COMMERCIAL REAL ESTATE RUSSIA # MARKETBEAT. Cushman & Wakefield Research Q4 2016

COMMERCIAL REAL ESTATE RUSSIA # MARKETBEAT Cushman & Wakefield Research Q4 2016

CONTENTS 03 14 47 52 SECTION 1 OUTLOOK SECTION 2 COMMERCIAL REAL ESTATE SECTION 3 APPENDIX SECTION 4 OUR TEAM Major economic trends of the current period, market review and forecast 03 Outlook 04 Macroreview 09 Capital Markets Macroeconomic and analytic review of various commercial real estate market sectors 14 Office 24 Retail 35 Warehouse & Industrial Major indicators of the Moscow commercial real estate market, standard commercial lease terms 48 Market Indicators 50 Lease Terms Information about Cushman & Wakefield in Russia, Research department contact details The best Research Team in Russia according to Euromoney Real Estate Awards in 2012, 2014 and 2016. #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 2

2017 WILL BE CALM OUTLOOK In 2017-2019 the Russian economy will be stagnating. However, there are signs of future appreciation of the Russian Ruble. In this case the real estate market will offer carry-trade opportunities for institutional investors. If oil prices are fixed above 60 Dollars per barrel, demand for quality real estate assets will grow significantly. IN 2017 WE EXPECT THE GEOPOLITICAL TENSIONS TO EASE. RUSSIA AND THE US MAY REACH A DEAL TO LESSEN SANCTIONS. We will remember 2016 as the most difficult year for the real estate industry. It was sort of a stress test that our sector had passed narrowly. In 2017 we will see a gradual recovery of the leasing market. The government will do its best to keep the situation stable during the pre-election year. While the overall growth rates will be modest, there will definitely be over performing sectors. The real estate sector will be focusing on 2 extremes: short term business schemes and long term projects that are not sensitive to short term cycles. CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 3 #MARKETBEAT Q4 2016

MACRO FORECAST BUDGET DEFICIT (% of GDP) 2016 2017 2018 2019-3,6% -3,2% -2,4% -1,6% RUB/USD EXCHANGE RATE MACROREVIEW 2016 2017 2018 2019 67,1 60,1 58,9 57,8 HOUSEHOLD CONSUMPTION 2016 2017 2018 2019-3,3% 0,2% 1,6% 2,0% CPI 2016 2017 2018 2019 The latest forecast review improves short term indicators, however suggests that the economic recovery may be slower than was previously expected. GDP GROWTH 2016 2017 2018 2019-0,5% 1,2 % 1,3% 1,2% 7,0% 5,1% 4,0% 4,0% INTEREST RATE 2016 2017 2018 2019 11,7% 10,5% 9% 8% Source: Oxford Economics (01/2017) #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 4 #MARKETBEAT Q4 2016

SUMMARY CONSUMER MARKET CORPORATE CURRENCY MACRO SUMMARY THE RUSSIAN ECONOMY IS GETTING READY FOR RECOVERY -0.5% GDP growth outlook for 2016 According to Oxford Economics A modest recovery in 2017 will follow the two years of recession. However very low growth rates suggest that the economy will stagnate. According to the base case forecast, the economy will return to 2014 indicators only towards 2020. GDP GROWTH OUTLOOK 4,5% 4,3% 3,4% Industries, including the real estate sector, will have to adapt to the economic stagnation. If the government is able to ensure a stable exchange rate and low inflation, this will create opportunities for long term projects in real estate, aimed for delivery in a better economic situation. INFLATION 15% CPI ИПЦ, % 1.2% 1,3% 0,6% 0,6% 1,2% 1,7% 1,3% 2,1% 1,2% 13% 11% 9% Oxford Economics (01/2017) Base case forecast Базовый прогноз, (12/2016) GDP growth outlook for 2017-0,5% -0,6% 7% According to Oxford Economics GDP Growth Рост ВВП, % -3,0% Base case forecast Базовый прогноз, (12/2016) Oxford Economics (01/2017) 2010 2011 2012 2013 2014 2015 F2016 F2017 F2018 F2019 5% 3% 2010 2011 2012 2013 2014 2015 F2016 F2017 F2018 F2019 #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 5 Source: Rosstat, the Ministry of Economics, Oxford Economics

SUMMARY CONSUMER MARKET CORPORATE CONSUMER MARKET CONSUMER MARKET IN RECESSION Moscow still holds the leading position by consumer market decrease rate. -9.4% In 10 months of 2016 Retail lost in Moscow -1.5% In 9 months of 2016 Retail lost in St. Petersburg CONSUMER MARKET 10% 5% 0% -5% -10% -15% -20% 6,5% 7,1% 6,3% 3,9% Disposable income Раcполагаемые доходы 2,7% Moscow retail trade Оборот розничной торговли по Москве Total retail trade Оборот розничной торговли по РФ -10,0% -4,6% 0,6% 1,1% 1,8% 2010 2011 2012 2013 2014 2015 F2016 F2017 F2018 F2019 Moscow is leading in the consumer market decline. The capital city lost over 25% in real retail sales in 2 years. However, there are some early signs of consumer confidence improvement in Moscow. If retail sales in December and January exceed expectations this will most likely mean that consumers will return to the stores in 2017. Moscow may also become the leader in recovery. Retailers should not expect good times in 2017. Consumers are now focusing on low budget formats and hypermarkets may be the first to experience growth. #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 6

SUMMARY CONSUMER MARKET CORPORATE HOUSEHOLD DEBT MORTGAGE LENDING IS STRONG. CONSUMER CREDIT OUTLOOK IS UNCLEAR 10% Mortgage growth IN 10 MONTHS OF 2016 12.7% Weighted average MORTGAGE RATE Household debt shrunk over the whole 2016. However improved consumer confidence may facilitate consumer credits growth in 2017, creating a positive impact on the retail sector. HOUSEHOLD DEBT M-o-M CHANGE 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% -1,0% -2,0% -3,0% Consumer debt growth Рост потребительского кредитования Mortgage growth Рост ипотечного кредитования 06-13 08-13 10-13 12-13 02-14 04-14 06-14 08-14 10-14 12-14 02-15 04-15 06-15 08-15 10-15 12-15 02-16 04-16 06-16 08-16 10-16 The mortgage market is very strong. It is growing at a monthly rate of 1%. The share of overdue debt is decreasing, which means that households adjusted their budgets to the new economic reality. Bank deposits remain stable. SHARE OF OVERDUE DEBT, % 9% 8% 7% 6% 5% 4% 3% 01-14 04-14 07-14 10-14 01-15 04-15 07-15 10-15 01-16 04-16 07-16 10-16 #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 7 Source: The Central Bank of the Russian Federation

SUMMARY CONSUMER MARKET CORPORATE CORPORATE DEBT DEBT IS LOW 7.3% Overdue debt ACROSS ALL SECTORS The corporate debt has been diminishing since the beginning of 2016 mainly due to a decrease in foreign currency loans. Ruble appreciation led to a reevaluation of f.c. loans. The most noticeable debt decrease was in the wholesale and retail sales, which lost about 15% in debt over 12 months. CORPORATE DEBT ABD OVERDUE DEBT The construction debt is stable, but the real estate sector faces significant decrease in debt. The construction sector is still suffering from bad debts. The share of the overdue debts in construction has stabilized at 20%, but is still about 3 times higher than across the economy in general. The real estate sector is underperforming: overdue debt increased by 5.5p.p. and reached 17%. 20% Total debt, mn RUB Construction and real estate, mn RUB Overdue debt Overdue debt IN CONSTRUCTION In Rubles In foreign currencies Construction Real estate F.C. RUB F.C. RUB All sectors Construction Real estate Trade #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 8

ACTUAL INVESTMENT VOLUMES 2016 5.1 US$ bn CAPITAL MARKETS In 2016, the total volume invested in the commercial real estate in Russia was US$5.1 bn. The purchases for owner occupation (30%) and debt-toequity swaps (14%) made a significant share of the total volume. The foreign investments made a decade anti-record (US$120 mn). We expect US$4.5 bn of investments in 2017. EXPECTED TOTAL INVESTMENTS PRIME CAPITALIZATION RATES OFFICES SHOPPING CENTERS WAREHOUSES 2017 4.5 US$ bn Q3 2016 Q4 2016 F2017 10.50% 10.50% 10.00% Q3 2016 Q4 2016 F2017 11.00% 11.00% 10.50% Q3 2016 Q4 2016 F2017 12.75% 12.75% 12.00% Source: Cushman & Wakefield #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 9 #MARKETBEAT Q4 2016

CAPITALIZATION RATES INVESTMENT VOLUMES INVESTMENT STRUCTURE BIGGEST DEALS CAPITALIZATION RATES CAPITALIZATION RATES REMAINED UNCHANGED DURING THE YEAR 10.50% CAPITALIZATION RATE FOR OFFICES Our estimation of the capitalization rates was kept at the same level all through the year. However, we expect a small compression in 2017. We believe the strengthening ruble and stabilizing oil prices will lead to the appreciation of assets. CAPITALIZATION RATES Based on the inflation slowdown the Central Bank of the Russian Federation reduced the key rate twice in 2016 (in June and September to 10.5% and 10.0% accordingly). The regulatory authority will keep investigating the possibility of further decrease of the key rate. It is expected the next decrease may take place not earlier than in Q1 Q2 2017. CBR KEY RATE, CBR REFINANCING RATE 16% 18% 14% 16% 10.00% CBR KEY RATE 12% 10% 8% 6% 4% 14% 12% 10% 8% 6% 4% 2% 0% Q1 Q2 Q3 Q4 2% 0% 11,00% 10,00% 13,00% 8,75% 7,75% 8,00% 8,25% 8,25% 17,00% 11,00% 10,00% 10,00% 10,50% 11,00% Q1 Q2 Q3 Q4 2006200720082009201020112012201320142015 2016 OFFICES SHOPPING CENTERS WAREHOUSES 2006200720082009201020112012201320142015 2016 CBR REFINANCING RATE CBR KEY RATE #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 10

CAPITALIZATION RATES INVESTMENT VOLUMES INVESTMENT STRUCTURE BIGGEST DEALS INVESTMENT VOLUMES THE MARKET HAS TOUCHED THE BOTTOM. GROWTH IS EXPECTED ONWARDS ON FROM HERE. In 2016, US$5.11 bn was invested in the Russian commercial real estate. 4.5 US$ bn 2017 FORECAST INVESTED VOLUMES, US$ MN 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 OFFICE RETAIL INDUSTRIAL OTHER FORECAST In H2 2016, there was a slight revival noticeable against the failed Q2. Though some potential deals were cancelled in 2016 (Yandex abstained from buying buildings in Krasnaya Roza business complex due to the economic situation; the owners of Atrium shopping center changed their mind and are not selling the property anymore) and some were postponed to 2017 (Leto SC; Immofnanz s retail portfolio in Russia), the total volume invested in the commercial real estate in 2016 was US$5.11 bn. It is to be specially noted the pure investments made up US$2.90 bn (purchases for own-occupation 1.51; debt-to-equity swaps 0.70). 60% of the total amount was attracted by the office segment. The strengthening ruble and oil getting more expensive make the Russian commercial real estate more attractive for potential investors. We expect an increase in the volume of pure investments starting from 2017. #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 11

CAPITALIZATION RATES INVESTMENT VOLUMES INVESTMENT STRUCTURE BIGGEST DEALS INVESTMENT STRUCTURE FOREIGN INVESTMENTS A DECADE ANTI-RECORD In 2016, the share of foreign investments fell to its historical minimum 2%. 3113 US$ mn INVESTED IN THE OFFICE SEGMENT 287 US$ mn INVESTED IN THE WAREHOUSE SEGMENT CASH FLOWS INVESTOR RUSSIA UAE SWITZERLAND USA FINLAND SEGMENT OFFICE HOSPITALITY RETAIL INDUSTRIAL VENDOR RUSSIA FINLAND AUSTRIA NORWAY BELARUS In 2016, the total volume of investments in the Russian real estate was US$5.11 bn. It is remarkable that US$2.08 bn was spent by banks (VTB, Russian Agricultural Bank, Sberbank), state companies and government entities (Transneft, Moscow authorities). A number of big deals were closed in the hospitality segment (Krasnaya Polyana, Azimut Hotel in Sochi; Park Inn and Holiday Inn portfolio) which totally attracted US$1.05 bn in total. The total volume of the foreign investments beat the decade anti-record just US$120 mn. Almost two thirds of the amount (US$77 mn) was attracted by the warehouse segment. At the same time the sells by foreign investors were pretty moderate. We would refer to it as marking time rather than quitting the market. #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 12

CAPITALIZATION RATES INVESTMENT VOLUMES INVESTMENT STRUCTURE BIGGEST DEALS THE BIGGEST DEALS THE TOP FIVE DEALS HALF OF THE TOTAL VOLUME 960 US$ mn THE BIGGEST DEAL SEGMENT QUARTER PROPERTY INVESTOR AMOUNT, US$ MN OFFICES Q1 EVOLUTION TRANSNEFT 960 OFFICES Q3 NORDSTAR GRUPPA KOMPANIY REGION 385 OFFICES Q3 PRESIDENT PLAZA SBERBANK 350 OFFICES Q1 EURASIA VTB 300 RETAIL Q4 K-RUOKA SHOPS LENTA 180 RETAIL Q3 TSUM MERCURY 100 RETAIL Q3 ZELENOPARK DG19 85 WAREHOUSES Q1 PNK - CHEKHOV 3 PNK - SEVERNOYE SHEREMETYEVO RDIF AND PARTNERS 100 WAREHOUSES Q1 NIKOLSKOYE LOGOPARK (DMITROV) BIN GROUP 50 НОТЕLS Q1 KRASNAYA POLYANA (SOCHI) KURORT PLUS 500 НОТЕLS Q4 AZIMUT HOTEL (SOCHI) YUG-BIZNESPARTNER 180 НОТЕLS Q4 PARK INN HOTELS AFK SISTEMA 104 #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 13

OFFICES SHARE OF VACANT OFFICE SPACES 16.26 mn sq.m TOTAL STOCK 2.8 mn sq.m VACANT OFFICES 17.6 VACANCY RATE % 2016 was quite active for office commercial real estate market. Several indices show slight positive tendencies. However, considering the depth of the market sagging and the pace of the recovery, the market is still far from balancing the situation and reaching equilibrium. RENTAL RATES CLASS A CLASS B CLASS A&B $459 $240 $315 CONSTRUCTION 317,000 NET ABSORBTION 474,000 TAKE-UP 1,645,000 Source: Cushman & Wakefield SQ.M SQ.M SQ.M #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 14 #MARKETBEAT Q4 2016

SUMMARY ABSORPTION DEMAND NEW SUPPLY AVAILABILITY EXPOSITION RENTAL RATES ABSORPTION DEMAND FOR OFFICES EXCEEDS NEW SUPPLY 474 317 VOLUME ABSORPTION IN2016 000 sq.m 000 sq.m OF NEW CONSTRUCTION2016 ABSORPTION AND NEW CONSTRUCTION ANNUAL ABSORPTION BY CLASSES Mn sq.m 2,5 2,0 1,5 Mn sq.m 2,0 1,5 1,0 2008 2009 2010 2011 2012 2013 2014 2015 2016 1,0 0,5 0,5 0,0 0,0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 New Supply Absorption -0,5 Class A Class A Source: Cushman & Wakefield #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 15

SUMMARY ABSORPTION DEMAND NEW SUPPLY AVAILABILITY EXPOSITION RENTAL RATES DEMAND 2016 TAKE-UP VOLUME EXCEEDED PRE-CRISIS 2013 YEAR FIGURE 2,112WERE EXECUTED IN new deals 2016 1,645 000 sq.m TAKE-UP VOLUME IN 2016 MAJOR DEALS IN2016 COMPANY AREA BUILDING CLASS / SUBMARKET Sberbank 114,000 sq.m President Plaza A / Central VTB 93,878 sq.m Eurasia A / Central Russian Agricultural 73,525 sq.m IQ Quarter A / Central Bank Moscow Government 55,000 sq.m OKO А / Central Transneft Tekhnologii 10,669 sq.m Ina House B+ / Central Yandex 10,333 sq.m Avrora Business Park A / Downtown Miratorg 8,542 sq.m Lotos A / OTA Rosenergoatom 8,449 sq.m Port Plaza B+ / OTA Source: Cushman & Wakefield The total volume of leased and owner-purchased office premises in 2016 exceeded the one in pre-crisis 2013. In total 2,112 deals were completed in 2016 with an overall volume of around 1.165 mn sq.m. 2016 was a year of major acquisition transactions: the four biggest deals of the year are acquisitions with a total area of approximately 350,000 sq.m. This is almost a quarter of total take-up volume in 2016. Considering these four deals, approximately 50% of the demand attributes to acquisitions of entire properties and blocks in business centres. For the whole year absorption totaled 474,000 sq.m and this is 160 000 sq.m higher than the new construction figure. Class A absorption volume was 2.5 times higher, than in the class B+ sector. Meanwhile Class B- office space is experiencing negative absorption. This indicates that companies sought upgrades in quality and efficiency via attractive rental terms. Limited new construction as well as increased demand resulted in optimistic indicators of 2016. The market is headed for stabilization and some growth. #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 16

SUMMARY ABSORPTION DEMAND NEW SUPPLY AVAILABILITY EXPOSITION RENTAL RATES NEW SUPPLY CONSTRUCTION ACTIVITY IS STILL LOW New construction volume will remain low for upcoming three years. NEW CONSTRUCTION BY CLASSES Thousands sq.m 2 500 2 000 1 500 1 768 1 000 693 1 212 881 623 500 674 765 386 394 348 714 150 275 331 403 292 297 131 219 225 327 247 225 0 70 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017f The volume of new supply is still low: approximately 317,000 sq.m of quality office premises were put into operation during 2016. Such low volume of new construction was fixed only in the beginning of the noughties when the Moscow office market was at the beginning of its growth. As it was expected at the beginning of 2016, majority of the projects under construction shifted delivery dates. Some projects were converted from offices to residential. There is still a lot of office space (around one million sq.m) under construction. However construction activity is stalling, so we expect this delivery to be spread over the next three years at least. In 2017 office annual new construction volume is expected to grow a bit and reach 375,000 sq.m. The largest schemes totaling 240,000 sq.m are planned to be delivered in the territory of the MIBC Moscow CITY. Class A Class B (B+&B-) Source: Cushman & Wakefield #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 17

SUMMARY ABSORPTION DEMAND NEW SUPPLY AVAILABILITY EXPOSITION RENTAL RATES AVAILABILITY SLOW BUT STEADY. THE AMOUNT OF VACANT OFFICES IS DECREASING 17.6 % VACANCY RATE IN THE END OF Q3 2016 2.8 mn sq.m EXISTING AVAILABILITY For the last three and a half years from mid 2012 to the end of 2015 the vacancy rate grew by 10 pct. 2016 shows the opposite trend: vacancy level decreased by 1.35 pct. Under positive conditions the situation with vacancies will improve, but it will take another few years at least. The Russian economy growth forecast does not allow to expect a rapid reduction of vacant space. VACANCY RATES 35% 30% 25% 20% 15% 10% 5% 0% 25,62% 15,83% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Class A Class B (B+&B-) Thousands sq.m There are office premises of different areas and conditions in both class A and B properties practically in all districts of Moscow. The majority of vacant spaces are located in the non-central submarkets. VACANT PREMISES 3 500 3 000 2 500 2 000 1 500 1 000 500 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Class A Class B (B+&B-) Source: Cushman & Wakefield #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 18

SUMMARY ABSORPTION DEMAND NEW SUPPLY AVAILABILITY EXPOSITION RENTAL RATES RENTAL RATES DEDOLLARIZATION USD Triple net OpEx+VAT US CPI indexation All inclusive Russian CPI ~ 12.5% Lease RUB USD at fixed rate Discount Exchange risk management Corridor RUB rate reverted to USD after fixed period Splits risk between landlord and tenant Splits risk over time Source: Cushman & Wakefield #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 19

SUMMARY ABSORPTION DEMAND NEW SUPPLY AVAILABILITY EXPOSITION RENTAL RATES RENTAL RATES RENTAL RATES* IN THE RUSSIAN RUBLE EQUIVALENT ARE STABLE 93 % SHARE OF RUSSIAN RUBLE DEALS IN 2016, BY NUMBER OF DEALS In 2016 the average rental rate in the dollar equivalent was US$315 per sq.m per year. This is still less than in 2015(US$355), but during whole 2016 the index showed a slight but steady increase. We expect that a relatively constant currency exchange rate will keep rental rates at the same level in the mid-term. Lease agreements with rents nominated in rubles or with special provisions for payment of dollar-nominated rates will be trending in the upcoming years. RENTAL RATES IN US DOLLARS VALUE $1 200 $1 000 $800 $600 $400 $200 $- $459 $240 2008 2009 2010 2011 2012 2013 2014 2015 2016 RENTAL RATES IN RUSSIAN RUBLES VALUE 40 000 rub. 30 000 rub. 20 000 rub. 10 000 rub. - rub. 29 566 rub. 15 658 rub. 2008 2009 2010 2011 2012 2013 2014 2015 2016 *hereinafter all rental rates are net of OPEX and VAT Class A Class B (B+&B-) Class A Class B (B+&B-) Source: Cushman & Wakefield #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 20

SUMMARY ABSORPTION DEMAND NEW SUPPLY AVAILABILITY EXPOSITION RENTAL RATES RUBLES VS DOLLARS RUBLE STRENGTHENED 459 15,728RUBLE EQUIVALENT DOLLAR EQUIVALENT ALL A CLASS DEALS IN 2016 US Dollars per sq.m per annum Rubles per sq.m per annum ALL DEALS IN B CLASS IN 2016 RUBLE DEALS VS DOLLAR LEASE DEALS LEASING DEMAND AND RENTAL RATES Thousands sq.m 900 800 700 600 500 400 300 200 100 0 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 2016 Class Deal Currency Deals Volume, sq m Rate А USD 102,236 $598 RUB 216,654 25,923 rubles B+ & B- USD 4,566 $509 RUB 786,234 15,629 rubles RUB Deals USD Deals Source: Cushman & Wakefield #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 21

$2 000 $1 800 $1 600 37 000 DEALS СДЕЛОК Moscow office lease deals by rent and transaction date bubble size reflects deal size Сделки аренды на московском рынке по дате заключения и арендной ставке. размер точки соответствует площади сделки ( = 10 000 sq m) Class B / Класс B Class A / Класс А Weighted average A class rent / Среднее взвешенное значение за год, Класс А Weighted average B class rent / Среднее взвешенное значение за год, класс B $1 400 $1 200 Rental rate, USD/sq m / Арендная ставка, долл. за кв.м. $1 000 $800 $600 $400 $200 $0 Source: Cushman & Wakefield 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 22 Deal date / Дата сделки

RETAIL 2017 forecast: Consumer activity stabilization at the level of 2016, slight growth is possible. Vacancy rate will be the same as in 2016. Potential growth of prime rental rate indicator in H2 2017. Source: Cushman & Wakefield Research 12 % VACANCY RATE (all shopping centers, Moscow) 145 000 RUB PRIME RENTAL RATE INDICATOR 355 000 SQ.M NEW CONSTRUCTION, MOSCOW, 2016 (Quality shopping malls, mixed-use buildings, outlets, and retail parks) 4.9 MN SQ.M TOTAL QUALITY STOCK, MOSCOW, 2016 (Quality shopping malls, mixed-use buildings, outlets, and retail parks) #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 23 #MARKETBEAT Q4 2016

SUMMARY SHOPPING CENTRES RETAILERS COMMERCIAL TERMS SUMMARY POSITIVE MARKET SIGNALS WILL BE REALIZED NO EARLIER THAN H2 2017 At the year-end, all the main economic indicators influencing the retail market are still in the red zone, however the fall has slowed down significantly. In 2017 we expect the indicators to enter the positive zone. Developers: finalize construction, focus on the future projects. Retailers: cautious optimism, moderate activity. Market indicators: stable, growth is not expected before the end of 2017. The forecast for the main macroeconomic indicators (retail and catering turnover and personal income) remains conservative, but is expected to enter the positive zone at least the last year level will be maintained, but a slight growth is also possible. While in 2015 the main trends of the year were operational optimization, stores reduction and slowing down or even freezing expansion plans, in 2016 retailers started to feel a slight stability and then modest optimism. We expect the retailers activity to remain stable next year. It is possible that by the end of 2017 the prime rental rate will start growing, affected by the improving market mood and recovering consumer activity. In general the average rental rate growth will not be significantly higher than the indexation fixed in the lease agreements. Despite the fact that by the end of the year the vacancy rate has slightly decreased, it will, most likely, keep the level of the mid- 2016 in 2017 due to the new properties planned for delivery to the market. At the same time, recently constructed properties are slowly decreasing vacancy rate which helps to keep the balance. In general, the construction activity is declining (in 2017-2018 this trend will continue). However, there is a number of announced projects planned for the delivery in 2019-2020, among them, there are large-scale projects planned to be constructed as a part of the transport transit hubs (TPU) development programs. #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 24

SUMMARY SHOPPING CENTRES RETAILERS COMMERCIAL TERMS SHOPPING CENTRES. MOSCOW AND REGIONS 36 SHOPPING CENTRES WERE OPENED IN 27 TOWNS OF RUSSIA IN 2016 In 2017, we expect new construction to decrease significantly. 20.2 mn sq.m EXISTING QUALITY RETAIL SPACE 1 mn sq.m NEW CONSTRUCTION, FORECAST, 2017 NEW CONSTRUCTION IN RUSSIA, 000 SQ.M In Q4, 16 retail schemes with total GLA of 660 000 sq.m were delivered to the market which is 42% of the total new construction in 2016. A number of large retail properties all over the Russia opened their doors earlier than expected (most likely to catch the increase of consumer activity during the New Year holidays ). In 2017 we expect the construction activity to continue decreasing (about 1 mn sq.m will be delivered to the market). It is important to note that the properties are still opening with about 50-60% of vacancy, in the majority of cases only anchor tenants are operational on the day of opening. Shopping centres that were opened earlier, in 2015-2016, are slowly increasing the occupancy level. The largest retail property opened in Russia in 2016 was a mixed-use building MegaGrinn in Kursk (GLA 129,000 sq.m). #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 25

SUMMARY SHOPPING CENTRES RETAILERS COMMERCIAL TERMS SHOPPING CENTRES. REGIONS SHOPPING CENTRES DELIVERED TO THE MARKET IN 2016 AND THE PIPELINE FOR 2017 CITY PROPERTY NAME RETAIL GLA, SQ.M DELIVERY Kursk MegaGRINN 129,000 Q1 Nizhnevartovsk Yugra Mall 40,150 Q1 Pskov Aquapolis 34,000 Q1 Ekaterinburg Akademicheskiy 30,000 Q1 Balakovo Green House (phase 2) 11,500 Q1 Vladivostok Sedanka-City 45,000 Q2 Barnaul Pioner Mall 37,000 Q2 Kovrov Kovrov Mall 26,481 Q2 Stariy Oskol Sputnik 18,000 Q2 St. Petersburg Okhta Mall 78,000 Q3 Irkutsk Noviy 43,000 Q3 Vladivostok Druzhba 28,530 Q3 Khabarovsk Na Pushkina 20,000 Q3 Blagoveschensk Ostrova (phase 3) 18,000 Q3 Samara Gudok 115,000 Q4 Barnaul Galaxy 65,400 Q4 Tyumen Tyumen City Mall 53,000 Q4 Tver Rubin (phase 2) 51,500 Q4 Arkhangelsk Maxi 49,200 Q4 Nizhniy Tagil Retail Park Depo 40,000 Q4 Ekaterinburg Greenvich (phase 5) 41,836 Q4 Ufa Ultra 33,500 Q4 Kazan Gorki Park 27,000 Q4 Krasnoyarsk Pokrovsky 23,700 Q4 Naberezhnye Chelny Sunrise City 23,000 Q4 Saratov Happy mall (phase 3) 9,000 Q4 CITY PROPERTY NAME * RETAIL GLA, SQ.M DELIVERY Novosibirsk Evropeiskiy 45 000 Q1 Lipetsk Riviera 61 000 Q1 Rostov-on-Don Megamag (phase 2) 57 000 Q2 Togliatti Aquarell 41 140 Q2 Kursk Evropa (phase 2) 107 000 Q3 Orenburg Armada Capital 67 358 Q3 Lipetsk Evropa (phase 2) 45 300 Q3 Krasnoyarsk SC on Severnoe sh. 106 450 Q4 Vladivostok Kalina Mall 46 300 Q4 Izhevsk Matrix 40 000 Q4 Total GLA Russia (without Moscow and the Moscow region), announced development plans for 2017 1,079,861 * The table includes the largest (GLA 40,000+ sq.m ) projects announced for delivery in 2017. Total GLA Russia (without Moscow and the Moscow region), 2016 1,090,797 #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 26

SUMMARY SHOPPING CENTRES RETAILERS COMMERCIAL TERMS SHOPPING CENTRES. MOSCOW AND MOSCOW REGION 8 SHOPPING CENTRES WERE OPENED IN MOSCOW IN 2016 In 2017-2018 construction activity will continue decreasing, but we expect to see growth starting from 2019. MOSCOW: 4.9 mn sq.m QUALITY RETAIL SPACE IN SHOPPING CENTRES 355 000 sq.m NEW CONSTRUCTION, 2016 NEW CONSTRUCTION IN MOSCOW AND MOSCOW REGION, 000 SQ.M 2 shopping centers were opened in Q4 2016: Butovo Mall (GLA 57,000 sq.m), the third phase of Vnukovo Outlet Village (6,500 sq.m) and the second phase of Fashion House outlet center (4,500 sq.m). In 2016 the construction activity continued to decrease. This trend will remain the same next year. Lately there have been announcements of a number of retail projects to be developed in the areas close to the transport transit hubs (TPU) and 39 Soviet-type cinemas are currently under reconstruction (ADG project ), so we can expect new construction volume increase in 2019-2020. After an impressive pool of large-scale projects opened in 2016 (6 noticeable retail projects were added to the market) only two properties of a similar scale are expected in 2017 Vegas Kuntsevo (GLA 119,467 sq.m) and Kashirskaya Plaza (GLA 71,000 sq.m). The opening of the largest quality Novomoskovskiy shopping centre (GLA 60,000 sq.m) in the New Moscow district was a significant event on the market. #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 27

SUMMARY SHOPPING CENTRES RETAILERS COMMERCIAL TERMS SHOPPING CENTRES. MOSCOW AND MOSCOW REGION SHOPPING CENTRES DELIVERED TO THE MARKET IN 2016 AND IN THE PIPELINE FOR 2017 LOCATION PROPERTY NAME RETAIL GLA, SQ.M DELIVERY LOCATION PROPERTY NAME RETAIL GLA, SQ.M DELIVERY Moscow Riviera 100,000 Q2 Moscow Oceania 60,000 Q3 Moscow Horosho! 50,000 Q3 Moscow Kosino Park 39,000 Q3 Moscow Metropolis (phase 2) 38,000 Q3 Moscow Butovo Mall 57,000 Q4 Moscow Vnukovo Outlet Village (phase 3) 6,500 Q4 Moscow Fashion House Outlet (phase 2) 4,500 Q4 Total GLA Moscow, 2016 348,500 Krasnogorsk Riga Mall 80,000 Q3 Moskovskiy Novomoskovskiy 60,000 Q4 Total GLA the Moscow Region, 2016 160,000 Total GLA Moscow and the Moscow Region, 2016 488,500 Moscow Auchan Proletarskiy 14,877 Q1 Moscow Vegas Kuntsevo 119,467 Q2 Moscow Smolenskiy Passage (phase 2) 15,100 Q2 Moscow Galeon 14,000 Q2 Moscow Kashirskaya Plaza 71,000 Q4 Total GLA Moscow, 2017 234,444 Vidnoe Vidnoe Park 70,000 Q1 Mytischi 4Daily 25,000 Q1 Pushkino Pushkinskiy 32,000 Q2 Mytischi RIO Mytischi 60,000 Q4 Naro-fominsk Udacha 28,000 Q4 Total GLA the Moscow Region, 2017 215,000 Total GLA Moscow and the Moscow Region, 2017 499,444 #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 28

Fashion House Outlet (phase 2) Metropolis (phase 2) Riviera Riga Mall Khorosho! Vegas Kuntsevo Oceania Smolenskiy Passage (phase 2) Riviera Kosino Park Oceania #MARKETBEAT Q4 2016 Vnukovo Outlet-3 Novomoskovskiy Galeon Butovo Mall Auchan Proletarskiy Kashirskaya Plaza Horosho! Existing Under construction Source: http://www.interactivemaps.ru Names of the projects opened in 2016 and planned for delivery in 2017 are indicated on the map.

SUMMARY SHOPPING CENTRES RETAILERS COMMERCIAL TERMS SHOPPING CENTRES. MOSCOW VACANCY RATE REMAINS STABLE DESPITE NEW CONSTRUCTION ACTIVITY MARKET STRUCTURE AND VACANCY RATE, Q4 2016 12% Average market vacancy rate IN 2017 OCCUPANCY LEVEL WILL BE THE SAME AS IN 2016 12%. VACANCY RATE IN THE EXISTING SHOPPING CENTRES WILL GRADUALLY DECREASE. BUT ADDITIONAL RETAIL SPACE WILL BE DELIVERED TO THE MARKET. Vacancy rate* by shopping center type: Prime: 2-3% Sustainable: 7-8% Opened in 2014-2016: 25-30% Announced to be opened in 2016: 35-40% (C&W estimation) Bubble size of a size of each shopping center. * Calculation is based on the actual vacant space in shopping centres, and not according to signed lease contracts. #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 30

SUMMARY SHOPPING CENTRES RETAILERS COMMERCIAL TERMS SHOPPING CENTRES. MOSCOW 25% OF THE TOTAL MOSCOW RETAIL SPACE WAS CONSTRUCTED IN 2014-2016 Occupancy level keeps growing in the new shopping centres, however, the stabilization period has increased. 65% SHARE OF SUSTAINABLE SHOPPING CENTRES 25% Prime shopping centres (successful projects in prime locations) show a high occupancy rate consistently, albeit with registered tenant rotation. Rotation is caused by business optimization from the tenants side and by partial revision of concepts and approaches from landlords side. Projects constructed over the past 2.5 years that had a high vacancy rate at the opening, are slowly decreasing their vacancy level. Retailers activity dropped noticeably and the exposition period increased. Privileges that tenants receive for opening and for the initial lease period are an important element in decreasing the vacancy rate. The vacancy rate in sustainable shopping centres (opened more than 2 years ago, with a loyal target audience and balanced tenant mix) hasn t changed significantly during the past year. Due to a high competition level and the current economic situation, the time period needed for the shopping centre stabilization is increasing. Before 2014, the average stabilization period was 1-1.5 years, now even after two years, the vacancy rate in a shopping centre may remain high and the project can still be looking for its market niche due to individual specific characteristics. OF TOTAL RETAIL SPACE WAS CONSTRUCTED IN 2014-2016 #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 31

SUMMARY SHOPPING CENTRES RETAILERS COMMERCIAL TERMS RETAILERS RETAILERS ACTIVITY EXPANSION PLANS, MERGERS, ACQUISITIONS The large international and federal players are expanding. In 2017, we expect retail turnover to enter the positive zone which can additionally stimulate retailers activity. NEW RETAILERS EXPANSION Retailers got through the last two difficult years with different results. In 2015, several international operators left the Russian market. In 2016, there was a number of mergers of the federal players (Zenden acquired Thomas Munz and Mascotte chains, Safmar company bought Eldorado and M.Video, Dixy purchased a part of Sedmoy Kontinent chain in Kaliningrad), small local players have been replaced by the larger retailers (X5 bought two large chains in Surgut and several shops of Zvezdny supermarkets chain in Ekaterinburg). Existing operators are renovating the stores, experimenting with formats, developing new strategies to attract the costumers. One of the most interesting recently developing trends are monobrand and multibrand stores of Russian designers, which were mainly presented online before. Considering retailer activity (lease and purchase negotiations, slowly decreasing vacancy rate in halfempty retail objects, announcements of expansion programs of the chain retailers directly or via franchise), many of them found stability in new conditions and consider them as new opportunities. The large federal chains are extending the geography of their presence and exploring new regions, regional chains are trying to start operations in Moscow. Moreover, some chain retailers have already started international expansion programs (Wokker plans to open 100 restaurants in Europe, including Czech Republic, Germany and Israel), the former shareholder of Lenta has launched a new hypermarket chain in West Africa, Gloria Jeans is going to enter the Eastern European market, DoubleB opened a coffee shop in Barcelona). #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 32

SUMMARY SHOPPING CENTRES RETAILERS COMMERCIAL TERMS COMMERCIAL TERMS STABILITY IN 2016 AND POTENTIAL TREND FOR GROWTH AT THE END OF 2017 If the expected consumer market recovery will follow the optimistic scenario in Q1-2 2017, then the following effect the prime rental rates growth will be realized in H2 2017. 145 000 / sq.m / year PRIME SHOPPING MALL RENTAL RATE INDICATOR*, MOSCOW, Q4 2016 The emerging trend of the economic indicators to grow is going to be the main factor supporting consumer activity and optimism of the market players. It is too early for rapid market recovery. The forecast for the retail turnover and disposable income is close to zero, we expect the growth to start no earlier than in 2018. However, such a change of the general trend should be sufficient for an increase in consumer confidence and market mood improvement. We expect the prime segment to be the first to react to this trend, so the prime rental rent increase is possible. The rental rate might increase after the temporary conditions fixed in the lease contracts expire, and if the real turnover of retailers grows. We expect no increase of the average market rental rate until 2018. The growth at the inflation level is the most likely scenario. * Prime shopping mall rental rate indicator - base asking rental rate for a 100 sq.m gallery unit on the ground floor of prime shopping centres. #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 33

2016 NEW CONSTRUCTION (CLASS A AND B) RUSSIA 1.2 mn sq.m MOSCOW 0.85 mn sq.m REGIONS 0.39 mn sq.m TAKE UP (CLASS A AND B) WAREHOUSE & INDUSTRIAL In 2016, the demand for warehouse premises decreased. In the Moscow region, rental rate is declining, vacancy rate is stable. New construction is decreasing. Tenants are optimizing costs for warehouse space. RUSSIA 1.6 mn sq.m MOSCOW 1.2 mn sq.m FORECAST 2017 NEW CONSTRUCTION (CLASS A AND B) RUSSIA 0.74 mn sq.m MOSCOW 0.36 TAKE UP (CLASS A AND B) RUSSIA 1.4 mn sq.m mn sq.m MOSCOW 1.0 mn sq.m REGIONS 0.43 mn sq.m REGIONS 0.38 mn sq.m REGIONS 0.40 mn sq.m Source: Cushman & Wakefield #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 34 #MARKETBEAT Q4 2016

TRENDS NEW CONSTRUCTION DEMAND REGIONS TRENDS TAKE UP AND CONSTRUCTION ACTIVITY DECREASED IN RUSSIA IN 2016 Retail turnover decline affects the retail market as well as the warehouse segment. Weak demand for warehouse space is the main factor influencing the market in all the Russian regions. Contracting consumer market has a strong effect not only on the retail segment, but also on the warehouse market. Retailers took advantage of the low market reaching record high demand levels in 2015. In 2016,retail operators were focused on the operational expenses optimization by decreasing their requirements for warehouse space. Demand from retailers is reducing. Domestic manufacturing and logistics are increasing but small blocks are in high demand. So, this does not provide sufficient demand to replace fragile demand from the retail sector. Reacting on the market changes, developers decrease speculative construction activity and start the construction only after signing preliminary lease and sale contracts. In the majority of the regions where the market size is not large, this approach has already resulted in improving the market situation. Rental rates have stabilized in 2016. In 2017, the situation will remain stable despite unstable demand. In the Moscow region covering 66% of the Russian warehouse market high vacancy rate still affects the market. Developers continued to decrease the rental rates in order to increase occupancy level in 2016. In 2017, the consumer market is expected to start stabilizing, therefore the demand will be more predictable and construction activity will slow down. We expect that vacancy level will start decreasing and rental rates in the Moscow region will stabilize at the end of 2017. #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 35

TRENDS NEW CONSTRUCTION DEMAND REGIONS TRENDS. MOSCOW REGION RENTAL RATE DECREASED, VACANCY RATE REMAINED STABLE IN 2016 10% VACANCY RATE CLASS A 3,650 RUB / sq.m / year CURRENT NET RENTAL RATE*, CLASS A * Rental Rate excluding OPEX, utilities, VAT Source: Cushman & Wakefield Research After 6 months of stability, rental rate decreased in Q4 2016. Average class A rental rate at the end of 2016 was 3,500-3,800 rub / sq.m/ year excluding VAT, OPEX and utilities, down 14% year-on-year. VACANCY RATE, CLASS A 14% 12% 10% 8% 6% 4% 2% 0% 13,5% 3,9% 7,0% 1,0% 1,0% 1,5% 10,0% 10,0% 9,5% 2009 2010 2011 2012 2013 2014 2015 2016 2017F Rental rate decrease resulted in take up increase. However, vacancy rate in class A still keeps the same level all through the year. NET RENTAL RATE*, CLASS A (RUB/ SQ.M/ YEAR) 4 500 4 250 4 000 3 750 3 500 3 250 3 000 3 480 3 331 3 341 3 820 4 198 4 299 4 500 4 150 3 650 3 650 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 36

TRENDS NEW CONSTRUCTION DEMAND REGIONS NEW CONSTRUCTION. MOSCOW REGION CONSTRUCTION ACTIVITY REMAINED STABLE IN 2016 We expect new construction volume to decrease more than twofold in 2017. 852 000 sq.m NEW CONSTRUCTION, 2016 360 000 sq.m NEW CONSTRUCTION, 2017 (FORECAST) NEW CONSTRUCTION, CLASSES A AND B, 000 SQ.M 235,000 sq.m of quality warehouse space was delivered to the market in Q4 2016. In total, 852,000 sq.m of warehouse space was constructed in 2016 which is 1 800 similar to the same indicator in 2015. 1 600 Vacancy rate in class A in 2016 remained stable all the 1 400 year - 10%. Vacancy rate in class B is lower because 1 200 tenants prefer to lease smaller blocks due to the 1 000 changes in demand structure. 800 We expect new construction to decrease significantly in 600 2017. According to preliminary estimates, 360,000 400 sq.m of warehouse space will be delivered to the market, which can result in a vacancy rate decrease by 200 the end of 2017. 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F Actual Construction Forecast Source: Cushman & Wakefield Research #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 37

TRENDS NEW CONSTRUCTION DEMAND REGIONS NEW CONSTRUCTION. MOSCOW REGION THE LARGEST SHARE OF WAREHOUSE SPACE IS CONCENTRATED IN THE SOUTH-EAST OF THE REGION The most undeveloped zone in the Moscow region is Kaluzhskoe highway area. 852 000 sq.m NEW CONSTRUCTION, 2016 360 000 sq.m NEW CONSTRUCTION, 2017 (FORECAST) GEOGRAPHICAL DISTRIBUTION OF QUALITY WAREHOUSE SPACE BY HIGHWAY, CLASS AND B, 000 SQ.M Novorizhskoe (M9) Minskoe (M1) Leningradskoe (M10) Kievskoe (MЗ) Kaluzhskoe (A101) Dmitrovskoe (A104) 2 500 2 000 1 500 1 000 500 0 Simferopolskoe (M2) Yaroslavskoe (M8) Kashirskoe (M4) Shelkovskoe (A103) Gorkovskoe (M7) Novoryazansko e (M5) New warehouse space delivered to the market in 2016 didn t change the warehouse space distribution in the Moscow region. The largest share of warehouse space is concentrated on Simferopolskoe highway 18%, on Novoryazanskoe highway 16%, on Kashirskoe highway 14%. The smallest share of warehouses are located on Kaluzhskoe highway less than 1% and Schelkovskoe highway 2%. The majority of warehouses (46%) is situated at a distance of 10-30 from MKAD. 30+ km 10-30 km 0-10 km Moscow Source: Cushman & Wakefield Research #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 38

TRENDS NEW CONSTRUCTION DEMAND REGIONS DEMAND. MOSCOW REGION TAKE UP DECLINE IN 2016 Average deal size decreased by 20%. 1,196 000 sq.m TAKE UP, 2016 1,000 000 sq.m TAKE UP, 2017 (FORECAST) TAKE UP, CLASSES A AND B, 000 SQ.M 1 400 1 200 1 000 800 600 400 200 0 2010 2011 2012 2013 2014 2015 2016 2017F Moscow Forecast In Q4 2016, due to the rental rate decrease take up comprised 528,000 sq.m, which is 2,5 times higher than the average indicator for 2011-2015. However, the total annual take up was 1.2 mn sq.m, which is 11% lower than the same indicator in 2015 and 7% lower than the average for 2011-2015. Longterm demand contraction caused by the economy slowdown still influences the market. The share of sale deals in the total volume decreased from 20% in 2015 to 14% in 2016. Average deal size in 2016 was 12,000 sq.m, up 11% year-on-year. Source: Cushman & Wakefield Research #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 39

TRENDS NEW CONSTRUCTION DEMAND REGIONS DEMAND. MOSCOW REGION DEMAND FROM RETAIL SECTOR IS DECREASING The number of deals with retail companies fell by 30%. 1,196 000 sq.m TAKE UP, 2016 1,000 000 sq.m TAKE UP, 2017 (FORECAST) TAKE UP STRUCTURE Distributor - 14.0% Logistic - 9.9% Other - 2.7% Producer - 16.5% Retailer - 56.2% 2015 2016 Distributor - 14.9% Logistic - 15.7% Other - 3.0% Producer - 18.4% Retailer - 48.0% The demand for warehouse space from retailers is decreasing. The share of retailers in take up structure contracted from 56,2% in 2015 to 48% in 2016. The number of deals also decreased. The average size of a transaction in this segment didn t change compared to 2015 and comprised 26,000 sq.m. There is a rise in demand from manufacturing and logistic companies. In these segments the number of deals compared to 2015 increased by 23% and 11% respectively. In the logistics sector the transaction size increased - in 2016 it comprised 11,000 sq.m, up 28% year-on-year. Source: Cushman & Wakefield Research #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 40

TRENDS NEW CONSTRUCTION DEMAND REGIONS NEW CONSTRUCTION. REGIONS NEW CONSTRUCTION DECREASED IN 2016 In 2017 construction activity will remain at the level of 2016. 392 000 sq.m NEW CONSTRUCTION, 2016 380 000 sq.m NEW CONSTRUCTION, 2017 (FORECAST) NEW CONSTRUCTION, CLASSES A AND B, 000 SQ.M 392,000 sq.m of quality warehouse space was delivered to the market in the regions in 2016, down 1 200 45% year-on-year. At the same time, 40% of premises are already preleased or sold to the final 1 000 user. Traditionally, the largest share of warehouse space 800 was constructed in St. Petersburg. In 2016, 132,000 600 sq.m of warehouse space was added to the market in the region, while 126,000 sq.m was constructed in 400 2015. We expect construction activity to remain the same 200 in 2017, around 380,000 sq.m of warehouses will be delivered to the market. 0 2010 2011 2012 2013 2014 2015 2016 2017F Actual Construction Forecast Source: Cushman & Wakefield Research #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 41

TRENDS NEW CONSTRUCTION DEMAND REGIONS DEMAND. REGIONS DEMAND FOR WAREHOUSE SPACE IN THE REGIONS DECREASED In 2016 take up decreased by 29% year-on-year. 432 000 sq.m TAKE UP, 2016 400 000 sq.m TAKE UP, 2017 (FORECAST) TAKE UP, CLASSES A AND B, 000 SQ.M 700 600 500 400 300 200 100 0 2010 2011 2012 2013 2014 2015 2016 2017F Regions Forecast The total volume of lease and sale transactions was 142,000 sq.m in Q4 2016, which is 19% lower than the average indicator in 2011-2015. In total, take up in the regions in 2016 comprised 432,000 sq.m, down 29% year-on-year. Take up reduction is registered the second year in a row. Average deal size declined by 13% and comprised 9,000 sq.m, number of deals decreased by 21% compared to 2015. Source: Cushman & Wakefield Research #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 42

TRENDS NEW CONSTRUCTION DEMAND REGIONS DEMAND. REGIONS RETAIL SEGMENT COVERS 67% IN TAKE UP STRUCTURE Retailers fixed the smallest fall in warehouse premises demand. TAKE UP STRUCTURE 432 000 sq.m TAKE UP, 2016 Distributor - 10.1% Logistic - 17.7% Other - 0.0% Producer - 19.3% Distributor - 4.0% Logistic - 20.8% Other - 0.9% Producer - 7.1% Demand from all sectors went down in the regions. The biggest fall was from manufacturing and distribution sectors. In 2016, the volume of lease and sale transactions was 3,5 times lower than in 2015. The lowest demand decline was from retailers and logistic companies. Take up decreased by 7% and 15% respectively. 400 Retailer - 52.9% Retailer - 67.2% 000 sq.m TAKE UP, 2017 (FORECAST) 2015 2016 Source: Cushman & Wakefield Research #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 43

TRENDS NEW CONSTRUCTION DEMAND REGIONS NEW CONSTRUCTION. MOSCOW AND REGIONS LARGEST WAREHOUSE PROPERTIES COMPLETED IN 2016 852 000 sq.m NEW CONSTRUCTION, MOSCOW, 2016 392 000 sq.m NEW CONSTRUCTION, OTHER REGIONS, 2016 PROJECT HIGHWAY REGION Mihaylovskaya sloboda Novoryazanskaya Moscow DISTANCE FROM CITY, KM 20 70.3 TOTAL AREA, 000 SQ.M DELIVERY Q1, Q2 Logopark Sever II Leningradskoe Moscow 30 104.9 Q2, Q3 PNK North Sheremet evo Kashirskoe Moscow 39 106.5 Q3, Q4 Industrial Park South Gate Kashirskoe Moscow 30 89.0 Q3 PNK - Valishevo Simferopolskoye Moscow 39 137,3 Q3, Q4 A Plus Shushary Moskovskoe St. Petersburg 20 95.0 Q2 Fright Village Vorsino Kievskoe Kaluga 67 35.6 Q2 Aviapolis Yankovskiy Vladivostok-port 30 28 Vladivostok Vostochniy Q2 X5 retail distribution center Toksovskoe Krasnodar 17 47 Q3 #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 44

TRENDS NEW CONSTRUCTION DEMAND REGIONS NEW CONSTRUCTION. MOSCOW AND REGIONS KEY WAREHOUSE DEALS IN 2016 1196 Tenant Project Region Lease/Sale Total area, 000 sq.m 000 sq.m TAKE-UP, MOSCOW, 2016 432 000 sq.m TAKE-UP, OTHER REGIONS, 2016 Auchan Industrial Park South Gate Moscow Sale 138,0 SLG Adidas - Chehov Moscow Lease 59,8 O Key Logopark Sever 2 Moscow Lease 59,6 X5 Retail Group PLG Sibirskiy Novosibirsk Lease 52,3 Hoff Industrial Park North Domodedovo Moscow Lease 50,0 Castorama PNK Chehov III Moscow Lease 40,1 Eldorado A Plus Development Kazan Sale 36,3 BMW PNK - Bekasovo Moscow Lease 34,3 LUDING Logistic park Krekshino Moscow Lease 30,4 Auchan Samaratransavto Samara Lease 25,4 #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 45

Market indicators Standard lease terms Interactive services APPENDIX Cushman & Wakefield Research Department provides clients with the most detailed information on the market indicators, including average rental and vacancy rates split by metro stations, administrative districts and submarkets in Moscow, as well as data on planned projects and projects under construction in Russia. If you need more detailed information please contact the Research Department. #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 46 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT

APPENDIX INDICATORS STANDARD COMMERCIAL LEASE TERMS INTERACTIVE SERVICES COMMERCIAL REAL ESTATE MARKET INDICATORS (1) OFFICES AND SHOPPING CENTRES The forecast is based on the conservative macroeconomic scenario. MOSCOW REAL ESTATE MARKET INDICATORS FORECAST/ПРОГНОЗ 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Average annual exchange rate RUB/USD 24,9 31,8 30,4 29,4 31,1 31,9 38,6 61,3 67,1 61,7 59,8 58,0 MOSCOW OFFICES Stock class A, EOP '000 sq m 1 326 1 7 29 2 021 2 318 2 536 2 684 3 416 3 821 3 972 4 119 4 244 4 344 Stock class B (B+ and B-), EOP '000 sq m 8 27 7 9 158 9 7 81 10 167 10 515 11 227 11 838 12 132 12 37 5 12 523 12 648 12 7 48 New construction, A, '000 sq m 331 403 292 297 219 225 714 327 150 225 125 100 New construction, B (B+ and B-), '000 sq m 1 7 68 881 623 386 348 67 4 693 394 250 150 125 100 Vacancy rate class A 12,8% 23,6% 22,5% 16,8% 14,6% 17,6% 23,8% 31,1% 25,0% 23,7 % 22,0% 19,5% Vacancy rate class B (B+ and B-) 6,1% 11,1% 10,4% 8,9% 9,1% 9,8% 10,8% 14,4% 15,9% 15,5% 14,0% 12,5% Take up class A, '000 sq m 456 183 388 638 459 361 324 427 726 350 450 550 Take up class B (B+ and B-), '000 sq m 1 237 558 911 1 224 1 398 1 205 937 87 2 918 900 1 000 1 100 Rental rates class A, USD/sq m pa $1 092 $7 29 $645 $7 33 $7 90 $867 $772 $549 $459 $500 $550 $640 Rental rates class B (B+ and B-), RUB/sq m pa 20 240 16 141 12 67 1 13 37 0 14 624 17 041 18 699 17 820 15 7 28 16 000 17 500 19 000 Prime capitalization rate 12,00% 13,00% 9,00% 8,50% 8,7 5% 8,50% 11,00% 10,50% 10,50% 10,00% 9,00% 8,7 5% MOSCOW QUALITY SHOPPING CENTERS Total stock, EOP, '000 sq m 2 091 2 607 2 97 3 3 158 3 308 3 480 4 133 4 565 4 914 5 144 5 244 5 544 New construction, '000 sq m 431 517 365 185 150 173 653 432 349 230 100 300 Prime vacancy rate, EOP 3,0% 5,0% 2,1% 0,4% 0,5% 1,2% 1,5% 2,0% 2,5% 2,5% 2,0% 2,0% Prime rental rate indicator, RUB/sq m pa* 99 480 87 368 88 102 105 804 114 959 121 258 127 380 159 432 145 000 150 000 160 000 180 000 (until 201 6 nom inated in USD, paid in RUB by offical exchange rate) 0,09 0,05 0,05 0,2516-0,09 Prime capitalization rate 12,00% 13,00% 10,00% 9,25% 9,50% 9,00% 11,00% 11,00% 11,00% 10,50% 9,50% 9,25% #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 47

APPENDIX INDICATORS STANDARD COMMERCIAL LEASE TERMS INTERACTIVE SERVICES COMMERCIAL REAL ESTATE MARKET INDICATORS (2) WAREHOUSE AND INDUSTRIAL, INVESTMENTS The forecast is based on the conservative macroeconomic scenario. MOSCOW REAL ESTATE MARKET INDICATORS FORECAST/ПРОГНОЗ 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 WAREHOUSES, MOSCOW REGION Stock, class A, EOP '000 sq m 3 7 23 4 352 4 67 6 4 933 5 598 6 456 7 852 8 669 9 501 9 841 10 341 10 941 Stock, class B, EOP '000 sq m 2 060 2 109 2 157 2 264 2 317 2 409 2 688 2 690 2 7 15 2 7 35 2 7 55 2775 New construction, class A, '000 sq m 594 629 324 257 664 858 1 396 817 846 340 500 600 Vacancy rate class A 2,0% 10,5% 8,0% 1,0% 1,0% 1,5% 7,0% 10,0% 10,0% 9,5% 8,0% 7,0% Rental rates class A, RUB/sq m pa 3 482 3 336 3 342 3 968 4 194 4 308 4 500 4 150 3 650 3 650 4 100 4 300 Rental rates class B, RUB/sq m pa 3 109 2 859 2 7 95 3 821 4 039 4 148 4 000 3 800 3 400 3 600 3 800 3 900 Prime capitalization rate 13,00% 14,00% 10,50% 10,50% 11,50% 11,00% 13,00% 12,7 5% 12,7 5% 12,00% 11,00% 10,7 5% INVESTMENTS TOTAL, MN US$ 5 798 2 256 3 994 7 657 7 458 8 066 4 309 2 828 4 826 4 500 5 000 5 000 Office, US$ mn 3 149 1 998 3 282 3 432 2 854 3 517 2 230 1 198 3 113 Retail, US$ mn 2 029 30 459 1 7 67 2 585 2 7 98 639 7 31 616 Warehouse, US$ mn 110 81 1 080 660 1 395 363 584 287 Other, US$ mn 510 228 172 1 37 9 1 358 355 1 076 315 810 * Base rental rate for 1 00 sq m unit on the ground floor of retail gallery of prim e shopping mall for fashion retailer #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 48

APPENDIX INDICATORS STANDARD COMMERCIAL LEASE TERMS INTERACTIVE SERVICES STANDARD COMMERCIAL LEASE TERMS LEASE TERMS DURATION OF LEASE Office: 5 years Industrial: either short-term (1-3 years) or long-term (5+ years) Retail: 3-5 years, anchor tenants - 10-25 years. BREAK OPTIONS Offices: Possible after 3 years with deposit withdrawal as penalty. After crisis have become very popular. Notice period is 6-9 months. When there is an option to review the rent after the third year, contract can be terminated from both sides. Retail: a standard lease agreement is not supposed to include break option. RENTAL PAYMENTS RENT PAYMENT AND FREQUENCY Offices and retail: RUB or US$ per square meter per year, payable due monthly or quarterly in advance. Industrial: Rubles. RENT DEPOSIT Offices: 1-3 months rent equivalent (bank guarantee optional, very seldom however). Retail: 1-2 months rent equivalent (bank guarantee optional). Industrial: 1-3 months rent equivalent (bank guarantee optional, very seldom however as landlords as landlords prefer the deposit) RENT REVIEWS After crisis have become more popular, negotiable. INDEXATION Offices: 7-10% for RUB agreements; 3-5% or at the level of USA / EU CPI. Retail: if rents in US$ US CPI or 5%; if rents are in RUB Russia CPI or 8-9%. Industrial: 8-10% ENTRANCE FEE It is possible to pay an extra-fee to enter the project applicable only for prime projects. Turnover rents (only in Retail): Compound rental rates (fixed rent and a percentage of turnover) are almost always used in shopping centers. Normally, the percentage of turnover varies between 12-15% (fashion), 1-3% for large anchor tenants. DISPOSAL OF LEASES ASSIGNMENT AND SUB-LETTING Offices & Industrial: Usually possible, but subject to negotiation. Retail: Not common. SERVICE CHARGES, REPAIRS & INSURANCE REPAIRS Tenant: Internal repairs and maintenance. Landlord: Structural repairs, common areas. INSURANCE Tenant: Contents insurance. Landlord: Building insurance which is normally charged back to tenant via the service charge. SERVICE CHARGES Service charge is payable by the tenant at either an open book basis or as a fixed cost. UTILITY EXPENSES Often included to service charges, but depends on landlord and different types of projects. TAXATION REAL ESTATE TAX Tenant: None. Landlord: the amount of tax depends on the region. In Moscow for office and retail: 1.2% of cadastral value in 2015, 1.3% in 2016, 1.4% in 2017 and 1.5% in 2018. VAT: 18% MEASUREMENT PRACTICE Space is measured generally on the BOMA system. Some Landlords have started to apply BTI (Bureau of Technical Inventory) measurements. #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 49

APPENDIX INDICATORS STANDARD COMMERCIAL LEASE TERMS INTERACTIVE SERVICES CUSHMAN & WAKEFIELD IN RUSSIA CUSHMAN & WAKEFIELD INTERACTIVE MAPS Commercial real estate and infrastructure interactive maps www.interactivemaps.ru Moscow offices Shopping centers in Russia Warehouses Hotels Infrastructure development #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 50

OUR TEAM RESEARCH DEPARTMENT CUSHMAN & WAKEFIELD IN RUSSIA RESEARCH DEPARTMENT CUSHMAN & WAKEFIELD, RUSSIA DENIS SOKOLOV Partner, Head of Research Denis.Sokolov@cushwake.com TATYANA DIVINA Associate Director, Deputy Head of Research Tatyana.Divina@cushwake.com For more information and contacts please visit CWRUSSIA.RU YULIA BOGOMOL Associate Director ALEXANDER KUNTSEVICH Senior Analyst Yulia.Bogomol@cushwake.com Alexaner.Kuntsevich@cushwake.com EVGENIYA SAFONOVA Junior analyst ANDREY VLADIMIRSKY Analyst Evgenia.Safonova@cushwake.com Andrey.Vladimirsky@cushwake.com The information provided in this report is intended for informational purposes only and should not be relied on by any party without further independent verification. Classifications of individual buildings are reviewed on a continuing basis and are subject to change. The standards used in this process are consistent with those used by Moscow Research Forum and in the United States by the Society of Industrial and Office Realtors (SIOR) and BOMA International. Reproduction of this report in whole or part is permitted only with written consent of Cushman & Wakefield. Data from this report may be cited with proper acknowledgment given. #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 51

OUR TEAM RESEARCH DEPARTMENT CUSHMAN & WAKEFIELD IN RUSSIA СUSHMAN & WAKEFIELD, RUSSIA Cushman & Wakefield is a global leader in commercial real estate services, helping clients transform the way people work, shop, and live. The firm s 43,000 employees in more than 60 countries provide deep local and global insights that create significant value for occupiers and investors around the world. Cushman & Wakefield is among the largest commercial real estate services firms with revenues of $5 billion across core services of agency leasing, asset services, capital markets, facility services (branded C&W Services), global occupier services, investment management (branded DTZ Investors), project & development services, tenant representation and valuation & advisory. #MARKETBEAT Q4 2016 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT 52 CUSHMAN & WAKEFIELD RESEARCH DEPARTMENT