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European Bank participates in rehabilitation of historic centre of St Petersburg
Three historic buildings in the centre of St Petersburg will be restored under a US$ 9 million (ECU 6.9 million) common share equity investment approved last week by the Board of Directors of the European Bank for Reconstruction and Development.
The proceeds of the investment in the St Petersburg Property Development Company, a Russian joint stock company, will be used to rehabilitate three neglected 18th and 19th century buildings which currently lack electricity, water and sewage connections.
"The refurbishment of these historical buildings will give St Petersburg a face-lift, provide much needed office and retail space, and earn hard currency", said Ron Freeman, First Vice President in charge of Merchant Banking. "Moreover, it marks the first major effort to develop real estate in St Petersburg privately and may trigger similar property development projects for other investors."
A company will be created between the City of St Petersburg and the European Bank. The City will grant 50-year leases on the three properties, after which the Company will issue new shares to be purchased by a consortium of investors who will be responsible for developing the properties. It is expected that the consortium will be formed by Golub and Company, a major Chicago-based real estate development company, and the Maccaferri Group, a large Italian general contractor and will acquire a 50% stake in the Company. The EBRD investment is contingent upon a satisfactory agreement with the consortium.
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