November 03, 2006
Evli's real estate fund and YIT to construct property in St. Petersburg for EUR 100 million
On 2 November Evli's real estate fund EPI (Evli Property Investments) Russia, together with the Finnish construction and engineering group YIT, signed a letter of intent on the implementation of two major real estate projects in St. Petersburg. The agreement includes the construction of a nine-floor office building in Primorskij Proskpekt in St. Petersburg and the construction of a logistics center at Gorelovo, south of St. Petersburg. The projects' combined value is approximately EUR 100 million and, in view of future extension options, may even rise to EUR 180 million. The constructor in the projects will be ZAO YIT Lentek.
The office building will be located in northern St. Petersburg is due to be completed by the end of 2007. A total of 10,130 m2 of premium-class office facilities will be built on the site. YIT will lease approximately half of the office building from EPI Russia under a ten-year agreement, and the rest of the premises will be leased to the market.
The logistics center to be built in Gorelovo will be well-located near the airport and the ring road, with good connections to Tallinn and Moscow. The project will total 75,000 m2, of which 35,000 m2 will be completed first. The first building is due for completion in the fall of 2007, and it is expected that the first stage will be fully completed in the first half of 2008. After the first stage, EPI Russia will have the right to expand the center by approximately 100,000 m2.
- The projects are a perfect fit for the fund's investment strategy, in which we aim to cooperate with well-established construction companies to build modern facilities for the needs of western operators in St. Petersburg's limited business premises market. Especially in St. Petersburg, construction has recently focused more on retail premises, and the supply of logistics premises has clearly lagged behind this growth. In the current market situation we will most probably be focusing on logistics and office properties also in the future, says Petteri Nurminen, Managing Director of Evli Property Investments.
- These projects to be implemented together with Evli are in line with YIT's strategy to expand its business in Russia. Our objective is to increase housing construction and commercial and business premises development projects. We respect Evli as a long-term and expert investor with whom we have been able make rapid progress in negotiations, says Timo Lehmus, Senior Vice President, International Operations at YIT Construction.
Established in June 2006, EPI Russia I Ky is Finland's first real estate fund investing solely in Russia, and one of the few mutual funds in the world that focuses uniquely on the Russian real estate market. The fund's investment strategy is to acquire and develop commercial properties in the St. Petersburg and Moscow regions. The Fund aims to establish a real estate portfolio of approximately EUR 300-400 million. Evli Property Investments and the fund's real estate portfolio manager, Catella Property Ltd, have formed a management company, EPI Russia Partners I Ltd, to manage the fund. The anchor investors in the fund are Varma Mutual Pension Insurance Company and the Local Government Pensions Institution.
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