OREANDA-NEWS. Public Joint Stock Company “MegaFon” (LSE: MFON), a leading Russian telecommunications operator (“MegaFon” or the “Company”), announces the acquisition of a 49.999% interest in Glanbury Investments Ltd (“Glanbury”), the owner of a landmark office building in the center of Moscow. Pursuant to a decision taken by the Company’s Board of Directors on 29 July 2015, MegaFon has completed a transaction to acquire 49.999% of the share capital of Glanbury Investments Ltd, the owner of Closed Joint Stock Company “Sadovoe Koltso” (“Garden Ring”), which owns and operates a class A office building at 41 Oruzheyny Pereulok (“Oruzheyny Building”) in the center of Moscow. Under the transaction, MegaFon will pay approximately $282 million for its stake in Glanbury and will enter into a joint venture agreement for the operation of the building with Sberbank Investments Limited, a subsidiary of PJSC Sberbank (“Sberbank”), which owns another 49.999% in Glanbury, and with Woodsworth Investments Limited, an independent Russian real estate developer, which owns the remaining 0.002% in Glanbury. Approximately $202 million has been paid by MegaFon to the seller on 9 October 2015 while the remaining portion of the consideration is being deferred for up to one year. MegaFon intends to use the Oruzheyny Building as its new corporate headquarters, and has signed a 10-year lease with Garden Ring. The terms of the lease represent a significant improvement to a binding contract signed with Garden Ring in 2012, and will result in up to $98 million in savings on rent for MegaFon over the next ten years. The amount of rental payments has been fixed in Rubles, thus eliminating foreign exchange risk related to MegaFon rental costs. Its lease of the Oruzheyny Building allows MegaFon to move to a single location up to 4 000 people who currently occupy six separate properties in various parts of Moscow, thereby reducing overheads and improving communication between various parts of the Company. The Oruzheyny Building has a gross leasable area of approximately 115,000 sq.m. Together with MegaFon, Sberbank will be a long-term premier anchor tenant, thereby ensuring the financial stability of the project and contributing to the attractiveness of the project as a real estate investment. Mr. Gevork Vermishyan, CFO of MegaFon, commented: “This is a unique opportunity for us to consolidate our Moscow operations from six premises into one location thus enhancing communication efficiency. Further, it allows MegaFon to bring substantial lease savings and mitigate FX risk by fixing rental payments in Rubles, which is in line with our strategy of prudent financial management. We are entering the real estate market at its bottom, and will own a building occupied by two high credit quality tenants. We also welcome the chance to create a strong partnership with Sberbank, which is one of our principal lenders and with whom we have enjoyed successful commercial relations for many years.”