PIK eyes mortgage ventures with Sberbank, VTB

LONDON/MOSCOW (Reuters) - Russian developer PIK (PIKK.MM)(PKGPq.L) is in talks with state-backed lenders Sberbank (SBER03.MM) and VTB Bank (VTBR.MM) to supply affordable mortgages to its customers as housing demand rallies, a senior executive told Reuters.

Chief Operating Officer Artem Eyramdzhants said Russian banks were looking to increase lending to prospective homeowners after largely suspending mortgage issuance or hiking interest rates as high as 20 percent during the global financial crisis.

"We understand the company has a possibility to take part in different programs with commercial banks ... and I think this summer, in June or July, we will report on resuming mortgage programs together with Sberbank and VTB," Eyramdzhants told the Reuters Real Estate and Infrastructure Summit on Thursday.

Earlier in June, PIK, which is 45 percent owned by tycoon Suleiman Kerimov's Nafta Moskva, said it had teamed up with Gazprombank in a venture to improve access to mortgage credit.

Home to about 140 million people, Russia is potentially one of the world's largest mortgage markets but it is also one of the most underdeveloped.

Eyramdzhants said the new programs with Sberbank and VTB would be similar to the Gazprombank deal struck earlier in June.

Under terms of that arrangement, Gazprombank is providing debt at a fixed interest rate of 13 percent for 25-30 year loans to apartment buyers at two mass market developments in the Moscow region.

Eyramdzhants was hopeful further sponsored or subsidized mortgage initiatives and further cuts in average lending rates could help boost PIK's annual sales and profits.

"If this all comes true ... then hopefully it will be reflected in the company's revenues and potentially, we can think about 5-15 percent of additional retail sales."

Before the crisis PIK sold almost a quarter of its apartments using mortgage programs. Today, these sales represent about 5 percent of retail sales, he said.

Highlighting the increase in demand for homes among Russia's middle classes, Eyramdzhants said PIK had sold between 14-15 apartments to private customers each day this year, more than five times the daily average rate in 2009.

This rate would remain stable throughout 2010, he added.

"In terms of our own sales, the fourth quarter was extremely positive compared to the first and second quarter last year and we are seeing the same trend in the first five months of 2010."

Eyramdzhants said enthusiasm to lend was being supported by signs of a stabilization in Russian residential real estate values, which he said was set to continue throughout 2010.

"We started to see the positive trends in the residential market in Russia in summer last year. People felt comfortable with prices and were no longer waiting for further falling prices," he said.

Property valuers spoken to by Reuters suggest PIK is likely to post a significant increase in the value of its portfolio in 2010 after securing new working capital and restructuring its debts with Sberbank.

On June 7, the company said the value of its property portfolio fell 13 percent to just under $2.5 billion during the final nine months of 2009.

"We hope that this (increase) is possible. We see no reasons for further impairments or depreciation," Eyramdzhants said, without giving detail on the size of the possible rise.

"In the last valuation report, the valuers had no time to price in all the market recovery that we are speaking about, potentially this could also be a factor," he said.

(Editing by Andrew Macdonald)

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