RusRating lowers OOO StroiForm credit rating and changes outlook to “negative”

The rating cut reflects cancellation of an investment contract and the resulting decline in creditworthiness due to a fall in expected cash flows, as well as a downward trend in sales on the Company’s main project.

The negative outlook reflects the growing risk of continuing weak sales on that same project.

The rating is itself based on close business ties to a major real estate development group and the high probability of debt re-financing.

Constraining factors include high uncertainty risks in the real estate market, a high debt burden, a minimal market presence, and the limited liquidity of the Company’s assets.

OOO StroiForm is a smaller limited-liability Russian real estate development company whose main current project is the Peresvet-Karasunski multi-family residential complex in Krasnodar. It has also invested in the Terletski Park residential complex in Moscow (formerly known as Moskovskiye Okna). The Peresvet-Karasunski project involves 4 independently-standing 17-storey cast-in-place economy-class concrete-frame blocks of flats with a total area of 67 700 m2. The Terletski Park complex, a shared-equity project in which StroiForm holds a stake, is located in Novogireyevo district. It consists of brick/cast-in-place residential structures of 12-21 storeys covering 153 100 m2, which are scheduled for completion in late 2016.

The Company is owned by its General Director, Oxana Kichenko, together with four companies that have close business ties to a major real estate development group whose combined portfolio exceeds 900 000 m2.

At this time the Company’s debt burden is very high. Cash flow gaps are possible in the foreseeable future. On the basis of official accounts most assets are classified as material reserves (flats for sale) or accounts receivable. Liabilities consist mainly of borrowed funds.