Ciputra Res Loan

completed

The Project involves a senior loan of $30 million in Ciputra Residence (“the company”), a leading Indonesia property developer. The company was established in Jakarta in 1989 and is one of three principal subsidiary companies of PT Ciputra Development Tbk (“Ciputra Development”). At present, Ciputra Residence is wholly owned by Ciputra Development, which in turn is controlled by the Ciputra family. In 2013 IFC supported the company with a Partial Credit Guarantee for 20 percent of a public bond issuance of IDR500 billion (approximately $50 million at that time). Bond proceeds were used to support construction of low-rise houses and relevant ancillary facilities across Ciputra Residence developments in Indonesia, primarily in Sumatra and Java. The company’s primary business model focuses on build-to-sell and build-to-lease residential properties. The core business involves development of new neighborhood townships and ancillary facilities. Most of Residential houses and apartments are sold in clusters before the completion of construction. A secondary focus is the development of synergistic commercial areas – such as hotels, shopping malls, golf courses - within the township projects. The company’s practice is to undertake long-term development, with construction and sales phased over 20 years or more, and to manage the townships and ancillary facilities throughout the periods of development. Domestic Indonesian projects undertaken by the company include the township of CitraGarden City, CitraRaya, and CitraMaja Raya near Jakarta, as well as 16 other projects in various stages of development, including projects in Java, Sumatra and Kalimantan. In the future the company will include high-rise residential developments in some of its townships. The CitraGarden City project is currently over 90 percent complete and will cover approximately 450 hectares at completion. The CitraRaya project is the largest developments that will ultimately cover a total area of 2,700 hectares to provide 100,000 homes to a population of 400,000. Construction commenced in 1994 and is currently just over 20 percent complete. Citra Maja Raya is a new township project, which will be developed over the next 15-20 years. The company also intend to extend its construction of residential and commercial property development projects to Sulawesi, and Kalimantan.The company’s developments are adjacent to or near established urban areas with existing connections to infrastructure and are relatively self-contained and phased. Potentially adverse impacts are generally of a temporary nature and primarily associated with construction. As soon as construction of housing blocks or high-rise residential buildings is complete, homeowners occupy these and construction shifts to new blocks or buildings within the respective estate.Engineering and construction contracts are outsourced on the open market via competitive bid processes with works being completed in a manner consistent with Indonesian regulatory requirements. The company uses local construction contractors with workers typically provided by subcontractors for the construction. Following IFC’s previous investment the company developed a comprehensive Environmental and Social Management System (ESMS) at the corporate level that is applied at the project level so as to identify and manage impacts and risks throughout the project development process which include the construction phase. The company completes up to 1,200 houses and shop-houses per year in Indonesia. At some of the developments, especially when local authorities are unable to provide these services, the company constructs and operates plants to treat and provide clean water to households and to treat domestic wastewater. In addition, the company provides landscaping and township maintenance services to facilities.