How do you see the future of the Moscow real estate scene after US pension fund CalPERS effectively acquired a half stake in the Metropolis shopping mall in the city via its involvement in the Hines CalPERS Russia Long Term Hold Fund?
This transaction could change things. A lot of US pension funds looked at Moscow pre-crisis and didn’t buy, but now it is happening. It’s good for the market, adding flavour, and it may add more European investors to the numbers of investors here.
What can Moscow property offer to new investors?
Our new investment assets in Moscow are built to the latest sustainability standards such as BREEAM. An example of this is our new project, the class B+ Point Green. The Sheremetevskya office complex provides 31,171 m2. Many buildings that were built in Moscow in the late 1990s and early 2000s are already tremendously outdated and we need to build in a way that incorporates efficiency and good design.
What does the future hold for O1 Properties?
We will continue focusing on further growth both organically and through acquisitions. Our shareholders are also committed to this strategy, reinforced by their recent subscriptions to our capital issue. We also continue to monitor the Russian stock market and want to see some growth in it before we decided to go ahead with another attempt at an IPO.
Tell us about the new projects.
We have two new projects to present: the iCUBE and Bolshevik office centres. We’re using the concept of augmented reality, 3D technology, and interactive modelling so that visitors can appreciate the architecture to the fullest extent. iCUBE
is one of the latest additions to O1’s portfolio. The 11-storey building features modern architecture and panoramic windows, and a green zone on the roof.
The Bolshevik dates from 1855. What are your plans for it?
The project comprises a number of buildings formerly occupied by a confectionery. This incredible red ?brick complex is being restored and transformed into a world-class business destination. It will offer over 80,000 m2 ?of Grade A loft-style office space with ?a selection of high-ceilinged office environments, ranging in size from ?300 m2 to 15,000 m2.
O1 Properties has just released half-year results. How are the figures?
Thanks to improvement in our financial results and the addition of the White Square office asset to the portfolio, our equity has increased from $1.07bn to $1.36bn over the first six months of this year. Compared with the first six months of last year, net rental income grew by 114% to $122m. This more than doubling of rental income stemmed mainly from new acquisitions – White Square, Ducat Place III, Silver City – and from reletting vacant space and the expiration of rental abatements on projects that completed last year, such as Vivaldi Plaza and Lighthouse.
What’s your financial position?
At the end of June 2013, our portfolio was valued at $3.7bn and enjoyed a 98% occupancy rate, confirming the importance we put on tenant retention. Our borrowings were $2.4bn with an average maturity of five years.
How did you find your first visit this year to EXPO Real?
It has been a great platform to introduce our new projects, to see our international banking partners from Germany and London as well as meeting some investors. It is also a good opportunity to meet with Moscow officials as so many of them are in one place.
