Q3 2013 Investor Presentation FINANCIAL & BUSINESS RESULTS November 2013
Disclaimer This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of AFI Development Plc (the "Company") or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this document, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of the Company or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with the document. This communication is only being distributed to and is only directed at (1) qualified institutional buyers (within the meaning of Rule 144A of the United States Securities Act of 1933, as amended (the "Securities Act") or (2) accredited investors (as defined in Rule 501(a) of Regulation D adopted pursuant to the Securities Act). Any person who is not a "qualified institutional buyer" or "accredited investor" should not act or rely on this document or any of its contents. This document contains "forward-looking statements", which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or GDRs, financial risk management and the impact of general business and global economic conditions. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as at the date as of which they are made, and the Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. Neither the Company, nor any of its agents, employees or advisors intends or has any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this document. The information contained in this document is provided as at the date of this document and is subject to change without notice. 2
AFI Development at Glance Market Cap, as of Nov 18, 2013 US$ 0.85 bn Price per share as of Nov 18, 2013 US$ 0.81 NAV (Equity), as of September 30, 2013 US$ 1.71 bn NAV per share, as of September 30, 2013 US$ 1.64 BUSINESS Full cycle real estate developer Focus on unique large scale commercial and residential projects FINANCIAL STABILITY Strong liquidity position: US$ 140,3 mn as at September 30, 2013 Secured financing for on-going projects Portfolio Value* Portfolio Value* US$ 2.5 bn Primary market: Moscow, Russia 30% Debt to Total Assets** HISTORY 12 years on the market Admitted to LSE in 2007 Premium listing from 2010 Free float 35,12% TRACK RECORD 16 completed projects with total c. 0,6 mln sqm of space Impeccable credit history Market reputation for high quality and professional property management * Gross Asset Value of Portfolio based on C&W Valuation as for 30 June 2013 and BV of Land Bank projects, Trading Properties and Hotels BRAND Strong global brand Affiliate of Africa Israel Group (64,88% owner), a major conglomerate with global focus on real estate, construction and infrastructure PORTFOLIO Substantial income generating portfolio. Major project AFIMALL 2 projects are in active stage of development 5 Pipeline projects & land bank ** Bank loans only 3
Key Projects in Moscow Current Portfolio Yielding Assets (retail, offices and hotels) Value** (afid share, C&W): US$ 1.7 bn Ownership:50% AFIMALL City Tverskaya Ib, II Berezkovskaya GLA(excl. hotels),sqm: 204K sqm Botanic Garden Four Winds*** NOI stab. ( excl. hotels): US$ 217 mn H2O Plaza SPA Zhel* Plaza SPA Kisl * Otradnoe Tverskaya Plazas Pochtovaya, Phase I Four Winds AFIMALL City Aquamarine Complex Paveletskaya, Berejkovskaya Phase # II H2O Office Paveletskaya, 1 Kosinskaya Paveletskaya, 1 Aquamarine Hotel * Outside of Moscow ** Hotels presented with cost value Development Projects Ozerkovskaya III Value*** (C&W): US$ 747 mn Tverskaya Plazas Odinburg* Pochtovaya GLA,sqm: 252K GSA, sqm: 574,3K NOI stab: US$ 142,3 mn Kosinskaya Paveletskaya II *** Odinburg presented with cost value Land Bank Value (BV): US$ 20 mn Note: the NOI projections are forward looking statements based on C&W valuation assumptions and Company estimations and they can be realized or not realized due to factors beyond the Company's control including, among others, the impact 4 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 Other
SECTION 1 Project Update Yielding Projects
AFIMALL City Update (1/3) CURRENT STATUS: NOI for the 9m 2013 reached US$ 48,4 mn compared to US$ 38,9 mn due to increase in AFIMALL operating activity Q1 2013 Q2 2013 Q3 2013 9M 2013 9M 2012 Revenue 23.2 24.9 26.5 74.6 62.1 Operating expenses (8.6) (8.1) (9.5) (26.2) (23.3) NOI 14.6 16.7 17.0 48.4 38.9 PROJECT HIGHLIGHTS (as of September 2013) Total GLA(shops, offices, storage), sqm 107.2K Total GLA shops only, sqm 96,8K % of GLA shops only 85% Stabilized NOI (C&W est.) US$151.2 mn Up to 24% Growth in occupancy with total leased area reaching circa 82,046 sq.m. as at 30 September 2013 (from 80,020 sq.m. as at 30 June 2013 and 74,353 sq.m. at yearend 2012) One of the most renowned department stores in Moscow TSUM has sighed a longterm lease for 1,688 sqm at the 1 st floor and became the new main tenant during Q3. The AFIMALL sustainable increases its popularity and awareness by the management quality work in improvement of tenant mix MV (C&W est.) Loan balance as for September, 2013 US$ 1.160 bn US$ 603 mn AFIMALL became one of the top stages holding Annual Russian Fashion Week Show The Company reduced the interest rate for US portion of the loan from Libor+6,6% to Libor +5.02% 6
AFIMALL and Moscow-City Development (2/3) AFIMALL MOSCOW CITY DEVELOPMENT Moscow City existing office space is approximately 500K sq m, with another 600K sq m of office space expected to be constructed by 2015. The Moscow City vacancy rate is c. 25% (existing buildings) Hotel Novotel, launched last quarter, will add additional visitors to the Mall. Existing supply (number of rooms) 360, pipeline (number of rooms) - 319 The following buildings are expected to be completed: Federation Tower (East), Eurasia Tower(107,5K) and OKO(gla:87K sqm) by the end of 2014, IQ-quarter (gla:107k and Evolution Tower by the end of 2015 (about 600,000 sq m of office area in total) Existing Office Complex 0 Tower 2000 4 Imperia Tower 8 CityPoint 9 Capital City 10 Naberezhnaya Tower 13a Federation Tower (West) 19 Northern Tower 6, 7 Central Core (AFIMALL City) Under Construction 2, 3 Evolution Tower 11 IQ-quarter 12 Eurasia Tower 13b Federation Tower (East) 14 Mercury City Tower 16a OKO 16b Parking Planned 15 Moscow City Government Building 20 Exposition and Business Center 2 additional metro lines: Prolongation of Tretyakovskaya till Ramenki, construction of Hordovaya with 4 different lines connections (Vystovochnaya, Polezhaevskaya, Hodinskoye Pole, Dinamo, Savelovskaya) by 2014 (see next slide) 7
AFIMALL and Moscow-City Transport Infrastructure(3/3) 4 2 1 3 0 (2014 Today: (0) Vistavochnaya metro station at the lowest level of AFIMALL City Till the end of 2013 (start of 2014): Point (1) Delovoy Center will be connected with Point (2) - Park Pobedy. Delovoy Center is going to be an additional station at the lowest level of AFIMALL City 2015: Point (1) Delovoy Center will be connected with Point (3) Khoroshevskaya Point (2) - Park Pobedy will be connected with Point (4) - Ramenki 8
Ozerkovskaya (Aquamarine III) CURRENT STATUS: AFID reached a binding agreement to dispose Bld#1 in Aquamarine Complex to a Russian State controlled corporation. Total transacted area of Bld #1 is approximately 11,994 sq.m and includes terraces & 71 parking spaces. The consideration amounts to US$91.5 mn excluding VAT, AFID expects to receive net profit on the transaction in the amount of approximately US$14.6 million (expected to be recognized in Q4 2013). Bld # 1 PROJECT HIGHLIGHTS* (as of September 2013) GBA, sqm: 73,4K GLA, sqm 55,4K MV (C&W est.) Loan balance as for September, 2013 US$ 389 mn US$ 220 mn * The data presented for all project ( Four Buildings) before disposal of Bld # 1. 9
Yielding Properties Building AFIMALL Berezkovskaya Paveletskaya, bld. 1 H2O Tvesrkaya Plaza Ib Tverskaya Plaza II Ozerkovskaya III*** Aquamarine Hotel Plaza Spa Kislovodsk Plaza SPA Zheleznovodsk Ownership 100% 74% 99.1% 100% 100% 100% 100% 100% 50% 100% Moscow Moscow Moscow Moscow Moscow Moscow Moscow Moscow Location Kavkaz region Kavkaz region Moscow City CBD CBD CBD CBD GBA, sqm 304,205 11,612 16,246 10,698 2,104 6,008 73,346 11,701 25,000 8,931 GLA, sqm 107,208 10,250 14,085 8,990 1,909 6,008 55,422 159 keys 275 keys 134 keys Parking lots (total), # 2,075 150 126 81 - - 551 15-15 * Ocupancy rate (shops only), % 85% 86% 96% 73% 87% 87% - 79% 52% 62% Current Net Rent as of 30.06.2013, $/sq m *** 1,251* 443 244 206 527 455 750 ADR 242 ADR 379 ADR 229 Class Retail Office B Office B Office B Street retail & Office Street retail & Office Office A & Street Retail Hotel Hotel Hotel NOI stab (C&W est.), US mn 151.6 5.8 4.6 2.9 1.3 4.5 46.0 - - - MV(AFID share),us$ mn** 1,160 31.3 30.1 18.3 9.0 31.5 389.1 31.0 25.0 23.0 CAP Rate 10% 12% 13.5% 14% 12% 11.5% 10% 9.5% 13% 13% * Current Net rent for AFIMALL presented as for the end of September, 2013 and does not include discounts ** MV based on C&W valuation as for 30.06.2013. Hotels presented by cost value ***Project is not leased yet 10
SECTION 2 Project Update Projects next for Development
Pipeline Projects Development Status ODINBURG KOSINSKAYA TVERSKAYA IC PLAZA IV BOLSHAYA POCHTOVAYA TVERSKAYA PlAZA IIA PARAMETERS: Type: Residential GBA(Phase I), sqm: 200,8K GSA(Phase I total), sqm: 149,4K # of Apartments: 2,620 PARAMETERS: Type: Mix GBA, sqm: 111,7K GLA, sqm: 90,3K MV(C&W),mn: S$ 103,5 PARAMETERS: Type: Office GBA, sqm: 51,2K GLA, sqm: 32,5K MV(C&W): US$ 105,8 mn PARAMETERS: Type: Office, Retail GBA/GLA, sqm: 108K/61,4K MV(C&W): US$ 168,6 mn PARAMETERS: Type: Residential GBA, sqm: 170,4K GSA/GLA, sqm: 63,2K/28,0K MV(C&W),: US$ 142,3mn PARAMETERS: Type: Office GBA, sqm: 10,5K GLA, sqm: 7,6K MV(C&W),mn: US$ 12,4 CURRENT STATUS: The first construction works on the land plot, allocated for the 1st stage in Phase # 1 have been launched (54,5K sqm from 200,8K sqm of GBA) The mortgage accreditation was passed with one bank CURRENT STATUS: The end of construction works was shifted from Q4 2013 to H1 2014 The project was submitted to top Russian banks CURRENT STATUS: Approval documentation GPZU and GZK are in place Design works are in process. Project design stage stage P finalized The company finalized the top list to choose General Contractor Start of construction : H1 2014 CURRENT STATUS (Plaza IV): Land plot s borders clarification has been finalized Securing approval documentation CURRENT STATUS: Design works are in process Securing approval documentation CURRENT STATUS: According to the article dated 29.10.2013 and published on the official web-site of the Moscow Government, the Construction Department of Moscow Government has made decision to start an active phase of redevelopment at Tverskaya Zastava Square already in 2014 (and the first stage of redevelopment will focus on construction of an additional overhead road across the railway lines), whereas the date of completion of these works remains unclear, which will incur significant delay and, thus, pose high 12 uncertainty with the timeline of the subject Plaza IIa project
Paveletskaya II: change in Value CURRENT STATUS: The Company finalized negotiations with Moscow City Government to change the permitted usage of land plot In November AFID has received a signed land lease agreement for 6 years for further development Thus, assumptions in valuation report made by Cushman & Wakefield have to be adopted for company valuation Type PROJECT HIGHLIGHTS (as of September 2013) Business class Residential GBA, sqm: 151,4K Land lease agreement for construction of residential and commercial space signed at Paveletskaya II in November 2013 resulting US$81.0 million gross valuation gain (US$64.8 million net of taxation), which is included in Company Q3 2013 result GSA/GLA, sqm: 53,2K/21,0K BV(cadastral value), mn: 11,6 MV(C&W), mn: 92,6 13
Land Bank Projects Project Type Land (ha) GBA upon completion (sqm) BV as of 30.06.2013, US$ mn Park Plaza Kislovodsk Hotel resort 5.3 40,000 7,2 Versailles, Kislovodsk Hotel resort 0.6 12,350 7,2 Ruza Mixed use 387 n/a 3,6 St. Petersburg Mixed use 3.07 n/a 1,8 TOTAL 19,8 Extensive land bank Land bank projects of the Company is currently put on hold Land bank strategy Activate projects upon securing required financing and evaluation of demand level from prospective tenants/buyer Full flexibility regarding future development in various cycles of the economy the major competitive advantage for the Company Note: MV upon completion and GBA upon completion are forward looking statements based on JLL valuation assumptions and they can be realized or not realized due to factors beyond the Company's control including, among others, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or GDRs, financial risk management and the impact of general business and global economic conditions 14
SECTION 3 Financial Update
Income Statement and Statement of Financial Position Q1 2013 Q2 2013 Q3 2013 9M 2013 9M 2012 # ITEM ('000) Actual Actual Actual Actual Actual (1) Construction consulting/management services 0.0 0.0 0.0 0.1 2.2 (2) Rental income 33.1 35.4 36.6 105.1 84.9 (3) Sale of residential and trading property 0.2 55.0 1.8 57.1 4.6 (4) TOTAL REVENUE 33.4 90.5 38.4 162.3 91.8 (5) Other income 3.2 0.4 0.8 4.4 0.2 (6) Operating expenses (21.4) (17.8) (18.3) (57.5) (44.2) (7) Administrative expenses (4.0) (7.0) (2.1) (13.0) (15.7) (8) Cost of sales of residential and trading property (0.2) (31.8) (1.3) (33.2) (3.8) (9) Other expenses (1.8) (0.8) (1.5) (4.1) (1.0) (10) TOTAL EXPENSES (24.2) (56.9) (22.3) (103.4) (64.5) (11) Share of profit of equity-accounted investees (0.6) (0.1) 0.3 (0.5) 6.3 (12) GROSS PROFIT 8.6 33.5 16.3 58.4 33.5 (13) Valuation gains on investment property 16.5 41.0 47.4 104.9 (243.4) (14) Impairement loss for trading property and hotels - - (65.4) (15) RESULTS FROM OPERATING ACTIVITIES 25.1 74.5 63.7 163.3 (275.3) (16) Profit on sale/disposal of properties/investment 32.1 - - 32.1 2.3 (17) Finance income 15.7 1.5 1.2 18.5 13.0 (18) Finance expense (16.8) (17.7) (16.8) (51.2) (45.4) (19) FX Gain/( Loss) (9.2) (19.6) 5.1 (23.7) 16.7 (20) Translation reserve reclassification due to disposal of subsidiary (30.3) - - (30.3) - (21) Net finance income/(costs) (40.5) (35.8) (10.5) (86.7) (15.7) (22) PROFIT BEFORE INCOME TAX 16.7 38.8 53.2 108.7 (288.7) (23) Current income tax (0.4) (0.4) (0.5) (1.3) (3.0) (24) Deferred income tax (0.7) (10.7) (11.9) (23.3) 15.1 (25) PROFIT FROM CONTINUING OPERATION 15.6 27.7 40.8 84.1 (276.6) (4) Revenue reached US$ 162,3 mn since the beginning of the year, which is 77% higher that same quarter last year (2) Rental income achieved USD 105,1 mn for 9m2013, which is 24% higher than same period 2012 AFIMALL contribution in rental income is US$ 74,5 mn (12) Gross profit went up to 74% compared September 2012 and come up to USD 58,4 mn as for September 2013 (13) Valuation gain US$ 47,4 mn is mostly related to change in value of Paveletskaya II and Plaza IIa (25)Profit from continuing operation amounted to US$ 84,1 mn compared to loss in US$ 276,6 mn for the comparative period in 2012 16
Statement of Financial Position # NARRATIVE 30.09.2013 31.12.2012 Changing US$ mn US$ mn US$ mn % (1) Investment property 1,679.9 1,292.3 387.6 30% (2) Investment property under development 631.7 567.7 64.0 11% (3) Investment in Joint Ventures 5.9 82.4 (76.5) (4) Property, plant and equipment 69.8 76.6 (6.7) (5) Long-term loans receivable 21.7 113.5 (91.8) (6) VAT recoverable 0.2 0.5 (0.2) (7) Goodwill 0.0 0.2 (0.2) (8) Non-current assets 2,409.3 2,133.1 276.1 13% (9) Trading properties 6.6 3.6 3.0 83% (10) Trading properties under construction 120.7 141.8 (21.1) (11) Inventory 0.6 0.6 (0.0) (12) Short-term loans receivable 0.1 0.1 (0.0) (13) Trade and other receivables 90.4 78.3 12.1 16% (14) Current tax assets 3.0 2.3 0.7 29% (15) Cash and cash equivalents 140.3 174.8 (34.6) (16) Current assets 361.7 401.6 (39.9) (18) TOTAL ASSETS 2,770.9 2,606.0 164.9 6% (19) Equity (20) Share capital 1.0 1.0 (0.0) (21) Share premium 1763.4 1763.4 0.0 0% (22) Translation reserve (145.4) (144.6) (0.7) 1% (23) Retained earnings 95.2 9.7 85.6 886% (24) TOTAL EQUITY 1,714.3 1,629.5 84.8 5% (25) Minority interest (0.9) (3.0) 2.1 (26) Long-term loans and borrowings 803.9 554.6 249.3 45% (27) Deferred tax liabilities 126.1 81.9 44.2 54% (28) Deferred income 21.4 20.2 1.3 6% (29) Non-current liabilities 951.4 695.0 256.4 37% (30) Short-term loans and borrowings 20.6 17.3 3.3 19% (31) Trade and other payables 85.4 267.1 (181.7) (68%) (32) Current liabilities 106.1 284.5 (178.4) -63% (2) Related to change in valuation of Paveletskaya II and Tverskaya Plaza IIa projects. (23) Retained earnings for the beginning of the period were US$9,7 mn (33) TOTAL LIABILITIES 1,057.5 976.5 81.0 8% (34) TOTAL EQUITY AND LIABILITIES 2,770.9 2,606.0 164.9 6% 17
Loans and cash position as of September 30, 2013 Gross balance of the bank loan portfolio (as of September 30, 2013) US$ 823 mn Total cash balance and deposits (as of September 30, 2013) US$ 140,3 mn The Company decreased the interest rate on the AFIMALL City loan in US dollars from 3 months LIBOR+6.7% to 3 months LIBOR+5.02%. The average rate for AFIMALL loan decreased from 8,2% to 7,3% Project Bank Balance as of September 30, 2013 Available (US$ mn) Nominal Interest rate Currency Maturity AFIMALL (Refinance) RCB $294-9.5% RUB 01.04.2018 RCB $309-3-m Libor+5,02% USD TOTAL AFIMALL RATE $603 $41 7.30% Ozerkovskaya III (100%) VTB $220 * $0 3-m Libor+5,7% RUB 26.01.2015 TOTAL/BLENDED RATE $823 Financial covenants AFIMALL Liquidation Value of the property should be higher than sum of the outstanding principal and six months interest Q3 Revenue: not less than US$ 19,8 mn (including VAT) As of September 30, 2013 the Company is in line with the covenants 18
Portfolio NAV as of September 30, 2013 PROJECT Book Value Bank Loan 30.09.2013 30.09.2013 AFI Mall 1,160 (603) 557 Berezkovskaya (100%) 42 42 Paveletskaya I (1) 30 30 Plaza H20 18 18 Ozerkovskaya III 388 (220) 168 Plaza Ib 9 9 Plaza II 32 32 TOTAL INVESTMENT PROPERTY: 1,680 823 856 Plaza Ic 106 106 Plaza II a 12 12 Plaza IV (100%) 169 169 Kosinskaya 104 104 Bolyshaya Pochtovaya 142 142 Paveletskaya II 93 93 Ruza 4 4 St. Petrsburg 2 2 Ozerkovskaya III (underground utilities) 1 1 TOTAL INVESTMENT PROPERTY UNDER DEVELOPMENT: 632 0 631 Ozerkovskaya Phase II (26) 6 6 TOTAL TRADING PROPERTY: 6 0 6 Aquamarine/Ozerkovskaya 26 31 31 Plaza SPA Zheleznovodsk 23 23 Pyatigorskaya (Park Plaza Kislovodsk) 7 7 Plaza Spa Kislovodsk (Tirel) (50%) 25 25 Versailles (Kislovodsk) 7 9 TOTAL PROPERTY PLANT AND EQUIPMENT: 94 0 95 Odinburg 121 121 TOTAL TRADING PROPERTY UNDER DEVELOPMENT: 121 0 121 TOTAL PORTFOLIO: 2,532 823 1,710 CASH AND CASH EQUIVALENT 140 DEFFERED TAX LIABILITY * (126) TOTAL OTHER ASSETS AND LIABILITIES (10) TOTAL EQUITY: 1,714 NAV LTV= 33% LTE = 48% 19
ANNEX Market Overview Yielding Projects
US$/psqm/pa ` Market Overview (1/2) MACROECONOMIC UPDATE GDP: In Q3 Russian economy entered stagnation phase and GDP growth reached 1,3% compared to 1,2% in Q2 2013 and 1,0% compared to Q3 2012. So far Russia is still ahead of Eurozone with its 0.3% growth rate but way below other BRIC partners and even USA with their 2.5%. Oil price (Brent): In September oil price slowed down compared to Q2 2013 on 0,7% and increased on 1,4% compared to September 2012. The World oil prices in the medium term will be reduced, their current level looks a bit overstated as a result of the existing political risks. Consumer sector: Economy is supported primarily by consumer market, which is fuelled by increase of pensions and salaries in public sector. Retail trade turnover is growing at about 4% - much faster than economy in general. Inflation: Consumer prices in Q32013 increased by 1.1%, with YTD inflation totaling 4.7%. Probability to meet inflation yearly target of 6% remains very high. MOSCOW OFFICE MARKET OVERVIEW 10.00 8.00 6.00 4.00 2.00 0.00-2.00-4.00-6.00-8.00-10.00 MACROECONOMIC UPDATE 120 100 80 60 40 United States Europe 20 Germany United Kingdom Czech Republic Poland Russia 140 Oil price (Brent, US$ per barrel) MOSCOW OFFICE MARKET OVERVIEW 109.2 Supply: Over Q3 2013 6 new office buildings were brought on the market with rentable area of c. 240K sq m. More than 50% of completed office space in this quarter is Class A developments, the most significant of which are Mercury City Tower (87,574 sq m). More than 80% of supply areas outside of TTR. Vacancy: Despite the strong new supply in Q3, the overall vacancy rate remained stable at the level of 13.1% Nevertheless, vacancy rates for Class A are particularly high at 18.9% as several new high-quality developments added available spaces to the market. Rental rates: The rental market remained flat over this quarter with prime rents at USD1,000 to USD1,150/sq m per year, Class A rents stand between USD600 and USD850, for Class B+ USD350 600/sq m per year and for Class B- falling in the range USD250 400. Yield(prime): The capitalization rates in Moscow remained almost the same in Q2 2013 ( 8,5%) 2,200 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 1,500 1,000 2,000 1,400 800 850 620 650 1,200 1,150 1,150 1,150 1,150 850 850 850 870 850 2007 2008 2009 2010 2011 2012 Q1 2013 average Class A Q2 2013 class A CBD Prime source: AFID, JLL, C&W Q3 2013 Key indicators Prime rate (trophy assets)* (US$/sqm/year) Base rent Class A (US$/sqm/year) Source: Commercial Real Estate Report, JLL; Cushman and Wakefield Report; EIU Russia, Rosstat Units 1,150 850 Yields (prime) 8,5% Overall Vacancy rate Vacancy rate, Class A 13,1% 18,9% *Prime base rents refer to rents in high quality buildings in the Central Business District (CBD). 21
USD psqm pa Market Overview (2/2) MOSCOW RETAIL MARKET OVERVIEW MOSCOW RETAIL MARKET OVERVIEW Supply: One shopping center opened in Moscow this quarter - Raikin Plaza (GLA of 35,000 sq m). Other two big openings were in St-Peterburg (GLA of 48K sqm) and Syktyvkar (GLA of 30K sqm.) Vacancy: Vacancy rate has been stable in Q3. The share of vacant spaces in quality premises is 2.5%. It is significantly lower compared to most European capitals. Rental rates: No significant changes were witnessed in rental rates over the quarter. The prime rent for 100 sqm. space in quality premises remains at the level of USD3,000 4,500 sq m/year. Average rental rate in shopping centres is USD 500 1,800 sq m/year. Yield(prime): The capitalization rates in Moscow remained the same as in Q1 2013 and amounted at 9% for retail sector 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 4,800 4,500 4,500 4,500 4,000 4,500 4,000 4,000 4,500 3,700 1,700 2,000 1,350 1,200 1,350 1,350 1,150 1,150 1,150 Prime rents Base rents 1,800 Key indicators CBD prime rates (US$/sqm/year) Average base rent (US$/sqm/year) Units 3,000 4,500 500 1,800 Prime Yields 9% Vacancy rate (market average) 2,5% MOSCOW RESIDENTIAL MARKET MOSCOW RESIDENCTIAL MARKET Supply: As the end of Q3 213 the supply of new residential remained stable and amounted to 1,5 mln sqm (incl. apartments and elite class). Business class and comfort class took the significant part of supply. Prices Moscow: The average price in Q3 2013 for primary business-class residential premises(incl. apartments) amounted to US$ 7,500 psqm compared to US$ 7,390 in Q2 2013. 8,000 7,500 7,000 6,500 7,500 Key indicators (Moscow) CBD prime (US$/sqm) Average price (US$/sqm) Units 13,000 7,500 At the moment the price for business-class residential unit in CBD of Moscow in the primary market reached a level of US$ 11,000 13,000 US$ psqm. Prices in the Moscow region was unchanged and stood at the average rate c. US$ 3,000 psqm 6,000 5,500 5,000 2010 2011 2012 2013 Key indicators (Moscow Region) Average Price (US$/sqm) Units 3,000 Source: Q3 Marketbit C&W report; Blackwood report, intermarksavills 22
Contact Information Registered office AFI DEVELOPMENT PLC Spryou Araouzou 165, Lordos Waterfront Building 5th Floor, Flat/Office 505, 3035 Limassol, Cyprus Tel. +357 25 310975 Principal office of operating subsidiary AFI RUS 16 A Berezhkovskaya Embankment, building 5, Moscow, 121059, Russian Federation. Tel: +7 495 796 99 88 http://investors.afi-development.ru 23