The bank is backing the largest private development in central Europe, as part of its commitment to the Polish capital.
The European Bank for Reconstruction & Development and a consortium of commercial banks have jointly provided financing for the 50,000 m2 Warsaw Financial Center in Poland.
The EBRD is funding $14.5m and $42.2m is to be syndicated to banks led by Creditanstalt-Bankverein of Vienna.
The project will be the largest private office development in central Europe.
Mark Mogull, director of the EBRD’s property and tourism team, said: “This is the third office project for the EBRD in Warsaw, and a logical culmination of the bank’s efforts to kick-start development in the city. The EBRD developed the financial models for these types of projects in Poland, and took the early risks.
“This project is large by local standards, so the sponsor’s ability to attract forward space commitments for nearly 40% of the offices 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 EBRD believes that there is huge demand for new office space in Warsaw and has decided to focus on developments there as well as in Moscow, Kiev and St Petersburg, where a sharp shortage of international quality office space has made rental levels among the highest in Europe.
Creditanstalt-Bankverein is the co-arranger of the syndicated loan and has also agreed to take a pre-let on the project.
Construction is set to start on November 14, with the project due for completion before the end of 1998.
The developer of the project is Golub Raczkiewicz Epstein Partnership.
Michael Newman, president and CEO of Golub 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.”
The total cost of the project is likely to be around $115m with additional equity funding provided by Northwestern Mutual Life Insurance and a major US pension fund.
