by that third party and you shall indemnify us should any such liability arise. If our valuation is required for the purpose of purchase or loan security, you accept that full investigation of the legal title and any leases is the responsibility of your lawyers. 7. CONFLICTS OF INTEREST AND ANTI CORRUPTION 7.1. We have conflict management procedures designed to prevent us acting for one client in a matter where there is or could be a conflict with the interest of another client for whom we are acting. If you are aware or become aware of a possible conflict of this type, please raise it immediately with us. If a conflict of this nature arises, then we will decide, taking account of legal constraints, relevant regulatory body rules and your and the other client’s interests and wishes, whether we can continue to act for both parties (e.g. through the use of separate teams with appropriate Chinese Walls), for one only or for neither. Where we do not believe that any potential or actual conflict of interest can be managed appropriately, we will inform you and consult with you as soon as reasonably practicable. 7.2. You acknowledge that we may earn commissions, referral fees and may charge handling fees connected to the services that we perform and agree that we shall be entitled to retain them without specific disclosure to you. We will not accept any commissions or referral fees in circumstances where we are of the reasonable belief that they would compromise the independence of any advice that we provide to you. 7.3. We confirm that we will not, and will procure that our employees will not, knowingly engage in any activity which would constitute a breach of Russian anti-corruption legislation as well as the UK Bribery Act 2010 and that we have in place a compliance programme designed to ensure compliance with the terms of the UK Bribery Act 2010. 8. MANAGEMENT OF THE PROPERTY We shall not be responsible for the management of the property nor have any other responsibility (such as maintenance or repair) in relation to the property. We shall not be liable for any damage that may occur while the property is unoccupied. The property shall be your sole responsibility. 9. TERMINATION BY NOTICE 9.1. Unless a fixed period has been agreed, either party may terminate the instruction by giving 14 days’ notice in writing to the other party.
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9.2. In the event of termination by notice, you shall be obliged to pay forthwith all the fees accrued in relation to the Services and work performed up to the date of termination (and any abort fee) plus any expenses or disbursements incurred by us or to which we are committed at the date of termination. 10. PROFESSIONAL LIABILITY 10.1. We shall not be liable to you in contract, tort (including negligence or breach of statutory duty), misrepresentation, restitution or otherwise, arising in connection with the performance or contemplated performance of the Services in respect of: (i) any direct loss of profit; (ii) any indirect, special or consequential loss whatsoever howsoever caused including without limitation (a) indirect loss of profit; (b) loss of business; (c) loss of goodwill; (d) loss of use of money; (e) loss of opportunity, and the parties agree that the sub-clauses of this clause shall be severable. 10.2. We shall not be liable to you in negligence for pure economic loss arising in connection with the performance or contemplated performance of the Services. 10.3. You acknowledge and agree that the exclusions contained in this clause 10 are reasonable in all the circumstances and that you have had the opportunity to take independent legal advice. 10.4. Where a third party has contributed to the losses, damages, costs, claims or expenses, we shall not be liable to make any contribution in respect of the liability of such third party. 10.5. Save in respect of third parties directly instructed by us and not on your behalf, we shall not be liable for the services or products provided by other third parties, nor shall we be required to inspect or supervise such third parties, irrespective of the third party services or products being incidental to or necessary for the provision of our Services to you. 10.6. Our total aggregate liability (including that of our members and employees) to you or to any other party relying on our valuation and/or report pursuant to this clause 10 in contract, tort (including negligence or breach of statutory duty), misrepresentation, restitution or otherwise, arising in connection with the performance or contemplated performance of the Services shall be limited to an aggregate sum not exceeding twenty times the fee as defined in the relevant Assignment to the Agreement,. Nothing in these Terms of Business excludes or limits our liability: (i) for death or personal injury caused by our negligence; (ii) for any matter which it would be illegal for us to exclude or attempt to exclude our liability and (iii) for fraud or fraudulent misrepresentation. 10.7. We shall be released from our obligations to the extent that performance thereof is delayed, hindered or prevented by any circumstances beyond our reasonable control (examples being a strike, act of God or act of terrorism). On becoming aware of any circumstance which gives rise, or which is likely to give rise, to any failure or delay in the performance of our obligations, we will notify you by the most expeditious method then available. 10.8. To cover any liability that might be incurred by us, we confirm that we will maintain compulsory professional indemnity insurance. . 10.9. Responsibility for our valuation extends only to the party(ies) to whom it is addressed. However in the event of us being asked by you to readdress our report to another party or other parties or permit reliance upon it by another party or other parties, we will give consideration to doing so, to named parties, subject to the following minimum fees: FIRST EXTENDED SECOND & SUBSEQUENT EXTENDED PARTY PARTIES For the first USD1m of reported 0.075% 0.025% per party value Thereafter 0.035% 0.015% per party These fees are exclusive of VAT and expenses (including the cost of readdressing the report) and are subject to a minimum fee of $1,250. Should additional work be involved, over and above that undertaken to provide the initial report, we may make a further charge although we will agree this with you before commencing the work.
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10.10. Where we consent in writing to reliance on our report by another party or other parties, we do so on the condition that (i) the other party or parties agree in writing to be bound by the Agreement and these Terms of Business as if it / they had been a party to the original Agreement between us, with such written agreement being provided to us, (ii) such other party pay the fees demanded as set out in clause 10.9 above (unless agreed otherwise in writing) and (iii) where you act on behalf of a syndicate or in relation to a securitisation, you agree that you are not entitled to pursue any greater claim on behalf of any other party than you would have been entitled to pursue on your own behalf had there been no syndication or securitisation. 10.11. Where you provide a copy of and / or permit another party or parties to rely upon our valuation report without obtaining our express written consent and fail to provide us with the written consent of any other party or parties who have received our report to be bound by the Agreement and Terms of Business (in accordance with clause 10.10 above), you agree to indemnify us for any and all liability which arises from the use of or reliance upon our report by such unauthorised party. 10.12. Notwithstanding clause 10.11, where a valuation report is prepared or where we consent to a valuation report being used for the purpose of a prospectus, offering (either directly or indirectly), or a circular to shareholders, you agree to indemnify us for any liability whatsoever that we may have to any parties that have not agreed with us in writing to be bound by these Terms of Business which exceeds our aggregate cap on liability (referred to at clause 10.6) arising from their use and / or reliance on the valuation report. 11. QUALITY OF SERVICE AND COMPLAINTS 11.1. All our valuation reports are signed by a Member of C&W whose responsibility it is to ensure that all relevant quality control procedures have been complied with. In particular, for valuations of properties with an individual value of $34m or over, the valuer is required to present and explain his methodology to another member of the Valuation & Advisory Team unconnected with the instruction and who is a Member of C&W. 11.2. If you wish to complain about the level or our service to you, in accordance with the requirements of the Royal Institution of Chartered Surveyors, we have a standard complaints procedure, a copy of which is available on request. 12. DATA PROTECTION 12.1. We (and any of our relevant international partnerships, group companies and affiliated organisations) are data controllers of all personal data collected during the provision of the Services. We shall use such personal data and information we obtain from other sources for providing the Services, for administration and customer services, for marketing and to analyse your preferences. We may keep such personal data for a reasonable period for these purposes. We may need to share personal data with our service providers and agents for these purposes. We may disclose personal data in order to comply with a legal or regulatory obligation and you may request, in writing and upon payment of a fee, a copy of the details held about you by us. 12.2. To help us to make credit decisions about you, to prevent fraud, to check identity and to prevent money laundering, we may search the files of credit reference agencies and we may also disclose details of how you conduct your account to such agencies. 12.3. We may share personal data within our international partnerships, group companies and affiliated organisations and with our business partners for marketing purposes, which may be to countries or jurisdictions which do not provide the same level of data protection as the country in which you are based, or we may send you and your employees information about other organisations' goods and services. We or any business partners may contact you and your employees, directly or via our agents, by mail, telephone, fax, email, SMS or other electronic messaging service with offers of goods and services or information that may be of interest. By providing us with your or your employees' personal data (whether that data is deemed sensitive or not) including fax numbers, telephone numbers or email addresses, you and your employees consent to being contacted by these methods for these purposes. 13. MONEY LAUNDERING REGULATIONS
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In order to comply with all applicable money laundering legislation and regulation, we may be required to verify certain of your details and may ask you to assist us in complying with such requirements. Where such information is requested, you will provide such information promptly to enable us to provide our Services. We shall not be liable to you or any other parties for any delay in the performance or any failure to perform the Services which may be caused by our duty to comply with any such legal and regulatory requirements. 14. ELECTRONIC COMMUNICATIONS We may communicate with each other by electronic mail, sometimes attaching electronic data. By consenting to this method of communication, we and you accept the inherent risks (including the security risks of interception of, or unauthorised access to, such communications, the risks of corruption of such communications and the risks of viruses or other harmful devices). In the event of a dispute, neither of us will challenge the legal evidential standing of an electronic document and our system shall be deemed to be the definitive record of electronic communications and documentation. 15. CONFIDENTIALITY 15.1. We owe you a duty of confidentiality. You agree that we may, when required by our insurers or other advisers, provide details to them of any engagement on which we act or have acted for you, and that we may also disclose confidential information relating to your affairs if required to do so for legal, regulatory or insurance purposes only. 15.2. Subject to clause 16.1, we both agree never to disclose sensitive details of transactions or our advice without the other’s consent. Unless we are expressly bound by a duty of confidentiality which otherwise overrides this, we both shall be entitled to mention to third parties (e.g. in the course of presentations, speeches or pitches) and/or publish (e.g. in brochures, marketing or other written material) that we provide our services to you. 15.3. We shall provide the Services to you only for your sole use and for the stated purpose. We shall not be liable to any third party in respect of our Services. You shall not mention nor refer to our advice, in whole or in part, to any third party orally or in annual accounts or other document, circular or statement without our prior written approval. The giving of an approval shall be at our sole discretion. 15.4. We will not approve any mention of our advice unless it contains sufficient reference to all the special assumptions and/or limitations (if any) to which our advice is subject. Our approval is required whether or not we are referred to by name and whether or not our advice is combined with others. 16. INTELLECTUAL PROPERTY All intellectual property rights (including copyrights) in the documents, materials, records, data and information in any form developed or provided to you by us or otherwise generated in the provision of our Services shall belong to us solely. You are granted an irrevocable, non-exclusive, royalty-free license to use or copy such intellectual property rights for any purpose connected with the property. 17. ASSIGNMENT Neither party shall be entitled to assign this contract or any rights and obligations arising from it without the prior written consent of the other, such consent not to be unreasonably withheld. 18. GENERAL 18.1. If any provision of these Terms of Business is found by any court, tribunal or administrative body of competent jurisdiction to be wholly or partly illegal, invalid, void, voidable, unenforceable or unreasonable it shall to the extent of such illegality, invalidity, voidness, voidability, unenforceability or unreasonableness be deemed severable and the remaining provisions of these Terms of Business and the remainder of such provision shall continue in full force and effect. 18.2. Failure or delay by us in enforcing or partially enforcing any provision of these Terms of Business shall not be construed as a waiver of any of our rights under these Terms of Business. 18.3. No term of the relevant Agreement or these Terms of Business is intended to confer a benefit on or to be enforceable by any person who is not a party to the same.
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18.4. The Agreement shall be governed by and be construed in accordance with legislation of the Russian Federation. Any dispute arising out or in connection with the services shall be submitted to the exclusive jurisdiction of the Arbitration Court of Moscow. Where the Client is a legal entity established under the laws other than Russian any dispute, controversy or claim which may arise out of or in connection with the present contract (agreement), or the execution, breach, termination or invalidity thereof, shall be settled by the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation in accordance with its Rules. 18.5. References to partners of LLC “Cushman & Wakefield OOO” are used to refer to a Member of LLC “Cushman & Wakefield OOO” or an employee or consultant with equivalent standing and qualifications. A list of the members of LLC “Cushman & Wakefield OOO” and of the non- members who are designated as “partners” is open to inspection at our registered office, 6th floor, Gasheka str., bld.6, Moscow, Russia, 125047.
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APPENDIX II GENERAL VALUATION PRINCIPLES 1. PRELIMINARY 1.1. These general valuation principles (the "Valuation Principles") shall apply to all valuation instructions, other than agency services and other forms of professional services (to which separate terms will apply), provided by LLC “Cushman & Wakefield OOO”, a limited liability company having its registered office at Gasheka str., bld. 6, Moscow, Russia, 125047 (“C&W”, “we” or “us”) to the client to whom a real estate valuation agreement (the “Agreement”) is sent (“you”). They shall apply separately to each service subsequently provided to you. 1.2. The Valuation Principles are to be read in conjunction with the relevant Agreement and the Terms of Business attached thereto. In the event of any ambiguity or conflict between the relevant Agreement, the Terms of Business and these Valuation Principles, the provisions in the relevant Agreement shall prevail. These Valuation Principles may only be varied in writing by agreement between the parties. It is our practice to review and upgrade our Valuation Principles frequently and new versions will be sent to you and agreed with you. 2. VALUATION BASES 2.1. Unless we have said otherwise within the Agreement, the date of valuation will be the date of our inspection. 2.2. Unless we have said otherwise in the relevant Agreement, the valuation will be prepared in accordance with the RICS Valuation Professional Standards current at the date of the Agreement (the “Red Book”) by valuers conforming to its requirements, acting as external valuer. 2.3. Each property will be valued on a basis appropriate to the purpose of the valuation, in accordance with the Red Book in part not contradictory to standards for valuation adopted in Russia. The basis of valuation that we will adopt for each property is specified in the relevant Agreement. Unless the definitions below contradict with the mandatory standards for valuation in Russia the definitions are as follows: (i) Market Value Market Value is “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”. (ii) Market Rent Market Rent is “the estimated amount for which a property would be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion”. (iii) Existing Use Value Existing Use Value is “the estimated amount for which an asset should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing and where the parties had acted knowledgeably, prudently and without compulsion, assuming that the buyer is granted vacant possession of all parts of the asset required by the business, and disregarding potential alternative uses and any other characteristics of the asset that would cause its market value to differ from that needed to replace the remaining service potential at least cost”. (iv) Fair Value Fair Value is “the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.” In the context of International Accounting Standard (IAS) 17, the fair value of the leased asset of interest will normally be its market value (see (i) above). (v) Existing Use Value for Social Housing Existing Use Value for Social Housing is “the estimated amount for which a property should exchange, on the date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing and where the parties had acted knowledgeably, prudently, and without compulsion, subject to the following special assumptions that the property will continue to be let by a body pursuant to delivery of a service for the existing use:
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a) at the valuation date, any regulatory body, in applying its criteria for approval, would not unreasonably fetter the vendor’s ability to dispose of the property to organisations intending to manage their housing stock in accordance with that regulatory body’s requirements; b) properties temporarily vacant pending re-letting would be valued, if there is a letting demand, on the basis that the prospective purchaser intends to re-let them, rather than with vacant possession; and c) any subsequent sale would be subject to all of the above special assumptions.” (vi) Projected Market Value of Residential Property Projected Market Value of Residential Property is “the estimated amount for which an asset is expected to exchange at a date, after the valuation date and specified by the valuer, between a willing buyer and a willing seller, in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”. 2.4. When assessing either Existing Use Value, Fair Value or Market Value for balance sheet purposes, we will not include directly attributable acquisition or disposal costs in our valuation. Where you have asked us to reflect costs (as required under FRS15), they will be stated separately. In the case of specialised properties (where valuation methods such as market comparison or an income (profits) test cannot be reliably applied), we may use Depreciated Replacement Cost (“DRC”) as a method of estimating Value. The valuation using this method of a property in the private sector will include a statement that it is subject to the adequate profitability of the business, paying due regard to the value of the total assets employed. If the property is in the public sector, the valuation will include a statement that it is subject to the prospect and viability of the continued occupation and use. Any writing down of a valuation derived solely from the DRC method to reflect the profitability/viability of the entity in occupation is a matter for the occupier. If the valuation is being undertaken for inclusion in accounts prepared under International Financial Reporting Standards, our report will contain a statement that because of the specialised nature of the property, the value is estimated using a DRC method and is not based on the evidence of sales of similar assets in the market. If we consider that the value of the asset would be materially lower if the business ceased, the report will contain a statement to this effect. 3. GENERAL VALUATION ASSUMPTIONS 3.1. Unless otherwise agreed, we will provide the Services in relation to any property on the following assumptions: (i) the property and any existing buildings are free from any defect whatsoever; (ii) all buildings have been constructed having appropriate regard to existing ground conditions or that these would have no unusual effect on building costs, property values or viability of any development or existing buildings; (iii) all the building services (such as lifts, electrical, gas, plumbing, heating, drainage and air conditioning installations and security systems) and property services (such as incoming mains, waste, drains, utility supplies, etc) are in good working order without any defect whatsoever; (iv) roads and sewers serving the property have been adopted and that the property has all necessary rights of access over common estate roads, paths, corridors and stairways and to use common parking areas, loading areas and other facilities; (v) there are no environmental matters (including but not limited to actual or potential land, air or water contamination, or by asbestos or any other harmful or hazardous substance) that would affect the property, any development or any existing buildings on the property in respect of which the Services are provided or any adjoining property, and that we shall not be responsible for any investigations into the existence of the same and that you are responsible for making such investigations; (vi) any building, the building services and the property services comply with all applicable current regulations (including fire and health and safety regulations); (vii) the property and any existing building comply with all planning and building regulations, have the benefit of appropriate planning consents or other statutory authorisation for the current use and no adverse planning conditions or restrictions apply (which includes, but is not limited to, threat of or actual compulsory purchase order);
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(viii) appropriate insurance cover is, and will continue to be, available on commercially acceptable terms for any building incorporating types of construction or materials which may pose an increased fire or health and safety risk, or where there may be an increased risk of terrorism, flooding or a rising water table; (ix) items of plant and machinery that usually comprise part of the property on an assumed sale are included in the property but items of plant and machinery that are associated with the process being carried on in the property or tenants trade fixtures and fittings are excluded from the property; (x) in reflecting the development potential of any property, that all structures will be completed using good quality materials and first class workmanship; (xi) any occupational leases are on full repairing and insuring terms, with no unusually onerous provisions or covenants that would affect value; (xii) in respect of any lease renewals or rent reviews, all notices have been served validly within any time limits; (xiii) vacant possession can be given of all accommodation which is unlet or occupied by the entity/borrower or its employees on service tenancies; and (xiv) any mineral rights are excluded from the property. 4. VALUATION ASSUMPTIONS FOR PROPERTY VALUED HAVING REGARD TO TRADING POTENTIAL 4.1. Unless we have agreed otherwise, for trading related property (such as hotels, marinas and self storage properties where the property is trading and is expected to continue, we will value on the basis and assumption of a fully equipped operational entity, having regard to trading potential. 4.2. Where we are instructed to value a property having regard to its trading potential, we will take account of any trading information that either the operator has supplied to us or that we have obtained from our own enquiries. We will rely on this information being correct and complete and on there being no undisclosed matters that could affect our valuation. The valuation will be based on our opinion as to future trading potential and the level of fair maintainable turnover and fair maintainable operating profit likely to be achieved by a reasonably efficient operator. 4.3. Unless we have said otherwise in the relevant Agreement: (i) the valuation will be made on the basis that each property will be sold as a whole including all fixtures, fittings, furnishings, equipment, stock and goodwill required to continue trading; (ii) we will assume that the new owner will normally engage the existing staff and the new management will have the benefit of existing and future bookings or occupational agreements (which may be an important feature of the continuing operation), together with all existing statutory consents, operational permits and licences; (iii) we will assume that all assets and equipment are fully owned by the operator and are not subject to separate finance leases or charges; (iv) we will exclude any consumable items, stock in trade and working capital; and (v) we will assume that all goodwill for the properties is tied to the land and buildings and does not represent personal goodwill to the operator. 5. STRUCTURE 5.1. We will not carry out a structural survey of any property nor will we test services. Further, no inspection will be made of the woodwork and other parts of the structures which are covered, unexposed or inaccessible. In the absence of information to the contrary, the valuation will be on the basis that the property is free from defect. However, the value will reflect the apparent general state of repair of the property noted during inspection, but we do not give any warranty as to the condition of the structure, foundations, soil and services. Our report should not be taken or interpreted as giving any opinion or warranty as to the structural condition or state of repair of the property, nor should such an opinion be implied. 5.2. If we give the age of a building in our report, this will be an estimate and for guidance only. 6. MEASUREMENTS
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6.1. Where we are required to measure a property we will generally do so in accordance with the latest edition of the RICS Code of Measuring Practice. However, you should specifically note that the floor areas contained in any report we may publish are approximate and if measured by us will be within a 3% tolerance either way. In cases where the configuration of the floor plate is unusually irregular or is obstructed, this tolerance may be exceeded. 6.2. We will not be able to measure areas that we are unable to access. In these cases we may estimate floor areas from plans or by extrapolation. Where we are required to measure land or site areas, the areas will be approximate and will be measured from plans supplied. They will not be physically checked on site. 6.3. The areas we report will be appropriate for the valuation purpose, but should not be relied upon for any other purpose. 7. PLANNING AND STATUTORY REGULATIONS 7.1. Unless specifically instructed in writing to make formal searches with local planning authorities, we shall rely in the provision of our Services on the information provided informally by the local planning authority or its officers. We recommend that your lawyers be instructed to confirm the planning position relating to the property and review our comments on planning in the light of their findings. 7.2. We may consider the possibility of alternative uses being permitted. Unless otherwise notified by you in writing, we shall assume that the property and any existing buildings comply with all planning and building regulations existing uses have the benefit of appropriate planning consent or other statutory authorisation, and that no adverse planning conditions or restrictions apply. 8. VALUATION EXCLUSIONS 8.1. We will not inspect title deeds and we will therefore rely on the information supplied as being correct and complete. In the absence of information to the contrary, we will assume the absence of unusually onerous restrictions, covenants or other encumbrances and that the property has a good and marketable title. Where supplied with legal documentation, we will consider it but we will not take responsibility for the legal interpretation of it. 8.2. We will take into account any information that you provide concerning any tenants’ improvements. Otherwise, if the extent of tenants’ alterations or improvements cannot be confirmed, we will assume that the property was let with all alterations and improvements evident during our inspection (or, in the case of valuation without inspection, as described within the information that you provide). 8.3. Our valuation will take into account potential purchasers’ likely opinion of the financial strength of tenants. However, we will not undertake any detailed investigations on the covenant strength of the tenants. Unless informed to the contrary by you, we will assume that there are no significant arrears and that the tenants are able to meet their obligations under their leases or agreements. 8.4. Any plans we provide to you indicating the site of a property are for identification only. We will rely on our inspection and information that you provide in outlining the extent of each property, but you should not rely upon our plans to define boundaries. 8.5. Where comparable evidence information is included in our report, this information is often based upon our oral enquiries and its accuracy cannot always be assured, or may be subject to undertakings as to confidentiality. However, such information would only be referred to where we had reason to believe its general accuracy or where it was in accordance with expectation. In addition, we have not inspected comparable properties. 8.6. For a recently completed development property, we will not take account of any retentions or outstanding development costs. For a property in the course of development, we will reflect your advice on the stage of construction, the costs already incurred and those still to be spent at the date of valuation, and will have regard to any contractual liabilities. 8.7. We will not make any allowance in our Services for the existence of any mortgage or other financial encumbrance on or over the property nor take account of any leases between subsidiaries. 8.8. Any valuation figures provided will be exclusive of VAT whether or not the building has been elected.
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8.9. We will not make any allowance in any valuation advice provided for the expenses of realisation or any taxation liability arising from the sale or development of the property. 8.10. Unless we have said otherwise in the Agreement, each property will be valued individually; in the case of a portfolio, we will assume that the properties would be marketed in an orderly way and not placed on the market at the same time. 8.11. The components of our valuation calculations (such as future rental values, cost allowances, or void periods) may only be appropriate as part of the valuation calculation. They should not be taken as a forecast or prediction of a future outcome. You should not rely on any component of the valuation calculation for any other purpose. 8.12. We will value in the local currency. If we are to report to you in another currency, unless we have agreed otherwise we will adopt a conversion rate equivalent to the closing rate (“spot rate”) on the date of valuation. 8.13. Our valuation does not make allowance either for the cost of transferring sale proceeds to another state, or for any restrictions on doing so. 8.14. In instances where we are instructed to provide an indication of current reinstatement costs for insurance purposes, this will be given solely as a guide without warranty. Formal estimates for insurance purposes can only be given by a building surveyor or other person with sufficient current experience of replacement costs. The property will not be inspected by a building surveyor or qualified building cost estimator and the guide will be based on costs obtained from generic building cost tables. You should not rely on it as the basis for insurance cover. 9. REGULATED PURPOSE VALUATIONS AND MONITORING 9.1. In circumstances where a valuation, although provided for a client, may also be of use to third parties, for instance the shareholders in a company (otherwise defined as a “Regulated Purpose Valuation” in the Red Book), we are required to state our policy on the rotation of the surveyor who prepares the valuation and the quality control procedures that are in place. 9.2. Irrespective of the purpose of the valuation, we will select the most appropriate surveyor for the valuation having regard to his/her expertise and the possible perception that independence and objectivity could be compromised where a valuer has held the responsibility for a particular client for a number of years. This may result in us rotating the surveyor responsible for repeat valuations for the same client although we will not do so without prior discussion with the client. 9.3. For all Regulated Purpose Valuations we are required by the Red Book to state all of the following in our report: (i) the length of time the valuer continuously has been the signatory to valuations provided to you for the same purpose as the report, together with the length of time we have continuously been carrying out that valuation instruction for you; (ii) the extent and duration of the relationship between you and us; (iii) in relation to our preceding financial year the proportion of the total fees, if any, payable by you to our total fee income expressed as one of the following: • less than 5%; or • if more than 5%, an indication of the proportion within a range of 5 percentage points; (iv) where, since the end of the last financial year, it is anticipated that there will be a material increase in the proportion of the fees payable, or likely to be payable, we shall include a further statement to that effect in addition to (iii) above. 9.4. The valuation may be subject to monitoring under the RICS’s conduct and disciplinary regulations.
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APPENDIX III LICENSES AND INSURANCE
APPENDIX IV INFORMATION RECEIVED FROM THE CLIENT
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