As expected, EBRD (European Bank for Reconstruction and Development) acquired a 10% stake in GTC Ukraine. As a result GTC will own 85.5% stake in the Ukrainian operations. GTC and EBRD plan to invest USD100m in equity, which assuming D/E of 0.65 may allow investments worth cUSD285m together with joint ventures in several projects in larger cities in Ukraine. The bulk of the projects would be commercial, i.e. retail and offices.
Our view: EBRD’s entry into GTC Ukraine has been expected nevertheless should reduce the investment risks in Ukraine. We believe that the potential in Ukraine is huge given higher yields of 8-10% compared to c6% in the C3 markets and complete lack of any quality real estate assets.