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Public Private Partnership in Small and Middle-Size Social Real Estate Projects

Public Private Partnership in Small and Middle-Size Social Real Estate Projects. Juuso Hietanen NCC Real Estate ProEstate 2009, 04/09/2009. Some of PPP Projects by NCC. South-West Waste Water Treatment Plant (SWTP), St. Petersburg, Russia

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Public Private Partnership in Small and Middle-Size Social Real Estate Projects

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  1. Public Private Partnership in Small and Middle-Size Social Real Estate Projects Juuso Hietanen NCC Real Estate ProEstate 2009, 04/09/2009

  2. Some of PPP Projects by NCC • South-West Waste Water Treatment Plant (SWTP), St. Petersburg, Russia • Arlanda Railway–connection between airport and downtown Stockholm, Sweden • A2 Motorway, Poland • Norrortsleden road project, Sweden • 4 schools in Espoo, Finland • 3 healthcare centres in Vantaa and Espoo, Finland NCC’s advantages: • Significant experience in PPP projects • Eko-concept and EstiModel – know-how successfully applied • Increasing amount of offering from NCC

  3. South-West Waste Water Treatment PlantSaint Petersburg, Russia

  4. Arlanda RailwayAirport-Downtown Connection, Stockholm, Sweden

  5. A2 MotorwayPoland

  6. Norrortsleden Road Sweden

  7. Tapiola Health CentreFinland

  8. Secondary School and Swimming PoolFinland

  9. Contractual Structure of PPP Project Contract for call option of Real Estate Company Ownership • Tenancy Agreement • Asset rental charge • Service charge • Real estate maintenance charge Owner Real Estate Company Public Corporation Loan Contract Facility Management Contracts Lender Maintenance Agreement Management Agreement Contract Agreement FMCompanies • Bank • Insurance company • Pension fund • etc. Bidding, coordination, control

  10. PPP Principles • Selection criteria • Prices of investment period and service period (NPV) • Quality of the design and services • Offering period usually 0,5-1 year • Offering costs and procedure very heavy for companies • Municipals continue negotiations possibly with 1-2 participants after competition • Package projects • Fair risk distribution • Municipals do not provide securities for financing

  11. Key Attributes of a Successful PPP • Authorities must have: • strong will to proceed • knowledge of what they want • knowledge of their limitations • Reliability and stability of partners (long-term liabilities) • Exit only with pre-agreed terms • Reasonable security arrangements for the project company • Interaction between the parties in the beginning to find the best solutions: • Fair distribution of risks • Flexibility, due to: • Authorities different situations • Market situation • Capability of contracting company

  12. Needed Improvements • Interaction needed from beginning • Risk division in correct way, balanced risks • Clear offering terms • Selection criteria: • for project company • for partners • Discussion point: how to compensate offering expenses • Securities from municipals for financing

  13. Conclusions • Points to discuss with authorities in order to proceed: • Willingness and readiness • Asset position • Risk division • Exit terms • Securities • Risk management (currency, inflation, etc.)

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