We offer you participation in financing of a logistics complex near the village of Ostředek at the exit on the 34th kilometer of the D1 motorway towards Brno. is provided for the purpose of refinancing a part of the own resources of the developer UDI Group ("UDI"), which through the project company EUDI REAL s.r.o. is implementing the construction of the logistics complex and its subsequent planned operation. The senior lender of the project is Komerční banka, a.s. ("KB"). The project is currently mainly in the advanced construction phase ("Construction Phase"), with 100% of the leasable and future leasable area already contracted under lease agreements with 4 tenants, however, according to the signed loan agreement, the Upvest is also structured for its subsequent operation ("Operational phase"). Upvest for the Construction Phase is in an amount of up to CZK 150,000,000 and its estimated repayment will occur at the time of completion of the Construction Phase and commencement of the Operational Phase of the project - "Recapitalization" - which we estimate to take place in Q2 2023 when the site is fully constructed. At the time of the Recapitalisation Upvest is planning an investment opportunity Sázava Logistics Park reopen to investors for investment, up to a volume of CZK 210,000,000 (i.e. Upvest's credit framework may be increased by up to CZK 60,000,000).
The Borrower has a senior loan agreement with KB for both the Construction and Operation phases of the project. The senior loan for the Construction Phase is granted in the amount of EUR 23.7 million and may not exceed 70% of the total project cost. The subsequent refinancing of the senior loan to start the Operational Phase of the project will be in the amount of EUR 31.0 million according to the signed loan agreement with KB and is to take place by 31 August 2023 at the latest.
Sázava Logistics Park consists of a set of 4 logistics halls, marked A to D, with Hall A already in use by the tenant, Hall B and part of Hall D expected to be handed over to the tenants before the end of this year and Hall C expected to be handed over to the tenant during the spring of the following year. The expected completion date of the construction according to the construction schedule is May - June 2023. The individual halls of the project are already fully contracted on the basis of lease agreements with 4 tenants: WEDO, Marimex, Emons and Nagel..
Due to the division of the project into Construction and Operational phases, a different set of financial covenants will be monitored during each phase, which the developer is obliged to adhere to. For the Construction Phase, the covenants to be monitored are a , for the Operational Phase , a (see. Financial analysis).
Repayment of the participation of the Construction Phase investors (which is the subject of this fundraising) is expected to occur during Q2 2023, at the time of the Recapitalization described above, at which point the Construction Phase investors will be repaid, by default, during the process of reopening the investment opportunity on the Upvest platform, possibly from the refinancing (or increase) of the Senior Loan drawn for the Operations Phase. Investors in the Construction Phase will have the priority option to continue the loan during the Operational Phase if they wish, and Upvest will prepare a new investment analysis for this purpose, reflecting the facts current for the Operational Phase of the project. As the amount of the Recapitalization, i.e. the amount of principal and proceeds repaid by Upvest's Construction Phase investors, is dependent on the future interest of Upvest's investors in entering the Operational Phase, there can be no assurance that the original participation of the Construction Phase investors will be fully repaid at the time of the Recapitalization. In the event of an incomplete Recapitalization, the unpaid portion of the participations will continue to finance the Project into the Operational Phase and will be repaid as of the anticipated repayment date, October 30, 2016.In the event that the Upvest Loan is not repaid by the 30.10.2026 date, the net return to the investor will increase by 4.0% p.a. to 12.50% - 13.00% p.a.
The main potential risks of the loan include the credit risk of the counterparties to the lease agreements, non-compliance by the general contractor of the development and the potential implications on the lease agreements or tenancies, and the risk of repayment of the loan from the sale of the asset or refinancing with another senior loan.
Legal due diligence did not identify any facts that would jeopardise the granting of the loan. Emphasis was placed on assessing the proper ownership of the property by the borrower, review of the project company and parent company, lease agreements, the credit relationship with the senior lender, and the extent of the general contractor's delivery of the construction and associated warranties and insurance for the work.
Technical due diligence also did not identify any facts that would jeopardise the granting of the loan. The main focus of the technical review was on the review of the construction contract with the general contractor, the standards under the lease agreements, the technical aspects of the lease agreements, the stage of completion and the project land.
Reporting to investors will be done on a quarterly basis.
The product described in this Investment Analysis is participation in loan provided for the purpose of refinancing part of the intercompany loans granted to the project company. Upvest's current assumption reflects that investors in this phase of the Project (i.e., the Construction Phase) will have the ability to repay in approximately 9 months at the time of the Recapitalization described above in the Initial Summary. At the moment of complete completion of the construction works and full commissioning of the site (i.e. after all approvals or consents have been issued or after the commencement of trial operation of the individual halls and other construction facilities), Upvest (i) plans to reopen the original loan tranche of up to 150,000.000,000 CZK to new investors, and at the same time (ii) increase the exposure of the mezzanine loan in the project by up to 60,000,000 CZK (i.e. up to 210,000,000 CZK in total) under the new fundraising, provided that the project progresses as expected with respect to commercial performance and taking into account the realistically drawn senior loan for the Operating Phase .
Sázava Logistics Park is currently at an advanced stage of construction, however, part of the site is already operational and occupied by tenants. Hall A is being fully utilised by the tenant WEDO and the start of operation of Hall B and the first part of Hall D is estimated to take place in the next few months. The Upvest interest relating to the Construction Phase will be paid at the time of the Recapitalisation, subject to the approval of KB. The Upvest interest relating to the Operating Phase will be paid semi-annually, but always subject to the prior approval of the Senior Lender.
The developer of the Project is the international development group UDI Group ("UDI"). UDI has a track record primarily in the development of residential projects, having developed approximately 6,500 residential units. At the same time, the developer has experience in the development of office properties, with a total lettable area of 135,000 m2 and logistics complexes with a total lettable area of 250,000 m2. In addition to this logistics complex, the developer is preparing other logistics complexes in Serbia, Slovakia and the Czech Republic near the D5 motorway near Přehýšov.
UDI Group will use a mezzanine loan from Upvest to refinance part of the intra-group loans granted to the project company to cover project costs, up to CZK 146,250,000. . For the Operational Phase (commencement Q2/3 2023), the Upvest loan can be increased by up to CZK 60,000,000, i.e. up to a total of CZK 210,000,000, under the loan agreement, provided that the project operates smoothly and the KB Senior Loan for the Operational Phase of the project is drawn down in accordance with the currently signed loan agreement. In the event that the borrower decides to draw down a different senior loan than the one for which it currently has a signed loan agreement with KB, the provision of the Upvest loan for the Operational Phase of the project will be re-evaluated taking into account the parameters of such senior loan, especially with regard to its amount, amortisation profile, interest cost, maturity date, etc. Any increase in the Upvest Loan would be used for the purpose of providing a reverse loan to the parent company of the borrower, as at that point of time, all the cash equity of the developer invested in the project would have already been refinanced. The repayment of the Upvest mezzanine loan is normally subordinated to the repayment of the senior lender's loan, however, the Upvest loan can be replaced and therefore repaid by a loan from the developer's own resources even before the final maturity of the senior loan. Under the Operational Phase, the developer will be incentivised to do so by increasing the interest rate by 4.0% per annum from that date onwards commencing 30 October 2026.
The borrower is obliged to maintain the value of the indicator during the Construction Phase at a maximum of 85.0% and the LTC ratio value A of a maximum of 70.0%. During the Operational Phase, the borrower is obliged to maintain the of at least 6.3%, the B at a maximum of 80.0% and the Investors will be kept informed of the progress of the project on a quarterly basis (see section Check).
Upvest's mezzanine loan qualifies for, among other things, the option to divest the investor's participation due to the longer Expected Loan Maturity and Final Loan Maturity. The option to divest the participation will be offered to the investor at the time of the Recapitalization, as currently anticipated.
In the event that Upvest does not raise at least USD 115 million from investors in the Fundraising Period (until 01.11.2022) under the Public Fundraising. CZK, the borrower has the right to withdraw from the agreement without any penalties. However, even in such a case, the borrower may apply for a drawdown of the actually collected (lower) amount.
Investment product description
|Product||(participation in the gains and losses of a loan agreement)|
|Purpose of the loan|
|Tranche A||Construction phase - Refinancing of part of the own resources of the borrower already invested in the project|
|Tranche B||Operational phase - Provision of a reverse loan to the developer's parent company|
|Location of the financed project||Obec Ostředek, Středočeský kraj, v těsné blízkosti sjezdu na 34. kilometru dálnice D1 směr Brno|
|Parties to the loan||Lender upvest s.r.o.; borrower EUDI REAL s.r.o. with the guarantee of the majority shareholder of the borrower, UDI CEE a.s.|
|Tranche A:||150.000.000 CZK|
|Tranche B:||60.000.000 CZK (not subject to current fundraising)|
|Total project costs||CZK 914,443,475|
|Senior Loan||EUR 23,670,000 (CZK 591,750,000)|
|Upvest Loan - the subject of this fundraising||150.000.000 CZK|
|Own resources invested in the project||CZK 172,693,475|
|Operational phase (current estimate):|
|Estimated future value of the property (rounded)||EUR 60.0 million (CZK 1,500,000,000)|
|Senior Loan||EUR 31.0 million (CZK 775,000,000)|
|Credit Upvest||210.000.000 CZK|
|Implicit own funds (residual value)||515.000.000 CZK|
|Minimum investment amount||5.000 CZK|
|Type of interest||Simple|
|Expected repayment method||Interest on Tranche A after the Constructive Phase is payable at the time of Recapitalization from the proceeds of the Senior Loan Refinancing, subject to the approval of the Senior Lender. Interest on Tranche B during the Operational Phase will be payable on an ongoing basis (semi-annually) from cash flows generated from the lease of the asset, subject to the consent of the Senior Lender. The principal of Tranche A and Tranche B shall be repayable no later than the Final Maturity Date by way of refinancing, sale of the Asset or from its own resources.|
|Fundraising period||20.09.2022 - 01.11.2022|
|Estimated start of interest||From successful fundraising (but not before 01.11.2022)|
|Expected date of repayment of investor participation in the Construction Phase||31.05.2023|
|Expected date of repayment of investor participation in the Operational Phase||30.10.2026|
|Formal final due date||31.05.2028|
|Securing a loan|
Guarantee by UDI CEE, a.s.
Subordination of all obligations of the borrower except the senior loan
|Project Company / Loaned||EUDI REAL s.r.o.|
The borrower may repay the loan from Upvest no later than the final repayment date in one lump sum or in instalments. The investor shares in the proceeds from the successful fundraising (but not earlier than 01.11.2022) until the loan is repaid in full. The actual interest on the drawn down portion of the principal begins on the day after the loan is drawn down by the borrower. The proceeds are paid to the investors after a given loan or interest payment to the borrowers, and the proceeds corresponding to the reservation fee (i.e. the reservation of funds pending the fulfilment of the drawdown conditions by the borrowers) will be paid to the investors together with the first interest payment. If the borrower repays the loan before the expiry of 12 months from the drawdown date, the borrower will be charged an early repayment fee that would equal the nominal yield that the investor would have earned if the participation had been held for 12 months. However, this early repayment charge will not apply if the loan is repaid at the time of Recapitalisation by drawing down the Senior Loan or by converting Tranche A of the Upvest Loan to the Operational Phase of the Project, i.e. if the current assumption is met with respect to the Project's business plan. In practice, therefore, the Early Repayment Fee would apply where the borrower repays the capital structure of the project through the sale of an asset or replaces the Upvest Loan with its own resources.
Total interest on the loan
>= 0 CZK
>= 100,000 CZK
>= 1,000,000 CZK
Interest income relating to the Construction Phase at the time of Recapitalisation (subject to Senior Lender approval). Interest income relating to the Operating Phase semi-annually (subject to Senior Lender approval). Principal no later than the Final Maturity Date.