Post on 14-Jan-2016
description
transcript
VK Development
Investor Conference in Kyiv
May 18, 2006
Presented by Roman Lunin
VK Development
Investor Conference in Istanbul
October 5, 2006
Presented by Mr. Roman Lunin
Shopping Malls in Ukraine
Continued Lack of Space
Kyiv substantially lags behind other European capitals in terms of shopping space density
Shopping mall space in Kyiv can easily double or quadruple,
matching that of Budapest and Warsaw, respectively
Lack of space forms a strong window of opportunity for new development
0 200 400 600 800
Kyiv
Moscow
Warsaw
Paris
Budapest
Berlin
Prague
(sq.m/1000 inhabitants)
Shopping Space (m2/1,000 pop.)
October 5, 2006
2
0 2000 4000 6000 8000
Warsaw
Kyiv
Moscow
Budapest
Prague
Berlin
Paris
October 5, 2006
Shopping Malls in Ukraine
Rates Still Comparatively Low
Despite lack of space and practically zero vacancy, rental rates for prime retail space in Kyiv remain modest compared to other European capitals
Developers in Kyiv and other cities are able to increase rents for existing and new space
Rents for new shopping malls in other cities match that of Kyiv
Rental rates are unlikely to shrink in the medium term
3
Rental Rates (USD/m2/year)
Shopping Malls in Ukraine
October 5, 2006
4
The Highest Yield Market
Investment yields in Kyiv real estate remain the highest among European capitals
While rental rates are expected to remain stable or grow, lower yields in the future will bring substantial capital appreciation
High yields are also reflected in the rather high current cost of capital, which limits development of new projects
0% 5% 10% 15%
Kyiv
Moscow
Budapest
Warsaw
Prague
Berlin
Paris
Investment Yield
Shopping Malls in Ukraine
The Highest Yield Market
Investment yields in Kyiv real estate remain the highest among European capitals
While rental rates are expected to stay stable or grow, lowering yields in the future will bring substantial capital appreciation
High yields are also reflected in rather high current cost of capital, limiting the development of new projects
Investment Yield
0% 5% 10% 15% 20%
Kyiv
Moscow
Budapest
Warsaw
Prague
Berlin
Paris
May 18, 2006
Existing Kyiv Shopping MallsExisting Kyiv Shopping Malls
Malls Total space (m2)
Selling space (m2)
Year Launched
Karavan 47 000 33 000 2003-05
Promenada Center 40 000 15 000 2004
Ukraina 38 000 17 000 2003
Rhythm 32 000 16 000 2003
Metropolis 31 000 25 000 2004-05
Magellan 29 000 16 000 2004
Alta Center 23 200 17 000 2004
Metrograd 20 000 17 000 2002
October 5, 2006
5
6
October 5, 2006
Malls Total space (m2)
Selling space (m2)
Expected Launch
Date
Mega (IKEA) 200 000 170 000 2008-09
Lybid Plaza 100 000 83 000 2008-10
Troitskiy Plaza 106 000 44 000 2007-08
Esplanada 125 000 55 000 2008-09
Petrivka Shopping Mall 137 000 53 000 2008-09
Kvadrat (Vyrlitsa) 60 000 40 000 2009
Lifestyle Center 50 000 32 000 2007-08
Mava 45 000 22 000 2007-08
Kyiv Shopping Malls in Pipeline
October 5, 2006
7
Shopping Malls in Other Cities
Shopping mall development in Ukraine is mostly limited to Kyiv
Demand for shopping space in other cities, as well as rental rates, is often similar to Kyiv
With higher shopping mall density in Kyiv, the focus for new shopping mall development is gradually shifting to other cities
Opportunities for development in other cities: – Higher traffic can be achieved due to greater scarcity or complete lack of
modern shopping space, attracting tenants more quickly and providing opportunities to charge relatively higher rental rates
– Acquisition of new land plots in other cities is often less cumbersome in comparison to Kyiv
– Construction and exploitation costs of shopping mall in other major cities are slightly lower than in Kyiv
8
October 5, 2006
Warehouse Market in Kyiv
The city’s warehousing market is the least developed of the property sectors…
…despite its potential as a regional logistics hub
Local warehousing stock is approx. 600,000 m2 – and only 26% of this is Class A or B
- 500 1,000 1,500 2,000
Kyiv
Sofia
Bucharest
Budapest
Prague
Warsaw
Moscow
Total Warehousing Stock (000’s of m2)
9
October 5, 2006
Warehouse Market in Kyiv
On a per capita basis, Kyiv has only one-tenth the warehousing space of Budapest and just 8% of that in Prague
The market could immediately absorb at least 400,000 m2
Zero vacancy rates
Yields and rents exceed the European average
80% of current occupants are not satisfied with their space
- 500 1,000
Kyiv
Sofia
Bucharest
Budapest
Prague
Warsaw
Moscow
Warehousing space per 1,000 people
October 5, 2006
10
Major Warehousing Projects
Warehousing Projects Gross Leasable Area (m2)
Expected Launch
Global Center 136,000 2007
Alacor Logistics Park 133,000 2007
Kyiv Ring Road Logistics Complex 88,000 2007
Brovary Logistics Complex 80,000 2007
Komora-S 26,000 2007
Chaika Commercial Warehouse 23,000 delivered 2006
Ost-West Express 20,000 delivered 2006
October 5, 2006
11
A Developer’s Market
The market is just beginning to emerge in Ukraine: lack of financing and managerial resources means developers are often restricted to one or two projects, and most of these projects are typically delayed as a result
Emerging developers: – ХХI Century– Nest-Hanner – IKEA
Competitive advantages of VK Development: – Management and project development resources– Access to capital markets– Ability to acquire land for development– Thorough understanding of logistics business– Existing database of potential lessees
0
50
100
150
200
250
300
2001 2002 2003 2004 2005
October 5, 2006
12
VK Supermarket Will Act as Anchor
Sales CAGR of 115% for 2001-2005 2005 sales grew 110% y-o-y to USD 232 million 2006 sales expected to grow 90% y-o-y to USD 440 million Sales projected to grow at a CAGR of 54%
in 2005-2010 and reach USD 2 billion by 2010
VK Net Sales (2001-2005, USD m)
0
250
500
750
1000
1250
1500
1750
2000
2250
2001 2003 2005 2007 2009
VK Net Sales (2001-2010, USD m)
October 5, 2006
13
Velyka Kyshenya on Capital Markets
In December 2005 VK accessed international capital markets with a private placement through Dragon Capital of 10% for USD 27.5 million (MC of USD 275 million)
In March 2006 VK placed an additional 2% for USD 7.75 million (MC of USD 387.5 million)
Current market capitalization: USD 406 million, implying a 48% increase since December 2005
VK is planning an IPO in London in the second half of 2007
275
388 406
0
100
200
300
400
500
December March October
VK Market Capitalization(December 2005 – October 2006, USD
m)
October 5, 2006
14
VK Development Background
Like other retailers, Velyka Kyshenya requires more space To boost VK’s expansion options and capitalize on the
booming domestic shopping mall market, the owner of VK has created a spin-off company to handle the chain’s construction and project development, VK Development
Focus will be on the development of modern shopping malls in other cities and Kyiv, as well as other attractive development opportunities, namely in warehousing
VK Development will independently manage development of the malls at all stages: site selection; financing; acquisition of planning and construction permits; project development and construction; letting and day-to-day operations
October 5, 2006
15
Project Description
VK Development has a massive land bank of 34 hectares in Kyiv, Poltava and several other cities. Sites were selected for their potential as locations for new shopping malls and entertainment facilities
Modeled after VK’s successful existing malls, VKD plans to build more than 250,000 m2 of modern shopping and entertainment space in six locations from 2006-2008
VK supermarkets and hypermarkets are expected to anchor the new malls at competitive prices
Also, VKD has 48 hectares of land suitable for a major warehousing project of 195,000 m2 close to Kyiv-Boryspil International Airport (KBP)
VK Shopping Mall Concept
October 5, 2006
16
VK Development is focusing on the development of:– Mega-malls with total space of more than 50,000 m2 – Malls with space of up to 50,000 m2 – Convenience malls with space of 12,000-16,000 m2
Each mall concept has been carefully developed with a thorough assessment of the location’s current and future competitive environment and target audience preferences
Based on marketing research results, the space split and rental rates for the following groups of tenants will be selected:
– Anchor tenants: grocery, white goods, DIY super/hypermarkets– Other retail galleries: branded stores and boutiques – Entertainment facilities: fast food, bowling, cinemas, nightclubs, etc.
October 5, 2006
17
Mega-Malls
Concept
Space:
Min. of 50,000 m2
Locations:
Promising areas of development
Availability of sufficient transport infrastructure
Current projects:
Kyiv Kollektorna
Construction term:
18-24 months
Malls
October 5, 2006
18
Concept
Space:
20,000-50,000 m2
Location:
High-traffic crossroads
Close to large/dense residential districts
Current projects:
Kyiv Bilychi, Poltava, Rivne, Ivano-Frankisvk
Construction term:
12-18 months
October 5, 2006
19
Convenience Malls
Concept
Space:
12,000-16,000 m2
Location:
Immediately adjacent to large residential areas
Current projects:
Chernivtsi
Construction term:
6-12 months
20
October 5, 2006
Concept
Space:
195,000 m2
(4 stages of 15,000/60,000/ 60,000/60,000 m2)
Location of Current Project:
Close to Kyiv-Boryspil International Airport (KBP)
Construction term:
36 months
Warehouse/Logistics Center
21
October 5, 2006
Project Overview
Shopping Malls Warehouse
Land Plots (hectares) 34.5 48.0
Planned Projects 6 1 (4 stages)
Expected Construction Area (m2) 255,800 195,300
Expected Construction Costs (USD m) 185 100
Expected Annual Normalized Net Operating Income (USD m)
34.5 15.8
Avg. Net Rental Yield (%) 22.2 18.7
October 5, 2006
22
Financing
VK Development will be seeking to attract about USD 83 m in equity to launch construction at the selected locations and expand its land bank
Subscription to the first tranche of equity financing of USD 37 m is expected in November 2006
New equity will be raised through the placement of shares in a Ukrainian-registered OJSC (open joint-stock company), with a subsequent listing on the PFTS, Ukraine’s premier stock exchange, providing investors with liquidity
Debt financing of about USD 155 m will be raised through financing from local banks