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Property firm Immofinanz offers Russian tenants temporary FX peg

VIENNA (Reuters) – Austrian property company Immofinanz has offered tenants in its five Moscow shopping centres a temporary fixed exchange rate for rental payments at a time of sharp volatility in the rouble.

It offered a rate of 40 roubles per dollar and 50 roubles per euro for three months, which corresponds to exchange rates from early October. The rate lasts from January until March 2015, it said in a statement.

The rouble was trading at around 52.79 against the dollar on Thursday, and at 64.04 versus the euro .  

Immofinanz’s tenants mostly pay rent in dollars or euros.

The offer applies for tenants which have not already struck agreements for rent reductions, and stipulates that tenants fully repay any outstanding rent by the end of February 2015.

“The sharp drop in the rouble and loss of purchasing power of Russian consumers have put many retailers under pressure. Our offer for a temporary FX fixing of rent will allow a quick solution before year-end for those retailers with whom we haven’t already agreed a temporary reduction,” Chief Executive Eduard Zehetner said.

“We do not expect any significant improvement in the situation in Russia over the short term. However, we believe in the Russian market … and we will overcome the current difficulties together with our tenants.”

Immofinanz said the measure’s impact on its business would hinge on how many tenants took up the offer and exchange rate developments. While it would lead to further temporary reductions of rental income, tenants would be able to repay outstanding rents at a more favourable exchange rate than the current one.

Zehetner said last week Immofinanz expected rental income in Russia to fall around 10 percent in its 2014/15 fiscal year.

(Reporting by Michael Shields; Editing by Pravin Char)

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