Svetlana Kara, Praedium Investment Capital

Praedium Investment Capital was founded to manage Russian real estate private equity investment funds and structure corporate finance and M&A transactions. Svetlana Kara, Founder and Managing Partner, spoke to Ilona Taillade about the Russian market and the opportunities it presents for real estate investors.

Tell us about Praedium Investment Capital and your role in the company.

Praedium Investment Capital is an investment firm focusing on private equity real estate fund structuring with a target size of €350 mln. We are also involved in the organization and execution of corporate finance and M&A transactions, with a focus on the Russian commercial real estate market. The capital value of executed investment sales and refinancing amounts to €0.5 bln. The company covers the office, retail, warehouse and industrial segments and invests in prime and stabilized assets. If we acquire, we like to invest in prime, class-A, centrally located assets and if we structure debt for our partners we also focus on these criteria.

I have 14 years of experience working in international investment companies and have been involved in large-scale refinancing and M&A transactions. Currently, the Russian market is booming in terms of the capital markets activity. We see a lot of new market players and a lot of new investors, both local and international, who are very active in terms of acquisitions.

Where there is crisis, there is opportunity. Does this apply to the property market in Russia?

That’s true. If we compare the current investment volume to pre-crisis levels we see a dramatic growth in investment volumes. There is huge potential on the market and if we compare the cost of capital with prime yields, the gap shows good returns for investors who are looking to invest in the market.

You said that Russia is on the way to recovery, which factors are contributing to this recovery?

The strong economic fundamentals contribute to the recovery of the real estate market and the overall real estate investment activity. We see that these fundamentals help the office, retail and warehouse segments to expand. The rental rates are stable and demonstrating moderate growth, which is a very good sign for investors who are looking to enter the market. When we see good dynamics in rents it means that the market is alive and there is good potential.

Would you say that there are more companies expanding on the Russian market?

We see a lot of new companies which come to Russia in all sectors; the companies are expanding their businesses and this is reflected in the expansion of the areas that they occupy in their offices. The center of business activity in Russia are cities like Moscow and St Petersburg and cities with a population of over a million people, while in secondary cities recovery is only just starting.

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