Russian Real Estate Investment Fund

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Russian Real Estate Investment Fund (specialized
in rent)
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Approaches on doing business in Russian real
estate market

• purchase of real estate with the following resale
  it at the better price
• acquiring property and getting income from the
  lease payments
• land purchase, construction and development with
  following sale of complete objects
• REIT is the best solution to carry out all these
  types of business

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Rent REIF

• Objectives
• Commercial real estate property control
  optimization as well as protection of property
  against hostile takeover
• Unit holders
• Real estate owners
• Investors external financing
• Term
• From 3 to 15 years with possible prolongation

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Advantages

• Totally legal tax reduction by 80 -100 !
• No profit tax and property tax!
• Possibility to reinvest the Fund income tax
  payment before the moment of unit redemption
  deferred taxation!
• Securitization of different assets, combining
  them into unified property pool with rights
  proved by the securities!
• Possibility of staged quitting the project on
  the rims for the reregistration property rights
  unit as a security increases liquidity of
  assets!
• Possibility of intermediate income payment
  (same as dividend)!
• Possibility to set up a new object into the
  Fund without withdrawing cash out of Fund upon
  completion of one project. In such case the term
  of the fund could be prolongated!
• Property protection from claims by third
  parties and raiders!

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Multilevel protection of investors rights

• Activity of all Funds participants is carried
  out on the authority of the licences
• Asset Management Company performance monitoring
  is carried out by
• Inner controller of the Asset Management
  Company
• Specialized depositary
• Auditor
• State regulatory authority the Federal
  Financial Markets Service
• Management, register and custody functions are
  divided between the Asset Management Company and
  Specialized depositary
• Funds property is registered by the Asset
  Management Company on the special balance and
  individual record is carried out
• The Fund does not respond by its property for
  debts of the Asset Management Company
• Legally speaking participation in the Russian
  Real Estate Investment Fund is equal to actual
  real estate possession

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Tax advantages

• Increment of property value inside the Fund is
  exclusive of profit tax
• Investor pays profit tax only in case of
• Receiving income of redemption or sale of
  investment units
• Receiving of intermediate income of Funds
  trust management
• Property depositing by the time of Fund
  establishment is exclusive of VAT.
• By the Russian Real Estate Investment Fund
  establishment asset writes off the balance of the
  Trust Management founder. Unit (as a security) is
  given in return. The asset is no longer subject
  to the Property tax. Asset Management Company is
  not the property taxpaying agent, the Fund is not
  a taxpayer either in virtue of article 378
  chapter 30 of the Tax Code of Russian
  Federation.
• Asset Management Company is a tax payee as for
  the estimation, deduction and transfer of the
  personal income tax to the budget

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Tax rates

• Tax rates for the unit possession in Russia
• resident individual 13 ,
• non-resident individual 30
• resident legal body 24 (Asset Management
  Company isnt a tax payee).
• non-resident legal body without representation
  office in Russia (Asset Management Company is a
  tax payee).
• Asset Management Company doesnt estimate and
  deduce profit tax of the foreign companies,
  doesnt perform its activity in Russia through
  permanent establishments in case of

- Payment of incomes which in accordance with
the Double Taxation Convention are not liable for
taxes in Russia - Provision of the Asset
Management Company with the confirmation of the
foreign companys permanent residence being in
the state, which enters an international treaty
with Russia, before the date of tax payment.
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Unit holders participation in Fund management

• Limitation of Asset Management Companys rights
  on activity with the Funds assets by the means
  of unit holders reconciliation procedure.
• Funds activity control by general meeting of
  unit holders
• Decision making concerning Fund Investment
  Declaration changes
• Amount and date of acquisition of intermediate
  income confirmation
• Pre-term termination of Funds activity or change
  of the Asset Management Company

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Rent REIF.Stages of establishment.

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Rent REIF. Operational scheme.
Contract of
lease
AMC
or real estate
management
Unit holders of the Mutual Fund
Closed-ended Mutual Fund management
Lease
payments
Development
Lease Closed-ended Mutual Fund
Funds
filling
Rent
net of
The Founder
company
payments
operational costs
during establishment
Initial unit holder,100
Property
of the unit holders
Upgrading
Dividends
management
Sale of
units
Commercial
investment
Investors unit holders
property
in assets
Object ? 1
Lease holders
Possible
investment
directions
of the Closed-ended Mutual fund income
Object ? 2
Stock
Bank
Real Estate
Construction
market
deposit
Object ? 3
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Rent REIF.How-to scheme.
Gross income from lease of the building amounts
to 5 Mio a year. Building self-cost is 25
Mio. The overall area 10 000 ?2 (8 000 ?2
useful area which brings income from
lease). Expenses incidental to operation and
running of the building amounts to 200 000 a
year.
Spread 1
152 800 (24,02 of gross income)
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