EvoEstate Risk rating is of an informative nature only & can not be considered investment advice.
Category - Development project
Annual interest - 13%
Payment frequency – interests every 6 months (01-2022, 07-2022, 01-2023)
Collateral - Owned by SPV
Duration - 18 months
Country - Latvia
The land plot will be owned by our SPV and the residential units will be fully developed and managed by Reinvest24, in partnership with an experienced construction company - Kirsan.
The 7-storey residential building will be located near one of the main streets of Riga - Aleksandra Caka street. Being next to the main street, the windows are both facing the courtyard as well as the facade of the building, creating privacy for its future owners.
The area near the building is well–developed. The infrastructure of the public transport is easily accessible. The kindergartens, schools, medical institutions, office buildings, sports and shopping centres, as well as one of the most beautiful parks in Riga - everything is in a very close proximity. The location of the project will provide an opportunity to enjoy a peaceful rhythm of life while being in the city centre. Only an 8 min car ride will bring You to the Arena Riga - an indoor arena, where currently the IIHF Ice Hockey World Championship 2021 is taking place.
The total land plot area is 1000 m2, which has detailed planning and approved project to build a 7-floor apartment building with a 2230 m2 living area. It is located advantageously so the noise of the surrounding streets is not heard, creating an ideal environment for a quiet home in the centre of the city. It is worth mentioning that this project is very similar to our previous Latvian development - Bauskas and the whole construction part will be managed by the same people from the Kirsan side.
What is a development project?
This is a loan type that is used to purchase a property in order to sell it. In this case, a 7-floor apartment building will be built on the land plot. It is important to mention that this loan type is more similar to our rental projects, rather than development loans. It means that we don’t lend money to a 3rd party, but purchase the property and manage the process in a similar way we do with our rental properties.
The land plot comes at a great discount and is ready to build on it;
Full control over the execution of the development project;
Interest payouts every 6 months (01-2022, 07-2022, 01-2023).
The Land plot will be acquired together with the Latvian company currently owning it. This company will become our SPV, which will be owned 100% by Reinvest Holding OÜ. Currently, the land plot is already reserved for us. The land plot comes at 290 000 EUR, adding up to 310 000 EUR together with notarial fees and taxes. All together the cost per sqm will still be under 310 EUR. The latest appraisal from 2017 is 318 000 EUR, with the 7-floor residential building project not confirmed by the local authorities yet. Considering that the real estate market in Baltics has grown exponentially in the past 4 years and that the project is now approved by the local authorities, the current valuation of this land plot is estimated to be around 400 000 EUR.
Currently, we are preparing all the documents to submit the application for a construction permit, which at this stage is easy and fast to obtain. Once the property gets fully funded, it will be acquired and construction works will begin. The total budget for construction works is 2 700 000 EUR, which will be funded stage by stage.
The demand and therefore the liquidity for small apartments in the city centre of Riga has always been great. The price per square meter for new apartments in the area varies from 1600 - 2100 EUR. Our projected sale price per square meter is 1700 EUR + VAT. Together with the parking slots, the estimated sale of apartments will amount to 4 000 000 EUR without VAT. The repayments together with interest will be paid from the sale of apartments or by refinancing via a financial institution. The selling process will be started as soon as the construction works start.