Foreign companies continue to leave the Russian market amid the military operation in Ukraine and the crisis. Thus, the Finnish developer YIT has agreed with Etalon Group to sell its portfolio of assets of 600 thousand. sq. m worth more than 8 billion rubles. with a significant discount – only 4.59 billion rubles. The Etalon Group deal will accelerate regional expansion.
Developer Etalon Group is acquiring the YIT Russia business of the Finnish construction concern YIT for no more than 4.59 billion rubles, the Russian company said today. The deal will include 19 projects in the design and construction stage with a net realizable area of 600 thousand. sq. m in Moscow, Moscow region, St. Petersburg, Sverdlovsk region, Kazan and Tyumen. The estimated cost of these projects is 8.4 billion rubles. For the final approval of the transaction requires the permission of the supervisory authorities. The Federal Antimonopoly Service told Kommersant that Etalon Group’s application to acquire YIT companies is under consideration.
The perimeter of the deal will also include the exclusive rights to the program of management of apartment buildings “Dispatcher 24”, which operates about 37 million square meters. m of residential real estate in 28 cities of Russia, design documentation and a library of standard design solutions, service companies, which manages 2.5 million square meters. m, and the share of 50% of “JIT Brusnika Service” in a joint venture with the Tyumen developer “Brusnika”. They declined to comment.
Etalon Group is building housing in Moscow, St. Petersburg and Omsk. According to the company’s own data, its portfolio is 7.5 million square meters. m. Revenue of the developer in the first half of 2021 was 39.9 billion rubles., Net profit – 2.5 billion rubles. The main shareholder is Sistema JSFC Vladimir Yevtushenkov with a share of 29.8%.
The YIT concern clarified that the process of strategic assessment of business options in Russia was launched in November 2021 and accelerated in March 2022 after the change in the geopolitical situation. “Due to the crisis in Ukraine, our business in Russia has faced unprecedented challenges, and continuing to become increasingly difficult,” said Markku Moilanen, President and CEO of YIT.
According to the CEO of YIT, the sale of the business will give the company the opportunity to quickly, controlled and complete exit from Russia. As a result of the transaction, YIT in the profit and loss statement for the first quarter of 2022 will record a decrease in value of about € 150 million.
Etalon Group President Gennady Shcherbina said that the integration of UIT’s business in Russia will allow Etalon Group to expand its activities and strengthen its market position, as well as regional expansion. Acquisition of a large pool of projects without loans to most developers today is not possible, and the current cost of financing more than 20% per annum stops potential buyers, said the head of the investment analysis group Accent Capital Igor Talalov. This may explain the price offered by Etalon Group for the assets of YIT, he believes.
For the Finnish concern, on the other hand, selling such a large portfolio at a significant discount is an economically unjustified deal and caused by political motives, says Key Capital CEO Sergei Kamlyuk. In his opinion, this was necessary in order to “get money” faster and leave the Russian market.
This is the second Finnish real estate company to leave the Russian market recently, selling off its assets at a significant discount. Earlier it became known about the Finnish fund Sponda, which reduced the price of one of the last assets – the Ducat II office center by 19 thousand. sq. m in the center of Moscow 2.5 times, up to 2.2 billion rubles. According to Kommersant sources, Sponda’s proposals have already been sent by Alexander Svetakov’s Absolut Group, Sergei Egorov’s and Denis Stepanov’s Central Properties and O1 Properties (owned by Pavel Vashchenko’s Riverstretch Trading & Investments).