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EBRD arranges Russia's largest property financing
A US$ 23.1 million (ECU 18.3 million) debt financing package has been arranged by the European Bank for Reconstruction and Development (EBRD) to complete the refurbishment and reconstruction into modern office space of one of St Petersburg's most significant sites, Nevsky Prospekt 25. The Russian company OAO St. Petersburg Property Development Company (OAO Nevsky 25) will receive the loans, which represent the largest limited recourse debt financing package ever assembled for a real estate development in the Russian Federation.
Commenting on the Nevsky 25 transaction, Guy de Selliers, EBRD Deputy Vice President, said: "The EBRD first invested in Nevsky 25 in March 1994. We knew then that raising limited recourse debt to complete the project would be a challenge, but we felt that the EBRD was uniquely placed to take up that challenge. The process took longer than we originally envisaged, mainly due to the time needed to select and engage a general contractor but, with this funding package in place, the last obstacle to completing the redevelopment has been removed."
"Since the outset, the EBRD has shown a steadfast commitment to completing the restoration of Nevsky 25," said Mikail Manevitch, Deputy Governor of St Petersburg and Chairman of the Property Committee. "The project clearly demonstrates the essential role of the private sector in restoring the city's architectural heritage and in creating an infrastructure for commercial activities. We hope the success of Nevsky 25, and similar initiatives between Russian and foreign partners, will encourage others to undertake such projects in the future."
Marc Mogull, Director of the EBRD's Property and Tourism team, added: "With the funding arrangements now finalised and disbursements having commenced, the partners can turn their collective attention to finishing and leasing this landmark building. Even with a work stoppage earlier this year, a substantial amount of construction has already been completed. Alarko Alsim, the general contractor, is now on site and should have the building ready for tenants by next June. Tenant interest has been encouraging, particularly since the elections, and we expect the building to fill quickly."
Academician Igor Spassky, Chairman of OAO Nevsky 25, officiated at the signing of the financing documents and expressed his "great satisfaction at reaching this important milestone". In thanking the Governor of St Petersburg, Vladimir Yakovlev, and his staff for their active support for the project, Academician Spassky extended a formal invitation to the Governor to preside at the opening of the building in June 1997.
The EBRD will provide US$ 6.4 million in loans to OAO Nevsky 25, alongside a US$ 13.5 million loan and stand-by facility from the Overseas Private Investment Corporation and US$ 3.2 million in shareholder loans from the Central Design Bureau for Marine Engineering, a Russian company, and Nevsky Investment L.P., an affiliate of Chicago-based property company Golub Europe LLC.
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