The EBRD is considering investing up to USD 50 million of equity for a significant minority stake in Amtel Properties Development Ltd (“Amtel”, the “Company”).
The project will largely support real estate developments in Early Transition Countries such as Belarus and Georgia, as well as in Russia and Ukraine. The primary sub-projects include (i) a 3-star, 120 room Hampton Hilton hotel and a class B+ office with total GLA of 4,250m² both located in the central part of Minsk, Belarus, (ii) a class B cold storage logistic centre near Tbilisi airport, Georgia, with total GLA of 16,000m² of cold storage warehouse space and 25,200m² of container yard.
The project will address the limited supply of quality logistic centres in Georgia and of internationally branded 3-star hotels in Belarus. The project will also contribute to setting sustainability standards in the property markets of Georgia and Belarus, which are expected to be above the standards currently observed in these markets.
The investment in the logistic centre in Georgia will support market expansion in the warehouse segment of the property market in Georgia, in which a large supply gap of modern cold storage facilities exists. The development will also lead to facilitating the supply of locally produced agricultural products from the regions to the capital city.
The 3-star hotel development in Minsk will promote greater competition in the hospitality sector in Belarus, which remains under-supplied with internationally branded quality mid-market hotels. The development will encourage locally managed competitors to improve their facilities through renovation and employ more professional property managers and hotel operators in the region. Furthermore, the project is expected to achieve an overall energy performance, compliant with the best international industry benchmarks and at least 20% beyond the current common market practice in Belarus as well as installation of the best available techniques.
Amtel Properties Development Ltd, a diversified regional real estate developer focussing primarily on construction and operation of commercial and residential real estate assets across Russia, Ukraine, Georgia and Belarus, including hotels, warehouses, offices and housing.
An equity investment of up to USD 50 million in Amtel Properties Development Ltd.
Approximately USD 507 million to be financed by USD 170 million of Amtel equity, USD 287.5 million of debt, and USD 50 million of EBRD equity.
Screening Categories: The project was categorized “B” by European Bank for Reconstruction and Development (EBRD), which means that an environmental and social analysis was required by the Bank, in accordance with the 2008 Environmental and Social Policy and Performance Requirements.
The Project has some site specific environmental and social impacts which can be readily addressed by adequate mitigation measures.
Environmental and Social Issues: The completed Environmental and Social Questionnaire and technical due diligence reports on the existing two sub-projects in Minsk and Tbilisi as well as the descriptions of potential additional sub-projects have been reviewed. Due diligence indicated that the client's environmental and social risk management capacities are adequate. Third party environmental and social audits will be required if any additional potential sub-projects are to be included as new sub-projects. The client is required to comply with EBRD Environmental and Social Procedures for Multiple Property Developments as well as to ensure that each sub-project complies with EBRD Performance Requirements.
Environmental and Social Monitoring: EBRD will monitor the Project’s environmental and social performance by reviewing an annual environmental and social report as well as site visits if deemed necessary.
Ove Arup & Partners International Ltd, UK has been contracted under the regional framework “Sustainable Energy Support for Built Environment Projects”, funded by the SSF for provision of TC support for energy performance assessment and identification of energy efficiency opportunities. Under this TC support, the Bank has engaged the energy efficiency consultant to perform energy performance assessment and identification of energy efficiency opportunities in sub-projects with the aim to introduce additional cost-effective opportunities leading to reduction of operational costs of the assets. Identification of opportunities is conducted by the Consultant in cooperation with the Client’s technical and design team. However any engineering, design, and commissioning works on implementation of opportunities identified are left on the Client to cover. In addition, the Bank’s funding will any energy and water efficiency opportunities identified within the TC.
The Project is a minority equity investment in Amtel Properties Development Ltd (the “Company” or “Amtel”), a real estate developer incorporated in the Cayman Islands with a focus on income producing assets in Russia, Ukraine, Georgia and Belarus. The Company is acting as a developer and asset manager of all its projects, with the exception of the hotels, whose management is outsourced to professional hospitality companies such as Hilton and Intercontinental.
The Bank's equity proceeds have been used to finance the construction of the Hampton by Hilton Hotel in Minsk and the Klin Logistic Centre in the Moscow region. Furthermore, EBRD’s investment was used towards renovation and rebranding of Iris Congress Hotel in Moscow under the Holiday Inn brand, construction of the second phase of the Kiev Logistics Park and Atria City Teremki, a residential development in Kiev region.
The project was expected to generate transition impact in multiple countries, mainly Georgia, Ukraine and Belarus, by leading the market expansion of the warehouse/logistics real estate market, increasing competition in the Belarusian hotel and office segments, as well as improving business standards. Nevertheless, the project has only partly achieved the envisaged impact. This is due to the delays in starting the Tbilisi sub-project and therefore having an impact on the Georgian real estate market, the more limited than expected sustainability improvements in relation to the Belarusian component of the project, as well as the unlikely IPO given the changed and difficult market conditions that have been exacerbated by the outbreak of the Covid-19 pandemic.
Amtel Properties Development Ltd
Daniel Gupta, CEO
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