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REMIC | Real Estate Management In Corporations

Russian Railways is releasing ineffectively used assets


Large business is carrying out a large-scale audit of own assets, revealing non-core property and commercializing them. Thus the strategy of business optimization and attraction of additional funds for development into the company budget is implemented.

JSC “Russian Railways” has also actively joined this process and for 2016-2018 is planning to sell non-core assets in the amount of RUB 24 billion. As the company is one of the major owners of real estate in Russia the strategy of releasing ineffectively used assets may considerably increase company capitalization and decrease the burden on State Treasury.

In the current year the state corporation is selling shares of a number of subsidiary companies as VRK-3, BET, CPPK, Kaluga Plant “Remputmash”, Moscow mechanical plant “Krasny Put” - of the total cost of RUB 14 billion. For example, the state corporation is planning to sell 25% shares of Beteltrans controlled by Russian Railways, the largest manufacturer of concrete sleepers in the Russian Federation, for RUB 1.5 billion to T-Industry Company. In 2014, it has already bought 50% minus two BET shares for RUB 3.025 billion. Currently the deal is being approved in the Government because the package of Russian Railways subsidiary companies may be sold only with the permission of the “White House” since 2004.

The company is also planning within next three years to evaluate and sell the real estate of educational, utility and living purposes - in total 3,953 facilities of residual value RUB 10.2 billion. Every year the company spends about RUB 1.8 billion for their direct, therefore the sale of these non-core assets becomes the most profitable investment. The property will be sold via auctions and to the relevant investors interested in the increase of their share in these assets and ready to pay higher price. Many buildings and constructions were created for old technologies and have low energy efficiency, and even to prepare them to the selling they require investments.

As reports state monopoly president has told that in prospect the company may privatize its telecommunication asset - the TransTelecom Company (TTC). “Currently the strategy of IT development is being prepared, after this the decision on TTC privatization will be taken. Anyway this will not mean controlling interest sale,” Oleg Belozerov commented.