Development company A Development

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Development company A Development
2006
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Investment concept

• Investment purpose
• The investment purpose of development
  company A Development is acquisition of stable
  income from warehouse immovables rental revenues
  and profit earnings at sale of properties due to
  increase in their cost.
• Investment strategy
• The warehouse immovables building of class A
  and B on Moscow region territory is based on the
  following principles
• Good location, High quality
• Benefits for A Development partners
• Investment into booming market of warehouse
  immovables
• Annual investment income from warehouse
  immovables rental revenues
• Annual increase in building value hedge
  against inflation

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Location of existing high quality warehouses on
highways
Highway Allocation
1. Leningradskoe 32
2. Yaroslavskoe 10
3. Simferopolskoe 9
4. Novoryazanskoe 9
5. Kashirskoe 6
6. Other highways 31
TOTAL 100
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Classification of current projects and new high
quality warehouse development on highways, sq. m.
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Demand analysis on size of rented area
QI 2005

QI 2005
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Approximate rental rates for warehouses of class
A and B depending on the remoteness from MKAD
Remoteness from MKAD, km Rental rates, /sq. m/year
0 (MKAD) 140
from 5 to 10 125135
from 10 to 20 115135
from 20 to 30 105130
All rates are put without VAT (18) and
operation expenses.
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Standard conditions of agreements
Class A Class B
Lease term 5-10 years 110-130/sq. m/ per year 3-5 years 90 110/sq. m/ per year
Base rate (abating operational expenses and municipal costs) (abating operational expenses and municipal costs)
Operation expenses 25-30/sq. m/ per year 25-30/sq. m/ per year
Municipal costs 8 -12/sq. m/ per year 6-10/sq. m/ per year
Insurance deposit 1-3 months 1 month
Prepayment 1-3 months 1 month
VAT 18 18
Other expenses can be partially included by the
owner in rental rate (for instance, heating).
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Property of investment

• Property selection criterion
• Property type warehouse immovables of class A
  and B
• Properties Property put in operation avoiding
  development risk, with predictable income of
  rent and industrial landed property (long lease)
  with design documentation ready for warehouse
  construction.
• Location strategic highways of Moscow region.
• Target yield of project
• Current yield (lease) from 10 to 16 yearly
  depending on property type
• Increase in property value from 5 yearly.
• Transparent structure of property acquisition
  agreement
• Area from 8 to 100 thousand sq. m
• Property cost increase potential
• Cost
• minimum 5 million
• maximum 100 million