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The company made a net loss of $201.7 million in the second quarter, compared with a net profit of $28.5 million in the second quarter of 2008. The gross loss for the quarter was $245.4 million, compared with a gross profit of $40.3 million for the second quarter.
For the first half, the company made a net profit of $215.1 million, compared with $97.3 million for the first half of 2008.
At the end of June, AFI had $132.5 million in cash and cash equivalents.
The company said that the second quarter loss stemmed from the decrease in the value of some of investment properties under development since the first quarter, which led to an impairment recorded to their book value totaling $297 million. After the end of the reporting period, AFI sold its Kossinskaya project for $195 million, reflecting a premium of $44.2 million over its book value. The cumulative effect of the impairment and of the sale after the tax was $211.6 million
AFI also mentioned that it had made further progress in leasing activity for the Mall of Russia development, with lease agreements reflecting a total take-up of about 30 percent, with an additional 30-35 percent covered by non-binding letters of intent and memoranda of understanding. It commented that "a less marked downward pressure continues to affect the real estate market in Moscow across all asset classes."
AFI CEO Alexander Khaldey said, "Our first half results were adversely affected by the continuing decrease in the values of our properties under development. At the same time as evidenced by the sale of our Kossinskaya project at significant premium to its book value, we believe that our projects continue to have potential for revaluation gain in future.
"Aside from the impact of revaluations resulting from the current economic uncertainty, we have seen a steady growth in lettings. Although funding remains scarce across the market, our cash resources, reinforced by the recent Kossinskaya sale, mean that we are better placed than many other developers to cope with the challenges of this still volatile market.
"We are focusing on Mall of Russia which will now be positioned as one of the few new high quality retail centers to be opening in Moscow in 2010. This will strengthen the Mall's ability to attract major operators as tenants, as shown by our recent leasing agreement with Inditex and its major brands such as Zara and Bershka."
To see more of the Globes or to subscribe to the newspaper, go to http://www.globes-online.com. Copyright (c) 2009, Globes, Tel Aviv, Israel Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
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