Capitalica Baltic Real Estate Fund I managed Capitalica Asset Management ended 2022 while improving all key financial indicators – increased total assets, sales revenue and profit.
“Excellent results were ensured by almost 100% occupancy in all our Lithuanian properties and steadily increasing rental income. Last summer Verde, the greenest A-class office complex in Riga, opened its doors. Well-known companies in Latvia and worldwide are already renting premises here: Swisscom, Decta, KPMG Latvija, Swetch, Merito Group, Workland, Enefit, VIA SMS Group and Tietoevry. Despite the rising energy prices and increased costs of construction and fit-out, we managed the challenges”, says Andrius Barštys, CEO of Capitalica Asset Management.
According to the unaudited data for 2022, the fund increased its consolidated assets to EUR 125.9 million, which is 39.4% more than in the same period in 2021 (EUR 90.3 million). All fund properties increased their value, but the most significant jump was made for the business center Verde in Riga, it doubled (108.7%). This was influenced by both, the achieved completion level (75%) and high occupancy, which according to the signed lease agreements was 74% at the end of 2022 (respectively, 28% at the end of 2021).
The fund’s own capital amounted to EUR 51 million or 43% more compared to 2021 (EUR 35.7 million).
The consolidated sales revenue of Capitalica Baltic Real Estate Fund I in 2022 amounted to EUR 5.7 million, and the consolidated net profit was EUR 17.7 million. That is 13.6% and 146.6% more than in the same period in 2021. The increase in income was due to the higher rental flow, and the main reason for the profit growth was the change in property values. During the last year, the fund recorded EUR 14 million in consolidated asset value increase following its revaluation.
Currently, the fund manages commercial real estate properties in Lithuania – office buildings Žalgirio 135 in Vilnius, Kauno Dokas in Kaunas and shopping center Luizė in Klaipėda. In Riga, Capitalica Baltic Real Estate Fund I is developing Verde, the greenest A-class office complex in the city.
“At this maturity stage of the fund, our investors are in the right place at the right time thanks to the Verde project being completed. We plan that 2023 will also be a successful year. The investment environment in the Baltic commercial real estate market has cooled down. The number of transactions almost doubled down in 2022, but despite this, prices in the office segment reached all-time highs. Rapidly rising inflation led the central banks to raise interest rates. At the end of 2021, its environment was still negative, but in 2022 EURIBOR reached almost 3%, and this year a further increase is predicted. This leads to growing costs of funding (most real estate funds are using financial leverage in their activities) and additional stress on cash flows. Striving to ensure profitable operations and return on investment, we offer effective management solutions in existing buildings and do approach tenant needs flexibly”, notes Andrius Barštys.
New services and the well-being of tenants are the focus. All buildings have parking lots for cars and bicycles, and charging stations for electric vehicles are being installed. The fund aims to implement the principles of green energy – so this year solar power plants are planned to install in all buildings we manage. For the convenience of tenants, cafes and wellness centers are open all day inside the properties or nearby. This year the pet clinic Dr.VET will be opened at the Žalgirio 135 office complex and the kindergarten is on the way to start operating there as well.
Capitalica Baltic Real Estate Fund I invests in the Baltic real estate market and focuses on commercial real estate. The fund has completed the active investment and acquisition phase. Once the Verde project in Riga is completed, no further investment is expected in the fund. New real estate acquisitions and developments are planned in the newly established funds.
