The real estate investment company INVL Baltic Real Estate has actively begun subscriptions for a new share issue that provides the opportunity to invest in the shares of a company which manages valuable real estate. The offering is considered a relevant alternative for those who want to invest in real estate but are unable to dedicate the time or money needed for its maintenance. The offering price for the issue is EUR 0.4 per share, with no restrictions on the size of an initial investment. INVL Baltic Real Estate seeks to achieve an annual return of 8 per cent.
Individuals may subscribe to the issue of INVL Baltic Real Estate shares until 3 March, professional investors until 4 March. Those who buy the shares will be investing in a company that manages a valuable diversified portfolio of commercial real estate properties – business centres as well as manufacturing and warehouse facilities in Vilnius and Riga. These properties stand out for their high rates of occupancy and generate stable financial flows. Some of them also have further development potential.
"Although real estate is perceived as one of the most attractive ways to invest money, the purchase of one or another property demands not only a relatively large initial sum of money, but also further continual maintenance. On top of that, people who take an interest in other real estate investment products managed in Lithuania discover that the starting amount for acquiring such products is rather high and hardly accessible," says Egidijus Damulis, the CEO of INVL Baltic Real Estate.
In his view, the new issue resolves relevant issues for people who want to invest their money in real estate: it makes it possible to invest a sum of any size in a company that is successfully managing and maintaining its real estate portfolio comprising a variety of properties in good locations which also enjoy high occupancy rates and generate stable cash flows. "It's not just a simple and effective way to invest part of your savings in real estate, but also a new investment product on the market," Damulis says.
That is confirmed by the head of the Lithuanian Financial Markets Institute, Prof. Gerda Zigiene. In her view, Lithuania's financial market is ripe for new solutions, and INVL Baltic Real Estate's share issue broadens the spectrum of investment instruments and makes it possible for anyone who wants to participate in financing the development of the real estate market to do so. "As a study conducted by our institute shows, investments by individuals in structured real estate products might also have a positive impact on Lithuania's economy and households," Prof. Zigiene said.
"Another reason this investment is relevant is that if you choose other investment opportunities, deposits or bonds for example, the return you get is relatively low. The safest German government bonds currently offer a negative return, and rates on deposits lately have also been low. Of course, in choosing where to invest, you also have to assess the potential risks," Damulis notes.
Investments in a company that manages real estate can be expected to provide a dividend return and the portion of capital gains from properties that are developed or successful acquisitions which corresponds to the investor. The level of return targeted by INVL Baltic Real Estate is 8 per cent or more. That is what the team managing the portfolio, which has strong experience in the area of real estate, will seek to ensure.
"The value of the assets that INVL Baltic Real Estate manages is ensured by properties in strategically important locations as well as professional management and maintenance. In addition, the INVL group's long experience and financial stability enable it to react flexibly to market changes and take decisions to expand the basket of managed assets by adding valuable real estate properties," says Saulius Vagonis, head of the Valuation and Market Research Department at Ober Haus, which conducted the valuation of the company's investment properties.
The board of INVL Baltic Real Estate is also proposing the adoption of a dividend policy foreseeing the payment every year of a dividend of at least EUR 0.012 per share, which equals 3 per cent of the offering price. A decision on this issue is planned on 15 January 2016.
Those wishing to acquire the new shares must by 3 March submit a subscription order indicating the desired share purchase amount. That can be done at the offices of INVL Finasta in Vilnius or Kaunas as well as at branch offices of Siauliu Bankas in Vilnius (Seimyniskiu St. 1A, 6th floor), Kaunas (Laisves Al. 80), Klaipeda (Taikos Pr. 101) and Siauliai (Tilzes St. 149). The subscription period will end for individuals at 5 pm on 3 March, and at 5 pm on 4 March for institutional investors. Altogether, up to 28,773,748 new INVL Baltic Real Estate shares may be issued for EUR 11.5 million. Once subscription ends, the total sum of received orders will be evaluated. If it is larger than the size of the issue, purchased shares will be allotted correspondingly.
The money that is raised will be used to partially finance or refinance the acquisition of 6,500 square metres of premises at the Vilnius Gates complex and to balance the company's debt-to-equity ratio before it becomes a closed-end investment company. Once it acquires that status, transfer of the company's management on the basis of a trust to the asset management company INVL Asset Management is planned.
INVL Baltic Real Estate, which is listed on the NASDAQ Vilnius exchange, manages real estate valued at EUR 52 million comprising 58,000 square metres of premises at strategically attractive locations in Vilnius and Riga: office space at the Vilnius Gates complex, the IBC Business Centre near Konstitucijos Ave., office buildings in the Old Town on Vilniaus St. and in Siaures Miestelis, office and warehouse premises in Kirtimai, and the Dommo Business Park manufacturing, warehouse and office complex alongside the Riga bypass.