2013 year end ir presentation

March 2013

Year End 2013 Investors Presentation

FINANCIAL & BUSINESS RESULTS

This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of AFI Development Plc (the "Company") or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this document, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of the Company or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with the document.

This communication is only being distributed to and is only directed at (1) qualified institutional buyers (within the meaning of Rule 144A of the United States Securities Act of 1933, as amended (the "Securities Act") or (2) accredited investors (as defined in Rule 501(a) of Regulation D adopted pursuant to the Securities Act). Any person who is not a "qualified institutional buyer" or "accredited investor" should not act or rely on this document or any of its contents.

This document contains "forward-looking statements", which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or GDRs, financial risk management and the impact of general business and global economic conditions.

Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as at the date as of which they are made, and the Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

Neither the Company, nor any of its agents, employees or advisors intends or has any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this document.

The information contained in this document is provided as at the date of this document and is subject to change without notice.

Disclaimer

2

SECTION 1

Company Overview

Company at Glance

4

•Full cycle real estate developer

•Focus on unique large scale commercial and residential projects

•Primary market: Moscow, Russia

BUSINESS

•13 years on the market

•Admitted to LSE in 2007

•Premium listing from 2010

•Free float – 35,12%

HISTORY

•Strong global brand

•Affiliate of Africa Israel Group (64,88% owner) , a major conglomerate with global focus on real estate, construction and infrastructure

BRAND

•Strong liquidity position: US$ 203,3 mn as at December 31, 2013

•Secured financing for on-going projects

• 29% Debt to Total Assets**

FINANCIAL STABILITY

•14 completed projects with total c. 0,6 mln sqm of space

•Impeccable credit history

•Market reputation for high quality and professional property management

TRACK RECORD

•Substantial income

generating portfolio.

Major project AFIMALL

•2 Projects are in active stage of development

•5 Pipeline projects & land bank

PORTFOLIO

Market Cap, as of March 14, 2014 US$ 0.81 bn

Price per share, as of March 14, 2014 US$ 0.77

NAV (Equity), as of December 31, 2013 US$ 1.73 bn

NAV per share, as of December 31, 2013 US$ 1.65

Portfolio Value* US$ 2.5 bn

47% AFIMALL

Yielding and Hotels 22%

Under Construction

9%

Development Projects 21%

Land Bank 1%

Portfolio Value*

* Gross Asset Value of Portfolio based on C&W Valuation as

for 31 December 2013 and BV of Land Bank projects,

Trading Properties and Hotels( inc. JV)

** Bank loans only

Note: the NOI projections are “forward looking statements” based on C&W valuation assumptions and Company estimations and they can be realized or not realized due to factors beyond the Company's control including, among others, the impact of competitive

pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or GDRs, financial risk management and the

impact of general business and global economic conditions

Key Projects in Moscow

Yielding Assets (retail, offices and hotels)

Ownership:50%

Other

** Odinburg presented with cost value

* Outside of Moscow

Value** ( C&W, Dec, 31 2013):

US$ 1.7 bn

GLA(excl. hotels),sqm: 195K sqm

NOI stab. ( excl. hotels):

US$ 204 mn

Value (BV): US$ 19 mn

5

Projects Under Development

Value** (afid share, C&W):

US$ 749 mn

GLA,sqm: 217,6K sqm

GSA,sqm: 588,4K sqm

Land Bank

Active phase of construction

Yielding Assets

Projects under

Development

Completed Assets

Tverskaya IB Riversede Station AFIMALL

PLAZA SPA Kisl* PLAZA SPA ZHEL* Aquamarine III

Aquamarine Hotel Paveletskaya,1 H2O

* * Hotels presented with cost value

Odinburg** Paveletskaya II

Plaza IC Pochtovaya

Plaza iia

Expolon

Plaza IV

Achievements 2012 (1/2) STATUS COMMENT

Company Achievements during the year 2013

In Q1 2013 the transaction relating to the disposal of 50% share in Four Winds Limited was

finalized. The consideration is US$103.5 mn for AFID share

In Q2 2013 The Company has finalized a disposal of 643 parking lots to VTB which resulted

with net cash flow for the Company at the amount of US$ 54.5 mn. Net profit is c.US$ 20 mn

In December 2013 the Company completed a transaction on disposal of one of the four buildings in

Ozerkovskaya III project. The consideration amounted to an equivalent of US$91.5 million

and applicable Russian VAT.

In Q3 2013 the Company decreased the US$ loan interest in AFIMALL US$ part of loan facility

from 6,5%+3mLibor to 5,02+3mLibor% (annual saving c. US$5,2 mn)

In Q1 2013 the company obtained a new loan facility in the amount of US$ 220 for

Ozerkovskaya III Project with interest rate 3m Libor+5,7%

In Q1 2013 the Company has launch the first stage of the residential project “Odinburg”, which has

approximately 2,652 apartments, with a total area of over 33 hectares located 11 km west of Moscow

in the town Odintsovo. In December 2013 the Company began initial sales.

In November 2013, the Company signed a 6-year land lease agreement in Paveletskaya II for further

development and construction of the residential and commercial space. This resulted in a US$81.0 million gross valuation gain (US$64.8 million net of taxation) in in Q3 2013.

6

Achievements 2012 (1/2) STATUS COMMENT

Company Share Performance 2010 - 2013

7

-80.00%

-60.00%

-40.00%

-20.00%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

AFI Development PLC Price AFI Development PLC Sponsored GDR RegS Price

MirLand Development Corporation Plc Price LSR Group OJSC Sponsored GDR RegS Price

PIK Group OJSC Sponsored GDR RegS Price Etalon Group Ltd. Sponsored GDR RegS Price

R.G.I. International Limited Price

SECTION 1

Project Update

Yielding Projects

(as of December 2013)

Total GBA, sqm 283,2K

Total GLA(shops, offices, storage), sqm 107.2K

Occupancy end of Dec, (as of shops only) 87%

Occupancy end of Dec, (as % of GLA total) 79%

Parking lots, numbers 2,075

Stabilized NOI (C&W est.) US$149.2 mn

MV (C&W est.) US$ 1.160 bn

Loan balance as for December, 2013 US$ 600mn

AFIMALL CITY

During 2013, AFIMALL City reported a strong increase (45% year-on-year) in

footfall. This was reached despite the ongoing construction works in the Mall's

surrounding area

The actual rented area reached 84,5K sqm as the end of 2013, which is 14% up

compared to 74,3K sqm as the end of 2012.

AFIMALL introduced and become a new home for the several well-known and new

brand over the year such as TSUM Discont, Forever 21, Marc O’Polo, Lee Cooper,

New Balance

In Q3 2013 the Company decreased the loan interest in US$ part of loan facility for

AFIMALL from 6,5%+3mLibor to 5,02 % +3mLibor (annual saving c. US$5,2 mn)

AFIMALL City Update

9

+43%

Q1 2013 Q2 2013 Q3 2013 Q4 2013 2013 2012

Revenue 23.2 24.9 26.5 29.5 104.1 81.4

Operating expenses (8.6) (8.1) (9.5) (8.8) (35.1) (33.2)

NOI 14.6 16.7 17.0 20.7 69.0 48.2

AFIMALL and Moscow-City Development

AFIMALL

MOSCOW CITY DEVELOPMENT

Existing Office Complex 0 – Tower 2000

4 – Imperia Tower

8 – CityPoint

9 – Capital City

10 – Naberezhnaya Tower

13a – Federation Tower (West)

19 – Northern Tower

6, 7 – Central Core (AFIMALL City)

Under Construction 2, 3 – Evolution Tower

11 – IQ-quarter

12 – Eurasia Tower

13b – Federation Tower (East)

14 – Mercury City Tower

16a – OKO

16b – Parking

Planned 15 – Moscow City Government

Building

20 – Exposition and Business Center

Moscow City existing office space is approximately 570K sqm, within 1,2 mn

sqm of office space expected to be constructed.

By 2015 total office stock expected to reach 1.1m sq m

About 120,000 workforce are expected to work in the Moscow City area

by the time all planned office has been constructed

The Moscow City vacancy rate increased to c. 25% due to the recent

launching of the new buildings

Apartments area around 0.5 mln sqm (155,000 sq m (800 apartments)

commissioned)

Hotel area around 153,000 sqm (Novotel (25,000 sqm) opened in February

2013)

At the beginning of 2014 the new metro station Delovoy Center, which has

a direct access to the mall, has started its operations

This new station (Delovoy Tcents) provides direct access to AFIMALL City

and will over the next two years become the main connecting point for a new

line, which will link the densely populated residential districts Ramenky,

Horoshevskiy, Savyolovsky and Maryina Roscha 10

AFIMALL and Moscow-City Development

AFIMALL

Based on C&W report 11

Building AFIMALL Ozerkovskaya III Berezkovskaya Tverskaya Plaza IIPaveletskaya, bld.

1H2O Tvesrkaya Plaza Ib

Aquamarine

Hotel*

Plaza SPA

Kislovodsk

Plaza SPA

ZheleznovodskTOTAL

Moscow Moscow Moscow Moscow Moscow Moscow Moscow Moscow

Moscow City CBD CBD CBD CBD

Class Retail Office A & Street

Retail Office B

Office & Street

Retail Office B Office B

Office & Street

Retail Hotel Hotel Hotel

GBA, sqm 283,128 61,772 11,612 6,008 16,246 10,698 2,104 8,931 25,000 11,701 437K

GLA, sqm 107,208 46,247 10,250 6,008 14,085 8,990 1,909 159 keys 275 keys 134 keys 195K

Parking lots (total), # 2,075 466 150 - 126 81 - 15 - 15

Ocupancy rate, % 79% - 91% 95% 96% 76% 95% 71% 56% 59%

750- Office

500 - retail

NOI stab (C&W est.),

US mn149.2 38.4 5.2 2.5 4.5 2.7 1.3 - - - 204

NOI Year 2014 (C&W

est.), US mn 89.0 12.2 4.6 2.8 2.9 1.6 0.9 - - - 114

MV(AFID share),US$

mn**1,160 324 39 32 30 17 9 31 25 22 1,688

Location Kavkaz region Kavkaz region

1,231 Average rent as of

31.12.2013, $/sq m357 579 365 689 594 ADR 231 ADR 371 ADR 223

Yielding Properties

12

• Current Net rent for AFIMALL presented as for the end of December, 2013

• ** Occupancy is a % of GLA total (107,2sqm)

*** MV based on C&W valuation as for 31.12.2013. Hotels presented by cost value and 100% of the project

**** Information after disposal of 1 Bld Project is not leased yet

12

*

****

* *



Total GLA, sqm 46,2K

Parking lots, numbers 466

Stabilized NOI (C&West.) US$38.4 mn

MV (C&W est.) US$ 323,7 bn

Loan balance as for December, 2013 US$ 205 mn

OZERKOVSKAYA III*

The sale of Building 1 in Aquamarine III to Russian diamond miner and

producer Alrosa JSC was the result of successful marketing efforts and in line

with overall management strategy. In addition to being a successful transaction,

the disposal is a strong benchmark for the entire Aquamarine complex and

should assist it in attracting other high quality tenants similar to Alrosa.

The transaction consisted of a gross office area of 10,985.8 sq.m., a terrace of

418.9 sq.m. and a 15.8% share title to common areas of the Complex, which

totaled 3,728.6 sq.m. The total transacted area corresponded to approximately

11,994 sq.m. The consideration was paid in cash and amounted to an equivalent

of US$91.5 million and applicable Russian VAT.

Following the transaction, the Company retains title to the remaining three

buildings of the Complex, which have a combined area of 62,800 sq.m. (GLA

46,247 sq.m.).

Ozerkovskaya III Update

* information after bld 1 disposal

13

SECTION 2 Project Update

Development Projects

ODINBURG (as of December 2013)

Type Residential

Ownership, % 100%

GBA,sqm 739,1K

GSA, sqm/GSA commercial total:

Phase I, sqm:

Phase II, sqm:

469,3K

149,4K

319,8K

Apartments, total : 8,899

Phase 1: 2,652

Stage 1 650

Parking units: 2,656

In October 2013, AFI Development began construction at “Odinburg”, the

Company’s largest residential projects with a total area of over 33 hectares

located 11 km west of Moscow in the town Odintsovo.

Initial construction works, allocated to the first stage of Phase I were

launched in October 2013. In December 2013 the Company began initial

sales of the Crown residential building.

For the convenience of customers, the Company has constructed a sales

office with an area of about 600 sq.m. Within this office, potential buyers

can receive comprehensive consultation on the project as well as apply for a

mortgage loan.

As for March, 12, 2014 107 signed contracts are in place.

Barks approved to provide the morgage for individuals

Odinburg Residential

15

During 2013 the Company progressed with the development of the most

asvanced office project in the Tverskaya Zastava area - complex Plaza Ic,

which is a Class A office complex located in the cultural and business quarter

of the Tverskoy sub-district.

The building is located within a 4-minute walk of the circle line of the

Belorusskaya metro station, which serves as the main transport hub linking the

city centre with one of Moscow’s main airports – Sheremetievo International

Airport.

The project has a GBA of 51,200 sq.m. (including underground parking of

approximately 519 parking spaces) and an estimated GLA of 32,454 sq.m.

Following the registration of a 10-year land lease agreement, the Company

successfully finalised the development concept and is in the final stages of pre-

construction works. Start of construction is scheduled for H1 2014 and the

Company is currently in the process of selection and appointment of the

general contractor.

On March 7, 2014 the Company has received the Construction Permit for

further development.

PlAZA IC



Ownership 100%

Total GLA, sqm 32,4K

Parking lots, numbers 280

MV (C&W est.) US$ 110,6mn

16

Plaza IC ( 2 Brestskaya, 50/2)

PARAMETERS:

Type: Mix

GBA, sqm: 111,7K

GLA, sqm: 90,3K

MV(C&W),mn: S$ 103,5


Type Office A, retail

Ownership 95%

GBA,sqm 108,0K

GLA/GSA, sqm 58,6K/2,7K


Status:

• During 2013 the Company progressed with securing the land lease agreement with Moscow authorities, having finalized the borders of the land plot.


Type Residential, retail

Ownership 100%

GBA,sqm 151,4K

GLA/GSA, sqm 21,0K/53,2K


Status:

• The Company finalised negotiations with the Moscow City

authorities to change the permitted usage of the land plot.

• In November 2013, the Company signed a 6-year land lease agreement for further development and construction of the residential and commercial space.

• This resulted in a US$81.0 million gross valuation gain (US$64.8 million net of taxation).


Type Residential, retail

Ownership 100%

GBA,sqm 170,3K

GLA/GSA, sqm 28,K/63,1K


Status:

• Currently, the Company is working on securing the land lease agreement to allow construction in accordance with the new development plan as well as on the planning and design of the project.

PLAZA IV

PAVELETSKAYA II

POCHTOVAYA

17

Plaza IV (Gruzinskiy Val, 11)

Main Pipeline Projects

SECTION 3 Financial Update

Q1 2013 2012

Actual Actual Actual Actual Actual Actual

(1) Construction consulting/management services 0.0 0.0 0.0 0.1 0.2 3.6

(2) Rental income 33.1 35.4 36.6 39.5 144.6 117.1

(3) Sale of residential and trading property 0.2 55.0 1.8 0.5 57.5 4.8

(4) TOTAL REVENUE 33.4 90.5 38.4 40.0 202.3 125.5

(5) Other income 3.2 0.4 0.8 2.0 6.4 0.8

(6) Operating expenses (21.4) (17.8) (18.3) (19.0) (76.5) (65.2)

(7) Administrative expenses (4.0) (7.0) (2.1) (3.9) (16.9) (20.2)

(8) Cost of sales of residential and trading property (0.2) (31.8) (1.3) 0.6 (32.6) (3.8)

(9) Other expenses (1.8) (0.8) (1.5) (1.4) (5.5) (1.5)

(10) TOTAL EXPENSES (24.2) (56.9) (22.3) (21.7) (125.1) (90.0)

(11) Share of profit of equity-accounted investees (0.6) (0.1) 0.3 (0.3) (0.8) 23.9

(12) GROSS PROFIT 8.6 33.5 16.3 18.0 76.3 59.4

(13) Valuation gains on investment property 16.5 41.0 47.4 0.3 106.2 (265.9)

(14) Impairement loss for trading property and hotels - (1.2) (2.2) (65.4)

(15) RESULTS FROM OPERATING ACTIVITIES 25.1 74.5 63.7 17.1 180.4 (272.0)

(16) Profit on sale/disposal of properties/investment 32.1 - - 0.2 32.3 2.4

(17) Profit on sale of Investment property 27.8 27.8 -

(18) Finance income 15.7 1.5 1.2 2.5 21.0 18.5

(19) Finance expense (16.8) (17.7) (16.8) (15.7) (66.9) (57.3)

(20) FX Gain/( Loss) (9.2) (19.6) 5.1 (5.2) (28.9) 16.6

(21) Translation reserve reclassification due to disposal of subsidiary (30.3) - - - (30.3) -

(22) Net finance income/(costs) (40.5) (35.8) (10.5) (18.4) (105.2) (22.2)

(23) PROFIT BEFORE INCOME TAX 16.7 38.8 53.2 26.6 135.3 (291.8)

(24) Current income tax (0.4) (0.4) (0.5) (7.6) (8.9) (2.0)

(25) Deferred income tax (0.7) (10.7) (11.9) 0.9 (22.5) 18.2

(26) PROFIT FOR THE PERIOD 15.6 27.7 40.8 19.9 103.9 (275.5)

# ITEM ('000)Q2 2013 Q3 2013 Q4 2013 2013

Consolidated P&L

19

(2) Rental income achieved USD 144,6

mn for 12m 2013, which is 23% higher

than in 2012

AFIMALL contribution in rental income

is US$ 104,1 mn

(12) Gross profit went up to 29%

compared 2012

(17) Sale of Ozerkovskaya III

(26) Profit for the period amounted to US$

103,9 mn compared to loss in US$ 275,5

mn in 2012

19

20

Statement of Financial Position

Comments: (1) Acquisition of 50% of shares in Ozerkovskaya III, sale of Bld. 1

(2) Revaluation of Paveletskaya II

(3)(5)(17) Sale completion of Four Winds

(10) Disposal of 643 parking lots to VTB and construction of Odinburg

20

31.12.2013 31.12.2012

US$ mn US$ mn US$ mn %

(1) Investment property 1,609.8 1,292.3 317.5 25%

(2) Investment property under development 635.3 567.7 67.5 12%

(3) Investment in Joint Ventures 5.6 82.4

(4) Property, plant and equipment 69.7 76.6 (6.8)

(5) Long-term loans receivable 21.7 113.5

(6) VAT recoverable 0.4 0.5 (0.1)

(7) Goodwill 0.0 0.2 (0.2)

(8) Non-current assets 2,342.5 2,133.1 209.4 10%

(9) Trading property 6.4 3.6 2.8 78%

(10) Trading properties under construction 127.2 141.8 (14.6)

(11) Inventory 0.6 0.6 (0.0)

(12) Short-term loans receivable 0.8 0.1 0.7

(13) Trade and other receivables 106.4 78.3 28.1 36%

(14) Current tax assets (4.1) 2.3 (6.4)

(15) Cash and cash equivalents 193.3 174.8 18.5 11%

(16) Other investments 10.0 0.0 10.0

(16) Current assets 440.6 401.6 39.1 10%

(17) Assets held for sale 0.0 71.3 (71.3)

(18) TOTAL ASSETS 2,783.1 2,606.0 177.1 7%

(19) Equity

(20) Share capital 1.0 1.0 (0.0)

(21) Share premium 1763.4 1763.4 0.0 0%

(22) Translation reserve (150.5) (144.6) (5.8) 4%

(23) Retained earnings 117.7 9.7 108.0

(24) TOTAL EQUITY 1,731.7 1,629.5 102.1 6%

(25) Minority interest (2.2) (3.0) 0.8

(26) Trade and other payables 0.0 38.3 (38.3)

(27) Long-term loans and borrowings 778.9 554.6 224.4 40%

(28) Deferred tax liabilities 125.3 81.9 43.3 53%

(29) Deferred income 22.0 20.2 1.9 9%

(30) Non-current liabilities 926.2 695.0 231.2 33%

(31) Short-term loans and borrowings 27.0 17.3 9.7 56%

(32) Trade and other payables 100.4 267.1 (166.8)

(33) Current liabilities 127.4 284.5 (157.1)

(34) TOTAL LIABILITIES 1051.4 976.5 74.9 8%

(35) TOTAL EQUITY AND LIABILITIES 2,783.1 2,606.0 177.1 7%

# NARRATIVE Changing

Strong cash position with US203,3 million in cash ,cash equivalents and

marketable securities as at 31 December 2013, compared to US$174,8 million

as at 31 December 2012

Increase in total equity was driven by US$ 103,9 mn of net profit for the

period

Debt to equity ratio ( 47%)

Investment property is significant part of total asset portfolio

Loans and cash position as of December 31, 2013

Gross balance of the bank loan portfolio (as of December 31, 2013) – US$ 805 mn

Total cash balance and deposits (as of December 31, 2013) – US$ 203,3 mn (marketable securities included)

The Company is in line with all financial covenants

*

Project Bank

Balance as of

December 31,

2013

Available

(US$ mn)Nominal Interest rate Currency Maturity

RCB $291 - 9.5% RUB

RCB $309 - 3-m Libor+5,02% USD

TOTAL AFIMALL $600 $41 7.32%

Ozerkovskaya III (100%) VTB $205 $0 3-m Libor+5,7% RUB 26.01.2015

TOTAL/AVERAGE RATE $805 6.97%

AFIMALL 01.04.2018

21

22

Net Asset Value

LTV= 33%

LTE = 47%

22

PROJECT Book Value Bank Loan Net Company's Share

31-Dec-13 31-Dec-13 31-Dec-13

AFI Mall 1,160 (600) 560

Berezkovskaya (100%) 39 39

Paveletskaya I 30 30

Plaza H20 17 17

Ozerkovskaya III 324 (205) 118

Plaza Ib 9 9

Plaza II 32 32

TOTAL INVESTMENT PROPERTY: 1,610 (805) 805

Plaza Ic 111 111

Plaza II a 12.40 12

Plaza IV (100%) 168 168

Kosinskaya 107 107

Bolyshaya Pochtovaya 139 139

Paveletskaya II 93 93

Ruza 4 4

St. Petrsburg 1 1

TOTAL INVESTMENT PROPERTY UNDER DEVELOPMENT: 635 0 635

Ozerkovskaya Phase II (26) 5 5

4Winds residential 1 1

TOTAL TRADING PROPERTY: 6 0 9

Aquamarine Hotel 31 31

Plaza SPA Zheleznovodsk 22 22

Pyatigorskaya (Park Plaza Kislovodsk) 7 7

Plaza Spa Kislovodsk (Tirel) (50%) 25 25

Versailles (Kislovodsk) 7 7

TOTAL PROPERTY PLANT AND EQUIPMENT: 93 0 93

Odinburg 127 127

TOTAL TRADING PROPERTY UNDER DEVELOPMENT: 127 0 127

TOTAL PORTFOLIO: 2,471 (805) 1,668

CASH AND CASH EQUIVALENT 203.3

DEFFERED TAX LIABILITY (126)

TOTAL OTHER ASSETS AND LIABILITIES (13)

TOTAL EQUITY: 1,732

*

* Including marketable securities

Annex

Market Update

Market Overview and Capital Markets

RUSSIAN MACROECONIMIC OVERVIEW RUSSIAN REAL ESTATE INVESTMENT MARKET • Russian economic growth fell to 1.3% in 2013, down from

3.4% in 2012. Stagnation was caused by a slowing-down of

Eurozone economies, the drop of industrial production

growth to about zero as well as reduction of fixed

investments from 6.6% in 2012 to 0.2% in 2013.

• Despite a slowdown in Russia's overall economic growth

during 2013 retail trade and the consumer market recorded

above average growth in real terms at 4.5% year-on-year.

• At the same time, inflation remained under control and

largely unchanged year-on-year at 6.5%, whilst the country

enjoyed close to full employment.

• Oil prices continued to drive Russian budget revenues with the

share of oil and gas revenues at 46.1% in 2013, against 50.2%

in 2012 and stood at the level of US$ 105 in the end of 2013.

• Unemployment rate remained the lowest 2013 and stood at

the level of 5,5%

• In 2013, Russia had the third-highest foreign direct investment

inflows in the world. High investment flows into Russia are

expected to continue over the coming years.

• Total investments into commercial real estate in 2013 made

up $7.45 billion which is similar to the volume of

investments in 2012. Many transaction were in the process of

finalization at the end of 2013 and they are expected to be

closed in the first quarter of 2014.

• The current yields for Prime commercial real estate projects in

Moscow in 2013 were 8.5% for offices, 9.0% for retail. In

2014 we expect that capitalization rates for the best properties

will not be corrected significantly.

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

GDP growth by country, %

Czech Republic Germany

Poland Russian Federation

United Kingdom United States

Europe Euro area

March, 3, 2014

US$ 110,8

0

20

40

60

80

100

120

140

160 Oil Price, US$ per Barrel

0.0

10.0

20.0

30.0

40.0

50.0 Unemployment rate, %

France Greece

Italy Russian Federation

Spain United Kingdom

United States Euro area

8.50

9.00

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

0

1000

2000

3000

4000

5000

6000

7000

8000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Investments, US$ mn and Yield (%)

Office Retail Warehouse Other Office Retail24

Office and Retail Markets overview

OFFICE MARKET OVERVIEW RETAIL MARKET OVERVIEW

Key indicators Units

Prime rate, US$ sqmpa

(US$/sqm/year)

950-1,150

Base rent Class A

US$ sqmpa

580-850

Yields (prime) 8,75%

Overall vacancy,% 13,7%

Vacancy rate,%

(Class A CBD )

18,0% 600

710

930

1,090

710 640

740 790

850

800

1,000

1,500

2,000

800 850

1,200 1,150

1,150

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

US$

/psq

m/p

a

average Class A class A CBD Prime

3,000

3,500

4,500 4,800

3,700

4,000 4,000 4,000

4,500 4,500

1,300 1,500

1,700 2,000

1,200 1,350

1,350

1,350

1,150

1,800

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

USD

psq

m p

a

Prime rents Base rents

Key indicators Units

Prime rate, US$

psqma (prime shopping center retail

gallery)

3,000- 4,500

Base rent, US$

psqma

500-1,800

Yields (prime) 8,5%

Vacancy rate,% 2,5%

Vacancy rate,% (prime shopping centers)

1,1%

• Whilst the overall volume of project completions in 2013

increased by 57% year-on-year to 888,270 sq.m., only 25% of new

office schemes met Class A requirements, with the majority classified

as Class B

• The average vacancy rate increased slightly to 13.7%, whilst

rental rates continued to grow by 7-12% year-on-year, subject to

building class and location

• The average asking rental rate for Class A buildings amounted to

US$ 870 while for Class B, the average asking rental rate was

stable at US$530. Average annual rental rates for prime office space

were at the level of US$1,200 per sq.m. (excluding VAT and

operational expenses)

• Looking to 2014, 70% of the announced pipeline is located outside of

central Moscow, with overall completion volumes estimated at

slightly below 2013 levels. Rental rates are expected to remain

largely stable

• During 2013, the Russian market received 1.65 million sq.m. of

new quality retail space, slightly below the completion volumes seen

in 2012 (1.7 million). 9 quality shopping centres totalling 231,850

sq.m. opening in Moscow

• Throughout 2013, the average vacancy rate and rental levels

remained stable across all sub-sectors. The level of vacant space in

quality retail shopping malls reached record lows at 1,5% -

2,5%, driven by the low level of new construction in Moscow

• Moscow retail gallery rental rates are in the range of US$ 500-4,000

• According to developer’s plans 3,2 bn sqm of new quality retail

space might be delivered the next year in Russia, most likely around

60-70% will be opened.

25

Residential Market Moscow and Moscow region

Source: Blackwood Report, 2013, Rosstat

• According to Rosstat, 69.4 million sq.m. of housing was

commissioned in Russia during 2013, which is 5.5% more

than during 2012. The Moscow region continued to witness the

highest levels of construction with 6.9 million sq.m.

introduced across the Moscow suburbs.

• The volume of new supply in the business segment in Moscow

is estimated at 82,000 sq.m. At end 2013, the average market

price for business class apartments stood at US$ 6,851 per

sq.m.

• At end-2013, the average market price for apartments in the

Moscow region stood at RUR74,830 or US$2,276 per sq.m.,

up 6% year-on-year.

• According to Rosserest the amount of mortgage transactions in

2013 reached 24.6% of total, compared to 20.5% in 2012.

• In economy segment the amount of mortgage is about

50%-70%

• One of the reasons for the mortgage market growth in 2013

was the slow down of mortgage rates at the level of 12,5%

26

2013 year end ir presentation

Documents