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Russian Real Estate Investment FundRussian Real Estate Investment Fund – – advantages and practical application of the new-brand advantages and practical application of the new-brand

financial vehiclefinancial vehicle

FOR DEVELOPERS, FOREIGN INVESTORS, LANDOWNERS

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Are you interested in dynamic Russian Real Estate Market?Do you want to start a construction project in Russia? Are you a land owner in Russia?Do you think about the diversification of your investments?Do you want to arrange joint business with Russian landowners?

Then Russian Real Estate Investment Fund (REIF) is an ultimate and best solution!

Real Estate Investment Fund

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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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Dynamics of REIF development

According to: investfunds.ru

1 2 3 6 917

37

127

0102030405060708090

2000 2001 2002 2003 2004 2005 2006 2007

Amount of established REIFs annually

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Russian REIF. Objects of establishment.

1. Involvement of investment resources.2. Attraction of bank crediting.3. Commercial real estate property control optimization

as well as protection of property against hostile takeover («Rent» REIF.)

4. Construction project control optimization. Simplification of a property right reregistration procedure as well as tax optimization. («Construction» and «Developer» REIF)

5. Development of multipurpose regional and/or housing programmes.

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Russian REIF. Structure.

AuditorReal Estate Properties

Real EstateInvestment Fund

Unit HoldersGeneral Meeting

General Meeting

Management Company

Fund building Property transactions Property management

Property management

Real estate consultants

Risk management Internal audit Statutory reporting Asset management

Legal Advisory

Regulator (FFMS) Specialized depositary Property rights record-keeping Control over property transactions Specialized Registrar Unitholder registrar Accounting for unit transactions

IndependentAppraisers

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Advantages of the Russian REIF

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 investor’s rights

Activity of all Fund’s 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

Fund’s property is registered by the Asset Management Company on the special balance and individual record is carried out

The Fund does not respond by it’s 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 Fund’s 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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REIF - securitization project

REIF

Right to land plot

Project

Project under construction

Planning estimates

Contracting and project JSC and LLC

Security - Unit

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REIF asset structure

Core assetsReal estate units (buildings, industrial constructions, land lots)Real estate property rights, including leasehold;Contract rights, i.e. receivables under obligations in accordance to constructive partnership agreement, investment contract and civil works contract;Corporate assets – shares in development and construction companies capital (JSC and LLC)

Non-core assets

Cash facilitiesDepositsOpen-market securities Units of other Funds

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Possible approaches to investment of ready assets (income) REIF

Ready assets

REIF Bank deposits

Stock market

Real estate

Construction

Other Fund’s units

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Example(construction Fund)

Construction costs $ 30 MioObject’s construction and sales horizon– 2 yearsLiving floor space – 20 000 м2

Commission for Fund management - 2% of net asset value annually

Project self-cost $ 1 500 за 1 м2 Total $ 30 MioMarketable value $ 4 500 за 1 м2 Building entirely $ 90 Mio

Index Companies The Fund

Gross income, $ 90 000 000 90 000 000Gross expenditure, $ 30 000 000 30 000 000

Gross profit, $ 60 000 000 60 000 000Commission of the AMC (2% of net

asset value, annually ), $- 1 200 000

Profit tax (24%), $ 14 400 000 -Net profit, $ 45 600 000 58 800 000

Spread: $ 13 200 000 (22% of gross profit)

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Example (rent Fund)

Gross income from lease of the building amounts to $ 5 Mio a year. Building self-cost is $ 25 Mio.The overall area 10 000 м2 (8 000 м2 – useful area which brings income from lease).Expenses incidental to operation and running of the building amounts to $ 200 000 a year.

Net rent a year $ 625 per 1 м2 Total $ 5 Mio

Marketable value $ 2500 per 1 м2 Building entirely $ 25 Mio

Book value (understated) $ 1500 per 1 м2 Building entirely $ 15 Mio

Index Companies Mutual FundGross income, $ 5 000 000 5 000 000

Management expenses, $ 200 000 200 000Commission for Fund management (1%

net asset value a year), $- 250 000

Gross profit, $ 4 800 000 4 550 000Property income (2,2%), $ 330 000 -

Profit tax (24%), $ 1 072 800 -Net profit, $ 3 397 200 4 550 000

Spread: $ 1 152 800 (24,02% of gross income)

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Contact us

Chairman of the Board Lazareva Natalia info@neofitous.ru

Director GeneralProject managers

Brut Olesya Morozova Elena Kuchinsky Vladimir

brut@neofitous.rumorozova@neofitus.ru vkuchinsky@neofitus.ru

Phone +7 (495) 727-35-70, +7 (495) 235-52-51, +7-800-200-52-51

123104, Moscow, Maliy Palashevsky, 550 meters from Pushkinskaya metro station

www.neofitus.ru