INVL Baltic Real Estate
Notification on material event
The transaction on the sale of the part of the Business Centre Vilniaus Vartai owned by INVL Baltic Real Estate has been completed
As it was informed, the special closed-ended type real estate investment company INVL Baltic Real (hereinafter – “the Company”) on 28 September 2020 concluded a real property sale and purchase agreement with UAB Tvarus projektas, legal entity code 305611411, a company owned by UAB Eastnine Lithuania, regarding the sale of the part of the Business Centre Vilniaus Vartai on Gyneju str. 14, A. Tumeno str. 4 and A. Tumeno str. 6 in Vilnius, that is owned by the Company and its subsidiary UAB Proprietas.
The Company gives notice that on 30 of September 2020 the transaction for sale of real estate – part of Business Centre Vilniaus Vartai on Gyneju str. 14, A. Tumeno str. 4 and A. Tumeno str. 6 in Vilnius, owned by the Company and its subsidiary UAB Proprietas was completed.
The value of the transaction is EUR 20 million. It is assessed that its impact on INVL Baltic Real Estate’s 2020 profit will be EUR 4,4 million and its impact on the Company’s net asset value (NAV) per share will be EUR 0,33. At the end of June 2020, Campany’s NAV per share was EUR 1.8678. The proceeds of the transaction will be used for Company’s investing activities, pay-outs to shareholders and to reduce outstanding loans of the Company.
The transaction for the sale of part of the Company’s real estate portfolio has no impact on the rights and/or duties of the shareholders of the Company or on the Company’s operations.
The Company complements the inside information announcement “Regarding INVL Baltic Real Estate’s debt level”, published on 10 March 2020, by indicating that using the preliminary data on 30 September 2020, at the time of publishing this announcement, the loan to real estate ratio of INVL Baltic Real Estate is about 63 percent.
The Company gives notice that the specified ratio was exceeded because, following the sale of the IBC Business Centre and the Business Centre Vilniaus Vartai, the real estate owned by INVL Baltic Real Estate decreased, but it was replaced by a much more liquid asset – cash.
The Company’s management company, INVL Asset Management UAB, is taking measures and preparing an action plan upon whose implementation would eliminate the discrepancy in the Company’s loan to equity ratio.
We draw attention to the fact that the interests and rights of the Company’s shareholders have not been violated as investors’ risk decreased with the replacement of lower-liquidity real estate by higher-liquidity assets (cash).
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 WINT advised 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.
The person authorized to provide additional information:
Real Estate Fund Manager of Management Company