Current investment opportunity offers CROWDESTOR investors to make a secured loan to developer of Project E. Fon Trompowsky Quarter.
The Project is developed by SIA “Prospectum” which is a subsidiary of one of the largest real estate groups in Latvia – SIA “Realto Capital" known under the brand Realto. Realto Capital manages more than 200 000 m2 rentable area, they have more than 750 tenants, 10 business centres.
Funds will be used to acquire and develop a real estate object with land plot of 16 371 m2 and two building with area of 14 941 m2. This is first development phase of E. Fon Trompowsky Quarter which is a historical industrial area located on the Riverside Daugava.
Project is developed together with Sampling architect company. The vision is to develop multifunctional quarter with active life 24/7 and combines clients in one place from creative industries, production companies, restaurants, offices etc.
Current investment opportunity offers CROWDESTOR investors to make a secured loan with 19 % annual interest rate annual interest rate with a LTV of 55% and a loan term of 23 months. Target to be raised in CROWDESTOR platform is EUR 250 000,00. This is second fundraising phase for Project E. Fon Trompowsky Quarter.
Minimum target: EUR 100'000
Maximum target: EUR 180'000
Loan term: 23 months
Interest rate: 19 %
Interest payments: paid monthly after 1 full year, interests for first year are paid in end of Loan term together with Loan repayment
Loan repayment: In full at the end of the Loan Term
Crowdestor BuyBack fund: Yes
Security: 1) 100% of Borrower company shares are pledged on behalf of Crowdestor; 2) Crowdestor has rights to delegate board member to Borrower company and all decisions have to be approved by the board member delegated by Crowdestor
Project: E. Fon Trompowsky Quarter.
Object: Two land plots with total size of 16 371 m2 and two buildings with total area of 14 941 m2
Valuation of the object: 2 386 000 EUR
Funds raised in fundraising phase 1: 550 000 EUR
Funds raised in fundraising phase 2: 100 000 EUR to 250 000 EUR
Total investments to be raised: 1 350 000 EUR
Purpose of funds raised in Crowdestor: Real estate acquisition, architect expenses, landscaping and first renovation costs, fee of Land Register and others fees
Address of the property: Riga, Aptiekas iela 19 and Aptiekas iela 19A
Land plot: 16 371 m2 together (10 663 m2 and 5 708 m2)
Buildings: 14 941 m2 together (8 608 m2 and 6 333 m2)
Realto is one of the leading groups of real estate developers in Baltic States, with business parks and centres having a total rental area of more than 200 000 m2 and the number of existing tenants of more than 750 companies operating in a wide variety of industries - representatives of both electronic communications, metalworking, food production, printing, pharmaceuticals and many other industries. In the real estate development sector, Realto has been active for more than 18 years.
Currently, Realto is developing and managing 12 business parks and centres in Riga, located in different areas - Jugla, Chiekurkala, Purvciem, Pardaugava. Similarly, Realto owns properties outside the Riga district.
Realto, in cooperation with architects and other specialists in the industry, is developing properties belonging to itself, providing companies in a wide variety of sectors with rental areas.
In the 80 s of the 19 th century, a rapid development of industry in Riga, Liepaja, Jelgava and other major cities of carical Russia began, including the Russian and French company Provodhnik, founded on 26 June 1888.
Although Provodhnik cannot be considered the oldest rubber industry company in Riga, it can be called the most important rubber factory.
“Provodhnik”, before World War 1, in terms of the number and importance of workers, was considered to be the largest and most important company, not only in Red Meadows, but throughout Riga, and was considered to be one of the four largest rubber factories in the world.
In 1915 the factory was evacuated to Moscow, the company was nationalised in 1918. In 1921, shareholders decided to restore Provodhnik to the former premises of the factory. Yet it never achieved a boom like the end of the 19 th year, at the beginning of 20.gs. 20.gs. Eliminated at the end of the 30 s.
The first buildings of “Provodhnik” were designed by Riga Polytechnic graduates Edmunds von Trompowsky (1851-1919) and Jan Benedykt Wodzinski (1859-1926). Engineering specialist J. Vodzinskis also worked as a teaching force at Riga Polytechnic/Riga Polytechnic Institute. Two large warehouse buildings were constructed along the Red River. These are the first monolithic concrete structures in Europe – 266 metres long and 15 metres high, built after Swiss engineer Robert Mayar.
In 1946, a Riga electric car factory (RER) was founded on the site of the former plant in Provodhnik. RER produced electrical equipment for trains. In 1950, the company became the first in the USSR to manufacture washing machines. Today, the factory focuses on the manufacture and manufacture of electrical equipment, electric motors, generators and transformers for electric trains, passenger wagons, hardware, electrical equipment and appliances, casting steel and light metals, general mechanical metalworking, etc. RER is continuing its operations today, too.
Prospectum's intention, in cooperation with the Architects' Office, Sampling, is to develop this environment into a multi-functional block where life runs 24 hours a day, where the creative industry, light manufacturing companies and different service providers, as well as offices, work in one place. First floors suitable
It is also planned to settle the area by setting up a promenade/boat berth on the coast of Daugava. There is potentially a suitable place for restaurants, cafes whose customers would appreciate the charm of the industrial environment and the proximity of Daugava. The tenants will also clearly assess the benefits of the upper floors of the buildings of the room, with a view to the port wall and Daugava.
On the other hand, the canal and the green area around it are separating the block from the street area. In the future, it is also planned to improve the area, as well as setting up a pedestrian bridge over the channel itself.
In the future, we also see the prospect of building rental apartments, loftus on the upper floors of buildings, from which a beautiful view of the harbour and Daugava would be opened.
In collaboration with the Architects Office, Sampling has developed visualizations that reflect future expectations.
The property consists of two land plots and industrial buildings with industrial and warehouse premises, operated as unified complex – located at Aptiekas Street 19 and Aptiekas Street 19A in Riga in the Republic of Latvia.
The property consists of two bound properties:
Land plot area according registered note (07.06.2016) in Land Book folio is 10 663 m2, the Valuer believes that land area registered in State’s Land Service is actual (cadastral survey done in 26.06.2014.). The configuration of the land plot has form of irregular shape polygon. The relief of the territory is plain. The land plot is built with two buildings - apparatus building extension (cadastre identifier 0100 013 0152 129) and pass building (cadastre identifier 0100 013 2039 001). The territory is partly enclosed with the fencing. The territory that is free from constructions (7587.6 m2) is covered by asphalt and is used for access roads, but the small part of area is greenery zone including some trees. The land plot with part of its southeastern edge borders with other land plot included in appraised property at Aptiekas Street 19A. This edge is not enclosed with fence and two appraised properties have free access to each other.
The land plot has connections to centralized communication networks - electricity line, centralized water and sewerage system and telecommunication network.
Land plot area according registered note (07.06.2016) in Land Book folio is 5 708 m2, the Valuer believes that land area registered in State’s Land Service is actual (cadastral survey done in 26.06.2014.). The configuration of the land plot has form of irregular shape polygon. The relief of the territory is plain. The land plot is built with one building - central material warehouse (cadastre identifier 0100 013 0152 130). The land plot is not bordered from surrounding territories; access to the property is free without limitations. The territory free from constructions (2786.1 m2) is covered by asphalt and is used for access roads, but the little part of area is greenery zone with some trees. The land plot with the northwestern edge borders with other land plot included in appraised property at Aptiekas Street 19, but its other edges border with property no Ganību dambis 63.
The land plot has connections to centralized communication networks - electricity line, centralized water and sewerage system and telecommunication network.
Pass building (cadastre identifier 0100-013-2039-001)
It is insignificant one above-ground building located next to entrance in the territory of land plot at Aptiekas Street 19 previously used as pass building in industrial complex for security purpose. Currently the building is not used. The building has 5 premises with total area 74.7 m2 including passage space, rest room, toilet and two auxiliary rooms. The ceiling height of premises is 2.5m. Technical condition of the building and premises is satisfactory.
The property is located in the northern part of Riga in the territory of neighborhood Sarkandaugava - in the area enclosed by Ganibu dambis and Tvaika Street. Three land plots are located in strategically convenient location – main object, such as, Central Coach and Railway terminals, Riga International and Spilve Airports – could be reached on average in 20 to 40 minutes. Distance to the city centre (linear) is approximately 5km.
The name of the neighborhood derives from that of the Sarkandaugava ('Red Daugava'; German: Rote Düna), a minor arm of the Daugava that formerly separated Pētersala from the mainland. As Riga developed and expanded, more and more of the Sarkandaugava was filled in, but it still appeared on maps from the late 1930s. All that remains of the Sarkandaugava today is a small, unnamed bay next to the bridge from the Tvaika street area over to Kundziņsala. The appraised property is located in mix-use area with predominantly industrial and commercial function. The centre of the neighborhood is considered the territories along Duntes and Tiltu Streets, and in this context, the location of the appraised property is very close. There are concentrated most of the retail facilities as these streets currently handle most of the private and public transport transit traffic. Areas of the west from Tvaika Street and the appraised property are occupied by industrial territories.
The relief in the territory is rather flat and rather intensively erected with the buildings mostly in the beginning of the 20th century and so-called soviet times. Surrounding territory is erected with the mix of one to five story brick and reinforced concrete buildings. There are several notable companies in near vicinity and operating in the port area: T2 Terminal, Woodison Terminal (oil products), Eko Osta (oily waste reclamation, treatment and processing), BMGS (constructions). Further to the west – the territory of Kundziņsala is predominantly industrial area, occupied by such companies as Riga Bulk Terminal (bulk cargo handling), T2 Terminal (oil products), Baltic Container Terminal (container handling, storage and warehousing, of cargo), National Container Terminal (container handling), Riga fertilizer terminal (mineral fertilizer handling), Kundziņsalas ziemeļu projekts / Kundziņsalas dienvidu projekts (proposed logistic and industrial park).
Uriekstes and Tvaika streets are primarily and intensively used by trucks which are servicing the port territories. Access to the site for trucks can be assessed as relatively convenient. The property is located next to an existing transport route which is used to access the port territories. The property is accessible with the private transport. It takes approximately 15 minutes to reach the property from the city center, or 10 – 15 minutes from the neighborhoods such as Mežaparks, Vecmīlgrāvis or Čiekurkalns if the traffic is not burdened (traffic jams at railroad overpasses). The most convenient access by private transport to the property from Riga city center or from the surrounding territories is along Ganību dambis, although access can be organized alos Aptiekas Street.
Generally, the situation with public transport along the property can be characterized as good. The property can be directly accessed by buss tram or minibus lines. Almost all the public transport routes are leading to or through the city center.
Overall the accessibility and location in the territory of the appraised property is good, taking into account location within mixed industrial and commercial territory.
Presumptions:
1. Industrial rental market in Riga and its neighborhood
According to Ober Haus real estate market report for industrial market in Riga, almost 60 000 m2 of new warehousing space was completed in 2018. Three projects with total warehousing area of 59 800 m2 were completed in Riga in 2018. The total amount of modern warehousing space in Riga and its immediate surrounding reached 708 800 m2 by the end of 2018.
In 2019, at least three major projects in Riga and its vicinity (within 20km) – and
2 including expansion stage – with total warehousing area of around 70 000 m , are
scheduled to be implemented. These projects are being developed by VGP, Piche and Sirin Development.
Industrial Area, Latvia:
The activity in the rental market for warehouse premises is still relatively low due to lack of available warehousing space close to the centre of Riga. There is also a lack of premises for rental in the vicinity of Riga.
Rent for warehouses remained intact during 2018. At the end of 2018, rents for new warehouses in Riga city and its surroundings ranged from 3.5 – 5 EUR/m . Rents for old construction warehouses (from poor quality to fully renovated) range from 1.5 – 3.2 EUR/m . Additional costs for tenants are from 0.5 – 1.0 EUR/m .
Industrial leases are rather simple; finance and construction opportunities are readily available. Rents are indexed to local or EU inflation. Usually, the parties conclude triple net lease agreements where the tenant pays all maintenance costs. Projects are usually built for the specific needs of the owner or intended end-user of the premises.
In the area of new warehouses and industrial areas, average rents have risen slightly, which is due to higher construction costs.
2. Industrial sale market in Riga and its neighborhood
Based on Colliers International Research & Forecast Report for Baltic States in 2019 Q1, activity in the Latvian investment market remained high, seeing two notable deals – acquisition of the Elipse BLC (speculative industrial project, Class A) in Marupe by Mariner Capital Limited (part of Hili Company) and sale of the neighborhood centre in Imanta district of Riga with RIMI and MyFitness as anchor tenants to Lumi Capital.
No notable deals in the office segment were finalized during Q1 2019, though increased activity has been observed with small-scale nonprofessional office buildings.
The development market also continues to be active, especially the residential segment. Prime yields remained stable.
East Capital Baltic Property Fund III purchased P5 industrial park, a 13 800 m2 logistics complex with two multi-functional buildings in Marupe parish, an area near the Riga – Jurmala/ Liepaja/ Ventspils motorway, between Riga Airport and SPICE shopping centre for 10.6 million EUR. It was developed by PICHE and was fully rented.
New Hanza Capital Investment Company bought a logistics complex in Maskavas Street in Riga for 4.6 million EUR. It includes 12.55ha of land and three warehouse and office buildings (built within the last ten years) with leasable area of 26 000 m2 . The site allows 7.5ha of the land to be used for new development, therefore the company has started to design an A class warehouse of 25 000 m2.
The warehouse and manufacturing segment has seen significant activity in 2018. There is still relatively high demand for production premises for purchase and there are also corresponding area offers. There is also a lack of premises for sale in the vicinity of Riga.
There is still strong demand for industrial buildings (factories) built in Soviet times, in the 150 – 200 EUR/m2 price range. Due to lack of premises, entrepreneurs look at objects located within a radius of 50km around Riga.
For small and older warehouses, factories and service facilities up to 500 m2 , the selling price is on average between 350 and 400 EUR/m . Sale price for hunger built
22 in the 80s – 90s starting at 500 m range from 70 to 250 EUR/m .
The trend is for companies to buy warehouse and production facilities for their own needs.
The following industrial properties are offered for sale in the market at the date of value in November 2019 in territory of Riga city:
Dynamics of yield rates:
After several years of decline, yields in early 2019 have shown signs of moderate growth pointing to short-term financial access risks
Market review is prepared using information from SIA City Real Estate Company database, internet portal Cenu banka, published market reports of SIA Latio, SA Ober-Haus, Colliers Internationa for 2018 and three quarters of 2019.
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