SRV Yhtiöt Oyj - Company Announcement

SRV to begin construction of Okhta Mall shopping centre with Russia Invest

Espoo, Finland, 2013-06-17 13:15 CEST (GLOBE NEWSWIRE) -- SRV GROUP PLC    
STOCK EXCHANGE RELEASE     17 JUNE 2013   AT 14:15 

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. 

SRV still owns 100 per cent of the other phases of the major Septem City
project.  Septem City covers a land area of 8.5 hectares in the Okhta area. The
plan is to build in the area a complex of over 400,000 m2, including a shopping
centre, office and commercial premises, and hotel, restaurant and entertainment
services. The project will be implemented in a number of phases, of which the
now signed contractual package for the implementation of the Okhta Mall
shopping centre accounts for 144,000 m2. 

“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

Taneli Hassinen
Vice President, Communications
Tel. +358 40 504 3321
taneli.hassinen@srv.fi

Further information:

Veli-Matti Kullas, Vice President, Project Development in Russia, tel. +358 40
501 5280