Boris #Mints is selling his stake in #O1Properties (office real estate assets worth $4.3bn) to Laysa, an advertising agency serving Russian Railways The property busienss come together with $2.8bn in debt.
The deal will be closed after approval from the Federal Antimonopoly Service. Dmitry Mints will quit as Chairman of the Management Board of O1 Properties Management Ltd, an operating entity of O1 Properties Limited, and Bagrat Gazaryan will step in his place while Dmitry Mints will remain Chairman of the Management Board of O1 Properties Limited.
According to an O1 Group press release, the deal envisages that Laysa Group (owns Laysa advertising agency) is obliged to repay O1 Group’s loan to Credit Bank of Moscow of about RUB25bn. The bank’s Chairman of Management Board Vladimir Chubar said the company is servicing the loan and there is no need of its restructuring. He did not specify the due date and terms of the loan.
Laysa General Director Armen Gazaryan provided no answers to RBC.
What is for sale?
O1 Properties invests in class-A office centres in Moscow. Its portfolio includes 15 complete office centres in ownership and under management, including White Square office centre near the Belorussky railway station, Lighthouse, Aurora and Vivaldi near the Paveletsky railway station and Legend on Trubnaya square. Total square of premises in ownership and under management is 743 thousand square meters, of which 584 thousand square meters is leased out. According to O1 Properties, its assets value is $4.34bn and its debt was $2.78bn as of 31 December 2016, including about $980m to Sberbank.
As of October 2017, 71% in O1 Properties was owned by O1 Group of Boris Mints, 12.8% by ICT Group of Alexander Nesis, 5.6% by Andrey Barinsky, 5.6% by Vladimir Zubrilin, 4.3% by Goldman Sachs and another 0.6% by the top management.
O1 Properties is the key asset of Boris Mint whose personal wealth was estimated by Forbes at $1.3bn (72nd on the Forbes list of 200 richest businessmen in Russia 2017). Mr. Mints also owns 80% in Future finance group that manages non-state pension funds.
Who is the buyer?
Laysa is an advertising agency of Russian Railways. It won the monopoly-run tender back in 2006. Under the contract valid until December 2021, Laysa can place advertisement in trains, at railway stations and on railway track infrastructure.
According to Espar-Analytic, as of November 2017, Laysa had 948 advertising surfaces with a total square of 54.5 thousand square meters along railways alone in 50 largest cities of Russia, ranking within top 5 of outdoor advertisers in Russia.
In spring of 2014, City Sign Group paid more than RUB1.3bn (about $39m at the relevant exchange rate) and became an owner in Laysa. City Sign Group owners, on parity basis, were Sergey Kolushev and OOO Regional Projects, whose founders are Romeo Gevorkyan, Bagrat Gazaryan and Igor Goncharov. Later, OOO City Sign Group was reorganized and merged with Laysa. Since spring of 2014, it is Armen Gazaryan, the nephew of Bagrat Gazaryan, who runs the company.
The new Laysa owners financed the acquisition with a loan from Otkritie FC Bank. As of 30 June 2017, the debt to EBITDA ratio was 3.4, according to Expert RA analysts reports in October last year. They called this debt burden as moderately high.
According to RAS statements, Laysa’s revenue for H117 reached RUB515m and its net profit was RUB80.4m.
RBC reports that, in 2015, Laysa intended to buy almost 49% in Russ Outdoor, the largest outdoor advertising agency in Russia (with 24.8 thousand advertising surfaces in 50 cities with a total square of 323 thousand square meters and estimated revenue of RUB6.8bn, according to Espar-Analytic, as of November 2017). But the deal was not finalized. Laysa did not receive a loan from Otkritie FC Bank. According to AdIndex, Laysa owners were ready to pay $10m in cash and give its own agency for a stake in Russ Outdoor.
Laysa did not participate in the Moscow commercial real estate market in the past but once it buys the O1 Group stake in O1 Properties, it will turn into a leading office premises investor, says Stanislav Bibik, a partner at Colliers International. Meanwhile, O1 Properties reports its share in the class-A office centres market in Moscow was about 12% as of October 2017.