£108M Of Income, Zero Idea What It’s Worth: Anglo-Russian Property Company Sells Itself To Local Management
Before sanctions were imposed on Russia earlier this month, London-listed Russian logistics property company Raven Property Group was, on the face of it, in good health: a net asset value of £437M and net income of £108M at the close of 2021.
But such is the impact of sanctions on the ability of international companies to do business in Russia, the company’s shares are being delisted from the London Stock Exchange, and it is being sold to its Russian-based management for what it terms a “nominal amount.”
Raven Property said on 17 March its shares were being cancelled, and its assets were being sold to Russian management via a Cypriot-based business. The purchase is being led by Igor Bogorodov.
Raven’s announcement on the transaction gave insight into the challenges being faced by any international owners of real estate in Russia right now.
“Prior to this restructuring, the unaudited balance sheet of [Russian subsidiary] RRHCL at 31 December 2021 had net assets equivalent to £437M … and unaudited net operating income for the year to 31 December 2021 equivalent to £108M," the company said in a statement. "The Russian business has collected 97% of all rents due in the year to date and remains 97% let at today's date. It is also expected that all debt service obligations will be met at the quarter end should sanctions allow for payment.
“However, as intimated in the announcement of 2 March 2022, sanctions and counter sanctions are severely limiting the company's ability to access funds from its Russian subsidiaries and exchange controls are limiting the ability to convert roubles into alternative currencies, even at the current punitive exchange rates. The uncertainty around the impact of those international sanctions and any Russian counter sanctions on the Russian economy make any estimate of the current net asset value of the company and RRHCL or any assessment of their future income profile unfeasible at this time.”
Raven owns a 20M SF portfolio of Russian logistics assets. The sale of the business is being structured with a put option, which means the current owners can buy the business back at an unspecified future point but are not obliged to.
