Further update re negotiations with VTB Bank

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION

IN OR INTO THE RUSSIAN FEDERATION, THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN

AFI DEVELOPMENT PLC

("AFI DEVELOPMENT" OR "THE COMPANY")

FURTHER UPDATE RE NEGOTIATIONS WITH VTB BANK

London, 16 June 2016 - Further to the Company's previous announcements regarding its negotiations with VTB Bank PJSC ("the Bank"), the Company announces today that the Bank and Mr Lev Leviev, the Company's Executive Chairman, are in discussions regarding an alternative proposal to the previously announced planned disposal by the Company on 26th May 2016 of certain of its properties to the Bank (the "Disposal") in consideration of the settlement of the Group's obligations to the Bank under loan facilities provided to Krown Investments LLC (the "Ozerkovskaya III Loan Facility") and Bellgate Construction Limited (the "AFIMALL City Loan Facility") (together the "Loan Facilities").

Mr Leviev has proposed to provide a personal guarantee to the Bank in respect of Krown Investments LLC' obligations under the Ozerkovskaya III Loan Facility (current balance US$191.1 million) for a period of 12 months from execution of legally binding documents between the Bank and Mr Leviev (the "Guarantee").

In exchange for the Guarantee, it is proposed that the Bank would grant the Company a 10 month moratorium during which the Bank would agree not to accelerate the Loan Facilities and not to enforce its security under the Loan Facilities.

The Guarantee is subject to Mr Leviev retaining effective control over the Company (Mr Leviev currently controls directly and indirectly 48.13% of the voting rights in Africa Israel Investments Ltd, which is the controlling shareholder of the Company with a 64.88% in the Company). Should Mr Leviev cease to control the Company for whatever reason, the Guarantee would terminate.

In the event that the Guarantee is entered into, the Company will make all possible efforts, within the 10 month moratorium agreed with the Bank, to dispose of the Ozerkovskaya III project and potentially some other projects to repay the loan provided to Krown Investments LLC.

The Guarantee is subject to further negotiation and documentation, which the parties are aiming to agree and complete by 1st August 2016, and accordingly the terms of the Guarantee may change. The Bank has confirmed to the Company that the potential execution and completion of the Disposal (as defined in the previous announcements by the Company) will be postponed till 1 August 2016 and will take place only in case the Bank and Mr Leviev will not complete the Guarantee by then. Accordingly, in the event that the Guarantee is not agreed or the Disposal is not completed by 1st August 2016 and the Bank exercises it rights under the loan facility agreements, it remains highly probable that there would be a material adverse effect on the Group's operations and on the value of the Company's shares.

- ENDS -

For further information, please contact:

AFI Development, +7 495 796 9988

Ilya Kutnov

Citigate Dewe Rogerson, London +44 20 7638 9571

David Westover

Sandra Novakov

Marina Zakharova de Calero

About AFI Development

AFI Development is one of the leading real estate development companies operating in Russia. Established in 2001, AFI Development is a publicly traded subsidiary of Africa Israel Investments Ltd.

AFI Development is listed on the Main Market of the London Stock Exchange and aims to deliver shareholder value through a commitment to innovation and continuous project development, coupled with the highest standards of design, construction and quality of customer service.

AFI Development focuses on developing and redeveloping high quality commercial and residential real estate assets across Russia, with Moscow being its main market. The Company's existing portfolio comprises commercial projects focused on offices, shopping centers, hotels and mixed-use properties, and residential projects. AFI Development's strategy is to sell the residential properties it develops and to either lease the commercial properties or sell them for a favorable return.

AFI Development is a leading force in urban regeneration, breathing new life into city squares and neighborhoods and transforming congested and underdeveloped areas into thriving new communities. The Company's long-term, large-scale regeneration and city infrastructure projects establish the necessary groundwork for the successful launch of commercial and residential properties, providing a strong base for future.