In May 2024, the Agency for State Asset Management (ASAM) announced the sale of three high-rise buildings located in Tashkent City – the towers of "Alokabank," "Asakabank," and "Uzpromstroybank." KPMG is acting as the transaction consultant.
The business centers have the following characteristics:
- "Alokabank": 26 floors, total area – 81,439 sq. m;
- "Asakabank": 26 floors, total area – 66,202 sq. m;
- "Uzpromstroybank": 33 floors, total area – 82,284 sq. m.
In August, the properties were divided into three separate lots following discussions with potential buyers. In October, it became known that four investors from the European Union, UAE, and Turkey expressed interest in purchasing them. ASAM accepted binding offers until November 25.
According to the materials from the annual general meeting of shareholders of "Uzpromstroybank" for the year 2023, the cost of constructing the 33-story headquarters of the bank amounted to $242.64 million. The project was planned to be financed through a loan from a consortium of foreign banks, which includes Swiss Credit Suisse, American Citibank, Austrian Raiffeisenbank, and Chinese China Eximbank.
The initial contract with the Chinese company Shanghai Construction Group was signed for an amount of $156 million (including VAT). The increase in the cost of the project resulted from the repercussions of the COVID-19 pandemic, which also affected the construction process.
The IFRS reporting of "Alokabank" for 2023 cites a figure of 1.33 trillion sums ($107.95 million at the Central Bank exchange rate) as the construction cost of the business center in Tashkent City. The contractor is Shanghai Construction Group.
As for the construction cost of the "Asakabank" building, Spot could not find publicly available information on this. The Unified Portal of Corporate Information only published an audit report on the bank's reporting for 2023, while the document itself remains fully inaccessible. Spot reached out to "Asakabank" requesting complete reporting but did not receive a response.
Spot discussed with commercial real estate experts how much the constructed business centers in Tashkent City might be worth and what influences their pricing.
Yodgor Gafurov,
partner and co-founder of Gafurov, Kardash & Partners.
All other factors being equal, the minimum cost of each building can vary depending on numerous factors: for instance, market expectations, risks, technical specifications of the property, as well as the expected yield, which may differ for each individual investor.
Additionally, a significant factor often is the presence of a unified professional management company, which, as I understand it, currently does not exist.
The estimated minimum cost of each building may be as follows:
- "Alokabank": $117−123 million;
- "Asakabank": $95−100 million;
- "Uzpromstroybank": $118−125 million.
It is important to note that this cost calculation is based on limited public data and serves solely to illustrate one of the possible approaches to valuation. It is not a market or fair value of the building and cannot serve as a benchmark for the deal's price.
In the absence of access to the necessary information about these properties, the Capitalization Rate Method can be applied to determine the approximate value of these assets.
For this, we need information on expected net rental rates and operating expenses based on market data to determine the net operating income (NOI). The net rental rate can be compared with a similar asset. The most suitable commercial office property is Tower 1 in the Trilliant business center.
Let's assume the net rental rate (excluding VAT and maintenance) is $38 per sq. m. Operating expenses in a similar building may range from 20% to 30% of the net rental rate, averaging at 25%. Thus, for calculating NOI, we arrive at $28.5 per sq. m (Net Rent).
To calculate rental income, we need to understand the usable area of each building. In buildings of this class located in seismic zones, the total usable area (GLA) can range from 60% to 80%. We will average it to 70%.
Assuming the buildings are already leased, and the office vacancy rate is between 5% and 10% per year, the occupancy rate will be 90−95%. Let's also assume that the buyer expects a dollar return (Cap Rate) at a level of 15% per year.
As a result, we obtain the formulas: NOI = GLA x Net Rent x Occupancy Rate x 12 months. Expected value = NOI / Cap Rate.
Since the properties have not yet been leased, an adjustment should be made for the lack of current income and the risks associated with future leasing. As a result, the price may be even lower than stated.
Pavel Dymov,
director of the Uzbekistan branch of Colliers.
The value of any building depends on its physical characteristics, location, income potential, economic conditions, and even legal aspects.
Professional appraisal is required for cost estimation. There are numerous valuation standards: national, international IVS (International Valuation Standards), British RICS.
However, the valuation methods remain unchanged:
- comparative: based on analogs available in the market;
- income: based on the potential income that the building can generate;
- cost: when all costs (material, construction, land
etc. ) are taken into account.
Now for the most interesting part – how much could each building be worth?
From the available information, there is only a teaser with basic data, and descriptions such as "using the highest environmental standards and principles of seismic and fire safety," which does not allow for a professional appraisal.
Nevertheless, an example can be given: a building in IT Park on Muminov Street (around 18,000 sq. m) with similar characteristics was valued by the seller at $30 million for a sale and leaseback format.
Based on this logic, the "Uzpromstroybank" building (about 82,000 sq. m) could be priced between $150 million and $200 million.
Previously, Spot reported that experts estimated the minimum value of the Humo payment system at $60−80 million.