1 / 22

VK Development

VK Development. VK Development. Presented by Mr. Roman Lunin. Presented by Roman Lunin. Investor Conference in Kyiv May 18 , 2006. Investor Conference in Istanbul October 5, 2006. October 5, 2006. Shopping Malls in Ukraine. Shopping Space (m 2 /1 , 000 pop. ).

beulah
Download Presentation

VK Development

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. VK Development VK Development Presented by Mr. Roman Lunin Presented by Roman Lunin Investor Conference in Kyiv May 18, 2006 Investor Conference in Istanbul October5, 2006

  2. October 5, 2006 Shopping Malls in Ukraine Shopping Space (m2/1,000 pop.) 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 strongwindow of opportunity for new development 2

  3. October 5, 2006 Shopping Malls in Ukraine Rental Rates (USD/m2/year) Rates Still Comparatively Low • Despite lack of space and practically zero vacancy, rental rates for prime retail space in Kyivremain modest compared to other European capitals • Developers in Kyiv and other cities areable 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

  4. October 5, 2006 Shopping Malls in Ukraine Investment Yield The Highest Yield Market • Investmentyields in Kyivreal estateremain the highest among European capitals • While rental rates are expected to remain stable or grow, lower yieldsin the futurewill bring substantial capital appreciation • High yieldsare alsoreflected in the rather high current cost of capital, which limits development of new projects 4

  5. May 18, 2006 Shopping Malls in Ukraine October 5, 2006 Existing Kyiv Shopping Malls Existing Kyiv Shopping Malls 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 5

  6. October 5, 2006 Kyiv Shopping Malls in Pipeline 6

  7. Shopping mall development in Ukraine is mostly limited to Kyiv Demand for shopping spacein other cities, as well as rental rates, is often similarto Kyiv With higher shopping mall density in Kyiv, the focus for new shopping mall development is gradually shifting to other cities Opportunities for developmentin 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 Shopping Malls in Other Cities October 5, 2006 7

  8. Warehouse Market in Kyiv October 5, 2006 • The city’s warehousing market is the least developed of the property sectors… • …despiteitspotential as a regional logistics hub • Local warehousingstock is approx. 600,000 m2 – and only 26% of this is Class A or B Total Warehousing Stock (000’s of m2) 8

  9. Warehouse Market in Kyiv October 5, 2006 • 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 immediatelyabsorb at least 400,000 m2 • Zero vacancy rates • Yields and rents exceed the European average • 80% ofcurrent occupants are not satisfied with their space Warehousing space per 1,000 people 9

  10. October 5, 2006 Major Warehousing Projects 10

  11. October 5, 2006 A Developer’s Market • The market isjust 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 advantagesof 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 11

  12. October 5, 2006 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 (2001-2010, USD m) VK Net Sales (2001-2005, USD m) 12

  13. October 5, 2006 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 VK Market Capitalization (December 2005 – October 2006, USD m) 13

  14. October 5, 2006 VK Development Background • Like other retailers, Velyka Kyshenya requires more space • To boost VK’s expansion options and capitalize on the booming domesticshopping 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 asother attractive development opportunities, namely in warehousing • VK Developmentwill independently managedevelopment of the mallsat all stages: site selection; financing; acquisition of planning and construction permits; project development and construction; letting and day-to-day operations 14

  15. October 5, 2006 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 spacein six locations from 2006-2008 • VK supermarkets and hypermarkets are expected to anchor the new mallsat 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) 15

  16. October 5, 2006 VK Shopping Mall Concept • VK Developmentis 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. 16

  17. October 5, 2006 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 17

  18. October 5, 2006 Malls Concept Space: 20,000-50,000 m2 Location: High-traffic crossroads Close to large/dense residential districts Current projects: KyivBilychi,Poltava, Rivne, Ivano-Frankisvk Construction term: 12-18 months 18

  19. October 5, 2006 Convenience Malls Concept Space: 12,000-16,000 m2 Location: Immediately adjacent to large residential areas Current projects: Chernivtsi Construction term: 6-12 months 19

  20. October 5, 2006 Warehouse/Logistics Center 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 20

  21. October 5, 2006 Project Overview 21

  22. October 5, 2006 Financing • VK Development will be seekingto attractabout USD 83 m inequity 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 22

More Related