The success of "Airplane" many market participants attributed to the administrative resource: among the shareholders of the companies belonging to the group, the brother of the governor of the Moscow region Maxim Vorobyov. And Igor Evtushevsky, the shareholder and CEO of the parent and other companies of the group, explains the growth of business correctly chosen by the financial model: the developer does not spend money on the purchase of land and practically does not attract loans.
"Our market has become a buyer's market"
- Amendments to the law on equity participation in construction are rather tough. How will they affect your business?
- Favorite question of all developers. Of course, immediately nothing will happen either with us or with the market. We are still experienced developers, adapt to the new rules. As for the market, there are several points. It is clear that today the government is extremely interested in creating more and more civilized rules of the game. And, probably, the new law will help. The problem is that these new rules, although they reduce financial risks, do not take into account the risks of development, and they will not go anywhere. You can recall the Chinese experience, when local developers built entire cities, they were given the opportunity to build them, and as a result, these cities were not needed by anyone. This is the risk of development, not finance.
Well, in my opinion, there will be a contraction of the market. Today in Moscow and the new Moscow declared 570 developers who sell housing. In my opinion, 300, and maybe even 400, will leave, because they are not capable of both administering the process and meeting the necessary financial requirements. Accordingly, if the market shrinks on the number of developers, then shrink and the number of created goods. And then there is a first trend. Companies - market leaders such as us, will replace the retired and will offer for sale a larger volume. And the second - the cost of financial encumbrances, obviously under any scenario, will be superimposed on the investment value of projects. Will this lead to some leveling of the price - so far no one can answer this question. But since the margin for large developers is not so great as to endlessly increase the costs per square meter created, they are likely to be transferred to the consumer. Nuances are many, but in the short term this will lead to a drop in supply and a rise in prices.
- The country's leadership aims to increase the amount of construction to 120 million square meters. m per year. How do you think, with such changes in the law this is real?
- Will it grow to this volume and when - a difficult question? It seems to me that in a year or two the market will soon return to 60 million square meters. m, and may even shrink to 45-50 million.
"Will the buyers protect these amendments?"
- Yes, they will. For this, everything is done, and we support the actions of the state. But at the same time, I repeat, the risks of development will remain. Compare with banks: despite everything that has been done in the industry, the risks for depositors remain. Analyzing the European experience, I see there are more complicated schemes, when the federal land and the local municipality divide the developer's risks, insuring each risk, but dividing it.
It is also important to understand what will happen to the competition in the market. After all, it was competition that led to the most powerful changes in our market. I, as a person who is interested in public life, believe that this is a big deal for citizens and the country - that our market has become a buyer's market. We have not thought about this before, but now a lot of nuances that allow you to fight for the consumer: finishing apartments, entrance groups, networks, infrastructure and much more. It's a whole achievement!
"Competition with the projects of the Moscow mayor's office will not be"
- If you take Moscow, do not you think that taking into account the renovation program, the main player here will be the city itself?
- I read the interview of Marat Khusnullin and Sergei Semyonovich [Sobyanin]. It turns out that they really [the city] will enter the commercial market in only about seven years, maybe six. Until that time, issues will be resolved with the withdrawal of five-story buildings, the construction of apartments for resettlement. Therefore, in the short term, they are unlikely to become players in this market. Nevertheless, the largest developers are developing integrated development projects, and there is a small margin and very attractive prices. Therefore, in our opinion, there will be no competition with the projects of the Moscow mayor's office. I very much doubt that they will sell their projects for 100 000 rubles. for 1 square. m or cheaper than the cost in good areas, it's just not constructive. Rather, their price tag will be at the level of 150 000-180 000 rubles. for 1 square. m, and this is another segment. Our customers do not reach this price.
- So they have the same entry cost will be lower. Is not it so?
- No, this is an illusion! With such a volume and rules of resettlement, it is, in fact, a golden land.
- Why then do many developers try to enter renovation projects?
- I can not speak for others, but it seems to me that if it is interesting for developers to participate in it, then basically as general contractors.
- You said that Moscow will enter the commercial housing market in 6-7 years. But during this time, new amendments may be introduced or they may change their minds to build solely themselves, but to attract the same developers.
- So they are not going to build themselves now. Contractors, general contractors will not be them. They will be responsible for the settlement, they will be responsible for the land, for general plans, PPT, PPZ and construction documentation, they will always be developers. No commercial developer, whoever he is, no matter how global, is not able to fulfill such a task. None of the resource is not even close. In the quarter it is difficult to agree, and here is the whole city, so they will be developers.
- But is there any danger of ruining the market?
- Do not you think that commercial developers understand the market a little better? People buy apartments not only because of the price, but also because of the quality of the projects.
- Of course, loss of quality is possible, but Moscow [the power of Moscow] is strong in that everyone understands that they will at least finish building.
co-owner of the group "Airplane"
1993 President of the Association "Aircraft", specializing in the construction of residential and commercial facilities (1996)
2001 headed the cultural and entertainment complex "Airplane Bowling"
2003 General Director "Aircraft Development Group", General Director of "Vedis Development"
2007 General Director of Glavstroy SPb
2009 Deputy General Director for Development in Glavstroy Management
2012 since August, headed "Aircraft Development"
"Our ambitions are to become a public company"
- Several years ago, the company announced that it plans to conduct a share placement. In recent months, the group has announced several major projects in Moscow. It seems that these statements were made just in anticipation of an IPO.
- Indeed, we have always stated our ambitions to become a public company. We are fully prepared for this in terms of investment attractiveness of business and corporate governance: IFRS reporting, independent directors, credit rating at the level of sector leaders. If the market situation is favorable, this opportunity is open to us. Only the task is not to enter the exchange at any cost, but to gain access to all possible instruments for financing our activities. Understand, our ultimate goal is to offer our customers the best possible price, so we are always looking for ways to reduce costs without losing the quality of construction. If there are opportunities to place bonds in a profitable way, then we use this. If the equity market is attractive, then we will go this way [IPO].
- And yet in June the Board of Directors decided to increase the authorized capital of the company. What is the reason for this?
"This is a technical step that gives us additional flexibility in the event of a favorable market environment, but does not commit to anything. That is, if there is a window of opportunity, we will be able to react quickly and take advantage of it without unnecessary delays.
- If you make a decision about entering the exchange, how will it technically happen? Which company will become public The group has a rather unusual structure: it includes three companies with different shareholders.
- At present the group is completing internal corporate reorganization, the structure will be as transparent as possible and will correspond to the best practices. There will be a parent company - the joint-stock company "Group of companies" Aircraft "and its subsidiaries. Our internal structure meets the specifics of the geography of our business, but all the companies of the group develop in the framework of a unified business model and on the basis of unified management standards. Therefore, which company will become public, for us the issue is largely technical. But if the decision is made, it is more logical to bring the parent company to the stock exchange, which consolidates all the businesses and segments of the group.
- And the fact that the company announced several large projects in just a few days, is this connected with the planned placement?
- No, it's not connected. All projects we do together with partners, and the timing of the announcement depends not only on us. In addition, Moscow and the new Moscow have become more attractive in terms of profitability, and we began to actively develop this direction in addition to the work that we are doing in the Moscow region, where we started our activities. Therefore, there is no other reason than business here.
"The structure of the group is clear and transparent"
- Market participants connect the company with the governor of the Moscow region Andrei Vorobyov. How do you explain to potential investors the absence of a conflict of interest?
- I, frankly, do not see any problems here. The structure of our group is clear and transparent. You can look at everything and check in open sources and registers. It's not for nothing that we seriously consider the possibility of becoming public and now we are meeting the level of disclosure with public companies. The group is developing in five regions and is equally effective everywhere. And in Moscow, and in the new Moscow, and in St. Petersburg, and in the Leningrad region, and in the Moscow region. As can be seen from public sources, Maxim Yurievich [Vorobiev] is not a shareholder of the parent JSC "GC" Airplane ", but is our minority partner in one of the" daughters ", which operates in Moscow and St. Petersburg. We at the very start of the company's work immediately with Maxim Yurievich determined that for him there is a certain problem regarding participation in projects in the Moscow region and he would like to avoid a conflict of interests. We did not attract him there. And in the new Moscow, Moscow, St. Petersburg or the Leningrad region, he has no conflict of interest. Therefore, in some of the projects that we implement there, he is a shareholder. Although we have projects in Moscow, which are implemented without Maxim Vorobyov.
- About other shareholders. Paul Golubkov remains your shareholder?
- Yes. We have two main shareholders directly involved in the management of the company - me and Mikhail Kenin (co-owner of Russian Aquaculture, whose largest shareholder is Maxim Vorobiev - Vedomosti), and there are financial partners, and Pavel among them.
- Who is he? Is he an independent player or represents someone's interests?
- Independent. He is a non-public person, but he has been doing business for a very long time and, as far as I understand, invested in projects in a wide range of industries - from leasing to construction. He has known Mikhail Kenin for a long time, and, as I know, this is not the first project in which they participate together.
- We were told that he still represents the interests of Maxim Vorobiev.
Do not build "Domodedovo"
In 2016, Domodedovo airport filed a lawsuit with the Moscow Arbitration Court against the structure of the "Airplane" group, in which it tried to challenge the issue of a permit to build a large residential area near its territory. The representative of the airport explained that this area has an increased level of aircraft noise, and therefore, it is impossible to build there. As it was said in the materials of the case, in December 2016 the consideration of the claim was suspended.
"Litigation is still ongoing," says Evtushevsky. According to him, the problem arose due to the lack of legislation regulating this issue, and also because of the desire of Domodedovo to limit the use of all territories within a 30-kilometer radius from the airport, where they could build up to eight runways. "For understanding: the territory of more than 600 square meters. km, according to the airport "Domodedovo", would be subject to full release, "- says Evtushevsky. Now, he continues, a law has been adopted that regulates the order of restrictions in the use of the territory near airports, including due to aircraft noise. The developer of the new runways should fully compensate the owners of residential premises and landowners for material damage associated with the inability to use residential facilities and land plots due to the impact of aircraft noise.
- I do not comment on rumors, but rely on facts and my experience. If you believe everything that they say and write, then in Russia almost all of us are not independent players, but represent someone's interests. It is very difficult for me to comment on this issue in this vein. He has been a financial investor and shareholder since the first days of his work, the same role is performed today.
- And Invest AG is still your shareholder?
"We did not have any changes." The entire shareholder structure, which started with us, remains with us. Nothing changes. And to go out, not to enter is their own business, I'm not ready to comment on it. In my opinion, all shareholders see success and understand the potential of the company, that's why they feel normal in this capacity.
"Did they buy their share for money?" There was information that it was some exchange of assets.
- No, they just bought it.
"Partnership is the basis of our business model"
- The group "Airplane" includes "Airplane two capitals", which, as stated earlier, will, in addition to Moscow, purchase projects in St. Petersburg. "LO aircraft" also works in St. Petersburg. Why do we need two companies?
- As I said before, the company grew rapidly and is now passing through the natural process of corporate reorganization. "Airplane two capitals" is one of the subsidiaries of the Civil Code [JSC "Group of companies" Airplane "], and" Airplane LO "is generally one of the" granddaughters ": it is the" daughter "of the company" Airplane Two Capitals ", which implements a specific the project is "Murino". This is a specialized builder for the Murino project, where serious competencies have already been created, an experienced team has been formed, which has established excellent working contacts in the market, in particular, with networkers.
- Do you plan to go to other regions?
- Still, we aspire to become a federal player. But the regional markets today are heavy. In addition to Moscow, the new Moscow, Moscow region, St. Petersburg, Leningrad region, today there are two promising markets for us - Ekaterinburg and Krasnodar. We look, we study the options, but there are no concrete plans yet.
- Two years ago you stated that the company's total portfolio is 17 million square meters. How much has it changed?
- We now have 8.5 million square meters. m in the standards of international appraisers is the third largest in Russia in terms of size, and we are actively growing. And 17 million square meters. m, which we mentioned earlier, are some estimate of management regarding the potential of the land bank in the long term, taking into account the plans of the authorities to transfer land to housing. But today we believe that it is still correct to operate with a figure of 8.5 million square meters. m.
- Then how much can your portfolio grow, say, until the end of the year?
- We do not have a goal to reach a specific figure or overtake a player. 8.5 million square meters. m - this is a large portfolio, consistent with our strategic plans: to become a federal player and consistently to be among the leaders in terms of construction. But taking into account several more promising sites, which we have not yet announced, the portfolio could grow to about 12 million square meters. m in the coming years.
- And you on all projects will operate under the old scheme? That is, you will not acquire land for projects, but will you seek partners?
- Of course. Partnership is the basis of our business model, the most important way to reduce the cost of projects by avoiding large infusions in the acquisition of land assets. At the same time, partnership allows the owner of the land to get a much greater return on his asset - because he participates in profits. But this approach is economically justified in the case of complex development of territories, since in case of point-like construction the cycle is shorter: money-commodity-money.
- You said that 17 million square meters. m is the normal figure. If you just follow the development market, then often - since the crisis of 2008 - it was the presence of a large portfolio and, as a consequence, high credit burden, that led to certain problems for companies.
- You are right: everyone who bought lots of lots, went bankrupt. And we do not buy land. Even in a growing market in the early and mid-2000s, many companies, behind which banks or oligarchic structures stood, acted in this way. And we do not. I was always reproached that I try not to take risks, and I said that in the mass segment the question of readiness for good or bad times is the main issue of survival. We are always ready. Also not all insured, but the portfolio of financial borrowings is minimal. Today, even at the start of projects, we do not take loans. We, in principle, have the resources for launch even for large projects: Ostafyevo, Putilkovo, etc. Therefore, we do not attract anything, although we could do it - 500-700 million rubles. for 2-3 months. But we do not even need this.
- And the main sources of financing are the funds received from the sale of apartments?
- Of course. If to speak roughly, we can sell 10 000 sq. M. m in the first month of the project start, while we do not bear any special expenses at this time. Fence to put, foundation pit to start - it's not those costs. Yes, then there is construction, finishing, networks, but we already have money from sales in the first months. But with the development of the project, the price is also growing. With such a model, I can very flexibly approach issues of borrowing and choose the best conditions, thereby reducing my expenses.
- But all the same you said that there is some kind of small credit load.
- There is. For example, when we were part of the Putilkovo project, the realization of which costs several billion rubles, small funds were given to it by partners - this is the 20th or 30th part of the asset value. We also there 5% proavansirovali. But the project's revenue for the month is such that I can repay the entire debt at the time. We consider this a very healthy situation, because the ratio of EBITDA to debt is always less than 1. And by the end of the year, this indicator will also tend to zero at all.
"90% of our facilities are targeted to the mass consumer"
- In view of the growing diversification of your portfolio and focus on new directions, will you review the current projects in the Moscow region? In the same Krasnogorsk declared more than 1 million square meters. m of housing.
- Why should we revise the Putilkovo project? The site is located next to the Moscow Ring Road, and in this case it does not matter, Moscow is a new Moscow or Moscow region. There will always be demand and a good price. Since 2012, when I was looking for business partners, I declared a simple strategy: there is a 10-kilometer zone around the MKAD, where you can work there. In the new Moscow, this zone is slightly larger - 12 km. Therefore, Krasnogorsk in the suburbs, and Ostafyevo in the new Moscow for us chicken, carrying golden eggs.
- Do you plan to buy out RDI's share in the project in Ostafiev?
- To redeem or not to redeem is a matter of business. Of course, we are more interested in redeeming when this share is undervalued, and for our partners - on the contrary, when overvalued. While we are, and they are satisfied with everything. We have just started building and selling. But if at some stage our partners want to leave the project, we will consider this possibility.
- All projects of the company in the mass segment. The only one that is different is the last project at the Danilovskaya Manufactory. Was there a good suggestion?
- Yes. We have partners who, of course, rely on us as more experienced developers. For us, this is a good opportunity to gain competence in the prospective and profitable segment of the complex business development in Moscow. And there are no risks here.
And as for the whole portfolio, then we have a division, which is engaged in such individual projects. We also have a project called Sputnik, which is also being implemented in another segment. But 90% of our facilities are projects of integrated development of the territory, it is a product that is oriented towards the mass consumer, where we understand everything very clearly.
- In your release, the project "Korobovo" is indicated. What is this project?
- This is a relatively old project (agreement on the site was concluded in 2016), which was on a pause, because in that area we are already building a large residential complex "Prigorod Lesnoye". Accordingly, it was premature to start another large-scale construction. We plan to start developing the project no earlier than the fourth quarter of 2018.
"We were told:" take social obligations "
- You know the problem of the Urban Group for sure. As far as we understand, they are trying to solve this problem urgently. We applied to different developers to help finish building. Have you been contacted?
- No. Neither to the company nor to me they did not apply. It would be rather strange. If you look at their projects, they do pretty ... curly, we do not do this - this time. Second - and what does it mean to "help"? I honestly do not understand this. If they need money, it means that everything must be demolished, the model must be altered - how can you help?
JSC "SC" Aircraft "
Shareholders: Mikhail Kenin (44%), Optimus Prime Limited (44%, final beneficiary - Pavel Golubkov), the rest - from Igor Evtushevsky and Invest AG.
Financial indicators (IFRS, 2017):
revenue - 41.9 billion rubles.,
net profit - 3.4 billion rubles.
Operating indicators (2017):
sales - 438,000 square meters. m,
concluded contracts - 356,000 square meters. m.
It was founded in 2012. It takes the 5th place in the InfoLine Building Russia TOP ranking for housing construction in 2017 (368,000 sq. M.).
- They have projects at an early stage, where there is still an investment component.
- I do not understand yet why the developer will go there. There are many interesting commercial projects on the market without any encumbrance.
- In any case, there are a number of companies in the Moscow region and in Moscow, to which the authorities apply for help. Let's say, Capital Group. You also have social projects, after all.
- We have, but they are direct. We were told: "Take social obligations", we agreed and build houses in Oktyabrsky. Everything is clear and clear there. There is an economic model even in the problem house that we built. We were declared conditions, we counted them, said: we undertake.
- So there is a scheme that the developer offers certain conditions for other projects.
- In any case, we have not been approached about the company, or about its projects so far.
- How much will this situation hurt the market?
"I think I already hit." As far as I understand, the new federal leaders of the construction block carefully analyzed this situation from the point of view of further development of the housing market in the context of the president's punishment and this affected the final interpretation of the provisions of the law.
"In the suburbs and New Moscow we are second after PIK"
- How have you changed sales in the last year?
- Sales are growing. The dynamics of sales is always a reflection of the development of both specific projects and the entire portfolio. For the I quarter of 2018, we sold about 100,000 square meters. m of housing in the Moscow region. We brought out a new project in the new Moscow - "Ostafyevo" and we are preparing for the start of "Nekrasovka". In the Moscow region, we increased the share of sales from 8.9% in 2017 to 11% in early 2018. We are preparing to bring to market a large-scale project "Putilkovo" and new lines of ongoing projects - Tomilino and Sputnik. If we talk about the plans, then by sales, we plan to double by further expansion - from the current 900,000 square meters. m from the beginning of the company to 2 million square meters. m in the medium term.
- Who do you consider to be competitors?
- In our segment, which we call a pragmatic class, that is, high-quality monolithic brick housing at the most affordable prices, we have no competitors, and this is the fastest growing sector. But if you take Moscow and the new Moscow, then we are second after the PIC. They are not our competitor, because they have a completely different business model and philosophy, but in some ways their experience is interesting to us, because they are 24 years in the market, and we are five. Our strategic goal is to turn the company into a federal player and to be consistently among the leaders in terms of both construction volume and profitability and loyalty to the aircraft brand. And of course, our goals provide absolute leadership in a pragmatist class.
- And what is the difference between a pragmatist class from economy classes or comfort?
- In its characteristics, it takes an intermediate place between economy and comfort class. The buyer counts on more durable materials and individuality, but is not ready to pay for additional unnecessary functionality. From the economist, the pragmatist is distinguished first of all by the construction technology (monolith or monolith-brick), i.e. strength, sound insulation, a variety of layouts and ceiling heights, as well as architectural individuality. In addition, this is a quality finished finish, well-designed entrance groups, landscaping and infrastructure (schools, shops). And in new projects, we begin to make through entrances, yards without cars. In turn, from the comfort-class pragmatist is distinguished by price, location (this is the nearest suburbs, a little more distance to the metro / key highways) and the lack of costly design solutions. We prefer functional beauty to spectacular excesses.
- Do you plan to buy your own production facilities?
"It does not fit into our business model and is not part of our path - we have always built monolithic brick buildings, and our customers appreciate their reliability and durability." And any plant - it's costs. First you paid money, then you pay interest, then you pay for metal, concrete, glass, and only then sometime you get this money back. And we are used to getting money first, then buying labor, concrete, etc. Therefore, the price is very competitive.
And the second - I do not depend on costs in any crisis. When I was in charge of Glavstroy, I had 32,000 people subordinate to me. Any meeting began with the fact that we can not fire people. This taught me that you need to be flexible to the changes and be flexible to the demands of the market. In the "Airplane" an operative and flexible approach to costs at each stage - from the acquisition of land, design, procurement of materials and labor at spot prices and obtaining initial permits for the sale of apartments and operation.