Lev Leviev in Romania
Photo: AFI Europe
Africa Israel warns of rouble impact on Russian properties
Billionaire Lev Leviev's real estate group says 'cannot quantify impact' of Russian crisis and subsequent currency depreciation.
Israeli real estate group Africa Israel Investment said on Thursday the crisis in Russia and the sharp depreciation in the rouble would likely hurt its business in Russia.
"Because of the great number of factors affecting Russian economic conditions and their consequences, and noting the extreme currency fluctuations, the company cannot quantify their impact," Africa Israel said in a statement to the Tel Aviv Stock Exchange.
Africa Israel, controlled by billionaire diamond dealer Lev Leviev, is the parent company of Russian real estate developer AFI Development. One of AFI Development's key assets is the Afimall City shopping centre in Moscow.
Africa Israel mall in Romania (Photo: AFI Europe)
Africa Israel noted that when it published its quarterly results last month it said a continuation of the Russian economic situation or a deterioration could significantly harm AFI Development due to weakening consumer purchasing power, a decline in the value of its assets and a rise in financing costs.
"In light of the deterioration in the Russian economy, the company estimates that the likelihood that these consequences will occur has increased," Africa Israel said.
Most of AFI Development's rental income is denominated in roubles and linked to the dollar and there has been a substantial rise in the number of commercial tenants who have sought to limit this linkage due to the rouble's sharp depreciation.
AFI Development is studying each of these requests individually and any limits agreed upon will be for no more than a few months in most cases, Africa Israel said. It added that about 40 percent of AFI Development's loans are in roubles.
In the residential sector, AFI has one substantial project with 700 housing units in development and there has not been a decline in the pace of sales so far, Africa Israel said.
"Nevertheless, the rouble's sharp depreciation could hurt the project's profitability," it said.
