The first phase of the SRV-developed Promenade shopping centre project is about to start. The approximately 55,000 square metre shopping centre, to be built in Mytishi city of Greater Moscow region, will consist of a district shopping and service complex, which will have around 26,000 square metres of leasable space. Construction will begin in June and the shopping centre will be completed in the first half of 2016. Preliminary lease agreements have been signed for around 60% of the leasable floor area. The target level of the shopping centre’s annual rental income, when it has stabilised, is expected to be around EUR 10 million.
The total investment of the first phase of the project is around EUR 75 million. SRV is acting in the project as a contractor and is responsible for leasing and marketing of the site. The total value of contracts is around EUR 50 million. In addition to the capital investment of the owners, investment financing will be implemented with long-term project loan financing of around EUR 40 million, negotiations on which are under way.
The shopping centre is being developed by a Russian joint venture company, OOO Promenad, whose investors are the Russian pension fund Blagosostoyanie (around 55% share), SRV (around 19%) and the Finnish real-estate investment company Vicus (around 26%). SRV’s total ownership of the project is around 20%, taking into account SRV’s 6.4% ownership of Vicus.
Blagosostoyanie pension fund is Russia’s second largest non-state pension fund, with investment assets of around EUR 6.5 billion and 2.9 million people insured. The Russian investment group Trinfico has acted as an adviser to the pension fund in implementing the arrangement. SRV’s total investment in the project is around EUR 7 million, of which around EUR 3.5 million will be invested during construction.
SRV and Vicus own the second phase of the Promenade project. SRV’s ownership share is 25%. Around 40,000 square metres of commercial space can be built on the second phase.
“The Russian retail market has grown strongly in recent years. The retail volume of the Moscow area is around EUR 125 billion, which is around four times the retail volume of the entire Finnish retail sector. Despite this large volume, the proportion of shopping centres fulfilling international standards still remains modest in the Moscow area, and therefore there is still plenty of room in the market for new, well-planned projects,” says Veli-Matti Kullas, SRV’s Vice President, Project Development in Russia.
SRV Group Plc
Vice President, Communications
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