Reuters

June 1, 2007

Dragon Ukrainian Properties & Development became the first Ukrainian real estate specialist to list on London's Alternative Investment Market (AIM) on Friday, raising $208 million.

The newly formed, Isle of Man-incorporated company, which focuses on development and redevelopment of commercial property in Europe's second-largest country, placed 104 million shares at $2 dollars each, it said in a statement.

The company said it was targeting an annual dividend yield between 7 percent and 10 percent and that it expected to invest the proceeds of the IPO within 2-1/2 years.

The company will be managed by Dragon Capital Partners, an affiliate of Ukrainian investment banking and asset management group Dragon Capital.

The shares had traded in a range of 110 pence ($2.18) to 112 pence by 1030 GMT.

Soaring prices and the closing gap between the yield generated by UK commercial property investment and the cost of borrowing have forced many UK institutional investors to consider increasing the ratio of higher-risk, higher-yielding overseas property assets in their portfolios.

Such a trend has helped property companies active in markets as diverse as Macau and Montenegro gain a presence on AIM, one of the world's fastest-growing stock exchanges.

Growth in the Ukrainian real estate market is driven by strong domestic and international demand for high-quality retail, warehouse and office real estate to replace the identikit concrete blocks which have dominated Ukraine's city skylines since the Communist era.

Dragon said that while supply of such real estate remains piecemeal, the growing demand is expected to exert upward pressure on rents and capital values across the country.

Foreign direct investment into Ukraine reached $4.5 billion in 2006 as the government continues to make strides to improve transparency and eliminate barriers to international investment.

Ukraine is in the final stages of a bid to enter the World Trade Organisation. Its Institute for Economic Research and Policy Consulting has forecast GDP growth of around 6 percent for 2007.