Transcript Title of presentation

Property Finance by EBRD
Oxana Selska, Senior Banker
25 September 2009
Ekaterinburg
EBRD is:
45

Established in 1991

Operates in 30 countries
from central Europe to
central Asia

2,750 signed projects

€44.39 bln commitments
40
35
30
25
20
15
10
5

0
'98 '00 '02 '04 '06 '07 '08 '09
Cumulative commitments
€44.39 billion
As of 30 June 2009
Total project value
€140.47 bln
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
EURO (millions)
Development of new annual commitments
440.0
400.0
360.0
320.0
280.0
240.0
200.0
160.0
120.0
80.0
40.0
0.0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
EBRD: general project features

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 Financing Instruments
Debt

Senior, subordinated debt,
convertible

Syndication

Denominated in major
currencies

Tailor-made security
package
Equity / Mezzanine

Common stock or preferred
shares

Minority positions only

Flexible exit strategies

Mezzanine loans
EBRD Portfolio – Geographic Distribution
7%
61%
Central Europe
15%
South-East Europe
Russia&Ukraine
Central Asia
Regional
1%
As of 30 June 2009
16%
Current Portfolio by type of financing
45%
Equity
55%
As of 30 June 2009
Debt
Property Commitments by sector
6%
9%
Investment Funds
7%
Property Development
Companies
Offices
15%
Residential
Retail/mixed use
4%
45%
6%
8%
Warehousing
Tourism
Hotels
As of 30 June 2009
EBRD Real Estate
TYPE:
PARTNERS:
• Office Buildings
• Real Estate Developers
• Retail / Shopping centres
• Real Estate Funds
• Warehouses
• Operators
• Mixed-use facilities
FINANCIAL INSTRUMENTS:
• Hotels and resorts
• Senior Debt
• Property Funds,
Joint-Ventures
• Mezzanine / Quasi-Equity
• Residential
• Equity
What is on the Market with EBRD
Equity Funds
Commercial Real Estate
•Marbleton Fund
•Europolis I, II, III
•Heitman I, II, IV
•Accession Fund
•Global
•Polonia
•BPH
•Bluehouse II
•Arka Property Fund
•Russia Developer Fund
•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)
Investments in
Developers
•GRDC
•GTC
•Trigranit
•BSR
Tourism & Hospitality
•Jadranka Hotels
•(Croatia)
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
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
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Financing structures
Debt Project Finance
EBRD
Sponsor
•Majority ownership +
property management
control
Debt /
Equity
Equity
Minority equity
partner(s)
•Possible EBRD equity (a small % of
debt amount)
Project Company
•A-loan (maximum 35% of
total project costs)
•Limited recourse to
sponsor
•Security on real estate
•May be divided into
operating and real
estate entities
Co-financing
Banks
•B-lender or parallel lender
Note: details are simplified for case study
13
Financing structures
Equity Finance
Sponsor
Ordinary
Majority ownership
and management
control
Project Company
Equity
Ordinary Equity /
Portage Equity /
Mezzanine
EBRD
•EBRD exit through a put to Sponsor with pricing in a range depending
on performance of the Company.
Minority partner
•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.
Note: details are simplified for case study
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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
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”
Property and Tourism team contact
Sergei Gutnik, Senior Banker, Property&Tourism
EBRD Moscow
Tel: + 7 495 787 1111
E-mail: [email protected]