The real estate investment company INVL Baltic Real Estate sold the 7 200-square-metre part of the Vilnius Gates business centre that it owned for EUR 20 million. The company Tvarus Projektas which is owned by Eastnine Lithuania, acquired the property. The proceeds from the transaction may be used for the reduction of existing debt, for pay-outs to the shareholders of INVL Baltic Real Estate, and for possible new investments in real estate.
It is estimated that the transaction will have a positive impact of EUR 4.4 million on INVL Baltic Real Estate’s profit in 2020 and of EUR 0.33 on the company’s net asset value per share. At the end of June 2020, INVL Baltic Real Estate’s net asset value per share was EUR 1.87.
“In our business we strive to create long-term value for investors by managing assets effectively and by constantly seeking opportunities that arise in the market. This transaction confirms that the decision in early 2016 to acquire part of the Vilnius Gates business centre was correct, and that the process of renovating the property and engaging clients was successful and of high quality. That made it possible not just to increase the value of INVL Baltic Real Estate’s shares but also to earn a significant return for investors,” said Vytautas Bakšinskas, the real estate fund manager at INVL Asset Management, which manages INVL Baltic Real Estate.
He said that over the last few years, from the end of the public share offering to finance the acquisition of this building in the spring of 2016 through September 2020, when that part of the Vilnius Gates facility was sold, INVL Baltic Real Estate earned EUR 11 million for investors from the property. The unlevered internal rate of return (IRR) amounts to roughly 18%.
“In terms of the outlook for the future, we continue working on developing existing assets and increasing their value. We’re also ready to invest in non-standard, creative solutions that would help earn a big return for investors and expand the real estate management business,” the fund manager said.
The Vilnius Gates business centre on Gynėjų Street in the Lithuanian capital has a leasable area of 7 200 square metres. Its occupancy level as of mid-2020 was 95%.
The law firm WINTadvised the seller on legal matters related to this transaction.
In 2015, for the acquisition of the Vilnius Gates business facility, the NASDAQ Vilnius exchange-listed real estate investment company INVL Baltic Real Estate raised EUR 10.071 million in a public offering of new shares. The new issue was intended not just to finance the acquisition of the Vilnius Gates building, but also to balance the company’s ratio of debt to equity prior to it becoming a closed-end investment company.
Following the sale transaction, INVL Baltic Real Estate’s portfolio of real estate holdings comprises assets in Vilnius and Riga: office buildings in the Old Town of the Lithuanian capital on Vilniaus Street and in Šiaurės Miestelis, and the Dommo Business Park manufacturing, warehouse and office complex beside the Riga bypass.At the end of June this year, the company’s properties had occupancy levels of between 69% and 100%.INVL Baltic Real Estate’s property holdings had a total area of 33 900 sq. m. and a value of EUR 38.9 million.
Since its inception (on 22 December 2016), INVL Baltic Real Estate is one of the Baltic real estate funds open to retail investors with the highest stable returns. The fund operates as a closed-end investment company. Management of the company was assumed by INVL Asset Management, one of Lithuania’s leading asset management firms. The company will operate as a closed-end investment company until 2046, with extension possible for a further 20 years.