Printer Friendly

RMG - AFI Development sells its stake in Four Winds, Dec 17, 2012.

AFI Development (AFID LI, AFRB LI) announced disposal of 50% stake in Westec Four Winds Limited, which developed and currently operate Four Winds office and residential project in Moscow. AFI partner (Snegiri Development) also sold its stake in the project. Buyer of 100% stake in Westec is Capricornus Investments Limited.

Each of the sellers is expected to receive $104m for the transaction, AFI estimates its profit from the operation at $50m. Jones Lang LaSalle earlier valued AFI stake at $160m (7% of end-2011 portfolio), which means that AFI is selling the asset 35% below its fair value. The proceeds are to be used for other projects in development stage.

The transaction will result in reduction of AFI net debt, as Westec outstanding debt to Nordea Bank ($163m) will be removed from company balance sheet (AFI end-2011 net debt stood at $540m). According to Mark Groysman, company Executive director, the disposal is in line with company strategy to dispose of completed developments. This has been news to us, as AFI earlier claimed that it focused from development to rental business.

We are confused by this corporate decision, as it falls out of previous company plans. Furthermore, Four Winds asset is sold at significant discount to JLL estimated fair value. Finally, the transaction will have negative effect on AFI portfolio and cash flows in 2012, as positive effect from the proceeds, which will be invested in other prospects, will not be immediately visible. Unfortunately, we could not reach any company representatives to obtain comments on the deal.

*****

Rye, Man & Gor Securities

Copyright: Rye, Man & Gor Securities, All rights reserved.

For further Information please contact: Rye, Man & Gor Securities,

Posledniy Pereulok 17, Moscow 107045, Russia

Tel: +7 495 258 62 62, Fax: +7 495 258 62 26

Websites: http://www.rmg.ru, e-mail: research@rmg.ru
COPYRIGHT 2012 AII Data Processing Ltd.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2012 Gale, Cengage Learning. All rights reserved.

 
Article Details
Printer friendly Cite/link Email Feedback
Publication:Russian Banks and Brokers Reports
Date:Dec 17, 2012
Words:303
Previous Article:RMG - Global Ports announces special dividend, Dec 17, 2012.
Next Article:UFS Investment Company - Daily review of the debt markets, Dec 17, 2012.

Terms of use | Privacy policy | Copyright © 2018 Farlex, Inc. | Feedback | For webmasters