A new model for refinancing construction projects
02/06/2009
On June 2, 2009 Natalia Dotsenko-Belous, a senior associate with Vasil Kisil & Partners law firm, conducted a meeting of a Ukrainian Building Association workgroup composed of Alexey Logunov, Executive Director of “Ukrstroicontract” and Timur Khromaev, Partner with АRTA Investment Partners LLC.
The aim of the meeting was to create a mechanism of refinancing construction projects. The members of the workgroup proposed a new mechanism that involves the following: banking institutions issue mortgage bonds on loans secured by real estate construction projects.
Further on, these bonds can be placed with interested investors whereas each of them receives a right to exchange these bonds for the apartments in the respective buildings that are being built and that banks have penalized in order to offset the problematic debt. Presumably, blocks of mortgage bonds will be offered for sale at cost of the construction project that needs additional investment (i.e. the cost of the apartment).
The aim of the meeting was to create a mechanism of refinancing construction projects. The members of the workgroup proposed a new mechanism that involves the following: banking institutions issue mortgage bonds on loans secured by real estate construction projects.
Further on, these bonds can be placed with interested investors whereas each of them receives a right to exchange these bonds for the apartments in the respective buildings that are being built and that banks have penalized in order to offset the problematic debt. Presumably, blocks of mortgage bonds will be offered for sale at cost of the construction project that needs additional investment (i.e. the cost of the apartment).