SRV to begin construction of Okhta Mall shopping centre with Russia Invest
The construction of the SRV-developed Okhta Mall shopping centre will begin in the autumn. SRV’s partner in the project is the Russia Invest real-estate investment company, in which SRV is also a shareholder. Construction is expected to begin in late autumn 2013 when final building permission has been granted. The shopping centre will open in spring 2016.
“The Russian retail market has grown strongly in recent years and in the St. Petersburg area alone retail trade volume is around EUR 20 billion, which corresponds to around three-quarters of the entire volume of the Finnish retail trade. Despite this large volume, the proportion of shopping centres fulfilling international standards remains modest in both the St. Petersburg and Moscow areas, 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 has sold a 55 per cent stake in Phase I, i.e. the Okhta Mall shopping centre, of the Septem City project to Russia Invest, which aims to make real-estate development project investments in Russia. Russia Invest’s shareholders are Ilmarinen, Sponda and SRV, each with a 27 per cent share, as well as Etera, 13 per cent, and Onvest, six per cent. After the sale, in addition to its shareholding in Russia Invest, SRV still has a 45 per cent direct stake in the Okhta Mall shopping centre project.
The total value of the Okhta Mall shopping centre investment is around EUR 250 million. Russia Invest’s investment in the project will be around EUR 50 million. In addition to the shareholders’ investments, the project will be financed through project loans. A EUR 160 million letter of intent has been signed with a Russian bank for the financing of the project. The intention is to sign the final loan agreement by the end of the year. SRV’s total investment in the project will be around EUR 44 million. Taking into account the cash flows from the above-mentioned sale of ownership share as well as project management agreements, the project will not increase the level of capital that SRV has committed to the project.
SRV has also signed project management contracts valued at more than EUR 160 million with the Russian project company OOO Tempo Invest for the development, design, leasing, marketing and construction of the shopping centre.
The scope of the shopping centre project is 144,000 m2, of which around 75,000 m2 is leasable space. Two underground parking levels plus a hypermarket and four floors above ground will be built at the shopping centre.
Okhta Mall is located in the immediate vicinity of the centre of St. Petersburg next to the River Okhta and it will be the first shopping centre close to the centre to have a hypermarket. Preliminary lease agreements have been signed for over 25 per cent of the leasable space. The target level for the shopping centre’s annual rental income is around EUR 33 million.
“The Okhta Mall project is a natural continuation to SRV’s shopping centre projects in Russia. August this year will see the opening of the Pearl Plaza shopping centre, with leasable space of around 48,000 m2. SRV owns half of the Pearl Plaza project, which is a joint venture with the Chinese Shanghai Industrial Investment Group. SRV is responsible for the design, construction, development and leasing of the project. Tenant demand at the Pearl Plaza shopping centre has been good, and over 90 per cent of premises have been leased or reserved,” explains Kullas.
SRV Group Plc
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