Sberbank and Rostelecom to increase capital of sub-fund for real estate redevelopment and management to RUB 8.8 billion

December 26, 2017, Moscow - Sberbank and Rostelecom have signed an agreement on a parity basis to increase the capital of the Telecom 5 commercial real estate sub-fund joint venture (JV) to RUB 8.8 billion. The transaction was organised with the participation of Sberbank Investments LLC, a 100% subsidiary of Sberbank. Sberbank and Rostelecom will make an additional contribution of RUB 2.4 billion each to the JV, maintaining 50% stake in the company.

The main objective of the capital increase is to purchase 22 additional real estate properties with a total area of 139,000 square meters in Moscow, the Moscow Region, and Saint Petersburg. This will help to further realise the investment and development potential of these properties. The portfolio managed by the JV has been increased to 38 properties in 11 Russian cities. The total area of the properties owned by the JV now exceeds 239,000 square meters. These properties previously belonged to Rostelecom.

Sberbank and Rostelecom established the JV on the basis of the first 16 properties in December 2016. The parties signed a letter of intent with LEGENDA Intelligent Development on the implementation of a development project at one of the properties in Saint Petersburg. In addition, more than 10 offers have been received from investors to purchase or jointly develop properties accounting for about 40% of the real estate portfolio of the JV, including the transaction of 2017.

James Corrigan, Managing Director at Sberbank Investments LLC, commented: "Rostelecom is one of our key clients and a long-term partner. This transaction is a great example of our partnership in a non-core business area. The project proved attractive for Sberbank clients, who acted as investors, for example, LEGENDA Intelligent Development. These developments show that the strategy is successful and this is a positive signal for our business and overall for the Russian market."

Dmitry Kurakin, Vice President and Administrative Director of Rostelecom, said: "We are moving forward with confidence, and by participating in this project, we can try a fundamentally new model for monetization of Rostelecom's extensive real estate assets. Given today's sluggish market conditions, it is rather difficult to employ traditional methods such as the release and selling. Therefore, the accumulation of assets with the development potential through external projects launched together with a reputable financial partner allows us to create a professional asset management team and to find ways to organise the turnover of the properties in the most appropriate way, including, in some cases, maintaining Rostelecom's shareholding in such properties. I believe that our companies will see the results from this joint project next year."

# # #

Rostelecom (www.rostelecom.ru) is one of the largest national telecommunications operators in Russia and Europe. The Company operates in all segments of the telecommunications market and covers millions of households in Russia.

Rostelecom is an undisputable leader of the broadband and pay-TV markets in Russia with over 12.7 million fixed-line broadband subscribers and over 9.7 million pay-TV subscribers, over 4.7 million of which are subscribed to Rostelecom's IPTV services.

The Group is a market leader in providing telecommunications services to government bodies and corporates of all levels.

Rostelecom is an important innovator that provides solutions in the field of E-Government, cloud computing, healthcare, education, security and housing & utility services.

Sberbank is Russia's largest bank and a leading global financial institution. Sberbank holds almost one third of aggregate Russian banking sector assets, it is the key lender to the national economy and the biggest deposit taker in Russia. The Central Bank of the Russian Federation is the founder and principal shareholder of Sberbank owning 50% of the Bank's authorized capital plus one voting share, with the remaining 50% held by domestic and international investors. Sberbank has more than 145 million customers in 21 countries. Sberbank has the largest distribution network in Russia with almost 15,000 branches, and its international operations include UK, US, CIS, Central and Eastern Europe, India, China, Turkey and other countries.

The Bank holds the general banking license No.1481 issued by the Bank of Russia. Official websites of the Bank: www.sberbank.com 
(Sberbank Group website), www.sberbank.ru.