New Europe – EBRD loan assists Azeri real estate sector

Azerbaijan’s real estate sector got a fresh boost recently with the help of a 10.2 million Euro loan from the European Bank for Reconstruction and Development to Neptune Ltd and Lybra Ltd, owners and operators of Landmark I and II. These are very highly developed commercial office buildings near the capital city of Baku’s historic centre.

The Landmark I and II buildings currently rent out office accommodation to international tenants including AIG, Exxon Mobil, Connoco Phillips, Statoil, and the US and the British embassies.

Funding will help the companies reorganise their existing debt and acquire long term financing other unavailable in Azerbaijan’s property sector. The Director for the Azerbaijan office of the EBRD, George Krivicky, said this project will provide both companies with finance to operate much-needed office space in Baku. Krivicky added that the project is in line with the bank’s strategy to finance projects beyond the country’s oil and gas sector.

It is expected that the project will also demonstrate to local banks that companies in Azerbaijan with strong management teams that are open to improving their corporate governance and accounting standards to international standards should be considered for longer-term financing.

Director of Property and Tourism team at the EBRD Edgar Rosenmayr said the financing and security structure, including its long-term maturity, has set a benchmark for real-estate financing in Azerbaijan. It should serve as a good example for future projects in the sector, and accelerate the establishment and development of a viable real estate market, he added.

According to Bertrand Millot, vice president Portfolio Management at IFPT — a Canadian investment fund which co-financed the project with 5.1 million Euro — “This project is a prime example of a well structured opportunity for private lenders to participate in the economic growth of countries such as Azerbaijan. It shows that forward thinking, quality oriented and transparent entrepreneurs can attract the international funds they need to finance their developments.”