Etalon’s Construction Plans Enhance Profile

Etalon’s Construction Plans Enhance Profile

The company aims to attract $500 million worth of investment.

Published: April 6, 2011 (Issue # 1650)

Ahead of its launch on the London Stock Exchange (LSE), the Etalon group of companies has revealed to investors plans to open three new sites across the city at 9 Smolenskaya Ulitsa, 110 Prospekt Obukhovskoi Oborony in the Nevsky district, and 2 Uralskaya Ulitsa on Vasilyevsky Island. The group plans to build a total of 335,000 square meters comprising both residential and commercial premises.

Information about these projects for future investors is available from Credit Suisse, which together with VTB Capital and Renaissance Capital is behind the IPO. According to a source with close links to the company, Etalon was due to launch a road show on April 4. The company aims to attract $500 million worth of investments.

According to information from Credit Suisse, the company intends to build 70,000 square meters of residential housing on 1.8 hectares of land on Smolenskaya Ulitsa that, according to a source, was obtained only several weeks ago. The source did not name the previous landowner. A real-estate market analyst and an employee at the neighboring Optima business center said they had heard that Etalon had recently acquired the land. According to reports produced by Credit Suisse, Etalon intends to have completed the project by 2013.

A source told Vedomosti that Etalon intends to build 100,000 square meters at 110 Prospekt Obukhovskoi Oborony on land previously occupied by a color-printing firm, covering 3.6 hectares. In 2006, a representative of the developer Petropol told Vedomosti that his company intended to invest $100 million into a project at that address. The company was the developer for that territory until 2009 for an external investor, a representative of Petropol told Vedomosti last week.

Lastly, according to Credit Suisse’s report, Etalon intends to build 165,000 square meters at 2 Uralskaya Ulitsa by 2014. The land covers an area of seven hectares, according to a source close to the company. The land plots in the Nevsky district of the city and on Vasilyevsky Island have not yet changed hands, the source said. According to him, agreements have been signed with the landowners that allow Etalon to act as the developer for every stage of the process, from drawing up documents to the sale of the apartments.

Residential property together with commercial outlets will be built on both Uralskaya Ulitsa and Prospekt Obukhovskoi Oborony, although the source declined to comment on who the current landowner was. Etalon’s press office declined to comment.

Vladimir Kopylov, chief analyst at Setl City, estimated that the purchase of 1.8 hectares on Smolenskya Ulitsa would cost about 500 million rubles ($17.7 million). The plot of land in the Nevsky district could sell for approximately 400 million rubles, while seven hectares of land on Uralskaya Ulitsa have a market value of 36 million euros, said Kopylov.

“These new projects from Etalon represent a serious undertaking — in recent years, the company has invested little in new assets,” he added.

Nikolai Pashkov, general director of Knight Frank St. Petersburg, estimates that Etalon may have to invest as much as $1,500 per square meter into the projects. By investing in the projects before even buying the land, Etalon is expanding its profile and increasing its share value ahead of its IPO, he said.

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