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. Last Updated: 07/27/2016

Warehouse Demand Boosts Raven Russia

Raven Russia, the British owner of Moscow and St. Petersburg warehouses, last week reported a sixfold increase in first-half profit.

Net income increased to ?26.4 million ($53 million), or 6.21 pence per share, from ?4.1 million, or 1.67 pence, a year earlier as economic expansion bolstered demand for commercial storage space, the company said Wednesday in a statement. Net rental income rose to ?5.2 million from ?1.6 million.

"Tenant demand remains strong, and investor demand is continuing to drive yields down further," chairman Richard Jewson said in the statement. "The business environment in which we operate continues to improve."

Investment in Russian commercial real estate has increased about 35 times in the past five years to about $4.5 billion in 2006, real estate adviser Jones Lang LaSalle said in February. The expansion of the country's economy has been driven by higher sales of oil and natural gas.

The company has committed to spend $1.9 billion on all of its projects that are due to be finished over the next three years. It has 14 joint venture developments that will have 1.8 million square meters of leasable space when complete.

"We are bang on track to spend the money we raised by the time we said," Glyn Hirsch, deputy chairman of Raven Mount, Raven Russia's manager, said in an interview. "We are having no problem finding attractive deals that will give us attractive returns."

The value of the company's four investment properties rose 22 percent to $265 million from a year earlier. Raven Russia intends to refinance them in the fourth quarter of this year with a $192 million loan from HSH Nordbank and Hypo Real Estate Bank International, the company said. It also plans to raise $303 million of financing for its developments.

Raven Russia aims to build two regional sites in Rostov and Novosibirsk. It is also considering its first investment in Kiev. That will require shareholder approval, since the company is only allowed to invest in Russia.

"The market in Ukraine is not dissimilar to Russia," Jewson said.

"We have been offered an attractive deal in Kiev to develop jointly a site of around 20 hectares with an experienced local partner into a Grade A logistics park ... with a pre-let of at least 40 percent of the proposed floor space," said Jewson.

Jewson said the company would call an extraordinary general meeting to discuss the opportunity with shareholders shortly.

Raven Russia lifted its interim dividend 25 percent to 2.5 pence per share. It is planning to pay a full-year dividend of 9 pence per share once it has fully invested the proceeds of its initial public offering and a share sale last year.

Raven Russia plans to report future earnings in U.S. dollars.

Bloomberg, Reuters