Redix Hotel Tbilisi

Location:

Georgia

Project number:

42001

Business sector:

Property and tourism

Notice type:

Private

Environmental category:

B

Target board date:

26 Nov 2012

Status:

Cancelled

PSD disclosed:

09 Nov 2011

Translated version of this PSD: Georgian

Project Description

The EBRD is considering a senior loan to 64 Chavchavadze LLC (the “Borrower”) to finance the development, construction and operation of a mid-range hotel in the capital Tbilisi. It would be run under the Hilton Garden Inn brand by the hotel operator Hilton Worldwide (the “Project”). The Client is close to finalising the negotiations with Hilton Worldwide.

The Project site is located on Chavchavadze Avenue, close to the city centre and major corporate demand generators, and would feature 160 rooms, 1900 square metres of retail space and approximately 80 underground parking units.

Transition Impact

The Project is expected to further increase competition in the mid-range hotel sector, which is currently still relatively small and fragmented. There are only two international branded hotels in operation in the mid-market segment in Tbilisi and very few in the pipeline. Non-branded mid-market hotels are classified according to the local rating system and the vast majority do not meet international standards. The Project will thus improve standards of accommodation and services offered at affordable rates to both leisure and business travellers. The Project will also set standards of energy efficiency and sustainability by introducing modern technologies and techniques. The installation of these technologies is likely to be undertaken by local companies which may thus benefit from dispersion of skills needed for a successful implementation of such technologies in any building design.

The Client

64 Chavchavadze LLC is a limited liability company incorporated in Georgia, whose ultimate beneficiaries are Mr. Lasha Papashvili and Mr. Sulkhan Papashvili.

Mr. Lasha Papashvili will co-Sponsor the Project jointly with the Georgian Real Estate Holding, a holding company set up in Georgia.

EBRD Finance

US$ 18.66 million, including US$ 15.55 million committed tranche and US$ 3.11 million uncommitted tranche.

Project Cost

US$ 31.1 million.

Environmental Impact

1. Screening Categories
The Project was categorised “B” by 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 environmental and social impacts which can be readily addressed through mitigation measures and an action plan.

2. Information Received
The client completed an Environmental, Energy Efficiency and Social Questionnaire, and this has been reviewed by environmental and social staff of EBRD. EBRD’s energy efficiency consultants carried out an energy efficiency performance analysis by visiting the site in October, 2011.

3. Environmental and Social Issues
Due diligence showed that the Project is not associated with significant environmental and social impacts. The Project is in line with the city planning and has been developed in compliance with legal requirements. The Project will create new employment by the opening of the new hotel. The client is familiar with the Bank's environmental and social requirements through a precedent project with EBRD. The hotel operator, Hilton Worldwide, is an internationally reputable operator, which operates 3,800 hotels in 91 countries worldwide. Hilton Worldwide is committed to following the principles of the Global Compact and the Global Reporting Initiatives, both arising from United Nations sustainability initiatives; Hilton Worldwide has an Environment Charter which is used as an environmental management tool for every Hilton Worldwide operated hotel; and specific food safety systems will be implemented ahead of the hotel inauguration following the world-wide Hilton Worldwide standards. The energy performance assessment showed overall energy consumption estimate is within the range of international benchmarks for energy consumption for this type of buildings. Hilton's specific design and life & fire safety requirements which are in line with international good practice need to be met by the building design.

4. Summary of the Environmental and Social Action Plan (ESAP)
An ESAP is currently being developed to address the Environmental Management, Occupational Health and Safety issues, grievance mechanisms for the neighbours and workers, and life and fire safety issues during the construction and operational periods.

Technical Cooperation

The Project qualifies as a Built Environment Project with substantial sustainable energy investments, and has benefited from a Technical & Energy Performance Assessment under the Framework for Enhancing Sustainable Energy and Transition Impact in the Built Environment funded by the Japan-SEI TC Fund, provided by the Government of Japan. A consultant engaged by Energy Efficiency and Climate Change Team has assessed the performance of the Project, assisted in identification of the overall Sustainable Energy Investment and proposed further energy saving opportunities suitable for the development. In addition the consultant provided a detailed cost-benefit analysis of the proposed sustainable energy investments and evaluated their impact on the overall energy performance of the building.

Company Contact

Yulia Stepanova
Senior Banker, EBRD, Property and Tourism
Tel: +90 212 386 1148
Email: stepanoj@ebrd.com

 

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