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Q4 2011

Moscow Warehouse Market

2

Moscow warehouse snapshot, Q4 2011

*Rent excludes VAT and operating expenses Source: Jones Lang LaSalle

Supply

Total modern warehouse stock, sq m 8,203,100

including Class A, sq m 5,731,000

Total speculative projects, sq m 4,828,300

Completions, 2011, sq m 486,200

including Q4 2011, sq m 208,600

Availability, sq m 104,780

Demand

Take-up 2011, sq m 1,269,200

including Q4 2011, sq m 186,200

Vacancy rate in existing complexes 1.26%

Commercial terms

Class A prime base rent* USD135 /sq m/year

Class A average base rent* USD125-130 /sq m/year

Operating expenses USD35-45 /sq m/year

Prime yields 11%

3

Nakhodka

Moscow

Arkhangelsk

Murmansk

Vologda

Nizhny Novgorod

Kazan

YekaterinburgSamara

Omsk

Novosibirsk

Krasnoyarsk Irkutsk

Ulan Ude Zabaikalsk

Khabarovsk

Kiyv

Almaty

- East-West Corridor

- North-South Corridor

- Existing transport routes inside Russia

- Existing transport routes outside Russia

- Northern Sea Route

Russia’s major transport corridors

Ufa

Rostov-on-Don

Chelyabinsk

St Petersburg

4

Moscow warehouse stock

Modern warehouse stock breakdown, Q4 2011

Source: Jones Lang LaSalle

With development of warehouse market, the share of Class A projects continues to grow

(by the end of 2011 it reached 70%). There are small differences in rents/prices between Class

A and Class B warehouses. However the differences in technical specification (e. g. ceiling

height) are notable.

Warehouse supply dynamics by class

5,803

2,491

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F

000’ sq m

Class В

Class А

Class А70%

Class В30%

5

Supply dynamics

Source: Jones Lang LaSalle

The volume of new completions fell during the crisis. In 2011 we noticed the lowest

levels (486,192 sq m) of new completion since 2005 (534,077 sq m). This continue to

foster a strong deficit. Supply recovery is expected by the end of 2012.

486.2

700

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F

‘000 sq m

Class B Class A

Availability dynamics

6

10560

0

100

200

300

400

500

600

700

800

900

1000

Q1 2009 Q2 2009 Q3 2009 Q4. 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012

'000 sq m

Low level of new completions and increasing demand activity contribute to supply at the

market. There is minimal availability at present. A preferred solution for potential tenants is

to pre-lease or built-to-suit schemes of construction.

7

Warehouse stock breakdown

• MLP Podolsk

• Belaya Dacha LP

• Krekshino LP

• PNK Chehov

• Raven Russia Istra

• Tomilino TLK

• North Domodedovo

LP

• Trilogy Park Tomilino

• Pushkino Logistic

Park

• MLP Leningradsky

Terminal

• CentrObuv’ Distribution

Centre

• Perekryostok Distribution

Centre

• Toyota Office-Industrial

Warehouse Complex

• FM Logistic Chekhov

• Gema

• NLC Khimki

Examples of Owner

Occupied Warehouses

Examples of Logistic

Warehouses (3PL)

Examples of SpeculativeWarehouses

Source: Jones Lang LaSalle

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2003 2005 2009 2011

Speculative Logistic Owner occupied

8

1. Pushkino LP

2. Tomilino TLK

Future:

18. Raven Russia Lobnya

21. Bykovo

19. Klimovsk LT I-II

22. Nikolskoe LP

Existing:

9. Belaya Dacha

3. Istra LP

4. MLP Leningradsky

5. MLP Podolsk I

6. Krekshino LP

7. Intercomplex South

8. Sholokhovo

10. North Domodedovo LP

11. BCRE Lobnya

12. Noginsk LP

13. Balashikha (VVV)

14. South Gate IP

15. Trilogy Park Tomilino

16. PNK-Chekhov

17. Agroterminal

23. PNK-Vnukovo

24. Dmitrov LP

25. Klimovsk LT III

26. MLP Podolsk II

27. Vnukovo-logistic LP

28. Domodedovo LP

29. Radumly

30. Leshkovo

31. Bykovo bldg. E

32. South Gate-II

Major Class A warehouse projects

20. FM Logistic Khimki

LP— Logistic Park

IP— Industrial Park

LT— Logistic Terminal

7

M-8A-104M-10

M-9

A-101 M-4 M-5

M-7

1

5

6

7 10

1213

15

14

2

3

4

8

9

11

16

17

18

19

22

2123

20

24

32

25

26

27

28

29

Р-105

M-3

30

31

M-1

Source: Jones Lang LaSalle

9

Supply trends

• The level of completions in 2011 was the lowest in the last 5 years. We expect the situation to improve in 2012, but the supply will remain insufficient in light of demand overshadowing.

• In H2 2011 several new speculative projects were announced with delivery scheduled by the end of the 2012 and early 2013. A majority of this space will be pre-leased well before completion, which will keep the vacancy rate at low levels.

• Under such conditions a preliminary contract or a built-to-suit scheme is preferred by the tenant.

• With growing popularity of built-to-suit schemes and the increasing cost of project finance many developers prefer to start construction only when they have identified specific client demand.

10

Take-up dynamics

Take-up in 2011 was 1.27m sq m. By the end of 2011 with high rental levels and low

vacancy rates, take-up rates softened (186,200 in Q4 2011). We expect this trend to

continue in 2012, with further contraction of take-up to 1m sq m or less.

Source: Jones Lang LaSalle

1,269

1,000

0

200

400

600

800

1,000

1,200

1,400

1,600

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F

‘000 sq m

11

Major deals on the Moscow market in 2011

Source: Jones Lang LaSalle* Deals done by Jones Lang LaSalle

Tenant Area, sq m Project

X5 Retail Group 75,700 LP Noginsk

CentrObuv’ 50,000 PNK-Vnukovo

Dixy 47,116 PNK-Vnukovo

Alidi 39,500 PNK-Chekhov

Bosch und Siemens Hausgerate 34,695 Bykovo

Imperia Pharma 20,876 Belaya Dacha

Confidential 20,847 Dmitrov LP*

Russky Svet 19,400 Bykovo

VEDK 18,058 Dmitrov LP*

VEDK 17,887 PNK-Chekhov*

12

Breakdown of demand by sector/company type

* Calculations are based on deals known to Jones Lang LaSalle

Retail and distribution companies remain stable and primary occupiers,

accounting for more than 50% of total demand. Share of logistic companies on the

contrary increased substantially in 2011. Manufacturing companies did not

decrease demand, but due to increase in other sectors its share contracted in 2011.

2010 2011

Source: Jones Lang LaSalle

Distributor20%

Logistic14%

Manufacturing31%

Retail35%

Distributor19%

Logistic26%

Manufacturing21%

Retail34%

13

Demand trends

• During 2011 demand remained high, however in Q4 2011 higher rents, low vacancy rate and increasing volatility on financial markets have resulted in a moderation of demand growth.

• Retail companies remained the primary occupiers. In 2011 many retailers changed their supply chains and moved into their own warehouses rejecting 3PL services.

• Logistics companies have become more active since the end of the crisis. The space they leased before the crisis is now fully occupied. So, logistic companies continue to lease further new spaces.

• Due to a critical supply deficit, built-to-suit schemes and forward contracts have become more popular. In 2012 we expect this trend to continue. Under such conditions, large-scale deals will be dominated by both of these schemes.

14

Market Balance

Due to demand growth and a supply deficit, vacancy rate decreased to 1.26%. We expect a

further decline over the next quarters to 0.6-0.8% level. Alleviation of this situation should

be expected no earlier than autumn of 2012.

As this deficit intensifies, rents will continue to grow. In 2011 they grew by 17%. In 2012 we

expect stable growth with a year rate of 3-5%.

14

Source: Jones Lang LaSalle

135

1.26%

0%

2%

4%

6%

8%

10%

12%

14%

60

80

100

120

140

160

2002 2003 2004 2005 2006 2007 2008 2009 2010 Q3 2011 Q4 2011 2012F

USD/sq m/year

Average rents Prime rents Vacancy rate

15

International comparisons: prime rents, stock per capita

* Rent excludes VAT and operating expenses

Warehouse rents in Moscow remain one of the highest in Europe. At the same time stock

provision per capita is the lowest in Europe. This gives rise to large opportunities for future

growth.

Source: Jones Lang LaSalle

0.0 1.0 2.0 3.0 4.0 5.0

Paris

Barcelona

Madrid

Prague

Warsaw

Budapest

Moscow

sq m per capita

Stock provision of different cities

0 50 100 150 200 250

London

Oslo

Moscow

Amsterdam

Warsaw

Madrid

Rome

Milan

Paris

USD/sq m/year

Prime rents for Warehouses in European cities

16

Conclusions

• Active demand has led to a considerable decrease in vacancy rate. This

situation will continue for several more quarters.

• The volume of new construction increased in 2011, but remains very low in

comparison with the existing demand. The situation may change only in Q2-3

2012.

• In 2012, new completions will increase by 50%, but as most of the new supply

is already preleased or will be preleased before commissioning, the deficit will

remain.

• Annual prime rents continued to grow throughout 2011, reaching USD135 per

sq m by the end of the year.

• We expect rents to continue gradual growth (3-5%) next year.

• Built-to-suit contracts and early preleases have become more popular as

companies think about expansion beforehand. With the rents growing, some

users prefer to buy instead of lease.

Thank you

COPYRIGHT © JONES LANG LASALLE IP, INC. 2012. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based

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