Property Finance by EBRD Oxana Selska Senior Banker

Property Finance by EBRD Oxana Selska, Senior Banker 25 September 2009 Ekaterinburg

EBRD is: l l As of 30 June 2009 Operates in 30 countries from central Europe to central Asia l 2, 750 signed projects l € 44. 39 bln commitments l Cumulative commitments € 44. 39 billion Established in 1991 Total project value € 140. 47 bln

EBRD Involvement in the Property Sector Total commitments as of 30 June 2009: • € 1. 82 billion to 107 projects (including equity participation in funds) • € 6. 5 billion total project value

EBRD: general project features l l Project makes economic sense - no “soft loans” Substantial equity contributions by the project sponsor, incl. cash l For commercial projects, need for private investment l Usual need for a B lender l Limited re-financing

EBRD Financing Instruments Debt l l Senior, subordinated debt, convertible Syndication Denominated in major currencies Tailor-made security package Equity / Mezzanine l Common stock or preferred shares l Minority positions only l Flexible exit strategies l Mezzanine loans

EBRD Portfolio – Geographic Distribution As of 30 June 2009

Current Portfolio by type of financing As of 30 June 2009

Property Commitments by sector As of 30 June 2009

EBRD Real Estate TYPE: PARTNERS: • Office Buildings • Real Estate Developers • Retail / Shopping centres • Real Estate Funds • Warehouses • Operators • Mixed-use facilities FINANCIAL INSTRUMENTS: • Hotels and resorts • Senior Debt • Property Funds, Joint-Ventures • Mezzanine / Quasi-Equity • Residential • Equity

What is on the Market with EBRD Equity Funds Commercial Real Estate • Marbleton Fund • Europolis I, III • Heitman I, IV • Accession Fund • Global • Polonia • BPH • Bluehouse II • Arka Property Fund • Russia Developer Fund • IKEA Mega Mall (Russia) • BD Logistics (Russia) • Raven Russia Novosibirsk (Russia) • Saratov Shopping Centre (Russia) • GTC Regional Retail (Romania) • 19 Avenue Office (Serbia) • Kashirka Mall (Russia) • Chisinau Shopping Mall (Moldova • East Gate – Tirana Shopping Mall (Albania) • Europolis Sema Park (Romania) Investments in Developers • GRDC • GTC • Trigranit • BSR Tourism & Hospitality • Jadranka Hotels • (Croatia)

Typical EBRD financing to real estate l Financing tailored to the needs and risk nature of each project – Long-term (7 -10 years) – Local / foreign currency – Target gearing varies – Competitive pricing – – – Clear and fair distribution of risks and returns between different financing partners Alignment of each financing feature (timing of disbursement / repayment, level of return, etc. ) with the underlying risk nature Financing predominantly for new developments; acquisition financing limited to date

Structuring solutions l Project Finance can work for large developments – Ring-fenced projects, often with developers/property managers – Equity component can reduce loan pricing – Project completion mitigation (turnkey contracts, sponsor support agreed) l Separation of property assets – Arm’s length leases, separate companies – Financial investors alongside developers/property managers 12

Financing structures Debt Project Finance EBRD Sponsor • Majority ownership + property management control Equity Minority equity partner(s) • Possible EBRD equity (a small % of debt amount) Project Company • May be divided into operating and real estate entities Debt / Equity • A-loan (maximum 35% of total project costs) • Limited recourse to sponsor • Security on real estate Co-financing Banks • B-lender or parallel lender Note: details are simplified for case study 13

Financing structures Equity Finance Sponsor Ordinary Majority ownership and management control Equity Project Company Ordinary Equity / Portage Equity / Mezzanine EBRD • EBRD exit through a put to Sponsor with pricing in a range depending on performance of the Company. Minority partner • Alternative is full risk equity or secured debt after certain “Project Completion” financial targets are met by Project Company or mezzanine financing. • EBRD risk can be limited to specified (such as political risk) events with guarantee from Sponsor to apply in other cases. Note: details are simplified for case study 14

How to best attract EBRD financing? General principles, applicable to all sectors l Sound integrity l Energy efficient projects l Transparency / early dialogue l Proven track record and market knowledge l Equity cash exposure l Clear business plan l Robust creditworthiness – Equity investors – key driver: ROE – Lenders - key driver: Project cash flows / DSCR

How EBRD can help Direct support – Advice in structuring the project – As an active or impartial shareholder, in equity investments – As an involved lender, in loans Help to secure additional financing – Preferred creditor status to attract commercial lenders – Investors Political comfort Due diligence “stamp”

Property and Tourism team contact Sergei Gutnik, Senior Banker, Property&Tourism EBRD Moscow Tel: + 7 495 787 1111 E-mail: gutniks@ebrd. com