Kyiv court invalidates TMM’s land lease for Sonyachna Brama

The Kyiv City Economic Court ruled on December 21, 2010 to invalidate an agreement between TMM Real Estate (FSE: TR61 GR) and Kyiv National University, which gave the former the right to construct the 234 ths m2 residential complex Sonyachna Brama on a 8.5 ha land plot owned by Kyiv National University. Sonyachna Brama is TMM’s biggest residential project under construction. TMM put the first of the four stages of the project in operation in late 2010. The lawsuit was brought forward by the Ministry of Education and Science, which argued that the agreement was not in the state’s interests. Concorde Capital: We expect TMM to appeal the court decision and note that judicial battles are typical in the domestic residential construction business. In the last ten years, we cannot recall a case of a court ruling leading to the destruction of a building or a forced ownership change. In the worst-case scenario, we see TMM increasing the share of the apartments given over to the university as payment for its land lease to ~25% from the current 10%.