Capitalica Asset Management launches bond offering for residential real estate project in Riga with 8% annual interest
On 7 October, fund management company Capitalica Asset Management launched the second tranche of its € 1.75 M bond issue to finance a residential real estate project in Riga.
On 7 October, fund management company Capitalica Asset Management launched the second tranche of its € 1.75 M bond issue to finance a residential real estate project in Riga. The total bond programme amounts to € 5 M.
The bond issuer is UAB Capitalica Residential, which is wholly owned by Capitalica Asset Management. The bonds offer an annual interest rate of 8%, with interest paid every six months. The nominal value of each bond is € 1,000, and the remaining term of the programme is 18 months.
The bonds are distributed through the BeMyBond platform. The first tranche of the programme, worth € 2 M, was fully subscribed in less than one day in May.
“In today’s unpredictable economic environment, investors are increasingly focusing not only on balanced returns but also on the issuer’s credibility, financial position and ability to meet its obligations. In the case of Capitalica Asset Management, these factors are further supported by extensive experience in both real estate and capital markets,” says Indrė Dargytė, CEO of BeMyBond.
Capitalica Asset Management manages over € 275 M in assets and has extensive experience in real estate and capital markets. To date, the funds managed by the company have issued € 83 M in bonds, of which € 69 M has already been successfully redeemed.
“We consistently use capital markets as one of the financing sources for our projects, making long-term investor trust particularly important to us. This time, we are offering investors an opportunity to participate in our residential real estate project in Riga, where we see significant market potential. Rental yields in Riga still reach 8% and above, while a large proportion of residents continue to live in older apartment buildings. This indicates structural demand for new housing,” says Andrius Barštys, CEO and Chairman of the Board of Capitalica Asset Management.
New residential development planned in Riga
The proceeds from the bond issue will be used to finance the acquisition of a land plot at Lielirbes St. 7 in Riga and the development of a residential real estate project. The proceeds from the first € 2 M tranche were used to make the initial payment towards the acquisition of the land plot.
The project is located next to the Agenskalns district, along one of Riga’s main transport arteries connecting the city centre with Riga International Airport. The development will include multi-storey residential buildings, parking facilities, internal roads, children’s playgrounds, bicycle storage facilities, green spaces and commercial premises.
Capitalica Asset Management already manages and develops commercial real estate projects in Latvia, including the VERDE Class A office complex in Riga’s Skanste district.
€ 9.3 M financing for the project
The total financing required at this stage of the Lielirbes St. 7 project amounts to € 9.3 M. Of this, € 7 M represents the land acquisition cost, while a further € 2.3 M is allocated to initial design and debt servicing expenses.
The project is expected to be financed through € 2.15 M in equity contributions and shareholder loans from Capitalica Asset Management’s shareholders, a € 3.4 M bank loan and € 3.75 M in bonds distributed in tranches through the BeMyBond platform.
The first-ranking mortgage over the land plot will be held by the financing bank, BigBank. The project's loan-to-value (LTV) ratio must not exceed 85%.
Upon maturity, the bonds are expected to be refinanced through a bank loan or a new bond issue. Alternatively, the bonds may be redeemed using proceeds from the sale of individual land plots within the project.
Both individual and corporate investors registered on the BeMyBond platform can invest in the bonds. The minimum investment amount is € 1,000.
