2009 - CRE

16
News:
Omar Gadzhiev,
managing partner of Panorama Estate
­­New­clauses­devoted­to­non-residentialmortgage­can­be­described­as­an­importantevent­in­the­commercial­real­estatemarket.­Because­pursuant­the­currentlaw,­the­Federal­Registration­Servicecannot­concurrently­formalize­a­freeholdto­a­purchased­property­and­allow­thepawning­of­a­premise­to­a­lender­advancingloans,­banks­run­unacceptable­risks­andeventually­refuse­to­base­their­operationson­this­scheme.­The­new­bill­envisagesa­concurrent­registration­of­propertytitles­and­the­right­of­pawning.­The­giveninnovation­secures­the­interests­of­banksand­gives­them­confidence­that,­regardlessof­the­borrower’s­conduct,­they­may­claima­mortgaged­property­anyway.­This­newlegislative­initiative­rules­out­any­possibilityfor­a­company­to­evade­liability­to­thelender.­The­new­clause­has­certain­pros­forthe­borrower­as­well­in­that­banks­won’t­beable­to­review­the­mortgage­terms.­­True,the­crediting­market­is­now­stagnant­but­webelieve­that­this­norm­will­help­to­developnew­crediting­programs­for­commercial­realestate­developers.­In­recent­months­thegovernment­proposed­quite­a­few­legislativeinitiatives­called­to­protect­the­interestsof­lenders.­Obviously­it­stakes­on­the
Transaction
Viewpoint: Most Important Events of the Last Two Weeks
MCG­purchases­55%­of­­
"Hotel­Budapest"­JSC
The­Mos­City­Group­company­has­signed­the­final­agreementto­purchase­55%­of­the­Hotel­Budapest­JSC.­15%­of­these­werebought­from­VTB,­the­remaining­40%­-­from­a­Cyprus­offshorecompany­-­MC­Ko­Hotels­Management­Ltd.­(15%­of­shares­areowned­by­the­­Bank­for­Development­and­Foreign­Economic­Affairs,­30%­by­the­Government­of­Moscow).­The­amount­of­thedeal­was­$60­million.­$47­million­will­be­used­to­repay­the­debtto­VTB­JSC.­Hotel­Budapest­JSC­manages­a­hotel­with­the­samename,­and­owns­the­Peter­I­Hotel.The­Mos­City­Group­intends­to­invest­approximately­$70million­into­the­reconstruction­of­the­Budapest,­after­which­thehotel­will­be­raised­to­a­5-star­category.­Currently­MCG­is­holding­discussions­with­two­international­operators­to­managethe­hotel.­Let­us­recall­that­VTB­had­granted­two­loans­($6.46million­and­$40.98­million)­for­the­reconstruction­of­Budapest­Hotel­and­the­construction­of­the­Peter­I­hotel.­The­new­hotelbuilding­was­used­as­security­for­the­loan.­­In­April­2008,­VTBapplied­to­the­Moscow­Arbitration­Court,­demanding­thesettlement­of­arrears.­Later,­the­bank­petitioned­to­place­Hotel­Budapest­JSC­into­bankruptcy;­after­which­monitoring­procedures­were­implemented.­However,­the­final­court­date­wasadjourned­because­the­petition­had­been­withdrawn.­
GVA­Sawyer­and­FHD­purchaseland­for­an­outlet-mall­
Fashion­House­Development­and­the­GVA­Sawyer­company­havepurchased­a­plot­of­land­in­Russia­for­the­future­constructionof­the­first­Fashion­House­outlet-mall.­The­facility­will­be­builtnear­the­Moscow­-­St.­Petersburg­highway­in­close­proximity­to­
"Sheremetyevo"­Airport.­The­developer­of­project­will­be­the­
development­of­banks­and­the­extension­oftheir­service­package.­
David Gousset,
The director of the project of Megalogix
­­­During­last­two­weeks­we­sense­anactivization­of­influence­of­financial­crisison­the­market­of­the­warehouse­real­estate,against­which­commissioning­and­put­intooperation­of­new­warehouse­projects­on­themarket­become­not­only­distinct,­but­I­wouldsay­sensational.­I­have­in­view­the­chain­ofconsequent­opening­of­Megalogix­logisticalparks,­including­in­Megalogix-Novosibirsk­
(on­February,­25th),­opening­in­Rostov­(on­
March,­25th),­and­in­St.-Petersburg­(for­
April).­I­would­like­to­share­impressionsabout­just­happened­grand­opening­in­Novosibirsk­and­what­resonance­causes­todayopening­of­such­complexes­in­regions.­Thelaunch­in­Novosibirsk­has­caused­doubtlessinterest­not­only­from­potential­tenants­
(we­welcomed­over­120­guests,­including­
Administration,­bank­structures­and­over­70potential­tenants),­but­also­severe­interestfrom­citizens­of­Novosibirsk.­There­arenumerous­discussions­at­Novosibirsk­forumsabout­logopark,­and­we­register­huge­shaft­ofinquiries­and­offers­on­cooperation,­includingjob­inquiries,­that­in­general­is­not­surprising­
to­us­during­crisis,­but­it­confirms­once­againeccentricity­of­event­of­these­two­weeks.­Itis­necessary­to­admit­that­Administrationsof­cities­express­keen­interest­and­completesupport­of­such­infrastructural­projects.­Atthe­press­conference­devoted­to­openingof­logopark,­the­first­deputy­of­the­mayor­of­Novosibirsk­Victor­Voronov­has­underlinedthat­the­project­will­give­more­than­1600workplaces­for­inhabitants­of­the­Kirov­areaand­all­Novosibirsk,­and­the­main­Architectof­a­city­has­noted­importance­of­creation­ofsuch­Grade­A­complexes­for­development­ofan­infrastructure­of­all­city.­I­would­like­toadd­that­we­determined­to­complete­all­ofour­projects­and­we­will­try­to­correspond­tomarket­realities­not­only­from­the­point­ofview­of­rent­rates,­but­also­a­lease­term.­
Heiko Davids, business development
director at Knight Frank Russia and CIS
­­What­we­have­observed­in­Russia,generally­speaking,­and­in­the­Moscowmarket,­in­particular,­during­the­first­twomonths­of­2009­can­be­described­as­“abalance­point”:­all­market­participantsexpected­either­a­“great­miracle”­or­anegative­scenario.­Two­recent­weeksadded­more­clarity.­We­realize­that­themarket­has­entered­a­new­phase­and­try­
GVA­Sawyer­Company.­The­land­area­comprises­13­ha.­An­investment­of­100­million­euros­is­planned­into­Russia's­first­outletmall­(the­purchase­price­of­the­land­was­not­disclosed).The­total­area­of­the­future­facility­will­be­around­40,000square­meters.­The­Fashion­House­will­be­built­in­two­stages.­
The­first­phase­of­the­project­is­scheduled­for­completion­by­
2012.­The­Fashion­House­development­team,­which­includesspecialists­from­Liebrecht­&­Wood­and­GVA­Outlet­Services,­hasalready­implemented­Fashion­House­network­stores­in­the­Czech­Republic,­Poland­and­Romania.­Today­Jan­Demier,­who­develops­concepts­for­the­Fashion­House,­is­developing­an­originalidea­for­the­Russian­project.­Brandon­O'Reilly,­the­director­of­GVA­Grimley­Outlet­Services­and­Fashion­House­Developmentexplains:­"Currently­there­are­no­outlet-centers­in­Russia.­But­we­believe­that­the­market­has­room­for­at­least­20­suchcenters."Tenants­of­Fashion­House­outlet-malls­in­Europe­aresuch­name­brands­as­Adidas,­Mexx,­Prima­Moda,­D'oro,­Ecco,­Lee­Cooper,­etc.­"Investment­funds­for­this­project­were­drawn­fromprivate­share­capital,­and­this­is­just­one­of­the­three­projectswhich­will­be­built­in­Russia­and­Ukraine.­The­other­two­projectsare­currently­in­the­planning­stages,"­says­Patrick­Van-Den­
Bossch,­the­co-founder­of­Liebrecht­&­Wood.
Company­News­
Carrefour­buying­shares­of­
Seventh­Continent­
French­retailer­Carrefour­intends­to­buy­almost­74.8%­of­theshares­of­­Seventh­Continent.­The­block­of­shares­was­put­onsale­by­the­owner­of­­Seventh­Continent­,­Alexander­Zanadvorov.­Let­us­recall­that­Mr.­Zanadvorov­was­unable­to­pay­back­a­loanof­$560­million,­which­he­had­taken­in­autumn­of­2007­from­Deutsche­Bank.­In­November,­he­was­forced­to­put­his­sharesup­for­sale,­when­the­bank­called­in­its­loan.Previously,­interestin­the­shares­of­the­­Seventh­Continent­­was­expressed­by­Apax­
to­get­adapted­in­the­current­marketsituation.­Our­company­showed­a­betterperformance­in­the­recent­two­monthsthan­we­expected­or­prognosticatedbefore­the­New­Year.To­begin­with,­several­good­deals­have­beenclosed­in­the­warehousing­segment­throughthe­mediation­of­Knight­Frank:­these­arelong-term­contracts­of­lease­in­the­Moscowregion­(in­particular,­as­far­as­the­South­
Logistic­Terminal­project­is­concerned.
Secondly,­a­contract­with­Okhta­Groupwas­signed­in­St.­Petersburg­in­mid­
February­for­the­300,000-sqm-odd­
Nevskaya­Ratusha­project.­Knight­Frankwas­chosen­as­the­company’s­consultantand­will­audit­the­design­documentsof­engineering­system­at­this­complex.­In­addition,­we’ll­consult­the­developerregarding­the­facility­management­modelafter­this­property­is­turned­over­foroperation.­This­is­a­very­important­eventfor­us­because­Nevskaya­Ratusha­is­alarge­and­iconic­project­for­the­Northerncapital.­One­of­the­buildings­will­beoccupied­by­the­city­administration.­Ibelieve­similar­events­can­be­anticipatedon­the­real­estate­market­in­2009­and­weshould­certainly­look­into­the­future­withoptimism!­
Partners,­TPG­and­other­investment­funds.­According­to­Natalia­
Sazonova,­head­of­market­research­at­Knight­Frank,­the­marketis­starting­to­revive­with­the­arrival­of­new­players.­This­is­alsogood­news­for­the­buyers.­"Creating­a­network­from­scratch­is­noeasy­task,­although­it­is­doable,­especially­for­a­corporation­like­Carrefour,­which­has­15,000­stores­worldwide.­The­retailer­hasalready­started­entering­other­markets­via­the­purchases­of­localnetworks,"­she­noted.Let­us­recall­that­Carrefour­was­one­of­the­bidders­for­thepurchase­of­the­"Lenta"­hypermarket­network.­But­the­deal­didnot­go­through.­That­has­not­deterred­the­plans­of­the­Frenchretailer­to­enter­the­Russian­market.­The­company­is­planning­tolease­or­build­its­own­small­shopping­centers­in­20­Russian­cities,­investing­10­million­euro­within­the­next­two­or­three­years.­
These­cities­will­be­Omsk,­Tomsk,­Ekaterinburg,­Ufa,­etc.­
Raven­Russia­tofocus­on­warehouses­
The­Raven­Russia­investment­fund­intends­to­exclusivelyfocus­on­the­development­of­warehouses­in­Russia,­duringthis­crisis.­This­is­what­the­director­of­Raven­Russia­Property­
Advisers­Ltd.,­Victor­Malevankin,­announced.­According­to­
Mr.­Malevankin,­the­company­will­now­invest­exclusively­in­
Russia.­The­fund­has­already­attracted­75­million­pounds,­andis­expected­to­attract­an­additional­25­million­pounds­throughthe­placement­of­new­shares.­­In­addition,­the­fund­intends­tobuy­its­parent­company­Raven­Mount,­which­has­a­number­ofassets­in­the­UK.­These­assets­will­be­sold­and­the­proceeds­willbe­sent­to­Russia.­­According­to­Mr.­Malevankin,­the­crisis­hasforced­a­change­in­priorities.­Development­projects­have­givenway­to­those­already­built.­­We­should­recall­that­Raven­Russia,together­with­its­Russian­partners,­is­developing­a­network­ofstorage­facilities­throughout­Russia,­including­Megalogix­project,­organized­in­cooperation­with­the­"Avalon"­Group.­­