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The Warsaw Voice » Special Sections » March 3, 2014
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Leading the Way on PPP
March 3, 2014   
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Gilles Leonard, CEO of developer ByPolska Property Development, talks to the Voice.

At the end of last year, BYPOLSKA Property Development secured a deal to deliver 1,000 student accommodation bedrooms in Cracow for the Jagiellonian university collegium Medicum. This project is one of the very first Public Private Partnership (PPP) projects in Poland. Before going into further detail about such projects, what exactly is the DNA of BYPOLSKA Property Development?
BYPOLSKA Property Development is the property development arm of a giant company, Bouygues Construction in Poland.

Our main activities are split into two core businesses.

First, on the property development market sector, we develop projects with a specific focus on complex schemes involving mixed-use projects (retail, housing and offices) and/or specific products such as data centers, private clinics, elderly care homes, private schools, and middle/small-size shopping centers.

In this field, BYPOLSKA Property Development has already delivered significant projects in Warsaw such as Plac Teatralny, Saski Point—the headquarters of BRE Bank and Societe Generale—and the Wola Park shopping center.

Second, we aim to be a leader on the Public-Private Partnership (PPP) market sector working in true partnership with public authorities.

Geographically, we are targeting the six main Polish cities—Warsaw, Cracow, ŁódĽ, Gdańsk, Poznań and Katowice, and our set-up in Poland is somehow unique because in all our projects we are benefiting from the full support, expertise and know-how of our sister company Karmar, with whom we work hand in hand.

What does the Cracow project consist of?
It is a typical PPP project finance undertaking structured on the same basis as those we can see in Western Europe, Canada and Asia.

The client, meaning the Jagiellonian University Collegium Medicum (UJCM) in Cracow, was looking for a private partner to undertake the design, refurbishment works, financing and operation of 1,000 student accommodation beds on its campus during 25 years. In exchange the university will pay an “availability fee” on a monthly basis during the contract term.

To this effect, we have set up a special-purpose vehicle (SPV) called “Neoswiat PPP Projects” fully dedicated to this scheme and which is gathering all competencies required to meet the university’s expectations.

The university had a very good idea of what they wanted to achieve and were also well advised by consultants experienced in this kind of procurement process.

Indeed, the procurement of PPP projects is quite complex as it goes beyond the simple analysis of the price for a given project. The public authorities have to select a future partner, who will be able to not only develop, finance and build the project, but also operate it for a long period of time.

BYPOLSKA Property Development and Karmar have extensive experience in these kind of projects because we can capitalize on the expertise of the group from the long list of PPP projects delivered in the UK, France, Canada and Asia in all types of buildings—hospitals, courts of justice, student accommodation, schools, stadiums… and we are able to draw on this know-how in the Cracow project.

What is your approach to the PPP market sector in Poland?
First of all, I think it is necessary to differentiate between PPP projects that are “property deals,” which means deals that involve the transfer of ownership of a plot of land from the city to a developer—for example, in the case of a regeneration project undertaken by a city—and PPP projects that are “project finance deals” which provide for a long-term cash flow based on an availability fee paid by the public authority.

In the latter case, the property reverts automatically to the authority at the end of the PPP contract term.

So, considering PPP property deals, those types of procurement processes exist in Poland and are developing towards a model pretty similar to the one adopted in the UK.

PPP project finance deals are probably more difficult because they require a high level of expertise. Such expertise is available in Poland from only a handful advisory firms—legal or financial consultants—and local authorities should be very careful when launching such projects regarding the quality of advice they require to help them structure the deal.

In any case, for both types of projects BYPOLSKA Property Development is definitely a market player, especially as we are very keen to establish long-term partnership with local authorities.

We really want to position ourselves together with our construction company Karmar as a solid delivery partner.

What are the unique selling points of BYPOLSKA Property development and Karmar?
It is a combination of being part of a big, financially reputable organization, the Bouygues group, and at the same time being local so that our property development team and our construction subsidiary Karmar can better understand the needs of our clients, especially when tackling complex projects.

Our goal is to give our clients certainty that we will deliver, and in this respect, our business model combining development and construction is very powerful.

Karmar SA is the general contractor of the Cracow student accommodation project. Set up in 1991, the company has been a member of French corporate group Bouygues for seven years. As well as construction, Karmar offers associated services: design, financing and management of buildings.

Apart from operating in the PPP and PD sectors, Karmar, which is a member of the Polish Green Building Council (PLGBC), is also involved in green building projects. The company employs its own assessors for the BREEAM and LEED environmental rating systems for buildings.

One of the green projects it has carried out is Miasteczko Orange, Poland’s biggest office building with a BREEAM “Excellent” certificate.

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