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Conference presentation draft v 4.11


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Conference presentation draft v 4.11

  1. 1. INVESTORPRESENTATIONSeptember 2011
  2. 2. Disclaimer This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of AFI Development Plc (the "Company") or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this document, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of the Company or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with the document. This communication is only being distributed to and is only directed at (1) qualified institutional buyers (within the meaning of Rule 144A of the United States Securities Act of 1933, as amended (the "Securities Act") or (2) accredited investors (as defined in Rule 501(a) of Regulation D adopted pursuant to the Securities Act). Any person who is not a "qualified institutional buyer" or "accredited investor" should not act or rely on this document or any of its contents. This document contains "forward-looking statements", which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Companys control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or GDRs, financial risk management and the impact of general business and global economic conditions. Such forward-looking statements are based on numerous assumptions regarding the Companys present and future business strategies and the environment in which the Company will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as at the date as of which they are made, and the Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Companys expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. Neither the Company, nor any of its agents, employees or advisors intends or has any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this document. The information contained in this document is provided as at the date of this document and is subject to change without notice. 2
  3. 3. Macroeconomic update Real GDP growth 3.7% in Q2 2011, TY 2011 150 110% estimation – 4% 140 104.0% 105% Sovereign debt to GDP ratio is the lowest 130 100% 120 among its peers 110 95% Oil price (Brent) is volatile but still over 100 U$100 per barrel 90% 90 Unemployment is 6.4% in May. Labor market 85% 80 is steadily improving 70 80% Inflation is estimated at 7.5-8.5% for TY 2003 2004 2005 2006 2007 2008 2009 2010 2011 Real GDP (Year 2003 = 100) - left axis Ruble exchange rate is fluctuating around 30 YoY growth, % - right axis RUB for 1 US$ 200% Sovereign Debt (% of GDP) 114% 150% 112% 100% 110% 108.8% 50% 108% 0% Portugal Spain Italy Ireland US UK Greece Germany Russia 106% 2003 2004 2005 2006 2007 2008 2009 2010 Russian CPI, % Source: EIU, Federal statistics service, JLL 3
  4. 4. Market updateRetail Retail supply and vacancy Retail rental rates, US$ psqm pa Key indicators Units 4 6% Million sqm 4,800 4,500 5% 4,000 4,000 4,000 Prime rates* 4,000 psqm pa 3 4% 3,500 3,700 3,000 Base rents 1,350 psqm pa 2 3% 2,000 2% 1,500 1,700 1,300 1,200 1,350 1,350 1,350 Prime yield 9.0% – 9.5% 1 1% Vacancy <1% (prime) 0 0% 2005 2006 2007 2008 2009 2010 H1 7% (Moscow aver.) 2011 2005 2006 2007 2008 2009 2010 Q1 2011 Q2 2011 total area vacancy Prime rents Base rents source: JLL, C&W source: JLL, C&W*Prime rates: 100 sqm shops on 1st floors in qualityshopping centersOffice Class A office supply and vacancy Class A rental rates, US$ psqm pa 3 2,000 Key indicators Units 25% Million sqm 20% 1,500 CBD prime US$1,100 - 2 1,150 rates US$1,200 psqm pa 15% 1,000 1,400 850 800 800 10% US$700 - US$800 1 1,000 Class A 750 750 psqm pa 5% 600 620 650 0 0% Yields 9% 2005 2006 2007 2008 2009 2010 H1 2005 2006 2007 2008 2009 2010 H1 2011 2011 total supply vacancy Class A Vacancy prime 2% - 4% vacancy Class A CBD source: JLL, C&W Average Class A Class A CBD Prime source: JLL, C&W Source: JLL, C&W 4
  5. 5. AFI Development at glance• Full cycle real estate developer Market Cap - Sep 09, 2011 US$ 0.65 bn NAV - Jun 30, 2011 US$ 1.8 bn• Focus on unique large scale Average share price - Sep 09, 2011 US$ 0.63 commercial and residential projects NAV per share - Jun 30, 2011 US$ 1.74• Primary market: Moscow, Russia Total equity – Jun 30, 2011 US$ 1.83 bn Cash & Cash equiv. – Jun 30, 2011 US$ 96 mn• Portfolio market value – US$ 2.4 bn Project level bank loans – Jun 30, 2011 US$ 489 mn (JLL valuation as of June 30, 2011) Land bank AFIMall City 27% 35% Moscow 94% Pipeline Kislovodsk 14% 3% Projects Completed Other under and unsold 3% development projects 10% 14% Portfolio market value by project type Portfolio MV by geography 5
  6. 6. Key projects1 AFIMALL City 8 Ozerkovskaya III CITY OF MOSCOW Shopping mall Mixed-use2 Four Winds 9 13 Kosinskaya “A”-class office “B”-class office3 Aquamarine hotel 10 Paveletskaya II 4* hotel Residential 12 14 24 Ozerkovskaya II 1 11 Otradnoye Residentaial 5 8 Residentail 4 3 6 7 10 95 Berezhkovskaya 11 12 Pochtovaya “B”-class office Mixed-use6 H2O 13 “B”-class office Serebryakova Residential7 Paveletskaya I “B”-class office 14 Tverskaya Zastava Mixed-use Existing projects Projects under development 6 Pipeline projects
  7. 7. Key Yielding Assets
  8. 8. AFIMALL CityKey advantages• Central location• Largest mall in the city center• High quality construction and fit-outHighlightsGLA/# of shops 107K /c.400Occupancy 81%2013 NOI (100%) US$120-130 mn (JLL)Revenue 2011 US$60 mnJLL appraisal value* US$1,093 mn 25 thousand visitors per day*(100% project as at Jun 30, 2011) 20Additional matters 15• The 25% city share acquisition in Sep 2011• The Company aims to have the finance in 10 place by the end of Sep 2011 5• The Company continues its negotiations with the City in respect of the parking 0 March April May June July August• Favorable finance terms have been reached in respect of the existing loan Average daily footfall 8
  9. 9. Four Winds officeKey advantages• Prime location in CBD• AAA long-term tenants• Well-known brand in MoscowHighlightsOwnership 50%GBA/GLA 28K /22KOccupancy 100%NOI US$29 mnRental rate US$1,350 psqm paJLL appraisal value* US$271 mn*(100% project as at Jun 30, 2011) 9
  10. 10. Aquamarine HotelKey advantages• Central location• Part of the residential / office complex with a total area of 160K sqm• Professional development conceptHighlightsGBA/# of keys 11K /159 keysOccupancy (H1 2011) 60%2011 NOP US$2.1 mn (JLL)Stabilized NOP US$4 mn (JLL)ADR US$195JLL appraisal value* US$47 mn*(100% project as at Jun 30, 2011) 10
  11. 11. Plaza SpaKey advantages• Recognized recreational area• Solid reputation for the top quality service in Kislovodsk town• Established client baseHighlightsOwnership 50%GBA/# of keys 25K /275 keysOccupancy (H1 2011) 73%2011 NOP (100%) US$8.1mn (JLL)JLL appraisal value* US$62mn*(100% project as at Dec 31, 2010) 11
  12. 12. Active Development
  13. 13. Ozerkovskaya IIIKey advantages• Prime location in CBD• 3rd phase of the residential / office complex with a total area of 160K sqm• High quality construction and fit-outHighlightsOwnership 50%GBA/GLA 79K /46KCompletion Q4 2011Stabilized future NOI US$38 million (JLL)Average rate US$800 (JLL)Management targets• Development completion in Q4 2011• The Company is exploring several disposal possibilities of completed office buildings, in whole or in part 13
  14. 14. Kalinina SpaKey advantages• Recognized recreational area• Second Spa project in the region after Plaza Spa success• Attractive price-qualityHighlightsGBA/# of keys 13K /175 keysOperation start Q1 2012Stabilized future NOI US$3 million (JLL)Management targets• Start operation in Q1 2012• Occupancy stabilization by 2012 end 14
  15. 15. Pipeline next for development
  16. 16. Tverskaya ZastavaKey advantages• Prime business location• Close proximity to public transport• Moscow top rental rates /prices in the neighborhoodHighlights (based on JLL)GBA Over 300KDelivery 2016-2017Current status• The Company is still in negotiations with the Moscow authorities on the matter of Tverskaya Zastava 16
  17. 17. Otradnoye (Odintsovo) Key advantages • Green zone in 7 km from Moscow • Prestigious direction & top prices in Moscow Region • All amenities for comfort living in place Highlights GBA/# of apartments 665K /c.7.5K Revenue US$1,370 mn* Development costs US$860 mn* Management targets • Renewal of construction permit and construction start and/or cooperation with co-investor (clarity in 2012)* The information is based on valuation report conducted by JLL as at Jun 30, 2011 for the purpose of the Company financial statements for the 6 months 2011 17
  18. 18. Paveletskaya Phase II Key advantages • Central location – 5 km from the Kremlin • Embankment of the Moscow River • Undersupply of quality residential space in Moscow Highlights GBA 106K Revenue US$390 mn* Development costs US$174 mn* Management targets • Design and approval works proceeding to secure construction permit (clarity in 2012)* The information is based on valuation report conducted by JLL as at Jun 30, 2011 for the purpose of the Company financial statements for the 6 months 2011 18
  19. 19. Pochtovaya Key advantages • Central administrative district of Moscow • Embankment of the Yauza River • Undersupply of quality residential space in Moscow Highlights GBA 424K Revenue US$1,497 mn* Development costs US$616 mn* Management targets • Design and approval works proceeding to secure construction permit (clarity in 2012)* The information is based on valuation report conducted by JLL as at Jun 30, 2011 for the purpose of the Company financial statements for the 6 months 2011 19
  20. 20. Financial position
  21. 21. Financial position• Stable cash position of US$ 96 mn• Total assets (TA) – US$ 2.57 bn• Total equity (TE) – 1.83 bn, TE/TA – 0.71• Net debt (ND) – US$ 393 mn, ND/TA – 0.15 Real estate properties Current & other assets Total assets 2,331 235 = US$2,566 mn 28 = Sources 1,825 462 252 of finance Equity Long-term loans Short-term loans Other Balance sheet structure (June 30, 2011), US$ mn 21