March 2015

Total Year 2014 IR 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 thesolicitation of an offer to buy or acquire securities of AFI Development Plc (the "Company") or any of its subsidiariesin any jurisdiction or an inducement to enter into investment activity. No part of this document, nor the fact of itsdistribution, should form the basis of, or be relied on in connection with, any contract or commitment or investmentdecision whatsoever. No representation, warranty or undertaking, express or implied, is made as to, and no relianceshould be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions containedherein. 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 otherwisearising in connection with the document.

This communication is only being distributed to and is only directed at (1) qualified institutional buyers (within themeaning 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 personwho is not a "qualified institutional buyer" or "accredited investor" should not act or rely on this document or any ofits contents.

This document contains "forward-looking statements", which include all statements other than statements of historicalfacts, 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 thenegative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and otherimportant factors beyond the Company's control that could cause the actual results, performance or achievements ofthe Company to be materially different from future results, performance or achievements expressed or implied bysuch forward-looking, including, among others, the achievement of anticipated levels of profitability, growth, costand synergy of recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatoryapprovals 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 ofgeneral business and global economic conditions.

Such forward-looking statements are based on numerous assumptions regarding the Company's present and futurebusiness 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 thatmay or may not occur in the future. These forward-looking statements speak only as at the date as of which they aremade, and the Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions toany forward-looking statements contained herein to reflect any change in the Company's expectations with regardthereto 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 tosupplement, 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 changewithout 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

•14 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$ 93,3 mn as at December 31, 2014

•Secured financing for on-going projects

• 32% Debt to Total Assets**

FINANCIAL STABILITY

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

•Impeccable credit history

•Market reputation for high quality and professional property management

TRACK RECORD

•Substantial income

generating portfolio.

Major project AFIMALL

•8 Development Projects & land bank

PORTFOLIO

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

for 31 December 2014 and BV of Land Bank projects, Trading

Properties and Hotels( inc. JV)

** Bank loans only

AFIMALL

50%

Yielding Projects and Hotels

21%

Development Projects

29%

PORTFOLIO VALUE*

Market Cap, as of March 17, 2015 US$ 270 mn

Price per share, as of March 17, 2015 US$ 0,26

Average price per share in 2014 US$ 0,69

NAV (Equity), as of December 31, 2014 US$ 1.29 bn

NAV per share, as of December 31, 2014 US$ 1,23

Portfolio Value* US$ 2.0 bn

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 and Botanic Garden presented

with cost value

* Outside of Moscow

Value**( C&W, Dec, 31 2014):

US$ 1.4 bn

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

NOI stab.( excl. hotels):

US$ 182 mn

Value (BV): US$ 8 mn

5

Projects Under Development

Value**( C&W, Dec 31 2014):

US$ 581 mn

GLA,sqm: 235,0K sqm

GSA,sqm: 708,6K sqm

NOI stab. (C&W, Dec

31 2014):

US$ 106,3 mn

Land Bank

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 IVBotanic Garden

Achievements 2012 (1/2)STATUS COMMENT

Company Achievements during the year 2014

AFIMALL occupancy increased by 9% and reached 85% in 2014 compared to 76% in December 2013.

AFIMALL NOI increased by 20% and reached US$ 83,0 mn in 2014 compared to US$ 69 mn in 2013

In the beginning of 2014 the Company started active sales of apartments at Odinburg, which had

positive impact on the cash flows

In January 2015, the Company subsidiary, Krown Investments LLC (“Krown”) signed an addendum to

the loan facility agreement with VTB Bank OJSC (“the Bank), extending the term of the loan to 26

January 2018. Krown, which owns the Aquamarine III (Ozerkovskaya III) office complex, had an

existing loan from the Bank maturing on 26 January 2015, of which US$ 205 million was outstanding.

In addition to extending the term of the loan, the new addendum amended the payment schedule and

interest rate conditions of the loan agreement and introduced new covenants. The payment schedule

anticipates repayments of the principal starting from Q4 2015, while the new covenants include a Debt

Service Coverage Ratio of 1.2 applicable from Q4 2015 and a Loan to Value ratio of 65% from January

2015. In line with the addendum, on 26th January 2015 Krown paid US$10 million to the Bank as

partial repayment of the outstanding loan amount, thus reducing the total to US$195 million. About

90% of the principal is to be paid at maturity.

In December 2014, AFI Development restored the Botanic Garden project on its balance sheet,

following liquidation of former primary investor, Novoe Koltso Moskvy OJSC (“NKM”), as risks

related to the bankruptcy of NKM were removed. The Company has completed the planning of the

residential complex and received Moscow construction authorities’ approval for the project. In

addition, the necessary construction permit was obtained in December 2014. It adds 113 sqm of

residential and commercial areas to company portfolio value.

6

SECTION 2

Project Update

Yielding Projects

(as of December 2014)

Total GBA, sqm 283,2K

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

Occupancy (as part of GLA total) 85%

Parking lots, numbers 2,075

Terminal NOI (C&W est.) US$ 133.7 mn

MV (C&W est.) US$ 1.000 bn

Loan balance as for December, 2014 US$ 481 mn

AFIMALL CITY

In 2014 the overall occupancy level increased and reached 85% compared to 76% in

December 2013. During 3 years of full operation AFIMALL became the noticeable and

popular shopping center located in the center of Moscow with quality tenant mix and

comfortable shopping zone.

AFIMALL became the leader within existing shopping malls, which introduced the new and

unique Russian and international brands on the market. Laura Eshley, Mirko Botticelli, Forever

21, H&M Home, SFIZIO, Crate&Barrel are entered in 2014. In Q4 2014 the management of

AFIMALL has signed the agreement with MFC (the center which serves people for

government and municipal needs) for lettable area c. 1,200 sqm.

Despite of ongoing construction, AFIMALL is easy to reach from different directions: from

office towers “Federation”, “Naberezhnaya Tower” and “Capital City”, also from Novotel,

“Evolution” tower and ExpoCentre.

In 2014, the management of AFIMALL launched the unique navigation system, which helps

visitors quickly and simply find the right direction to the parking or shops location.

AFIMALL City Update

8

Q1 2014 Q2 2014 Q3 2014 Q4 2014 2014 2013

Revenue, mn USD 28,0 28,7 26,0 24,3 107,0 104,1

Operating Expenses, mn USD (11,1) (6,2) (1,0) (5,7) (24,0) (26,2)

NOI 16,8 22,5 25,0 18,6 83,0 69,0

+20%

AFIMALL and Moscow-City Development

AFIMALL

MOSCOW CITY DEVELOPMENT

Existing Office Complex0 – 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 Construction2, 3 – Evolution Tower

11 – IQ-quarter

12 – Eurasia Tower

13b – Federation Tower (East)

14 – Mercury City Tower

16a – OKO

16b – Parking

Planned15 – Moscow City Government

Building

20 – Exposition and Business Center

Moscow City existing office space is approximately 770K 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. 40% due to the recent

launching of the new buildings

Apartments area around 0.7 mln sqm (190,000 sq m commissioned)

Hotel area around 153,000 sqm (Novotel (25,000 sqm, which is 360 keys)

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 Tcenter) 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

9

Yielding Properties

* GBA and GLA presented after disposal of Bld. 1.

** MV based on C&W valuation as for 31.12.2014. Hotels presented by cost value

10

Building AFIMALL Ozerkovskaya III* Berezkovskaya Tverskaya Plaza II Tvesrkaya Plaza Ib Paveletskaya, bld.

1

H2O Aquamarine Hotel Plaza SPA

Kislovodsk

Plaza SPA

Zheleznovodsk TOTAL

Moscow Moscow Moscow Moscow Moscow Moscow Moscow Moscow

Moscow City CBD Moscow CBD CBD CBD

Class RetailOffice A & Street

RetailOffice B

Office & Street

Retail

Office & Street

Retail Office B Office B Hotel Hotel Hotel

GBA, sqm 283 182 61 772 11 612 5 913 2 338 16 246 10 698 8 931 25 000 11 701 438K

GLA, sqm 107 208 46 247 10 250 5 856 2 054 14 085 8 991 159 keys 275 keys 134 keys 194K

Parking lots (total), # 2 075 466 140 - - 126 81 15 - 15

Ocupancy rate

(31.12.2014), %85% 1,0% 88% 83% 83% 93% 86% 73% 71% 69%

NOI (12m forward)

(C&W est.), US mn 99,7 12,4 2,6 1,6 0,7 1,1 1,4 - - - 120

NOI stab.

(C&West.), US mn133,7 35,0 3,5 2,6 0,9 3,8 2,2 - - - 182

MV,US$ mn** 1 000 300 21,3 15,2 5,4 19,5 12,1 17,3 14,4 12,2 1 418

Location Caucasus region Caucasus region

1 147 Average rent as of

31.12.2014, $/sq m205 347 213 - - -792 404 395

SECTION 3Project Update

Development Projects

Odinburg Residential

12

GBA, sqm 767,1K

GSA residential, sqm 453,0K

STATUS: Construction Bld#1, Bld.#2 are

ongoing

Odinburg Residential

13

OVERVIEW

The ODINBURG residential district is located in the town of

Odintsovo, a modern area considered to be one of the best and

most environmentally clean towns in the Moscow region. (11 km

from MKAD).

New highway to Moscow is right next to the complex.

The entire residential district takes up an area of 33 hectares, which

will host eight 8-to-25 story buildings. The residential element will

offer 9,139 apartments and a total sellable area of 453K sq.m.

(Inclding City share).

CONSTRUCTION STATUS and SALES

As of today - 594 apartments have been signed

The construction of bld. 1 is finalized. Facade works are ongoing.

Construction of Bld.#2 has been started

ODINBURG

(as of December 2014)

Type Residential

GBA,sqm 767,1K

GSA, sqm/GSA commercial total:

GSA resi(Phase I), sqm:

GSA resi(Phase II), sqm:

GLA, sqm:

453,0/19,6K

145,1K

307,9K

16,8K

Apartments, total : 9,139

Phase 1: 1,512*

Stage 1 723

Stage 2 789

Parking units: 3,399

* Including City share

PlAZA IC

(as of December 2014 )

Total GBA, sqm 61,8K

Total GLA, sqm 37,0K

Parking lots, numbers 467

MV (C&W est.) US$ 87,7mn

14

Plaza IC ( 2 Brestskaya, 50/2)

OVERVIEW

The Plaza 1C project is located in Moscow business district in close proximity

to the Garden Ring and Belorussky railway station and implies A class office

complex construction with retail zones on the ground floor.

CONSTRUCTION STATUS

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

successfully finalised the development concept, received the necessary

construction permit and completed all pre-construction works. AFI

Developments plans to start construction of this project as soon as it has

secured debt financing on favourable terms and the market situation improves.

Projects under Development

Other

15

1. POCHTOVAYA (RESIDENTIAL COMPLEX)

Location: Moscow, CAD

GBA, sqm 170,3K

GSA/GLA, sqm 56,9K/34,2K

Status: Stage P finalized

MV, US$ (C&W) 108,3 mn

• The Company has several projects in pipeline with total GBA c. 1,6 bn sqm.

2. PAVELETSKAYA (RESIDENTIAL COMPLEX)

Location: Moscow, CAD

GBA, sqm 151,4K

GSA/GLA, sqm 48,2K/26,1K

Status: Stage P ongoing

MV, US$ (C&W) 67,4 mn

3. PLAZA IV (OFFICE COMPLEX)

Location: Moscow, CAD

GBA, sqm 108,0K

GLA, sqm 61,3K

Status: Securing approval

MV, US$ (C&W) 107,1 mn

Pochtovaya

Paveletskaya

Plaza IV

4. BOTANIC GARDEN (RESIDENTIAL COMLEX)

Location: Moscow

GBA, sqm 255,0K

GSA/GLA, sqm 107,5/5,1K

Status: Concept

MV, US$ (C&W) 20,1 mn

Kosinskaya

Botanic Garden

SECTION 4

Financial Update

Consolidated P&L

17

Comments:

Despite of severe rouble

depreciation versus the dollar,

rental income and income from

hotel operations decreased only

by 2% year-on-year to

US$141.4 million (compared to

US$144.6 million for 2013)

AFIMALL City contribution

amounted to US$107.0 million

(compared to US$103.9 million

for 2013), 3% increase year-on-

year despite difficult

macroeconomic environment

Gross profit for 2014 was

US$49.9 million, compared to

US$76.3 million in 2013 (the

2013 results were largely

affected by the completion of

disposal transaction of parking

space at AFIMALL City to

VTB Bank JSC in the mount of

US$ 24,7 mn)

In 2014 AFI Development

incurred net loss of US$287.3

million, compared to net profit

of US$103.9 in 2013, mainly

due to valuation loss of

US$220.7 million in Q4 2014

and rubble depretiation

Q1 2014 Q2 2014 Q3 2014 Q4 2014 2014 2013

Actual Actual Actual Actual Actual Actual

(1) Construction consulting/management services - - 0,1 0,1 0,2 0,2

(2) Rental income 36,7 38,2 35,0 31,6 141,4 144,6

(3) Sale of residential and trading property - 1,4 0,2 0,8 2,4 57,5

(4) TOTAL REVENUE 36,7 39,6 35,3 32,6 144,1 202,3

(5) Other income 1,7 1,3 0,1 0,4 3,5 6,4

(6) Operating expenses (21,8) (15,5) (11,5) (13,7) (62,5) (76,5)

(7) Administrative expenses (7,4) (3,6) (7,1) (4,1) (22,3) (16,9)

(8) Cost of sales of residential and trading property - (1,0) 0,0 (0,6) (1,6) (32,6)

(9) Other expenses (2,3) (0,7) (3,1) (0,7) (6,8) (5,5)

(10) TOTAL EXPENSES (29,7) (19,6) (21,6) (18,8) (89,7) (125,1)

(11) Share of profit of equity-accounted investees (0,6) 1,2 (1,3) (3,7) (4,5) (0,8)

(12) GROSS PROFIT 6,3 21,2 12,3 10,1 49,9 76,3

(13) Valuation gains on investment property 73,3 (46,8) 108,4 (220,7) (85,9) 106,2

(14) Profit (loss) for trading property (0,4) (8,3) (8,8) 8,6 (8,9) (2,2)

(15) RESULTS FROM OPERATING ACTIVITIES 79,2 (34,0) 111,9 (202,0) (44,8) 180,4

(16) Profit on sale/disposal of properties/investment 0,1 - - 0,1 0,1 32,3

(17) Profit on sale of Investment property - - 27,8

(18) Finance income 2,7 2,0 0,3 1,8 7,0 21,0

(19) Finance expense (14,8) (14,1) (14,2) (17,3) (60,8) (66,9)

(20) FX Gain/( Loss) (37,9) 22,8 (63,8) (146,0) (224,8) (28,9)

(21) Translation reserve reclassification due to disposal of subsidiary - - - - - (30,3)

(22) Net finance income/(costs) (50,1) 10,7 (77,7) (161,5) (278,6) (105,2)

(23) PROFIT BEFORE INCOME TAX 29,2 (23,3) 34,2 (363,5) (323,3) 135,3

(24) Current income tax (0,2) (0,3) (0,3) 0,2 (0,6) (8,9)

(25) Deferred income tax (4,8) 3,1 (9,7) 48,1 36,7 (22,5)

(26) PROFIT FOR THE PERIOD 24,3 (20,5) 24,2 (315,2) (287,3) 103,9

(27) LOSS ATTRIBUTABLE TO:

(28) Non-controlling interests 0,3 (1,0) 0,7 (6,2) (6,3) 0,9

(29) Owners of the Company 24,0 (19,5) 23,5 (309,0) (281,0) 103,1

# ITEM ('000)

Statement of Financial Position

Comments:

18

Cash position remains strong at US$93.3 million in cash, cash

equivalents and marketable securities as at 31 December 2014

Gross Asset Value reduced to US$2.0 billion as at 31 December 2014

(compared to US$2.4 billion as at 31 December 2013), due to sharp

valuation decreases across the portfolio owing to deteriorating

macroeconomic conditions

Debt to Equity Ration is 53%

(1)(2) Revaluation of IP and IPUD

(3) FX loss

(4) Due to the FX change

(7) Botanic Garden

(10) Odinburg

(26) Decrease due to negative valuation and IP and IPUD

31.12.2014 30.09.2014 31.12.2013

US$ mn US$ mn US$ mn US$ mn %

(1) Investment property 1 375,4 1 602,3 1 609,8 (226,9) -14%

(2) Investment property under development 431,5 686,6 635,3 (255,1) -37%

(3) Investment in Joint Ventures 0,0 3,9 5,6 (3,9) -100%

(4) Property, plant and equipment 35,1 54,7 69,7 (19,6) -36%

(5) Long-term loans receivable 18,1 21,4 21,7 (3,3) -16%

(6) VAT recoverable 0,0 0,1 0,4 (0,0) -28%

(7) Inventory of real estate 20,1 0,0 0,0 20,1

(8) Total non-current assets 1 880,2 2 368,9 2 342,4 (488,7) -21%

(9) Trading property 3,0 4,8 6,4 (1,8) (38%)

(10) Trading properties under construction 133,0 143,4 127,2 (10,4) (7%)

(11) Inventory 0,6 0,4 0,6 0,2 40%

(12) Short-term loans receivable 0,0 0,8 0,8 (0,8) (100%)

(13) Trade and other receivables 39,0 67,3 106,4 (28,3) (42%)

(14) Current tax assets 1,3 (0,1) 0,0 1,4 (2229%)

(15) Cash, cash equivalents and tradable securities 93,3 97,3 203,3 (4,0) (4%)

(16) Total current assets 270,2 313,9 444,7 (43,7) -14%

(17) TOTAL ASSETS 2 150,4 2 682,8 2 787,1 (532,4) -20%

(18) Equity

(19) Share capital 1,0 1,0 1,0 (0,0) (0%)

(20) Share premium 1763,4 1763,4 1763,4 0,0 -

(21) Translation reserve (314,9) (229,2) (150,5) (85,7) 37%

(22) Retaining earnings (159,0) 149,1 117,7 (308,1) (207%)

(23) TOTAL EQUITY 1 290,6 1 684,4 1 731,7 (393,8) -23%

(24) Minority interest (8,8) (2,4) (2,2) (6,4) 268%

(25) Long-term loans and borrowings 455,1 540,7 778,9 (85,6) (16%)

(26) Deferred tax liabilities 102,6 140,1 125,3 (37,5) (27%)

(27) Deferred income 13,0 18,3 22,0 (5,3) (29%)

(28) Total non-current liabilities 570,7 699,1 926,2 (128,4) -18%

(29) Short-term loans and borrowings 231,7 231,8 27,0 (0,1) (0%)

(30) Trade and other payables 28,2 35,4 100,2 (7,2) (20%)

(31) Advances from customers 38,0 34,5 0,1 3,5 10%

(32) Income tax payable 4,1

(33) Total current liabilities 297,9 301,7 131,4 (3,8) -1%

(34) TOTAL LIABILITIES 859,8 998,4 1055,5 (138,7) (14%)

(35) TOTAL EQUITY AND LIABILITIES 2 150,4 2 682,8 2 787,1 (532,4) (20%)

# NARRATIVE Changing

Loans and cash position as of December 31, 2014

Gross balance of the bank loan portfolio (as of December 31,2014) – US$ 686 mn

Total cash balance and deposits (as of December 31, 2014) – US$ 93,3 mn (including marketable securities)

The Company is in line with all financial covenants

19

Project Bank

Balance as of

Debt, 2014

(US$ mn)

Available

(US$ mn)Nominal Interest rate Currency Maturity

VTB $185 - 9,5% RUB

VTB $296 - 3-m Libor+5.02% USD

TOTAL AFIMALL $481 $0 6,88%

Ozerkovskaya III (100%) VTB $205 $0 3-m Libor+5.7% USD 26.01.2015

TOTAL/AVERAGE RATE $686 6,60%

AFIMALL 01.04.2018

• In January 2015, the Company subsidiary, Krown Investments LLC (“Krown”) signed an addendum to the loan facility agreement with VTB Bank OJSC (“the Bank), extending the term of

the loan to 26 January 2018. Krown, which owns the Aquamarine III (Ozerkovskaya III) office complex, had an existing loan from the Bank maturing on 26 January 2015, of which US$

205 million was outstanding. In addition to extending the term of the loan, the new addendum amended the payment schedule and interest rate conditions of the loan agreement and

introduced new covenants. The payment schedule anticipates repayments of the principal starting from Q4 2015, while the new covenants include a Debt Service Coverage Ratio of 1.2

applicable from Q4 2015 and a Loan to Value ratio of 65% from January 2015. In line with the addendum, on 26th January 2015 Krown paid US$10 million to the Bank as partial

repayment of the outstanding loan amount, thus reducing the total to US$195 million. About 90% of the principal is to be paid at maturity.

Gross Asset Value

LTV= 51%

LTE = 53%

20

PROJECT Book Value Bank Loan Net Company's

Share

Net Company's

Share

31.12.2014 31.12.2014 31.12.2014 30.09.2014

AFI Mall 1 000 (481) 519 593

Berezkovskaya (100%) 21 21 38

Paveletskaya I 20 20 30

Plaza H20 12 12 17

Ozerkovskaya III 300 (205) 95 118

Plaza Ib 5 5 8

Plaza II 15 15 24

Sadovaya -Samotechnaya 2 2 2

TOTAL INVESTMENT PROPERTY: 1 375 (686) 689 830

Plaza Ic 88 88 136

Plaza II a 4 4 12

Plaza IV (100%) 107 107 164

Kosinskaya 54 54 107

Bolyshaya Pochtovaya 108 108 159

Paveletskaya II 67 67 104

Ruza 4 4 4

TOTAL INVESTMENT PROPERTY UNDER DEVELOPMENT: 431 0 431 687

Ozerkovskaya Phase II (26) 2 2 4

4Winds residential 1 1 1

TOTAL TRADING PROPERTY: 3 0 3 5

Aquamarine/Ozerkovskaya 26 17 17 25

Plaza SPA Zheleznovodsk 12 12 18

Pyatigorskaya (Park Plaza Kislovodsk) 4 4 6

Plaza Spa Kislovodsk (Tirel) (50%) 14 14 21

Versailles (Kislovodsk) 0 0 4

TOTAL PROPERTY PLANT AND EQUIPMENT: 48 0 48 74

Odinburg 133 133 143

Botanic Garden 20 20

TOTAL TRADING PROPERTY UNDER DEVELOPMENT: 153 0 153 143

TOTAL PORTFOLIO: 2 011 (686) 1 325 1 739

CASH AND CASH EQUIVALENT 93 97

DEFFERED TAX LIABILITY (104) (140)

TOTAL OTHER ASSETS AND LIABILITIES (24) (11)

TOTAL EQUITY: 1 291 1 684

Market Update

Market Overview and Capital Markets

22

Source: MED, C&W, JLL, Economist

JLL CBRE C&W

3.0 2,5 2,5

RUSSIAN MACROECONIMIC OVERVIEW

• Russian economic growth falls short even a 1% and based

on IMF amounted at the level of 0,5% in 2014. Falling oil

price, Ukraine conflict, depreciation of Rubble put pressure on

Russian Economic which has already faced circle recession.

• The oil price remains the biggest unknown in 2015. Oil

prices went 50% down in December 2014 vs December 2013.

• Prices for imported goods will significantly increase.

Inflationary pressures have largely been driven by the food

sector, where prices were up by 15.4% year on year in

December. In December’2014 the inflation velel reached

11,4% vs 6,5% in December 2013.

• The rouble remains the key factor to watch. At the end of

December 2014 the rouble was down by 43% against the US

dollar compared to September 2014 and down by 72%

compared to December 2013, owing to international sanctions,

perceptions of high political risk and falling oil prices.

• Retail sales will continue to come under pressure, following

significant pressure in 2014. The weaker rouble combined

with rising inflation and falling wages decreased retail

spending power.

• n 2014, the total volume invested in commercial real estate

in Russia was US$ 4.1 bn. The number is significantly lower

than the volumes invested in 2011— 2013 (US$ 7.5—8.1 bn)

and comparable to the volume during the 2010 recovery (US$

4.0 bn)

• n Q4 2014, the CBR increased the key rate up to 17% (in

January’2015 - 15%, in March’2015 – 14%) pointing to the

oil price downturn, toughed sanctions and the need to limit

inflation / devaluation risks. Following the CBR and overall

market trends, the capitalization rates have been increased for

offices, prime retail and warehouse objects, respectively,

setting them at 11.00%, 11.00% and 13.00%.

RUSSIAN REAL ESTATE INVESTMENT MARKET

0.5%

-20

-10

0

10

20 Russia GDP Growth, % Y-O-Y

0

20

40

60

80

100

No

v-0

3

May

-04

No

v-0

4

May

-05

No

v-0

5

May

-06

No

v-0

6

May

-07

No

v-0

7

Jun

-08

Dec

-08

Jun

-09

Dec

-09

Jun

-10

Dec

-10

Jun

-11

Dec

-11

Jun

-12

Dec

-12

Jun

-13

Dec

-13

Jun

-14

EUR/RUB USD/RUB

60,1220

40

60

80

100

120

140 Oil price (Brent, US$ per barrel)

Exchange Rates

Forecast of Investment Volume in 2015 (USD mn)

0,5

1,7

4,6

5,35,8

2,3

4,0

6,5 7,47,1

4,1

11,00

0

2

4

6

8

10

12

14

16

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F

Investment Volume, USD mn

Office Retail Warehouse Other Office Retail

Office and Retail Markets overview

OFFICE MARKET OVERVIEW

Key indicators Units

Base Rent Class A

(Prime) ,US$ sqmpa

750-900

Base rent Class A, US$

sqmpa

450-650

Overall vacancy,% 17,2%

Vacancy rate, Class A, % 28,4% - 32%

Key indicators Units

Prime rate, US$

psqma (prime shopping

center retail gallery)

2,500 – 4,500

Base rent, US$

psqma

400-1,450

Vacancy rate,% 1,5% - 6,0%23

• 2014 marked the highest level of new construction since

2009: 1.4 mln sq m of offices were delivered in 54 office

buildings. The biggest one are the President Plaza Business

Center (114,695 sq m), the first phase of the business park

Comcity (107,546 sq m) on the New Moscow territory and two

more developments at the Moscow International Business

Center Moscow City – OKO Tower (110,000 sq m) and Steel

Summit (93,878 sq m).

• During 2014, asking rental rates decreased. The average

asking base rent for vacant class A premises now is $620. A

discount of 10-15% is possible during the negotiation process.

External factors coupled with the high level of new supply has

resulted in increasing pressure on rents in 2014 – the rental cost

decreased on average by 22% YoY. Prime rents stood in the

range of USD750–900 per sq m per year. Class A rents ranged

between USD450 and USD650 and Class B+ between

USD275–450 per sq m per year.

• A decline in demand, especially in class A resulted in the

average vacancy rate increasing, from 12% at the beginning

of the year to 17.2% at year-end. Office premises are

available in all submarkets; however, there are areas, where the

vacancy rate is much higher than average. The vacancy rate in

Moscow-City has already reached 40%.

RETAIL MARKET OVERVIEW

• Quality retail construction in 2014 was at a record level in

Moscow and in Russia. In 2014 a record volume of new retail

spaces was delivered in Moscow. The biggest mall in Europe,

AviaPark, was opened in Moscow in November. Moscow is

still undersupplied with quality retail space compared to the

biggest European cities. The provision of quality shopping

centre retail space in Moscow is 345 sq m per 1,000 inhabitants

by the end of Q4 2014.

• The average rents are at USD400-1,450 per sq m per year,

while the prime rents are ranging between USD2,400 and

USD4,500 per sq m per year. Retailers are asking for a short

term rental discount, fixing foreign currency exchange rate, or

paying rent as % of turnover. Developers are ready to consider

alternative commercial terms.

• The vacancy rate in Q4 2014 remained at the level of 1,5% -

6%. The growing va- cancy rate in existing shopping centers

leads to high com- petition for tenants between landlords of

existing and new retail spaces.

935

1 088

731

645734 796 870

770

646

807

509 414 444 466530

480300

500

700

900

1 100

1 300

2007 2008 2009 2010 2011 2012 2013 2014

US$

/psq

m/p

a

Base Rent, US$ psqmpa

average Class A average Class B

sourceC&W

3 500

1 500

2 000

2 500

3 000

3 500

4 000

4 500

2007 2008 2009 2010 2011 2012 2013 2014

Prime Rents, US$ psqmpa

Residential Market Overview

24

RESIDENTIAL MARKET MOSCOW AND MOSCOW REGION

• MOSCOW: In 2014 in Moscow it was delivered c. 3,3 mn

sqm of residential construction compared to 3,1 mn sqm in

2013.

• Monthly analysis of residential areas commissioning in

Moscow in 2014 revealed the maximum rate in Q4 2014 -

986,900 sq m.

• 14 new business class residential buildings were supplied in

the market in 2014. (intermarksavills)

• For the twelve months 2014 it was closed 3785 transactions

in the primary business class residential. The average

amount of deals in the months was 315 transactions, it is

50% more than in 2013. The most active months were

November and December of 2014.

• During the year the average asking price per sqm in

business class residential decreased till the level of 5 100

USD. (the min amount was in 2009 with the level of 7 750

USD). Ruble prices showed predictable growth, more than

15 %. In the end of 2014 the ruble price reached 290 000

sqm per sqm.

• MOSCOW REGION: By the end of 2014 in the Moscow

region there were 982 new buildings.

• The average price per sqm in Moscow region amounted at

the level of 81 550 rub ( 1,462 USD). By the year end

comfort class apartmaents reached 83 750 rub psqm,

business – 189 450 rub psqm. (Blackwood).

• The average price per sqm in Odintsovo region is c.

96,800 rub.

Price (all market) apartments residential

Q1 Q2 Q3 Q4

Odinburg

Asking average price by

regions, rub per sqm

more

less