AFI Development PLC SALE OF TWO BUILDINGS AT AQUAMARINE III (0037Y)
30 November 2017 - 10:51PM
UK Regulatory
TIDMAFRB TIDMAFID
RNS Number : 0037Y
AFI Development PLC
30 November 2017
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION
IN OR INTO THE RUSSIAN FEDERATION, THE UNITED STATES, CANADA,
AUSTRALIA OR JAPAN
AFI DEVELOPMENT PLC
("AFI DEVELOPMENT" OR THE "COMPANY")
AFI DEVELOPMENT AGREES TO SELL
TWO BUILDINGS AT AQUAMARINE III
(CLASS 2 TRANSACTION NOTIFICATION)
London, 30 November 2017 - AFI Development Plc announces that it
has agreed to sell Building 2 and Building 4 at the completed
Aquamarine III Business Centre in Moscow to one of the leading
Russian banks (the Buyer) for total cash consideration of RUR7.89
billion (circa US$135 million), net of the applicable Russian
VAT.
Subject of the transaction are office premises, underground
parking and a share of commonly owned service areas at the
Aquamarine (Ozerkovskaya) III Business Centre at 22-24,
Ozerkovskaya embankment, Moscow, Russia. The transaction consists
of two Russian law governed agreements: a sales-purchase agreement
of 39,635.8 sq.m of gross buildable area (including 328 underground
parking units) and a sale-purchase agreement of a circa 57% share
in the title to the premises of 3,728.6 sq.m of gross buildable
area ("the Transaction agreements").
The Aquamarine (Ozerkovskaya) III Business Centre is an office
complex forming part of the "Aquamarine" mixed-use development,
located on the Ozerkovskaya embankment in the historical
Zamoskvorechie district of Moscow. The project consists of four
Class A buildings with common underground parking. In 2013, AFI
Development disposed of Building 1 in the complex to ALROSA mining
company. After the disposal of Building 1, the Business Centre has
61,579 sq.m of gross buildable area and 466 parking units. Building
3 of the complex is leased to various tenants, including
Brown-Forman and Deutsche Bank.
The transaction consideration shall be satisfied in three
tranches as follows: 50% of the consideration shall be paid upon
execution of the Transaction agreements ("Tranche 1"), the other
50% shall be deposited under a covered irrevocable letter of
credit: 40% of the consideration ("Tranche 2") shall be released to
the Company when the Buyer is registered as owner of the purchased
premises and the remaining 10% of the consideration ("Tranche 3")
shall be released when the Buyer is registered as co-lessor under
the property land lease agreement (the land plot under the
Aquamarine III complex is co-leased by owners of the respective
buildings, in accordance with the Russian law). Tranche 1 is
expected to be paid in the coming days.
The value of the gross assets subject of the transaction in the
consolidated IFRS accounts of the Company is circa US$135
million.
As the disposed buildings were vacant, they did not contribute
to the profits of AFI Development.
Although the transaction will be subject to Russian profit tax
estimated at RUR440 million (circa US$7.5 million), as a result of
the transaction on the consolidated IFRS accounts, the Company
expects to incur a loss of about US$12.4 million. The Company does
not expect a property tax effect from the transaction.
The Aquamarine III Business Centre is currently mortgaged in
favour of VTB Bank PJSC ("the Bank") under the Ozerkovskaya III
loan agreement and the AFIMALL City loan agreement. The mortgages
will be removed once Tranche 1 of the consideration has been
transferred to the Bank as partial repayment of the Ozerkovskskaya
III loan.
Most of the sale proceeds of the transaction will be transferred
to the Bank as partial repayment of the Ozerkovskaya III loan. The
Ozerkovskaya III loan expires in January 2018, the Company and the
Bank had been negotiating its restructuring prior to the
transaction. The Company assumes that, in case of successful
completion of the transaction, it will be able to reduce the
outstanding balance of the Ozerkovskaya III loan to approximately
US$86 million. The Company's interest expense under the loan will
be significantly reduced. However, the exact effect on future
interest expense will be clear once the restructuring terms have
been agreed with the Bank.
- ENDS -
For further information, please contact:
AFI Development, +7 495 796 9988
Ilya Kutnov, Corporate Affairs/Investments Director (Responsible
for arranging the release of this announcement)
Citigate Dewe Rogerson, London +44 20 7638 9571
David Westover
Sandra Novakov
This announcement contains inside information.
About AFI Development
Established in 2003, AFI Development is one of the leading real
estate development companies operating in Russia.
AFI Development is listed on the Main Market of the London Stock
Exchange and aims to deliver shareholder value through a commitment
to innovation and continuous project development, coupled with the
highest standards of design, construction and quality of customer
service.
AFI Development focuses on developing and redeveloping high
quality commercial and residential real estate assets across
Russia, with Moscow being its main market. The Company's existing
portfolio comprises commercial projects focused on offices,
shopping centers, hotels and mixed-use properties, and residential
projects. AFI Development's strategy is to sell the residential
properties it develops and to either lease the commercial
properties or sell them for a favorable return.
AFI Development is a leading force in urban regeneration,
breathing new life into city squares and neighborhoods and
transforming congested and underdeveloped areas into thriving new
communities. The Company's long-term, large-scale regeneration and
city infrastructure projects establish the necessary groundwork for
the successful launch of commercial and residential properties,
providing a strong base for future.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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