GIC RE enters Russian real estate market

It buys 25% of township project for US$233m; forms partnership with PIK

AFTER announcing around $7 billion worth of property deals in 2007, GIC Real Estate (GIC RE), the property arm of the Government of Singapore Investment Corporation, said that it will develop a township on a site in Russia with a market value of US$1.33 billion.

In a statement released yesterday, GIC RE said that it will acquire a 25 per cent stake of the township project in Russia for about US$233 million.

It said that it had entered into an agreement to form a partnership with Russia’s PIK Group.

The township will be built in the city of Mytischi, north-east of Moscow. Covering more than 114 ha, it will have around 1.14 million net saleable square metres.

It will comprise 50 high-rise apartment buildings, 13 low-rise commercial buildings, five elementary schools, seven kindergartens, two medical polyclinics and 17,470 parking lots.

When completed in 2013, the development will offer housing for about 50,000 residents.

GIC RE president Seek Ngee Huat said: ‘This investment provides GIC Real Estate with a strong entry into the Russian real estate market. We believe in the potential of the market and are excited to be partnering PIK, one of the largest developers in Russia, for this major Mytischi project.’

This may be GIC RE’s first development project in Russia but more could follow.

PIK CEO Kiril Pisarev said: ‘It is a significant development for PIK and an appropriate model which could be replicated for other projects as we execute our regional expansion strategy.’

In the years between 2004 and 2006, PIK completed over 36,000 residential units in Russia.

Of GIC RE’s announced deals last year, the most recent was the acquisition of a prime office building in Stockholm with a lettable area of 17,211 sq m for 123 million euros (S$258.4 million).

Its largest acquisition in 2007 was for Merrill Lynch’s flagship London office campus worth £480 millionpounds (S$1.4 billion).

 

Source: Business Times 22 Jan 08

TOWNSHIP DEVELOPMENT: GIC property unit in Russian joint venture

THE property arm of the Government of Singapore Investment Corporation (GIC), GIC Real Estate, and a Russian company have announced a joint venture to develop a residential township north-east of Moscow.

GIC Real Estate will acquire a 25 per cent stake in the project for about US$233 million (S$335 million). Its partner, PIK Group, will hold the rest.

The 1.14 million sq m Mytischi township, as the development is called, will house around 50,000 people when it is completed in 2013. It will have 50 high-rise apartment buildings, 13 low-rise commercial buildings, five elementary schools, seven kindergartens, two medical clinics and about 17,470 parking lots.

‘This investment provides us with a strong entry into the Russian real estate market,’ said GIC Real Estate president Seek Ngee Huat.

‘We believe in the potential of the market and are excited to be partnering PIK, one of the largest developers in Russia.’

The Mytischi district site – one of PIK’s largest development sites – has a pre-tax market value of US$1.33 billion as at Jan 1, according to a CB Richard Ellis appraisal.

PIK chief executive Kirill Pisarev said getting such a strong international co-investor as GIC Real Estate for the flagship project is a significant development for the company.

 

Source: The Straits Times 22 Jan 08

Russia developer posts US$78m loss in 9 months

(MOSCOW) Russian property developer Sistema-Hals yesterday reported a net loss of US$77.6 million for the first nine months of 2007 compared with a net profit of US$34.3 million in the same period last year.

The company, part of diversified holding company Sistema, said operating expenses rose by 165 per cent to US$279.3 million mainly due to a US$98 million non-cash expense on a stock option bonus plan for management and the board of directors.

‘The increase in SG&A (sales, general and administrative expenses) was also caused by an increased number of personnel in line with an increase in the number of new development projects,’ the company said.

Its consolidated revenues rose by 28.8 per cent to US$207.5 million, with the real estate development division accounting for 68.6 per cent of total revenues.

Other divisions include project and construction management, asset management and facility management. Consolidated operating loss before depreciation and amortisation was US$63 million versus operating income before depreciation and amortisation of US$60 million a year earlier.

The company focuses on Class A office buildings, retail centres, multi-use complexes, villa communities and business-class residential buildings.

 

Source: Reuters Business Times 11 Dec 07