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. Last Updated: 07/27/2016

Investors Hear Pitch For Kremlin Projects

Top executives of local and foreign financial companies, banks and investment firms got a private sales pitch on the presidential property department's prize development projects at a closed meeting Friday as the department tries to attract $4 billion in outside investment.

"The presidential property department has a huge potential and can attract investors of various specializations and levels," said Vyacheslav Kokunov, first deputy chief of the department.

The department owns a huge portfolio of property here and abroad that has been valued at $650 billion, but it can no longer rely on the lavish budget support it used to enjoy.

It holds 6.2 million square meters of federal real estate, including medical clinics, hotels, apartment blocks and cottage villages, and also owns tourism businesses, farms and transport fleets.

Under its former head, Pavel Borodin, the department in the 1990s reportedly spent $488 million on the restoration of the president's Kremlin residence and another $335 million was spent on restoring the Grand Kremlin Palace. This was at a time when the government was not paying pensions on time.

Valery Lukyanenko, head of the foreign economic relations division at the property department, said Friday that the department now gets only 52 percent from budget funds.

"It's a cry from the soul. The volume of business is growing, but the funding is slashed," Lukyanenko said. "To preserve the properties we need investment."

Friday's meeting was a precursor to a meeting in the fall when investors will be matched with particular investment projects, said Igor Tolstoshein, executive director of the Federal Valuation Foundation.

The foundation was set up in 1996 by the Association of Russian Banks and the Union of Industrialists and Entrepreneurs to broker the property department's relations with investors.

The department is working on 51 projects worth $4 billion, Tolstoshein said.

But only 15 projects will eventually be presented for investors. Twenty investors will then be selected for those projects and organized in pools.

In return, investors will be granted rights to use and manage the properties, or rent them. But the department has no plans to relinquish the property.

"We intend to hang on to it. We haven't sold any property abroad in the last five years," Lukyanenko said.

Tolstoshein said that after the current investment round is over the gathering of potential investors could acquire a permanent status and an internal closed club of investors will be created.