AFI Development today announces that the Company subsidiary MKPK JSC and the Moscow city authorities have signed an addendum to the land lease agreement for the Paveletskaya Phase II project, amending the permitted use of land from industrial to the construction of residential and commercial premises.
The addendum is in line with previous decisions of the Moscow authorities on development rights of the Company in this project. However, the addendum provides the level of certainty required to change the fair value of the project to market value on the Company balance sheet: the market value of the project, confirmed by Cushman & Wakefield, the Company independent valuers, is US$92.6 million as opposed to the current book value of US$11.6 million. The resulting US$81.0 million gross valuation gain (US$64.8 million net of taxation) will be included in AFI Development Q3 2013 results.
As previously announced, in Paveletskaya Phase II the Company will be allowed to construct 151,373 sq.m. of gross buildable area.
