Back to the list

Industrial BTS deals: key [legal/technical] aspects of site selection and contracting


On July 22, the AEB Real Estate Committee and the Industrial Construction Committee of AIP Russia held an open joint webinar dedicated to important legal and technical aspects of site selection and contracting in industrial BTS deals.

Tatyana Kovalenko, chairperson of the Committees, opened the session by pointing out that the Russian built-to-suit, or BTS, market (which implies building a facility on the "turnkey" basis, for its future sale or lease to the customer) is intensively developing. Even though this format isn't new, companies are increasingly in need of commercial real estate objects (warehouses, production and office buildings) that are customized to their needs, allow to implement all the necessary processes and to accommodate people and production most effectively. 

Evgeny Bumagin, Head of Industrial and Warehousing department at JLL Russia, gave an overview of the warehouse market regarding BTS-projects, with a focus on the Moscow region, and made a forecast on the cost of such construction until the end of the year. Referring to statistical data, the speaker underlined that today there is a decreasing vacancy rate and increasing competition among tenants - due to a combination of economic factors and the development of e-commerce. In addition, Evgeny informed the audience about the existing options for projects with different implementation timeframes as well as about privileges and preferences for new projects in the Moscow region.

The next speakers from ALRUD, Partner Andrey Zharskiy and Senior Consultant Stanislav Veselov, highlighted the problem of structuring a deal on future property and main legal issues on the sale and purchase agreement, as well as common approaches and certain nuances of due diligence of an industrial site. Andrey Zharskiy told about the options for future property acquisition transactions and specifics of certain types of agreements, their contents, main risks, financial obligations of the parties, liability and methods of legal protection. Stanislav Veselov considered questions of legal investigation of the industrial site. The expert listed the necessary documents of title and town planning and the circumstances requiring special verification, with due diligence and the buyer's good faith principle taken into account. 

Sergey Uminov, Capital Construction Division Head, Project & Development Services, at CUSHMAN & WAKEFIELD, spoke about benefits of BTS deals and the role of a technical consultant in all major stages of those: from contract drafting to facility management. In particular, the speaker focused on the steps to be taken prior to signing a contract, on the risks in case of any omissions at this stage, and pointed out a number of items to be mentioned in the contract.

Along with the reports of the previous speakers Ekaterina Kalinina, Head of Real Estate & Regulatory Practice at SCHNEIDER GROUP, outlined the specific features of the sale and purchase agreement for investors and developers. Among other things the expert stressed the importance of environmental, financial and compliance inspections at the pre-contract stage of the project, especially for foreign companies, and described existing financing schemes and risk distributions between an investor and a developer. In conclusion, Ekaterina shared some real cases from the company's practice.

The webinar ended with answers to listeners' questions and a discussion among participants.