The FINANCIAL -- The EBRD and IFC, a member of the World Bank Group, are boosting the retail sector in Serbia, Montenegro and FYR Macedonia with €164 million in loans to the investment firm Hystead.
Hystead is a London-based company and an important investor in the Western Balkans. It owns Delta City shopping malls in Belgrade and Podgorica as well as Skopje City Mall.
The financial package includes a €60 million loan from the EBRD and a €104 million loan from IFC. IFC’s financing includes a €60 million “A” loan from IFC’s own account and a loan of €44 million from IFC’s Managed Co-Lending Portfolio Program (MCPP). Funding for the loan under IFC’s MCPP is provided by the People’s Bank of China, according to the EBRD.
The funds will refinance an existing loan and improve the company’s capital structure. They will also support the expansion and upgrade of the three shopping centres.
Upgrades will focus on adopting international environmental and social standards, implementing green building practices, efficient use of energy, rational water and resource management, waste minimisation and recycling, as well as the use of high-performing equipment and technologies. These improvements will enable the company to certify the retail centres under an international sustainability scheme. The retail centres in Skopje and Podgorica will be the first ones in their respective countries to receive such certification. Their example will pave the way to more sustainable building management in the region.
In addition, Hystead is committed to creating opportunities for young people and preparing them for the job market. The company is planning to partner with local education institutions in the three countries to develop curricula on sustainable building management.
Furthermore, IFC and EBRD loans will help Hystead develop as a platform to attract future funding for retail property growth in the eastern Europe region.
In the Western Balkans region, local companies that operate income-generating commercial property have not been able to access international capital markets to fund their growth. Such companies have not yet been structured as REITs and lacked the scale, diversification, and standards required by international and regional institutional investors.
With the help of IFC and EBRD financing, Hystead, a REIT focused on retail property assets in the region, will address these challenges. Hystead intends to aggregate a diversified portfolio of quality income-generating commercial properties with the scale, standards and diversification needed to attract institutional investors seeking property exposure in the region.
Hystead CEO Alex Papageorgiou says: “We are pleased to partner with the EBRD and IFC and their loan is testament to the quality of Hystead’s portfolio and asset management expertise. We strive to create value for stakeholders, while balancing our impact on the environment and the communities in which we operate; this is evident through our planned commitment to sustainable building management and youth development programmes.”
Hystead was established by Hyprop Investments Limited, a South African real estate investment trust (REIT) with a strong track record of operating shopping malls together with its joint venture partner PDI, a company associated with Louis Norval, a non-executive director of Hyprop Investments Limited.
Phil Bennett, EBRD First Vice President, said: “We in particular applaud the company’s commitment to offering greater training and job opportunities to young people. Sustainable management of buildings is a complex, interdisciplinary area and on-the-job learning is crucial for those who seek a career in real estate project planning and management with focus on environment. Hystead is a great example of foreign investment bringing know-how, creating jobs and boosting the regional economy.”
“This is IFC’s third capital markets-focused investment in commercial property in the eastern Europe region in the last 18 months. It’s an exciting time for IFC, as we find innovative ways to support the property sector,” said Lukas Casey, IFC Manager for Manufacturing and Services for the Europe, Middle East and North Africa regions. “We are very pleased to support skills training, retail infrastructure, green buildings, south-south investments and attracting commercial capital to the region.”
Supporting job-generating foreign direct investment in the Balkans countries is among the priorities of both the EBRD and IFC.