Manutent Signed Hotel Purchase and Sales Contract with SOK

26 June 2008
Earlier today, Manutent and the largest Finnish trade and hotel group SOK
signed a purchase and sales contract pursuant to which SOK Real Estate Int. OY,
a subsidiary of SOK, purchases the 100% shareholding of Manutent Hotellid OÜ, a
subsidiary of Manutent, in the company Otel Plus which is registered in Russia
and which owns a 255-room four-star hotel on Vassily Island in St. Petersburg. 
The purchase and sales transaction is the logical sequel to the preliminary
lease contract made more than two years ago where the parties agreed on the
terms and conditions of the long-term lease of the hotel after the completion
of its construction and that also stipulated the rights of SOK to buy the
hotel. 
Manutent is pleased to have the opportunity to sell the hotel in the current
market situation where liquidity is very important. The company will earn a
profit of about 1.5 million euros by selling the hotel, which is below the
profit expected at the time the investment decision was made. The profitability
of the hotel's construction decreased because the construction period of the
hotel was longer than expected, which caused additional costs, and because of
the increase in construction prices. 
Real estate prices in St. Petersburg have increased considerably during the
entire development period. However, the increase in market prices has not had a
significant impact on the market price of the completed hotel, because it is
restricted by the cost of the 15-year lease agreed with SOK before the start of
construction. This why it was profitable for both parties to enter into the
contract for sale of the brand new hotel for the price defined with the
purchase option of SOK signed at the same time as the lease contract. 
The hotel will be named Sokos Hotel Vassilievskiy and it has 255 rooms with
more than 500 beds. The hotel has a restaurant, lobby bar, sauna complex and
conference room. The hotel is located on Vassily Island next to the Lieutenant
Smidt Bridge, a short walk from Nevsky Prospect. 
According to the contract signed today, the purchase price of the hotel will be
paid by 26 September 2008 at the latest. Manutent plans to use the proceeds of
the transaction to redeem all the bonds issued by the company for 7 million
euros if necessary and to reduce the loan burden in Latvian development
projects. 
“We appreciate the experience we gained from developing real estate on the St.
Petersburg market very highly. We believe that this will not be the last
development project of Manutent in Russia,” said Märt Vooglaid, Chairman of the
Management Board of Manutent. 

Reimo Raid
Member of Management Board
Tel.: +372 50 16190
reimo@manutent.ee