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Content ID: PR_WCS01_UCM01059638

BPI/IFRRU 2020 Line - Urban Regeneration

Credit line of up to € 400 million to finance urban regeneration projects executed in Portugal by private or public legal persons.

BPI/IFRRU 2020 Line - Urban Regeneration

BPI/IFRRU 2020 Line - Urban Regeneration

Background

After having been selected in a public tender, BPI signed a Financing Agreement with the Managing Body of IFRRU 2020 (EG IFRRU 2020; IFFRU - Financial Instrument for Urban Renewal and Revitalisation) on 9 August 2017 with a view to granting BPI a financial allocation of 186 million euros in order to implement a financial debt instrument within the context of IFRRU 2020.

IFRRU 2020, the Financial Instrument for Urban Regeneration and Revitalisation, is intended to support operations, on favourable terms, corresponding to the full restoration of buildings at least 30 years old, or in the case of newer structures, those which demonstrate a level of preservation equal to or less than 2, as determined under the provisions of Decree-Law no. 266-B/2012, of 31 December, and the restoration of abandoned industrial spaces and units with a view to conversion, as well as the rehabilitation of public spaces associated with the restoration of building structures.

The financial allocation to BPI includes contributions from various funding sources, both from the Community, such as the European Structural and Investment Funds (ERDF – European Regional Development Fund – and Cohesion Fund) and the European Investment Bank, as well as from others such as the Council of Europe Development Bank.

In addition to the financial allocation, BPI will co-finance the projects on a 1-to-1 basis, thereby making available 372 million euros in overall funds to finance projects located in Portugal.
In this context, the Bank created the BPI/IFRRU 2020 - Urban Regeneration Line for the granting of new medium- and long-term financing operations. Operations consist of two tranches, the first of which will use IFRRU funds under management (IFRRU Tranche") and the second of which will use BPI funds ("BPI Tranche").

Advantages

  • Product directed to companies of any size, as well as other public or private legal persons;
  • Access to financing specifically adapted to project needs;
  • Terms of up to 20 years, appropriate to the maturity of investments;
  • Extended grace periods: equivalent to the investment period + 6 months, with a 4-year maximum;
  • 50% of credit comes from public funds, with very attractive pricing;
  • Competitive spreads: the IFRRU Tranche (50% of Credit) has low spreads and is repaid after the BPI Tranche is repaid in full;
  • Up to 50% reduction of fees under BPI’s general pricing policy.

Beneficiaries

Public or private legal persons that develop urban regeneration and revitalisation investments eligible for support under IFRRU 2020 and that:

  1. Are legally created;
  2. Have a balanced economic-financial status or demonstrate the capacity to finance the operation;
  3. Do not meet conditions to be considered as under difficulties (Commission Regulation [EU] 651/2014, art. 2);
  4. Have no outstanding obligations pertaining to the Tax Administration and Social Security within the scope of European Structural and Investment Funds (ESIF) and no unjustified defaults or incidents with the Bank;
  5. Do not have wages in arrears.

Eligible operations

Main operations eligibility conditions:

  • Restoration operations relating to:
    a) Complete restoration of buildings1 at least 30 years old, or, if newer, that demonstrate a level of preservation2 of less than or equal to 2;
    b) Restoration of abandoned industrial spaces and units – which may include the construction and restoration of buildings and public space.
  • Investment of less than or equal to 20 million euros (including VAT);
  • Located in specific areas certified by respective City Hall;
    a) Urban Regeneration Areas (ARU);
    b) Projects intended for housing located by mandate in Urban Regeneration Action Plans (PARU)3 or similar instruments in Autonomous Regions.
  • Operations that lead to improvements in the energy performance of the building undergoing work;
  • Operations that have not been started (not considered in the start date of the project: purchase of land or buildings, obtaining licences, preparing plans and feasibility studies);
  • With economic and financial feasibility (if intended for economic activities);
  • Projects that present, when applicable, documentation demonstrating the environmental licensing processes and prior control of the urban planning project.

There is no limitation on the intended use of buildings to be restored, and they may be designated for any use, such as housing, economic activities and equipment for collective use.

Ineligible operations

  • Operations that do not comply with the eligibility conditions or that lack merit according to the selection criteria (detailed description of these criteria, formula for calculation of the project’s merit and scoring for each of the criteria is described in the Notice of call for proposals, available on the IFFRU website);
  • Operations that are intended for financial restructuring and/or that involve the consolidation of outstanding loans, or that are intended to directly or indirectly replace financing previously agreed for the same or other project.

Number of Operations
There is no limit to the number of operations or the amount financed for each Beneficiary, provided that State aid is respected, if applicable.

1 Full restoration of buildings is considered to be works through which a building, as a whole, is given adequate characteristics for performance and functional, structural and construction safety, with work of mere restoration, maintenance, cleaning, embellishment or equipping of buildings not considered to be full restoration. In this context, the following types of works (definitions according to RJUE - Legal Regime of Urban Planning and Building, approved by Decree no. 555/99, of 16 December, according to its current wording) are eligible: reconstruction works; alteration works; expansion works; preservation works resulting in an increase in the property’s preservation of at least 2 levels, as certified by the City Council; demolition works (total or partial), provided that such works are preceded by one of the types of works referred to in the preceding items. Pursuant to IFFRU 2020, the assessment of this criterion is confirmed by the specific opinion issued by the respective City Council.
2 Determined by an expert pursuant to Decree-Law no. 266-B/2012, of 31 December. Pursuant to IFFRU 2020, the assessment of this criterion is confirmed by the specific opinion issued by the respective City Council.
3 PARU: Urban Regeneration Action Plans are specific areas within each Municipality (within ARU), such as historic downtowns, riverine areas or abandoned industrial areas. 

Amount

Line amount: Up to €400 million.

Amount of operations:

  • Minimum: €200,000;
  • Maximum: €10,000,000, for the energy efficiency component; €20,000,000 overall.

Term

Term defined based on the Project’s maturity and cash flow (minimum of 2 years) as a general rule:

  • IFRRU Tranche: long term (up to 20 years);
  • BPI Tranche: medium or long term, with a minimum term equal to half the period established for IFRRU and a maximum term of 15 years.

Grace period:

  • IFFRU Tranche: grace period equivalent to term of BPI Tranche;
  • BPI Tranche: grace period corresponding to the estimated terms for execution of projects plus 6 additional months, with a maximum of 4 years, counted from the contract date. 

Guarantees

The package of guarantees will be defined on a case-by-case basis and may include the usual guarantees for this type of financing, ensuring a minimum guarantee/financing ratio of 100%:

  • Real estate mortgages and other guarantees in rem;
  • Executory attachment of concession rights and pledge of assets assigned to concessions;
  • Pledge of shares and shareholder loans;
  • Pledge of claim for damages;
  • Revenue appropriation;
  • Additional recourse to the project’s shareholders/developers.

Conditions

  • Interest rate according to combination of different sources of financing;
  • Fee pursuant to the Bank’s Pricing Policy only applicable to the BPI Tranche; there is no penalty in case of early repayment due to sale of the property;
  • The customer is responsible for costs associated with the contractual assumption of financing, namely those associated with the valuation of real estate, records and deeds, taxes or fees, and other similar expenses.

State Aid

If the project is located in the Lisbon Region, the amount of IFFRU financing to be granted is limited for reasons of state aid, except in certain parishes of that Region considered as an "Assisted Region", namely: Mafra, Loures, Vila Franca de Xira, S. João das Lampas, Terrugem and Setúbal Peninsula:

  • SME Operations: Subject to the limit provided for in Article 17 of the General Regime for Exemption by Category.
  • Non-PME Operations: The following are subject to the de minimis limit. 

Eligible Expenses

Eligible Expenses (main typologies)

  • Preparation of studies, plans and projects, including economic and financial feasibility studies;
  • Acquisition of buildings and land (maximum 50% of financing);
  • Construction and engineering works;
  • Acquisition of equipment essential for restoration of the building (fixed equipment);
  • Supervision, safety coordination, technical assistance and testing;
  • VAT (not recoverable);
  • Specific expenses related to the energy efficiency component, complementary to the urban regeneration work, namely:
    - Work on external glass and glazing of buildings;
    - Work on hot water production and ventilation systems;
    - Interior lighting;
    - Installation of systems and equipment that allow the management of energy consumption;
    - Work promoting renewable energy for self-consumption in housing.

Non-Eligible Expenses

  • Compensation to tenants;
  • Expenses with acquisition of equipment inherent to the productive activity to be installed, expenses with operation, maintenance or repair related to operation of infrastructure or equipment, including working capital;
  • SPU (Small Production Units);
  • Modernisation or conversion work that modifies the use of infrastructure co-financed by ESIF for less than 10 years;
  • Resettlement expenses;
  • Costs related to depreciation of real estate or equipment;
  • In-kind contributions;
  • Expenses with interest owed, fines, financial penalties and expenses with legal proceedings;
  • Expenses related to subcontracting of intermediaries or consultants, where the amount to be paid is expressed as percentage of the amount of eligible financing or expenses of the operations;
  • In the Autonomous Regions of the Azores and Madeira - the acquisition and installation of Hot Water Systems using liquefied petroleum gas.

Application submission steps

Only 3 steps are required to submit an application for the BPI/IFFRU 2020 - Urban Regeneration Line:

  1. Request prior opinion from City Hall corresponding to the property’s location;
    File application for opinion (details here) in order to obtain a binding opinion related to the framework of the operation.
    See IFFRU points of contact at City Halls.
  2. Obtain Energy Certificate for the property prior to work, prepared by an expert qualified by ADENE (Portuguese Energy Agency), given that all properties supported by IFFRU 2020 must demonstrate improved energy performance.
    See list of ADENE-qualified experts.
  3. Formalise the application for funding by filling out the application form and collecting all the information requested therein, for submission at any BPI branch, Investment Centre or Business Centre.

For more information, please go to any BPI Branch or Corporate Centre or contact us.

 

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Observations

This information is provided for advertising purposes and does not constitute a contractual offer; you must read the pre-contractual and contractual information required by law.

Contracting subject to prior approval by the entities involved and subject to the conditions defined according to the risk profile of each operation.

Banco BPI, S.A., Rua Tenente Valadim, 284, Porto, Tied Insurance Intermediary no. 207232431 (registered with the Insurance and Pension Funds Supervision Authority on 31-10-2017 - more details on the registration available at www.asf.com.pt); authorised to carry on insurance business in the Life and Non-Life Branches with the insurers BPI Vida e Pensões - Companhia de Seguros Vida, S.A., Companhia de Seguros Allianz Portugal, S.A. and COSEC - Companhia de Seguro de Créditos, S.A. Banco BPI, S.A. is not authorised to receive premiums or enter into contracts on behalf of COSEC, Allianz or BPI Vida e Pensões and, as an insurance intermediary, assumes no responsibility for the coverage of risks inherent in the insurance contract.