Update from the originator:
The originator would like to inform you that the mortgage agreement with the project owner (UAB „Rego Group“) has been successfully placed and registered. The interest for investments will be distributed on the 7th of June.
The document is attached in the documents section.
|Criteria||From a+ to d||Project rating|
Macro Location Analysis
EvoEstate Risk rating is of an informative nature only & can not be considered investment advice.
InRento is introducing a new buy to let investment opportunity - M16, Vilnius. This project has a Risk Rating and the project owner is among the “Strongest in Lithuania” companies by “Creditinfo”. The investment case consists of two commercial premises located at Meistrų str. 16 in Vilnius, Lithuania.
Currently, the properties are rented out and are generating 1.400 EUR per month of rental income, which results in an 8.44% gross annual rental yield.
The net annual rental yield is 1.260 EUR that is distributed to the investors, or in a percentage value equal to 7.60% per annum net with the given situation of the tenancy.
Reasons to invest in M16 project in Vilnius:
UAB ‘’Motogama“ is the official authorized representative of Malaguti scooters, AGV and Shiro helmets, Spool clothing in Lithuania. The company also sells various brands of motorcycles and provides maintenance services.
The company has been renting the premises since 2016. The new long-term lease agreement will become effective from 1st of May. The tenant will be paying 1.400 EUR per month for rent and the outstanding new rental contract is valid until 2026-05-01.
The tenant has paid the project owner a 3-month lease deposit. In case of the tenant's insolvency, the deposit would be distributed proportionally to investors.
Advantages of the assets
The main benefit of this asset is that during the winter season, there are no heating costs, as the property is surrounded by the pipes' of the heating network and this reduces the cost of the utilities significantly. Thus this reason makes this property highly attractive and competitive in the rental and sales market because there are multiple ways on how the asset could be utilized.
Additionally, this property has a drive-through ramp that enables easy access for cars, motorcycles, and logistics.
This industrial-manufacturing part of Naujininkai district is experiencing a refurbishment and conversion period, thus there is increased activity by the investors. Other floors of this building have already been sold for the conversion and the 2-3rd floors have already been converted into residential apartments.
These premises have convenient access to the inter-city highway.
Financial terms of the investment:
InRento investors are granting a loan to the borrower for the acquisition of the rental properties. The loan is secured with a first-charge mortgage which in case of the borrower’s inability to fulfill financial obligations would be used to repossess the asset.
The revenue-share between the borrower and the investors is set at 90/10, meaning that the borrower is obliged to distribute 90% of the income to the investors. The current absolute income is 1.400 EUR per month, which results in 1.260 EUR distribution to the investors, or in a percentage value equal to 7.60% per annum with the given situation of the tenancy.
The capital growth distribution:
15,000 - 29,999 EUR - the capital growth will be distributed in the following structure: 65% investor / 30% borrower / 5% InRento.
30,000 EUR and more - the capital growth will be distributed in the following structure: 70% investor / 30% borrower.
Rental income (interest)
This project has a 60 days funding period. This project rental yield will be distributed on June 7th day even if the project would not be fully funded.
The project owner (borrower)
UAB ‘’Rego Group“ - is a real estate services company with a wide range of services in its portfolio. The CEO of the company - Andrius Rimdeika is a former investment banker, who has worked in investment firms such as ”Morgan Stanley” and “Prime investment”.
The company specializes in the development and advisory on property cash-flows, additionally, the company provides consulting services in the area of Real Estate. More information could be found on their website.
Leading credit-scoring firm - “Creditinfo” has included the project owner among “Strongest in Lithuania”, the list of companies in Lithuania having the highest creditworthiness rating.
When is it possible to "exit the project"?
When the project is fully funded you will be able to sell your investment on the secondary market. The fee for the secondary market transactions is 2% of the principal value, which is being charged to the seller.
What would happen if the tenants would leave the property?
In a scenario of the tenant canceling the tenancy, the borrower would be paying a 1% annual interest rate until the new tenant would be found. If the borrower would not rent out the assets within 4 months, the fixed-interest rate would be increased to 6% per annum.
What will happen when the property will be sold?
When the property will be sold and it will be sold more expensive than it was acquired. The capital growth will be distributed in the following structure: 60% investors / 30% borrower / 10% InRento. The project owner assumes potential loss if the property is sold at a lower price.
Key investment risks:
Risk of falling prices: The price of the property might fall due to the increase in supply or decrease in demand in the area or other economic factors.
Liquidity risk: The borrower might be unable to find a buyer in order to sell the property.
Tenant risk: Although the assets currently are fully rented out, there is a risk that the asset can lose the Tennant and it can take time in order to find the new tenant.
Investing with InRento, is similar to owning a rental property, however with us you don't have to worry about day-to-day property management and in the periods of vacancy, the borrower is required to distribute fixed-interest payments.
|Borrower's equity exceeds the amount of financing needed||1 / B|
|Borrower's last year's net profit is sufficient to cover the fixed-interest||0 / A|
|Borrower's ability to repay liabilities in the past||-1 / A+|
|Property price comparison to a 3rd party valuation||1 / B|
|Property type||1 / B|
|Is there a tenant already||0 / A|
|Additional point: if the tenant has paid on time during the tenancy||-1 / A+|
|Borrower's experience with rental properties||0 / A|
|Property occupancy over the last 2 years (if it was rented)||0 / A|
|Will the property require renovation||0 / A|
|Micro-location||1 / B|
|Years since the last renovation of the building||2 / C|
|Does the property have a dedicated parking slot near the premises? (long-term rent)||0 / A|
|Does the property have security? (for commercial)||0 / A|
|Property has been for sale for less than 1 year?||0 / A|
|Property has all applicable certificates/zoning rights at least 2 years before the expiry date||0 / A|
|Borrower's Debt / Equity ratio||0 / A|
|Total:||4 / A|
*InRento Risk rating is of an informative nature only and can not be considered investment advice. InRento is licensed and regulated by the Bank of Lithuania.
|07.06.2021||Paid||No||08 June 2021, 20:38|
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