Update from the originator:
Considering the insufficient activity in funding the refinancing round, the Borrower will be presenting a different offer to refinance this project. The Borrower is also looking for other funding sources. The Borrower has to provide more detailed information on it by the end of April.
Current tennants are generating 7800 Euros + VAT monthly rental income to the property owner and this property has 50% vacancy rate. The money from this loan will be used to improve the warehouse conditions that would enable to obtain refinancing from another lender- bank.
Although Daugavpils doesn't have such an active real estate market as Riga, the price of the collateral (LTV<19%), could enable to liquidate the property in case of default due to the cash-flow generated by the tennants.
Current investment opportunity offers CROWDESTOR investors to make a secured loan to SIA TERLAX who to upgrade their warehouse is seeking for additional financing of target EUR 150,000 for 18 months’ period. The loan will carry a 12.8% annual interest rate paid monthly.
Targeted amount: EUR 150’000
Loan term: 18 months.
Interest rate: 12.8 %
Interest payments: paid monthly
Loan repayment: In full at the end of the Loan Term.
Crowdestor BuyBack fund: Yes
Location: Daugavpils, Latvia
Security: The loan is secured by the First-hand mortgage
The site is located in the chemist district of Daugavpils (industrial part), Višķu Street, which is the main street in this area. Buildings in the vicinity of the site are constructed by Daugavpils Bizness Park, industrial production and storage buildings, administrative buildings, railways.
There is 6 km to the centre of the city, or a 10 to 15-minute road trip. Public transport movements are provided by bus and tram marshals travelling through the streets of Višķi and Jātnieki, the distance to the nearest stop ~ 300 m
Area of land – Land unit (Cadastral designation 05000070097) 3,6502 ha total area
Shape, placement – Irregular shape of a polygon. Units of land are located adjacent and form one parcel of land. The land is located inside the block, in the area of Business Park (a former chemist-fibre plant), the block is restricted by the streets of Medeļejev and Višķi, a forest, a railway marshalling yard. Driving to the area mainly used streets are Višķu and Mendeļejev streets.
Relief – Flat
Engineering communications – The land is connected to centralized electricity networks, water and sewerage networks, natural gas networks.
5-story production – warehouse building with a total area of 41 904,4 m2 (Cadastral designation 05000071601052)
Type of use of the building – the former Chemical Fiber plant, a wetting-weaving building with manufacturing, storage and administrative premises – was the second-largest workshop in the plant (the first occupies an area of 130000 m2) The building was constructed and transferred to the expressway in 1982 and partly met the modern requirements. The building is a five-level building with manufacturing plants on floors 1 and 3 and can be driven to the third floor by a freight road to the built-in bridge, the tunnel.
The second level is occupied by an attached 2-story administrative part with several cabins, staff spaces, corridors, shower rooms that are not in use. First and second-floor workshops have a simple plan – one large area space with separate parts of the staff. On the second floor earlier, there were ventilation shafts with huge venting equipment and systems. These mines were needed due to the main company profile – the production of chemical fibres. All shafts were dismantled and the 2nd floor part is completely free and released from brick, a metal that allows them to be used for production or storage purposes. The third floor also houses staff rooms – closets, laundry rooms, lounges, etc. On the fourth and fifth floors, there are small auxiliary spaces in the construction of the roof.
The building consists of several large areas, household and technical spaces. The largest area of the building is occupied by production workshops located at levels 1 and 3. The building has several entrances, big gates, a railway line from an adjacent marshalling yard with a landing ramp into the building enters the premises of the 1st floor of the building. The entry of heavy-duty vehicles on floors 1 and 2 to the manufacturing plant is fitted. There is an unloading ramp with an awning. The building also houses freight elevators. The railway line is served by the city’s municipality. The building has a replaced roof.
The building is a huge structure that today is difficult to use for the production or storage of one company. On the other hand, it can be divided into several parts, or that the first and second floors can function completely autonomously. The administrative part may be used jointly. On the other hand, the object has advantages – rail line, technical condition and so on. The installation has a high-powered electricity connection, two transformers, each at 1600 kW. Only one is working right now.
Total area of the building – 41 904,4 m2, including:
1st floor area – 19 304,2 m2;
2nd floor area – 3 786,1 m2;
3rd floor area – 18 666,2 m2;
Staircase and auxiliary rooms – 147,9 m2
Room height – 2,47 – 7,3 – 9,5m
Building area – 19 982,4 m2
Construction capacity – 332 120 m2
The market for production buildings and warehouses in Daugavpils City is not active, but interest in this sector’s properties is increasing. The supply of industrial building sites – manufacturing, workshops, warehouses, administrative buildings – exceeds the demand. The demand is mainly for properties with different uses, in areas with good infrastructure, with good traffic, as close as possible to the city, favourable road networks, ports, at an adequate price. More active is demand for room purchases than rentals. Activity is positively influenced by the availability of funds from various European Union support funds.
Industrial production facilities are offered on the outskirts of the city, where all the major building and industrial institutions of these cities were located. The development of these sites and the attraction of investments are often delayed by fragmentation, undefined status and ownership of the sites. Production and storage facilities are currently characterised by a low supply of quality spaces. The offer contains many Soviet-built manufacturing and storage rooms: buildings of bankrupt “Soviet Time” companies, which are both morally and physically outdated (no necessary engineering communications and technical equipment to meet international standards), but whereas in most cases such facilities are provided with the necessary engineering connections and the means to invest in buildings, however, in general, the costs of purchasing land and building buildings are relatively lower, so demand for these facilities is also maintained. But increasingly, such properties are being offered renovated and reconstructed. There is little business because the technical state of the buildings does not always satisfy the buyer at a price offered by the seller.
As the technical situation of formerly constructed industrial production sites is getting worse every year, resulting in increased costs of reconstruction, it has been found that more and more investors in the industrial production zones of the above-mentioned cities, or on the outskirts of cities, are purchasing plot of lands (not less than 1 ha) and are building on the basis of their chosen design solutions and building space areas that meet European standards of industrial buildings.
The main value factor of production/storage facilities is the proximity of engineering communications (access to a gas pipeline, urban water pipeline and sewer), the consistency of driveways, the availability of labour.
In addition to the availability of engineering communications, the level of development of transport and social infrastructure is important as well. The availability and frequency of public transport, as well as the location of various trade and services sites, medical care and educational establishments, entertainment and recreation facilities, are seen here.
When purchasing a production facility, the area and configuration of the plot of land contained in the property are essential, which must ensure that there is sufficient area free for placing machinery and materials / finished products. The plot of the land must be so big, so if it’s necessary, it’s possible to extend existing buildings or to create new buildings.
In the case of production buildings and warehouses, if they are connected to engineering networks, the price of 1 m2, depending on location, for the availability of communications and the technical state of buildings are EUR 0,50 – EUR 2.50/m2, for office premises – EUR 2,00 – EUR 3,00/m2. Rental charges for similar production – storage facilities on floor 1 are EUR 0,50 – 2.50/m2, for office premises EUR 2,00 – EUR 3,00/m2. The price of 1 m2 of production sites in economically developed areas, if connected to engineering networks, is EUR 1,20 to EUR 4,00 m2.
Currently, in Daugavpils market there are more than twenty sites for sale and about ten sites for rental. Offer prices, compared to sales transactions, are about 10-20% higher than those recorded in official State sales registers.
A relatively average price rate and average liquidity can be forecasted for this object.
The level of development and transaction intensity of Latvian real estate market, as well as the practice of selling specific properties, shall determine – 6 to 12 months as the necessary period for the sale of real estate at the specified price. At this time, interested buyers get familiar with the proposed property, await changes in the real estate market (potential falls in prices), seek alternative options for investing funds – comparable offers at a lower price, negotiate with owners on price and terms of payment.
Thereby, the period of 12 months is considered to be the most likely term for the sale of the valuation object if the seller does everything necessary for the offering of the property on the free market. Under limited exposure (approximately six months), the price decrease could be approximately 30% of the value of the market.
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