WRAPUP 1-Pressure mounts on Russian real estate sector
By Maria Kiselyova
MOSCOW, Oct 2 (Reuters) - Pressure on the Russian real estate sector mounted on Thursday as a broker predicted forced property sales, an industry major recognized losses on portfolio revaluation and another company faced a loan recovery lawsuit.
High-leveraged real estate companies, which rely heavily on external borrowings, are among the worst hit by tighter credit market conditions, and analysts say some developers will have to resort to asset sales to repay short-term debt, or go bust.
In a research note called "Real estate. Method in the madness", Renaissance Capital, Russia's largest investment bank, said the sector was likely to experience a wave of delayed completions and project freezes, potential forced sales of development portfolios and bankruptcies of smaller players.
"This should put pressure on commercial and residential property values as the environment has rapidly changed from a sellers' to a buyers' market," Renaissance said.
Russian developer Mirax Group has this month frozen all projects on the drawing board, while real estate company Sistema-Hals (HALSq.L) announced plans to sell stakes in some of its projects to outside investors.
Construction and real estate firm LSR Group (LSRGq.L) said on Thursday its first-half net profit collapsed after a $159 million downward property revaluation, in part thanks to less optimistic lease revenue prospects for a major office project.
In another development, Alfa Bank filed a lawsuit that seeks to recover $10.6 million from developer RTM (RTMC.MM) for alleged violations of a loan agreement.
RTM denied any wrongdoing, saying in an emailed comment: "We attribute this to the current situation in the banking sector, in particular the low liquidity in a number of banks."
Earlier this week Fitch ratings agency said Russian property development companies faced severe liquidity strain.
"There has been a general assumption by the management of some Russian property developers that it would always be relatively easy to sell assets and banks would always be willing to refinance short-term debt maturities," it said in a report. "This is no longer the case." -- To read a story on Renaissance Capital warning of forced asset sales, please click on [ID:nL2483851]. -- To read a story on LSR Group H1 results, click on [ID:nL2348554] -- For a story on RTM facing lawsuit on loan deal, click on [ID:nL2414073]. -- For a Fitch report on Russian property development companies, click on [ID:nWLA0536] (Editing by Sue Thomas)
