EBRD Promotes Affordable Hotels in Russian Regions
OREANDA-NEWS. July 14, 2010. The EBRD and the International Finance Corporation (IFC) are jointly raising over EUR50 million in long-term debt and equity to fill a need for better hotel accommodation in the regions of Russia by funding the building over the next two years of five mid-range hotels meeting international standards and targeted at business travelers, reported the press-centre of EBRD.
All five will be operated under a long-term contract by France’s Accor Group, a global leader in hotel services. Accor S.A. is listed on the Paris stock exchange.
The absence of hotels with good quality service at affordable prices outside Moscow and St. Petersburg has long been identified as a major constraint on the flow of foreign investment in the regions of Russia. This project will alleviate this problem by adding 750 rooms to the market in what are four key regional cities for investors.
The project envisages the construction of hotels under the Ibis brand in each of the following cities: Samara 1,100 km to the south of Moscow, the western exclave of Kaliningrad and the city of Yaroslav 250 km northwest of Moscow. In addition, two hotels will be built in the Siberian city of Krasnoyarsk, one Ibis and one Novotel.
The EBRD and IFC, a member of the World Bank group, have each raised EUR 22.6 million in debt financing for the project.
In addition, the EBRD will acquire a minority stake in the Netherlands-registered Russian Hotel Investments B.V., an investee company set up for this project, for EUR 3.2 million while IFC will invest EUR 2.2 million in it.
The debt-financing, which will be paid out in four tranches corresponding to each of the Russian cities involved, will have a 12-year maturity for the Samara and Yaroslav portions and a 13-year one for the Kaliningrad and Krasnoyarsk ones.
The borrowers are four special purpose vehicles set up for the construction of these hotels and incorporated in Russia. These four companies are fully owned by Russian Hotel Investments representing the interests of a group of Turkish investors including Afken REIT, part of Akfen Holding, a leading Turkish investment conglomerate, and Kasa Construction, one of the important contractors in the Russian Federation, controlled by the principals of Turkey’s Kayi and Insa groups.
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