Capitalica Baltic Real Estate Fund I, managed by the investment management company Capitalica Asset Management, has completed the distribution of EUR 5 million bonds issue three months earlier than anticipated. The raised funds will be used to partly finance the A-class business centre VERDE in Riga, Latvia.
“The successful bond issue that was distributed earlier than anticipated has confirmed our assumption that in the low-interest environment, real estate investors are interested in a broader portfolio of financial instruments. Given the current demand for bonds that have exceeded our expectations, we are likely to offer new fixed income instruments to investors soon again. Real estate developers prefer bonds because of the possibility to expand the project financing sources,” said Andrius Barštys, the CEO of Capitalica Asset Management.
It was planned earlier that the bonds of Capitalica Baltic Real Estate I would be distributed in three stages and the emission distribution would last until the 3rd of December, but it turned out that two steps were just enough. According to the CEO of Capitalica Asset Management, there is an apparent lack of higher return investing instruments in the market. Mr Barštys suggests that in the low-interest era, investors are actively looking for various options to make use of their capital, and the real estate projects of Capitalica, which until recently were available to qualified investors only, have now become accessible to retail investors as well.
“Top-class commercial real estate projects are one of the most popular and profitable investment trends globally; however, requirements for investors are quite high. In this case, the minimum investment amount of merely EUR 100 has resulted in a substantial increase in the investors’ interest who decided to become our partners in developing the ambitious real-estate project in Riga and earn money from its return,” says Mr Barštys.
According to him, the attractiveness of bonds is also increased by the fact that they are traded on a stock exchange.
Three-year bonds are subject to 5% annual interest payable quarterly. The issue of Capitalica bonds was distributed by Šiaulių Bankas AB. More than 100 natural persons and legal entities have invested in the bonds of Capitalica Baltic Real Estate Fund I.
Capitalica Asset Management is currently launching a general contractor tender for VERDE project in Riga. Together with the underground garage, its area amounts to 45 thousand square meters and the investment estimates are as high as 60 million Euros. VERDE office complex of exclusive design, which is designed to be built according to the BREEAM Excellent standard, is expected to open its door in 2021.
In addition to the project developed in Riga, Capitalica Baltic Real Estate Fund I also manages the business centre ‘135’ in Vilnius, the capital of Lithuania, the business centre ‘Kauno Dokas’ near the Neris River in Kaunas, the second-largest city of Lithuania, and the shopping mall ‘Luizė’ located in the Lithuanian harbour city of Klaipėda. In line with other investors, the pension funds managed by the company INVL Asset Management invested in Capitalica Baltic Real Estate Fund I at the end of last year as well as this year.
Capitalica Asset Management, the company in charge of Capitalica Baltic Real Estate Fund I, manages commercial real estate in the Baltic States. The investment management company was established in 2016. The majority holding of Capitalica Asset Management (80 percent) is owned by one of the largest Lithuanian capital business groups SBA; another 20 percent of shares are owned by Mr. Barštys’s enterprise Fox Holdings.