26132 - Soravia Multi-Country Commercial Development Project

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Summary of Proposed Investment

Project Number

26132

Company Name

SORAVIA INVESTMENT HOLDING GMBH

Date SPI Disclosed

Dec 28, 2007

Country

Southern Europe Subregion

Industry

Tourism, Retail and Property

Projected Board Date

Jan 28, 2008

Status

Completed

Sector

Construction and Real Estate

Department

Gbl Ind, Manufact, Agribus & Services

Environmental Category

B - Limited

Previous Events

Approved : Apr 3, 2008
Signed : May 15, 2008
Invested : Jul 3, 2008

Project Description

Soravia Real Estate Development GmbH (SRED or the company) is the recently formed, commercial real estate development arm of the Austria-based Soravia Group (the Group or the Sponsor). The company identifies, evaluates, builds and sells real estate projects in Austria, Slovakia, Estonia, the Russian Federation, Romania, Bulgaria, Serbia, Macedonia and Albania. The company’s intended buyers are third party real estate investment funds, although, on a selective basis, some properties may be sold, on an arm’s length basis, to Soravia Properties GmbH, the properties company within the Group.

The proposed project consists of an investment program to be implemented by SRED and comprises a series of commercial real estate development projects (sub-projects) located in Macedonia, Serbia, Romania, Bulgaria and Ukraine (the Target Markets). SRED’s current pipeline includes 7 sub-projects in the Target Markets at an advanced stage (i.e., land has been purchased for each of these sub-projects) and 5 sub-projects are at an early stage (i.e., land has been identified but not purchase yet).

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	30.08
Equity	15.04

Development Impact

The project will create value by developing real estate sites to better meet market demands for a mix of retail and business activities. It will focus on the countries of former Yugoslavia, primarily Serbia and Macedonia, as well as more remote areas/secondary cities in Romania and Bulgaria, where there are acute needs for such type of urban real estate developments. The project is expected to support these countries’ urban infrastructure development, thereby facilitating the growth of local and regional businesses. In addition to tax revenues to governments and new jobs creation, other development impacts include:

- providing essential and affordable infrastructure to local businesses;
- improvement in quality standards;
- demonstration effect to other international real estate companies; and
- increase in industry transparency.

IFC will play an important role in the project in terms of:

- providing political comfort to the Sponsor with IFC’s role as honest broker,
- structuring the financing to augment the company’s ability to grow sustainably in risky markets,
- putting the company in a better position to raise additional long-term financing from other lenders, and
- in the longer term helping position the company for a possible IPO.

Key environmental and social issues associated with this project will be the project design and planning process, including social and environmental assessment and putting in place appropriate permissions. Designs must incorporate life and fire safety measures appropriate to building size, location and expected use. Management of occupational health and safety during construction is important. Once operational, key issues are expected to be the energy efficiency and water use of the buildings since projects are expected to be connected to established utility systems.

The potential adverse environmental and social risks in this real estate development project are few in number and limited in scope, and can be mitigated by appropriate project design. This is therefore an Environment Category B project.

Contacts

For Inquiries About the Project, Contact

Mr. Martin Ohneberg, Chief Financial Officer
Soravia Group
Hainburger Strasse 15, 1030 Vienna, Austria

Telephone: +43 (1) 716 90-0
Fax: +43 (1) 716 90-20
E-mail: office@soravia.at
Website: www.soravia.at

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This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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