MULTINATIONAL LOGISTICS PARTNERSHIP

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MULTINATIONALLOGISTICSPARTNERSHIP
High rents for warehouses in Russia. Speculation
or underlying trend?
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Executive Summary

• Multinational Logistics Partnership (MLP)
  Highlights
• The most significant investment-grade logistic
  park development project in Russia and the CIS
• MLP plans to construct up to 1.5 million sqm of
  class-A warehouse space by 2009
• Overall volume of investment is estimated _at_ 1
  billion
• Unique business model which creates investment
  grade product capable of being financed with
  international financial institutions.

• MLP Business Strategy
• Establish MLP as the leading logistic
  development business in Russia and the CIS with
  the ability to identify, develop, lease, finance
  and operate a network of up to 1.5 million sqm of
  standardized grade-A logistic parks.

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Company Overview site program
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MLP Standards

• Warehouse
• Concrete floor with anti-dust overlay
• Floor load - 6 T/sq. m
• Clear height 12 m
• Mezzanine storage
• Column grid 12 m x 24 m
• 14º C inside the warehouse when -24º C outside
• Minimum 1 loading dock per 1,000 sq. m
• Dock levelers
• Sprinkler system in the warehouse
• Offices
• Built-in office blocks ready for fit-out
• Territory
• Centralized security system, video-monitoring of
  the site perimeter, control access
• Minimum one truck parking space per 1,000 sq. m
  of warehouse space
• Minimum two car parking spaces per 1,000 sq. m of
  warehouse space

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Tenants
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Rents Main Drivers.

• Development yield (rent and overall costs of the
  project)
• Assets value (rent revenue and cap rates)

Exit yields
?
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Cost 1.

• Land cost within 15 km far from MKAD average
  increase 100
• Engineering communications and energy resource
  connection cost average increase 40
• Administrative expenses, design and licensing
  documentation and other expenses average
  increase 15
• Construction costs (building and territory)
• April 2005 540 USD/ sq.m.
• August 2006 - 675 USD/ sq.m.
• August 2007 - 800 USD/ sq.m.

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Cost 2.

• Cost of construction materials (data from audit
  reports and Glavstroy)

• Construction costs (tender quotes August07)
• building and territory 800 1200 USD/sq.m.
• Average rents for class A warehouses August07
• 130 USD/sq.m./year triple net

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CAP Rates.

• CAP Rates are compressing.
• European and Worldwide forecasts
• should lead to CAP Rate
• bottoming at 8 in Russia.

CAP Rates evolution in Russia
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Supply and Demand.

• Announced projects in 2005y 800 000 sq.m.
• Complete 42
• Announced projects in 2006y
• over 1 mln. Sq.m.
• Complete 38

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Rents and construction costs.

• 2005 - 2006
• Increase of construction costs 25 (including
  utility and land)
• Rent increase 10
• 2006 - 2007
• Increase of construction costs 30 (including
  utility and land)
• Rent increase 15

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• Appreciate your attention !

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