| Investment case. A Swedish private investment fund is eager to enter the buoyant warehousing segment in the central Russian regions. The investment fund is coming out with a draft project which implies pre-development of a 15 ha large land plot and development of: -47,000 sqm of prime warehousing facilities -6,000 sqm of class B office spaces Optional for the project is equipping the storehouses with refrigerating machines, electric trolleys and elevators. The warehouses are expcted to be rented out to up to 5 core tenants representing major retail chains with heavy presence in Moscow. We plan to sign preliminary lease contracts for 70% of the total space in course of development. |
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| Finance. We take cautios approach to valuation of the project and believe it can generate as much as $7 mln in yearly rental income, which takes into consideration a vacancy rate of 7%. We thus estimate the project’s net present value at almost $65 mln. At the same time the calculated total cost is between $40 mln and $45 mln, depending on the built-in option. The project would be completed in 15 months from the date of getting all necessary state approvals. |
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| Project progress. At present the project is in design phase. We have carried out general market survey and competitors analysis, conducted preliminary effectiveness estimates and started preliminary talks with landowners and potential tenants. We are now at the stage of fundraising to finance acquisition of a land plot and preparation of documentation needed for the predevelopment to be started. |
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