|
EBRD finances eastern Europe's largest office development
A US$ 56.7 million (ECU 45 million) financing package for the largest private sector office development undertaken to date in central and eastern Europe has been arranged by the European Bank for Reconstruction and Development (EBRD) and Austria's Creditanstalt Bankverein for the construction of the Warsaw Financial Center.
"This is the third office project for the EBRD in Warsaw, and a logical culmination of the Bank's efforts to kick-start office development in the city. The EBRD developed the financing models for these types of projects in Poland, and took the early risks," said Marc Mogull, Director of the EBRD's Property and Tourism team. "Certainly this project is large by local standards, so the sponsor's ability to attract forward space commitments for nearly 40 per cent of the space was a key part of our financing decision. Even a project as large as this, however, will be unable to satisfy the increasing demand for modern office space in Warsaw, so we hope the project's success will attract other property lenders to enter the Warsaw market."
The debt package, for which the EBRD is funding US$ 14.5 million and US$ 42.2 million is to be syndicated to a consortium of commercial banks, will be made to Warsaw Financial Center Sp. z o.o., a Polish limited liability company. The largest forward space commitment in the project was made by the Austrian bank, Creditanstalt Bankverein, co-arranger of the syndicated loan.
"We are pleased to be associated with the entire financing and development team for this project," said Otto Ilchmann, Assistant General Manager of Creditanstalt-Bankverein in Vienna which, as an international financial services group, has the most extensive network of commercial and investment banking operations in central and eastern Europe. "The Warsaw Financial Center will provide us with an excellent opportunity to consolidate all of our commercial, investment and leasing operating units in a premier, centrally located office tower. We look forward to our future at Warsaw's most prestigious business address."
The developer of the Warsaw Financial Center is Golub Raczkiewicz Epstein Partnership Ltd., which consists of Golub Europe Ltd. (a limited liability company whose members are affiliates of General Electric Capital Corporation and Chicago-based developer Golub & Company), Maciej Raczkiewicz and Epstein Engineering, a Chicago and Warsaw-based architectural and engineering firm. General Electric International has also signed a major commitment for space in the project.
Michael Newman, President and CEO of Golub & Company, said: "We had no doubts that if the financing could be organised for the Warsaw Financial Center, the rapidly growing Polish economy would guarantee continuing demand for quality office space from international and Polish companies." Maciej Raczkiewicz, President of Epstein's Warsaw affiliate, added: "The design team worked with Warsaw authorities to ensure that the building would be sensitive to the scale of both the old and new Warsaw. It will be architecturally noteworthy and unparalleled in technical quality."
A severe shortage in international quality office space has made rental levels in Warsaw among the highest in Europe. Completion of the Warsaw Financial Center, towards the end of 1998, should help ease the shortage. The building is centrally located in Warsaw, at the corner of ulitca Swietokrzyska and Emilii Plater, and will provide over 50,000 rentable square metres of superior quality office accommodation. Total cost of the project is expected to be approximately US$ 115 million.
Additional equity funding for the project was provided by Northwestern Mutual Life Insurance Company, the sixth largest US-based life insurance company (Milwaukee WI) and a leading US pension fund, advised by Chicago-based advisor Heitman Capital Management. Warsaw Financial Center is the second project developed jointly by Golub and Epstein in Warsaw, following the Warsaw Corporate Center, which was completed in 1993.
|
