Press releases – 2007
Trading update
21 Aug 2007
Chagala Group Limited, the specialist Kazakh real estate developer and operator, today gives the following trading update ahead of its close period. Chagala would also like to note that, in line with its policy of giving regular net asset value (NAV) updates, it will also be making an announcement in this regard before the end of the third quarter.
The company is pleased to report that all of its businesses are performing well, underpinned by an influx of oil and gas workers servicing both the Karachaganak gas field near Uralsk and the Kashagan field in the North of the Caspian sea. Chagala's retail mall joint venture, Chagala Zere Malls (CZM), is progressing and construction of its first mall in Ust Kamenorgorsk is expected to start by the end of this year. A more detailed breakdown of progress throughout the company is given below.
Uralsk
Over the past five months, occupancy levels have been rising and are now over 75%. This is as a result of increased activity on the giant oil and gas field Karachaganak, 140 kilometres East of Uralsk and the general up-turn in economic activity in the region that this is driving. We believe that this will be a long-term trend and as a result of this view we are extending our accommodation capacity through the development of 41 serviced apartments on our existing hotel site. In addition, we have sufficient space for a further 41 apartments should demand continue. Our existing hotel is being refurbished and upgraded to include a conference facility with space for 120 people.
Chagala is currently in negotiations with a major oil service provider to review the provision of accommodation and support services to their personnel within the town of Aksai, which is adjacent to the Karachaganak field. This is a natural extension to our range of activities and we see this as an ideal opportunity to develop and extend our support service operations.
It has been the Board's view for some time that Uralsk would play an increasingly important role in the development of Western Kazakhstan and this view is now being vindicated as the economy in the region continues to grow.
Atyrau
As from the 1st of July all our 235 apartments are fully leased. In addition, from the 1st of July, 34 of our hotel rooms have been booked by one of our major clients for an indefinite period. This has boosted our occupancy levels within the 110 room hotel, which is now running at over 85%. We expect the rapid increase in personnel servicing the Kashagan field to continue over the next two to three years, as the programme moves into its next phase, which had previously been delayed due to technical modifications. We are confident of maintaining our present high levels of occupancy through to at least 2011. Additionally we are working with one of our major clients towards the provision of 150 family apartments on our new development project adjacent to our existing properties.
August saw the full operation of our new 120 seat Mediterranean style restaurant "COCO'S" and with our completely refurbished nightclub "La Cabana" re-opening in mid September, we will have seven food and beverage outlets on our existing complex.
At the end of June, we successfully re-negotiated a contract with Agip for the operation of catering and cleaning services at their 250 person training centre and were awarded a three year facility management contract for a 2,000 m2 office leased by Agip from a third party.
The master plan for our 7.5 hectare development is well under way and will form a valuable addition to our existing Atyrau complex. It will consist of leased serviced apartments, apartments for sale, office space, retail and recreational facilities – all of which will be serviced by Chagala. We hope to finalise negotiations with local authorities and start construction by the end of the year. We have already received strong interest in the first phases of both our residential and office developments and aim to have the 150 apartment building ready for occupancy the end of 2008.
To satisfy future development we have acquired 30 hectares of land, with an option to purchase an additional 30 hectares, 10 kilometres outside Atyrau on the banks of the Ural River. The site is situated just off the newly completed Uralsk – Atyrau highway and only 20 minutes from the city centre. The plans are for the development of a "gated" community, offering high quality suburban accommodation to satisfy the increasingly sophisticated demands of the rapidly growing middle class of Atyrau – we expect the development to be completed over the next three to five years. The completion of this project will result in Chagala being able to offer the full range of high quality urban and suburban properties to the growing population of Atyrau.
Bautino
The 96 room hotel has been operating at over 90% occupancy for the past five months and demand pressure continues to build. The 50 room extension is well under way and our forecast for completion during the second quarter of 2008 remains on target.
The Board has taken the decision to develop the Residential & Commercial Park (RCP) in one go and not in phases, as previously announced, which is due to a general increase in demand from companies mobilized for offshore work. We have selected and negotiated a contact with a building supplier and work will start on the site during September with completion scheduled for the second quarter of next year. The project comprises of accommodation for 350 people, 2,000 m2 of offices and 1,000 m2 of warehousing.
The company currently holds over two hectares in its land bank for future development and continues to look for additional land where available.
Aktau
Construction of the first 83 room phase of our Aparthotel is underway with completion expected by the end of the second quarter of 2008. For our beach front development, we expect to award the full architectural project during the third quarter of this year. We are now looking at maximising this prime site with around 15,000 m2 a mixed office and residential development, some for sale and some for rent. Over the next two to three months we will be clearing and preparing the land to start construction in the first quarter of next year with completion expected in the second quarter of 2009.
3.4 hectares of land has been secured in the industrial zone of the city for the development of two 2,000 m2 warehouses and we are in negotiations with two oilfield service companies who require these facilities. We expect to finalise the lease agreements by the end of the year and for construction to be completed during the second quarter of next year.
As Kazakhstan's only commercial port, Aktau is developing at a rapid pace and we are actively looking for additional land for both residential and commercial developments.
Chagala Zere Malls (CZM)
Ust Kamenorgorsk
All approvals and utility connections have been completed through the relevant local authorities. It is expected that the construction contact for the 30,000 m2 mall will be awarded during the third quarter, with construction work starting by the end of the year and completion during the first quarter of 2009. We are in the final stages of negotiations with a number of anchor tenants including a supermarket chain, a white goods retailer and a bank.
Atyrau
The 30,000 m2 Atyrau mall is an integral part of the 7.5 hectare development that Chagala is undertaking. It is approximately three months behind the Ust Kamenorgorst project and we expect completion by the end of the second quarter of 2009. We are in negotiations with the same anchor tenants as those involved at Ust Kamenorgorst.
Outlook
The outlook for the rest of the year looks particularly encouraging given the continuing strength of the international oil and gas market. The Kashagan oil and gas field is developing well, resulting in a substantial increase in workforce and it is expected that this will continue into the foreseeable future. The focus now is on future development and the acquisition of land to build up our land bank. In particular we are looking for additional land in Uralsk that we can use for our planned future sales of residential dwellings and are in the process of identifying suitable land plots in Aktau, Kustanai, Shymkent and Uralsk on which to develop malls, through our CZM venture.
-ends-
For more information:
Tim Abson, Chief Executive
Chagala Group Limited |
+7 (327) 254 3501 |
Peter Otero/Victoria Geoghegan
Bell Pottinger Corporate & Financial |
+ 44 (020) 7861 3232 |
Notes to Editors
- Chagala's shares in the form of global depositary receipts started trading on the main market of the London Stock Exchange plc on the 27th of February 2007
- Chagala, formed in 1994, is the leading real estate developer in West Kazakhstan exploiting real estate development opportunities related to the emerging offshore oil and gas industry in the region.
- The first facility was opened in 1995 in the city of Atyrau on the Caspian Sea and, to date, Atyrau has been the prime area of activity.
- The Company is expanding in centres of oil and gas operations in West Kazakhstan namely: Atyrau, the administrative centre for Kazakhstan's oil & gas industry, Bautino, the supply base for the off-shore oil industry; Aktau, a major Kazakh sea port with oil-loading facilities; and Uralsk, the regional centre connected with the Karachaganak gas field, one of the biggest gas condensate fields in the world.
- The diversified property portfolio includes: a chain of three star hotels catering to businessmen working in the rapidly expanding energy sector, fully-serviced, high quality apartments, a range of stand alone food and beverage outlets, office buildings complying with international standards and a sizeable portfolio of land in strategic locations for future development
- Chagala has a high name recognition in the region as a quality brand and has a record of achieving consistently high occupancy rates from its property portfolio
- The Group has ownership of a sizeable, diverse and well-located land bank acquired at competitive prices with excellent development potential