Nyhetsbrev 03/07
Kjære aksjonær,
Oslo, 15. november 2007
Vi skifter navn til E-STAR PROPERTY AS
30. oktober 2007 vedtok den ekstraordinære generalforsamlingen i Eastern Property AS å
skifte navn til E-STAR PROPERTY AS. Dette ble gjort for å ikke skape forvirring rundt navnet
da et annet eiendomsselskap har et lignende navn.
Investeringsportefølje
De seneste månedene har vi fått eksklusive opsjoner på flere fullt utleide high yield
eiendommer. E-STAR PROPERTY planlegger å sluttføre avtaler om kjøp av eiendom for
minimum USD 150 millioner, noe som vil øke selskapets posisjon innen kontor, butikklokaler
og logistikkbygg betraktelig.
Selskapet har tilgang til en sterk portefølje av prosjekter i alle overnevnte segmenter. ESTAR PROPERTYs eiendomsrådgivere vil fortsette å utvikle denne porteføljen slik at
selskapet vil ha flere gode prosjekter å velge mellom. Det er viktig for oss å påpeke at vi blir
gjort oppmerksom på disse eiendommene gjennom private nettverk og dyktige kontakter,
ikke gjennom den russiske meglerbransjen.
Ledelsen i E-STAR PROPERTY venter at selskapets balanse vil være USD 200 millioner
ved utgangen av første kvartal 2008.
Refinansiering
Som følge av den positive utviklingen i russisk økonomi øker etterspørselen etter lån
betraktelig. Den russiske sentralbanken har reagert med å tillate at de kommersielle bankene
å refinansiere sine lån hos sentralbanken, et tydelig signal på at russiske myndigheter
prioriterer økonomisk vekst.
Et økende antall internasjonale banker retter nå oppmerksomheten mot det russiske
markedet. Som følge av kreditturoen som har rammet mange vestlige banker de seneste
månedene, har likevel ikke den totale utlånskapasiteten økt det seneste halvåret.
Med et økende behov for finansiering, har marginene gått opp de siste seks månedene, men
ikke til et alarmerende høyt nivå. Ledelsen i E-STAR PROPERTY anser dette som en
kortvarig utvikling, og at marginene vil synke. Bankene er fortsatt svært interessert i å
finansiere vestlige investorers investeringer (yielding assets). Den risikojusterte avkastningen
bankene kan få fra russiske lån (inkludert den økte investeringskostnaden) er fortsatt
lønnsom sammenlignet med andre lånemarkeder. Investeringsporteføljen selskapet nå er i
gang med å kjøpe vil delvis bli finansiert med gjeld, i tråd med de opprinnelige planene. ESTAR PROPERTY er i dialog med flere banker som har gitt signaler om tilfredsstillende
betingelser. Dette gir selskapet mulighet til å få god avkastning på investeringene.
Insentivprogrammer
Den ekstraordinære generalforsamlingen godkjente også hovedprinsipper for et
insentivprogram i selskapet, slik styret foreslo. Hovedprinsippene som ble vedtatt er: i)
bonusen er i sin helhet knyttet til aksjekursen i form av syntetiske aksjer ii) bonusen omfatter
både selskapets styre og ledelse. Rammeverket for insentivprogrammene vil bli fastsatt
individuelt, og vil av skattemessige årsaker bli behandlet som bonus.
E-STAR PROPERTY AS
Niels Troen
Administrerende direktør
Telf: +47 954 11 922
An update on the latest development in the
Russian Real Estate Market
By Colliers International
Acquisition Advisor for E-STAR PROPERTY AS
Current development in the investment market
The commercial real estate investment market in Russia demonstrated a significant level of
activity during 2007. Foreign investors find rates of return in Russia attractive as they are
substantially higher than in more developed countries.
A significant investment deal in the retail sector was BPT Arista’s acquisition of Global City
shopping center. Deal volume was $65 mill. In the warehouse sector, Raven Russia Fund
announced the creation of a joint venture with RDI Group, a Russian development company,
to build a large class A logistic complex located on Kashirskoe Shosse. Total amount of
investments will exceed $100 mill. Moreover, in March Raven Russia and EGL Holdings
(Turkey) announced the creation of a joint venture to build a new logistic complex of 55,000
sq. m. near Sheremetyevo airport with investments amounting to $56 mill.
Yields
Capitalization rates in all sectors of the commercial real estate market demonstrated further
compression in 1H 2007. Currently the rates are as follows: office sector – 8.5–9.5%, retail
sector – 9.5–10.5%, warehouse sector – 10–11%.
It is also noteworthy that strategic and financial investors such as investment banks and
private equity funds are interested in acquisition of stocks in Russian development
companies. For example, in the end of March Morgan Stanley Real Estate Special Situations
Fund III acquired 25% stock in RBI, one of the leading players in the St. Petersburg
residential and retail market.
Other interesting trend was that Russian commercial real estate market players purchase
stocks in international construction companies that allow them not only to reduce costs of
development projects by decreasing construction costs, but also improve quality and shorten
delivery dates. Thus, in April Basel announced an acquisition of 30% stock in Austrian
construction company Strabag and at the beginning of May reported about the plans to
increase its stock in the biggest German construction company Hochtief.
Debt and financing
The debt capital market has continued to develop in Russia. The number of foreign banks
providing project financing steadily increases. More international banks enter the Russian
market, which indicates the decreasing risks and higher transparency of the commercial real
estate market, forcing Russian banks to reduce interest rates and offer more favourable
financing terms.
Office Sector
Existing and Future Stock
In 1H 2007, the total new construction and reconstruction of Class A and B office space
came to approximately 490,000 sq. m., demonstrating an overall 50% growth year-to-date
Class A accounted for 6% of the total volume of added office space, and Class B for 94%
(against 20% and 80% in 1H 2006, respectively). The share of newly constructed offices was
62%; reconstructed offices – 38%.
Major Class A and B office buildings completed in 1H 2007 are shown Table 1:
Source: Colliers International
The pipeline for 2H 2007 is 960,000 sq. m. of Class A and B office space (Class A – 35%,
Class B – 65%).
During 1H 2007, there was a huge increase in Class A office buildings offered for sale in the
early stages of construction compared to the supply in the previous year.
There was a huge gap in the Class A segment between offer prices and the expectations of
potential buyers.
Demand
In 1H 2007, approximately 628,000 sq. m. of Class A and B office space was leased, and
490,000 sq. m. was sold. In 1H 2007, large domestic companies showed an increasing
demand for the purchase of Class A office space. These deals amounted to 27% of the gross
take-up of purchased space over the period.
Vacancy Rate
By the end of 1H 2007, the average vacancy rate for Class A offices was 1.3% (against 1.7%
as of the end of Q1 2007), while for Class B offices it was 4% (against 3.5% as of the end of
Q1 2007).
There was not enough quality Class A office space to meet the strong level of demand from
both domestic and international companies, which resulted in a low average Class A vacancy
rate.
The low vacancy rate of Class B office space has remained stable due to new, high-quality
premises delivered in 1H 2007.
Source: Colliers International
Rental Rates and Sale Prices
The urgent demand for quality Class A and B office space, far exceeding the supply level,
means that rental rates and sale prices will probably remain at their current high level (see
Table 3).
Source: Colliers International
In 1H 2007, base rental rates for Class A and B offices increased by 20-30% and in some
cases 50%.
Recently, developers have been increasingly changing currencies to euros or convertible
units as the U.S. dollar continues to depreciate against the ruble. Also, the use of rental
indexation has become a lot more widespread than it was at the beginning of the year.
There has been a trend for developers of newly constructed, high quality business centres to
declare longer minimum lease terms than they have declared previously. For Class A, the
minimum lease term has become 7 years (versus 5 years) and for Class B – 5 years (versus
3 years).
Warehouse Sector
The high-quality warehouse market is at an active stage of formation. High development of
the economy, the growth in investment demand and the increase of retail turnover have
favoured the growth in demand for high-quality warehouse premises.
In 1H 2007, the warehouse market kept expanding due to the successful realization of new
warehouse premises and high-quality projects announcement.
Demand
The demand for warehouse premises continued to show rapid growth in 1H 2007. As a result
of the expansion of retail and logistic companies, FMCG distributors, and distributors of
pharmaceutical substances, there remained a tendency for demand to exceed supply.
According to our estimations, there remains unsatisfied demand of around 1.5 mill sq. m. We
also note that there is unsatisfied demand for specialized warehouses, particularly for
refrigerated and pharmaceutical warehouses.
The following areas are the most demanded:
- The south (Kashirskoe and Simferopolskoe Shosses)
- The southeast (Novoryazanskoe Shosse)
- The northwest (Leningradskoe Shosse)
- The west (Minskoe and Kievskoe Shosses)
This is due to their proximity to international airports and main highways, which provides
goods transportation from Russian regions and countries of the EU.
There has been a trend of increasing demand for warehouse premises of 5,000–10,000 sq.
m. In 1H 2007, the demand for these premises made up 26% of the total demand for Class A
and B premises. The demand for 1,000–3,000 sq. m. premises, which previously had the
highest share of total demand, was 11% in 1H 2007. There remains to be a high rate of
demand (20%) for premises from 3,000 to 5,000 sq. m. The highest demand – 43% of
potential warehouse users – is for large warehouses (more than 10,000 sq. m.). Such
premises are generally used by logistic operators and retail companies.
Supply
In 1H 2007, several warehouse properties with a total area of about 80,000 sq. m. were put
into operation (see Table 1), which is less than 15% of the warehouse space that was
supposed to enter the market in 2007.
Source: Colliers International
The vacancy rate for Class A warehouses does not exceed 1%. It is expected that the main
warehouse premises planned for completion in 2007 will enter the market in Q3 and Q4 of
2007. Largescale multinational developers and Russian companies are currently constructing
new warehouse complexes.
Rental Rates
Though we may have observed a stabilization of rental rates in 1H 2007, the demand for
high-quality warehouse premises has put these rates at a high level. Triple net rental rates
for Class A warehouse facilities are estimated at $115–135/sq. m./year, and for Class B –
$100–125/sq. m./year. At the same time, operating expenses have increased, reaching
about $30-40/sq. m./year for Class A warehouses, which is a consequence of the increase in
maintenance and servicing costs for warehouse facilities.
Retail Sector
In 1H 2007, five shopping centres were opened in Moscow (see Table 1). This led to a
growth in Moscow’s retail property supply of 263,000 sq. m. (gross leasable area (GLA) –
116,000 sq. m.).
At the moment, the total area of professional shopping centres in operation in Moscow is
more than 3,150,000 sq. m.(GLA – about 1,650,000 sq. m.). By the end of 2007, about
1,250,000 sq. m. of retail property is expected to enter the market.
Major Retail Events of 1H 2007
In January, it was announced that Sportmaster sports stores had begun developing a new
format of hypermarkets with an area of about 8,000 sq. m. The first hypermarket (10,000 sq.
m.) was opened in St. Petersburg on Pulkovskoye Shosse. By the end of the year, the
company plans to open a second one (5,000 sq. m.) in Moscow.
On March 2, construction of the OZ shopping center began in Krasnodar (with a total area of
about 148,000 sq. m.). Construction is to be completed by Q4 2008. The developer, AIM
Property Development, plans to create a chain of 20 shopping centers in such cities as
Saratov, Omsk, Nizhny Novgorod, Volgograd and others.
At the beginning of March, the first regional franchise shop of British retail chain Marks &
Spencer was opened in the MEGA shopping centre in Nizhny Novgorod.
In mid-March, it was announced that Carrefour had purchased a construction site in Rostovon-Don. Besides, the operator has signed a rental agreement for a hypermarket in the
Gorizont shopping center in Rostov, where Carrefour will take the place of Ramstore
(thereby increasing the hypermarket’s area up to 15,000 sq. m.).
On June, 7 the DIY hypermarket Castorama opened its doors at 5 Novoryazanskoe Shosse
in Moscow. It is the chain’s fourth store in Russia.