[PPT] - HOUSING PROVISION ON THE MORTGAGE LENDING OR FINANCIAL LEASING PowerPoint Presentation

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THE INVESTMENT PROJECT: «HOUSING PROVISION ON THE MORTGAGE LENDING OR FINANCIAL LEASING CONDITIONS» (NEW REVISION)

July, 2017

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THE PROJECT’S GOAL: raising loan funds to provide housing for Ukrainian citizens on the mortgage lending and financial leasing conditions THE PROJECT’S FINANCING:

 500 million US dollars - of loan funds secured

by the State Guarantee envisaged by the State Budget for 2017

THE PROJECT’S GOAL and FINANCING

1 USD = 29,3 UAH according to the predictable rate of the Cabinet of Ministers of Ukraine budgetary policy for 2018-2020

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 STRENGTHENING THE POLITICAL SITUATION AND IMPLEMENTING THE SUSTAINABLE DEVELOPMENT STRATEGY «UKRAINE - 2020»  STABILIZING THE CONDITION OF THE FINANCIAL SECTOR OF UKRAINE  RENEWING AND UPGRADING THE MORTGAGE LENDING MARKET  CREATING WELL-ORGANIZED FINANCIAL LEASING MARKET  CREATING ADDITIONAL EMPLOYMENT OPPORTUNITIES AND IMPROVING THE SOCIAL SECTOR  REDUCING THE ACCOMMODATION WAITING LIST BY 30,6 thousand

OF UKRAINIAN FAMILIES

THE PROJECT’S OBJECTIVES

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THE COST AND PREDICTABLE RESULTS

THE PROJECT PROVIDES FOR:  financing of 1,4 million m2 of housing construction in the total amount of 20,7 billion UAH (taking into account the Project’s reinvestment means)  supplying 30,6 thousand of Ukrainian families with the purchased apartments on the mortgage lending and financial leasing conditions (without the down payment) at the rate of 15,3% per annum

Apt. total useful floor area

taken in calculations, m2 Number of apartments, psc. Total floor area of a building apartment, m2 Apartment cost, in thousands of UAH

1-BEDROOM APT. 40 17 249 689 975 9 927 360 2- BEDROOM APT. 55 12 545 689 975 9 927 360 3 – BEDROOM APT. 70 822 57 498 827 280 TOTAL 30 616 1 437 448 20 682 000

The predicted average housing cost within Ukraine (including the equipment) -

1 m2 = 14,4 thousand UAH

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THE BUDGET EFFECT

THE PROJECT DOES NOT INVOLVE THE USE OF THE BUDGETARY FUNDS *

THE PROJECT’S BUDGET EFFECT is 15 556,3 million UAH (for 15 YEARS)

* it is not foreseen to use the budgetary funds - to compensate the interest rates amounts on a foreign loan to the SMI; to grant the budgetary funds on a free-of-charge basis; the budgetary subsidies related to the supply of the Project’s mortgage lending and financial leasing rates, etc.

THE INCOME TAX, 18%

3 517,1

THE DIVIDENDS, 75% OF THE NET PROFIT

12 016,9

THE UNIFIED SOCIAL TAX, 22% FROM THE SALARY

9,2

THE FEE FOR THE STATE GUARANTEE GRANTING

13,1

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THE PROJECT EFFECTIVENESS

THE ECONOMIC EFFECTIVENESS INDICATORS (PREDICTED AND PEER) THE INVESTMENT PROJECT PAYBACK SCHEDULE (NPV), in thousands of UAH

The predicted efficiency calculations assume that the housing sale (according to the citizens’ choice) is carried out on the financial leasing conditions. When citizens picking out the mortgage lending, the Project’s indicators will get significantly improved due to the receipt of advanced payments (the down payment should be not less than 25% of housing cost) in the amount of 5,17 billion UAN

Indicator Calculated values Reference values according to the Ministry of Economic Development and Trade of Ukraine requirements

NET PRESENT VALUE – NPV, IN THOUSANDS OF UAH

4 099 586,7

≥ 0

PAYBACK PERIOD - PB

9,3 years

≤ of the Project term (15 years)

DISCOUNTING RATE, %

6,21%

DISCOUNTING PAYBACK PERIOD - DPР

12,5 years

≤ of the Project term (15

years) or similar projects payback period

PROFITABILITY INDEX– PI

1,162

≥ 1

INTERNAL PAYBACK RATE - IRR, %

10,32%

≥ discounting rate

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THE PROJECT PROVIDES FOR THE FOLLOWING DIRECTIONS: ”THE HOUSING PURCHASE” - implies acquisition of ownership on ready-built

housing or property rights on housing with the high level of construction readiness, getting finishing works done in the apartments and installing the equipment

”THE HOUSING CONSTRUCTION FINANCING " – implies financing of “turn-key”

housing construction-in-progress

The implementation of the Project’s directions is held according with the citizens applications who are in need of housing on mortgage lending or financial leasing conditions based on the results of competitive selections of housing delivery projects.

DIRECTIONS FOR CREDIT USE

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THE SCHEMATIC ILLUSTRATION OF THE PROJECT’S IMPLEMENTATION

THE STATE GUARANTEE ON THE SMI LOAN THE MORTGAGE LOAN

БАНКИ-ПАРТНЕРИ (Укргазбанк, Укрексімбанк та ін.)

100% FINANCING THE HOUSING DELIVERY

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STATE MORTGAGE INSTITUTION

(THE LOAN BORROWER, THE BUYER, THE INVESTOR, THE HOUSIG OWNER) THE CABINET OF MINISTERS OF UKRAINE (THE MINISTRY OF FINANCE OF UKRAINE)

ФІНАНСОВІ УСТАНОВИ (НБУ, українські та іноземні інвестори)

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THE HOUSING MARKET

THE HOUSING DELIVERY AGREEMENTS (PURCHASE/SALE AGREEMENTS, INVESTMENT CONTRACTS.ETC.)

THE ORDERING CUSTOMERS (REAL ESTATE DEVELOPERS) THE ORDERING CUSTOMERS (REAL ESTATE ELECTRONIC AUCTIONS – COMPETITIVE SELECTION (PROZORO,ETC)

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THE PROJECT’S CREDITOR SELECTION

THE GOVERNMENT EMPLOYEES CITIZENS OF UKRAINE

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THE HOUSING DELIVERY PROJECTS SELECTION (THE HOUSING CONSTRUCTION)

FINANCIAL COMPANIES

AN OPEN CONTEST

THE MORTGAGE LOAN SECURITY THE LOAN SECURITY

I PHASE – THE HOUSING PURCHASE OR
II PHASE – THE HOUSING CONSTRUCTION FINANCING
«MULTIPLICATIVE EFFECT» - THE HOUSING PURCHASE

THE REAL ESTATE DEVELOPERS

(THE WINNERS OF THE HOUSING DELIVERY CONTESTS) ENSURING THE HOUSING DELIVERY OBLIGATIONS FULLFILLMENT

THE REQUESTS OF THE HOUSING NEED

(AS WELL AS DETERMINING THE FINANCIAL AND MORTGAGE MECHANISMS FOR OBTAINING HOUSING) THE GOVERNMENTAL AUTHORITIES, STATE ENTERPRISES

THE RESULTS OF THE HOUSING PURCHASE

THE LOAN (LEASE) PAYMENTS AS WELL AS HOUSING AND UTILITY OAYMENTS THE LEASE PAYMENTS OR THE LOAN PAYMENTS

COMING INTO AGREEMENTS

THE HOUSING TRANSFER INTO LINANCIAL LEASING OR MORTGAGE LENDING

THE AUTHORIZED BANK

(THE STATE-OWNED BANK )

15,3% PER ANNUM

THE HOUSING PROVISION

THE HOUSING STATUS INFORMATION

LEASING OR LOAN SERVICING

3 6

THE NEED IN HOUSING PROVIDING THE STATEGUARANTEE ON THE SMI EXTERNAL BORROWINS

THE CONSTRUCTION,THE “TURN KEY” HOUSING EQUIPMENT NKS AND NON-BANKING FINANCIAL INSTITUTIONS, THE HOUSING MARKET PARTICIPANTS

THE MORTGAGE LENDING
THE FINANCIAL LEASING

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There are taken into account the Ministry of Regional Development requirements for the 1 m2 cost  the amount of the predictable average annual indicator of the indirect cost

f housing construction in the regions of Ukraine for 2017 (the order N102 of

03.05.2017)  the requirements for the internal finishing works List (the Ministry of Regional Development order № 2 of 11.01.2014)  the Ministry of Regional Development recommendations on the need to increase the indicators of the indirect cost of housing construction by the regions on the expenses that were not taken into account for the indirect cost (the letter of 01.11.2016 №7 / 17-13302)

THE HOUSING REQUIREMENTS

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THE MARGINAL COST RATE

The marginal cost of 1 m2 used in the Project’s indicators calculations is on average within Ukraine at the level of 14 388 UAH or 493 USD per 1 m2 according to the predicted rate fixed by the Cabinet of Ministers of Ukraine in account that 1 USD = 29,3 UAH including throughout Ukraine

The marginal cost of 1 m2 is calculated taking into account the predicted by the Ministry of Regional Development of Ukraine indicator of indirect housing construction cost throughout Ukraine for 2017 and increased on the expenses associated with the construction site preparation, the external engineering networks construction, payments for the social, transportation and engineering infrastructures development as well as the expenses related to the internal finishing works, all necessary equipment purchase and installation.

THE MARGINAL cost of 1 m2 of the Project’s housing

UAH equivalent in USD

Ukraine 1

14 388 491

1. Vinnytsia Oblast

14 047 479

2. Volyn Oblast

14 014 478

3. Dnipropetrovsk Oblast

14 110 482

4. Donetsk Oblast

15 038 513

5. Zhytomyr Oblast

13 051 445

6. Zakarpattia Oblast

12 934 441

7. Zaporizhia Oblast

14 093 481

8. Ivano-Frankivsk Oblast

13 289 454

9. Kyiv Oblast

14 447 493

10. Kirovohrad Oblast

12 754 435

11. Luhansk Oblast

13 988 477

12. Lviv Oblast

14 378 491

13. Mykolaiv Oblast

14 390 491

14. Odessa Oblast

13 990 477

15. Poltava Oblast

13 211 451

16. Rivne Oblast

14 307 488

17. Sumy Oblast

13 729 469

18. Ternopil Oblast

13 729 469

19. Kharkiv Oblast

15 034 513

20. Kherson Oblast

13 420 458

21. Khmelnytskyi Oblast

14 041 479

22. Cherkasy Oblast

14 278 487

23. Chernivtsi Oblast

13 592 464

24. Chernihivska Oblast

14 392 491

25. Kyiv

16 406 560

1- the cost used in the Project’s calculations

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THE LOAN PROFILE

 THE LOAN AMOUNT - 500 000 000,00 USD  THE PERCENTAGE OF THE PROJECT COST FINANCING– 100 % at the loan’s expense  THE LOAN TYPE – a credit line issued by separate tranches  THE LOAN DRAWDOWN -  «THE HOUSING PURCHASE» direction – 200 000 000,00 USD by two tranches 100 million USD each on 01.07.2017 and 01.08.2017;  «THE HOUSING CONSTRUCTION FINANCING» direction – 300 000 000,00 USD by three tranches 100 million USD each on 01.07.2017, 01.01.2018 and 01.08.2018  THE LOAN TERM- 180 months (15 years)  THE DEFERMENT OF THE LOAN REPAYMENT PERIOD (grace period) – three (3) years  THE LOAN EFFECTIVE INTEREST RATE - up to 4,5% per annum  THE INTEREST PERIOD - every six (6) months (half year)  THE LOAN COLLATERAL – the state guarantee (the state guarantees) for the State Mortgage Institution external borrowings provided according to the legislation

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 THE LEASE PAYMENTS consist of the housing repurchase payments and

finance lessor’s fee

 THE FINANCE LESSOR’S FEE RATE - 15,3% per annum  THE FINANCIAL LEASING PERIOD - from 3 up to 15 years

 the lease payments are being paid by annuity payments

 THERE IS NO ADVANCE PAYMENT (DOWN PAYMENT) FOR HOUSING  THERE IS A POSSIBILITY OF AN EARLY REDEMPTION FOR HOUSING

 the utility bills and the bills of the service company of the building apartment co-owners association are paid separately

THE FINANCIAL LEASING CONDITIONS

The financial leasing advantages over the mortgage lending:  a citizen has the opportunity to start living in an apartment right after signing the lease agreement with the SMI and receiving the moving-in certificate  there is no down payment for housing  the creditor (lessor) is protected – the housing ownership is transferred only after the lease payments repayment in full

LEASING

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THE FINANCIAL LEASING PAYMENTS CALCULATION

LEASING

FINANCIAL LEASING

THE COMISSION RATE FOR LEASING:

15,3%

per annum

THE FINANCIAL LEASING PERIOD:

15

years

THE 1 M2 HOUSING COST : 14 388,0

UAH THE AVERAGE PREDICTED THROUGHOUT UKRAINE)

Total useful floor area, m2

The 1 m2 housing cost including the equipment , in UAH

THE HOUSING cost, in UAH MONTHLY PAYMENT, in UAH THE LESSEE'S FAMILY TOTAL INCOME (SHOULD BE NOT LESS), in UAH THE TOTAL AMOUNT THAT SHOULD BE PAID WITHIN THE WHOLE PERIOD, IN UAH

ENLARGEMENT COEFFICIENT OF THE HOUSING COST IN 15 YEARS

TOTAL:

THE HOUSING COST THE FINANCE LESSOR'S FEE

1-bedroom apartment

40

14 388

575 520,00 8 173,49

16 346,98

1 471 228,2

575 520,0 895 708,2

2,6

2-bedroom apartment

55

14 388

791 340,00 11 238,54

22 477,08

2 022 937,2

791 340,0 1 231 597,2 3-bedroom apartment

70

14 388

1 007 160,00 14 303,60

28 607,20

2 574 648,0

1 007 160,0 1 567 488,0

THE 1 М2 HOUSING COST : 9 000,0

UAH (ACCORDING TO THE NET COST)

Total useful floor area, m2

The 1 m2 housing cost including the equipment , in UAH

THE HOUSING cost, in UAH MONTHLY PAYMENT, in UAH THE LESSEE'S FAMILY TOTAL INCOME (SHOULD BE NOT LESS), in UAH THE TOTAL AMOUNT THAT SHOULD BE PAID WITHIN THE WHOLE PERIOD, IN UAH

ENLARGEMENT COEFFICIENT OF THE HOUSING COST IN 15 YEARS

TOTAL:

THE HOUSING COST THE COMMISSION FOR LEASING

1- bedroom apartment

40

9 000

360 000,00 5 112,69

10 225,38

920 284,2

360 000,0 560 284,2

2,6

2-bedroom apartment

55

9 000

495 000,00 7 029,95

14 059,90

1 265 391,0

495 000,0 770 391,0 3-bedroom apartment

70

9 000

630 000,00 8 947,21

17 894,42

1 610 497,8

630 000,0 980 497,8

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 THE LOAN AMOUNT - NOT MORE THAN 75% of the housing cost  THE DOWN PAYMENT - 25% of the housing cost  THE MORTGAGE LOAN INTEREST RATE– 15,3% per annum  THE MORTGAGE LENDING PERIOD – up to 15 years  THE MORTGAGE LOAN REPAYMENT is done by annuity payments or equal-sized

payments  there is a possibility of an early mortgage loan redemption

THE MORTGAGE LENDING CONDITIONS

The mortgage lending advantages over the financial leasing :  a citizen (borrower) obtains title to housing simultaneously while signing up a mortgage loan agreement together with a mortgage agreement

The creditor bears the risks of a foreclosure on the mortgaged property in case the citizen lacks possibility to service the mortgage loan

THE MORTGAGE LOAN

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THE MORTGAGE LOAN PAYMENTS CALCULATION

THE MORTGAGE LOAN

THE COMISSION RATE FOR LEASING:

15,3%

per annum

THE FINANCIAL LEASING PERIOD:

15

years

THE 1 M2 HOUSING COST : 14 388,0

UAH THE AVERAGE PREDICTED THROUGHOUT UKRAINE)

Total useful floor area, m2 The 1 m2 housing cost including the equipment , in UAH THE HOUSING cost, in UAH THE DOWN PAYMENT (25% OF THE HOUSING COST), in UAH THE MORTGAGE LOAN AMOUNT, in UAH MONTHLY PAYMENT, in UAH THE LESSEE'S FAMILY TOTAL INCOME (SHOULD BE NOT LESS), in UAH THE TOTAL AMOUNT THAT SHOULD BE PAID WITHIN THE WHOLE PERIOD, IN UAH ENLARGEMENT COEFFICIENT OF THE HOUSING COST IN 15 YEARS

TOTAL:

THE MORTGAGE LOAN THE MORTGAGE LOAN INTEREST

1-bedroom apartment

40

14 388

575 520,00 143 880,00 431 640,00 6 130,12

12 260,24

1 103 421,6

431 640,0 671 781,6

1,9

2-bedroom apartment

55

14 388

791 340,00 197 835,00 593 505,00 8 428,91

16 857,82

1 517 203,8

593 505,0 923 698,8 3-bedroom apartment

70

14 388

1 007 160,00 251 790,00 755 370,00 10 727,70

21 455,40

1 930 986,0

755 370,0 1 175 616,0

THE 1 М2 HOUSING COST : 9 000,0

UAH (ACCORDING TO THE NET COST)

Total useful floor area, m2 The 1 m2 housing cost including the equipment , in UAH THE HOUSING cost, in UAH THE DOWN PAYMENT (25% OF THE HOUSING COST), in UAH THE MORTGAGE LOAN AMOUNT, in UAH MONTHLY PAYMENT, in UAH THE LESSEE'S FAMILY TOTAL INCOME (SHOULD BE NOT LESS), in UAH THE TOTAL AMOUNT THAT SHOULD BE PAID WITHIN THE WHOLE PERIOD, IN UAH ENLARGEMENT COEFFICIENT OF THE HOUSING COST IN 15 YEARS

TOTAL:

THE MORTGAGE LOAN THE MORTGAGE LOAN INTEREST

1-bedroom apartment

40

9 000

360 000,00 90 000,00 270 000,00 3 834,52

7 669,04

690 213,6

270 000,0 420 213,6

1,9

2-bedroom apartment

55

9 000

495 000,00 123 750,00 371 250,00 5 272,46

10 544,92

949 042,8

371 250,0 577 792,8 3-bedroom apartment

70

9 000

630 000,00 157 500,00 472 500,00 6 710,41

13 420,82

1 207 873,8

472 500,0 735 373,8

SLIDE 16

16 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Hryvnia/US dollar exchange rate,

n

average for the period, UAH for USD

31,5 32,0 32,6 33,1 33,6 34,2 34,7 35,3 35,9 36,5 37,1 37,7

THE PROJECT TAKES INTO ACCOUNT THE PREDICTABLE UAH/USD CURRENCY EXCHANGE RATE CHANGES IN ACCORDANCE WITH THE MAIN DIRECTIONS OF THE BUDGETARY POLICIES FOR 2018-2020 APPROVED BY THE CABINET OF MINISTERS OF UKRAINE:

*APPROVED BY THE CABINET OF MINISTERS OF UKRAINE RESOLUTION № 399 “On the Forecast approval of the economic and

social development of Ukraine for 2017” dated 01 July 2016 (as amended in the Cabinet of Ministers of Ukraine Resolution № 385 dated 31 May 2017)

FOR THE PERIOD OF 2021-2032, THE PROJECT APPLIES THE TENDENCIES OF THE LATEST OFFICIAL PREDICTABLE YEAR:

FOREIGN CURRENCY RISKS

2017* 2018 2019 2020 Hryvnia/US dollar exchange rate, on average for the period, UAH for USD

27,8 29,3 30,5 31

The Project additionally provides for the hedging instruments against foreign currency risk (such as SWAP – operations, «foreign currency bonds»). The use of the predictable currency exchange rate from 29,3 UAH up to 37,7 UAH per US dollar in the Project calculations as well as the SMI profit margins minimize the foreign currency risks impact on the Project’s results

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FOREIGN CURRENCY RISKS

The Project implementation start Opening SMI Escrow account in Ukrainian bank Entering into SWAP agreement with the Bank Receiving the first tranche in the amount of 500 million USD from Chinese banks- creditors Receiving the Bank SWAP agreement amount in UAH (increasing The transaction amount) Funds’ use directions

«Financing housing purchase» “Financing of housing construction

Apartments sale

“Housing transfer according to participatory share”

FINANCIAL LEASING MORTGAGE LENDING

Accumulation of funds Reserving funds for 2 payments on the loan Receiving the Bank SWAP agreement amount in USD (decreasing the transaction amount) Interest and principle payment

n the loan

Forwarding surplus cash > 2 payments =2 payments Receiving UAH from apartments sale Has the loan been repaid? The Project implementation accomplishment YES NO

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18 ДЕРЖАВНА ІПОТЕЧНА УСТАНОВА STATE MORTGAGE INSTITUTION The address: Office 201, 34 Lesi Ukrainki boulevard Kyiv, Ukraine 01133 Contact information: +38(044) 207-14-14 - fax +38(044) 207-14-13 +38(044) 207-14-02 The SMI web-page: http://IPOTEKA.GOV.UA E-mail: V.Frolov@ipoteka.gov.ua Office@ipoteka.gov.ua