Russian President Putin
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Lev Leviev
Photo: Yisrael Bardugo
Africa Israel warns of rouble impact on Russian properties
As Russian economy tumbles, Israeli investment form which owns Russian development company, could suffer.
Israeli real estate group Africa Israel Investment said on Thursday the crisis in Russia and the sharp depreciation in the ruble would likely hurt its business in Russia.
Most of AFI Development's rental income is denominated in rubles 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 ruble's sharp depreciation.
"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.
Photo: AP
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 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.
Photo: Reuters
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 rubles.
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 ruble's sharp depreciation could hurt the project's profitability," it said.
