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Property Finance by EBRD

Property Finance by EBRD. Oxana Selska, Senior Banker 25 September 2009 Ekaterinburg. EBRD is:. Established in 1991 Operates in 30 countries from central Europe to central Asia 2,750 signed projects €44.39 bln commitments Total project value €140.47 bln.

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Property Finance by EBRD

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  1. Property Finance by EBRD Oxana Selska, Senior Banker 25 September 2009 Ekaterinburg

  2. EBRD is: • Established in 1991 • Operates in 30 countries from central Europe to central Asia • 2,750 signed projects • €44.39 bln commitments • Total project value €140.47 bln Cumulative commitments €44.39 billion As of 30 June 2009

  3. EBRD Involvement in the Property Sector • Total commitments as of 30 June 2009: • €1.82 billion to 107 projects (including equity participation in funds) • €6.5 billion total project value

  4. Project makes economic sense - no “soft loans” Substantial equity contributions by the project sponsor, incl. cash For commercial projects, need for private investment Usual need for a B lender Limited re-financing EBRD: general project features

  5. Senior, subordinated debt, convertible Syndication Denominated in major currencies Tailor-made security package EBRD Financing Instruments Equity / Mezzanine Debt • Common stock or preferred shares • Minority positions only • Flexible exit strategies • Mezzanine loans

  6. EBRD Portfolio – Geographic Distribution As of 30 June 2009

  7. Current Portfolio by type of financing As of 30 June 2009

  8. Property Commitments by sector As of 30 June 2009

  9. EBRD Real Estate • PARTNERS: • Real Estate Developers • Real Estate Funds • Operators • FINANCIAL INSTRUMENTS: • Senior Debt • Mezzanine / Quasi-Equity • Equity • TYPE: • Office Buildings • Retail / Shopping centres • Warehouses • Mixed-use facilities • Hotels and resorts • Property Funds, Joint-Ventures • Residential

  10. What is on the Market with EBRD • Investments in • Developers • GRDC • GTC • Trigranit • BSR • Tourism & Hospitality • Jadranka Hotels • (Croatia) • Commercial Real Estate • IKEA Mega Mall (Russia) • BD Logistics (Russia) • Raven Russia Novosibirsk (Russia) • Saratov Shopping Centre (Russia) • GTC Regional Retail(Romania) • 19 Avenue Office (Serbia) • Kashirka Mall (Russia) • Chisinau Shopping Mall (Moldova • East Gate – Tirana Shopping Mall (Albania) • Europolis Sema Park (Romania) • Equity Funds • Marbleton Fund • Europolis I, II, III • Heitman I, II, IV • Accession Fund • Global • Polonia • BPH • Bluehouse II • Arka Property Fund • Russia Developer Fund

  11. Typical EBRD financing to real estate • Financing tailored to the needs and risk nature of each project • Long-term (7-10 years) • Local / foreign currency • Target gearing varies • Competitive pricing • Clear and fair distribution of risks and returns between different financing partners • Alignment of each financing feature (timing of disbursement / repayment, level of return, etc.) with the underlying risk nature • Financing predominantly for new developments; acquisition financing limited to date

  12. Structuring solutions • Project Finance can work for large developments • Ring-fenced projects, often with developers/property managers • Equity component can reduce loan pricing • Project completion mitigation (turnkey contracts, sponsor support agreed) • Separation of property assets • Arm’s length leases, separate companies • Financial investors alongside developers/property managers 12

  13. Financing structures Debt Project Finance EBRD Sponsor • A-loan (maximum 35% of total project costs) • Limited recourse to sponsor • Security on real estate • Majority ownership + property management control Debt / Equity Project Company Equity • May be divided into operating and real estate entities Co-financing Banks Minority equity partner(s) • Possible EBRD equity (a small % of debt amount) • B-lender or parallel lender Note: details are simplified for case study 13

  14. Financing structures Equity Finance Sponsor OrdinaryEquity / Portage Equity / Mezzanine Ordinary Equity Project Company EBRD Majority ownership and management control • EBRD exit through a put to Sponsor with pricing in a range depending on performance of the Company. • Alternative is full risk equity or secured debt after certain “Project Completion” financial targets are met by Project Company or mezzanine financing. • EBRD risk can be limited to specified (such as political risk) events with guarantee from Sponsor to apply in other cases. Minority partner Note: details are simplified for case study 14

  15. How to best attract EBRD financing? General principles, applicable to all sectors • Sound integrity • Energy efficient projects • Transparency / early dialogue • Proven track record and market knowledge • Equity cash exposure • Clear business plan • Robust creditworthiness • Equity investors – key driver: ROE • Lenders - key driver: Project cash flows / DSCR

  16. How EBRD can help Direct support • Advice in structuring the project • As an active or impartial shareholder, in equity investments • As an involved lender, in loans Help to secure additional financing • Preferred creditor status to attract commercial lenders • Investors Political comfort Due diligence “stamp”

  17. Property and Tourism team contact Sergei Gutnik, Senior Banker, Property&Tourism EBRD Moscow Tel: + 7 495 787 1111 E-mail: gutniks@ebrd.com

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