AFI Development, the London-listed subsidiary of Africa-Israel Investments Ltd. (TASE:AFIL) that deals in real estate in Eastern Europe and Russia, reported a large loss for the first half year this morning, mainly because of write-downs and asset revaluations.
Revenue for the six months to 30 June 2012, including net proceeds from the sale of trading properties, increased by 40% year-on-year to $81.5 million, driven by higher rental income. The contribution from AFIMALL City in Moscow was $42 million.
The company recorded a valuation loss on investment properties under development in the amount of $179 million, mainly due to a decrease in the value of the its four projects: Bolshaya Pochtovaya, Kossinskaya, Tverskaya Plaza Ib and Tverskaya Plaza II. It said that the decrease in value resulted from changes in master planning and development policies of the Moscow government. In addition, AFI Development recorded an impairment loss on inventory of real estate in the amount of $65 million, due to its decision to write-off the Botanic Garden project.
As a result, AFI posted a loss on operating activity of $205.7 million for the first half of 2012, compared with a profit of $37.1 million for the first half of 2011.
In the second quarter of 2012, the Russian rouble depreciated versus the US dollar by 11.9%. Consequently, the company recorded a foreign exchange loss of approximately $11 million, compared with a gain of $7.8 million in the first quarter.
AFI posted a net loss for the first half of 2012 of $240.6 million, compared with a net profit of $28.7 million for the first half of 2011.
The gross value of the company's portfolio of properties reduced from about $2.8 billion at the end of March 2012 to about $2.4 billion at the end of June.
Published by Globes [online], Israel business news - www.globes-online.com - on August 22, 2012
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