The real estate investment company INVL Baltic Real Estate sold the IBC Business Centre in Vilnius for EUR 33 million; companies owned by the Lords LB Baltic Green Fund (V) investment fund acquired the property. Proceeds from the transaction will be used for pay-outs to shareholders of INVL Baltic Real Estate and to reduce loans.
The transaction was completed on 6 March. It is assessed that its impact on INVL Baltic Real Estate’s 2019 profit will be EUR 7.6 million and its impact on the company’s net asset value (NAV) per share will be EUR 0.58. At the end of September 2019, INVL Baltic Real Estate’s NAV per share was EUR 2.72.
“We’re pleased to have successfully closed this deal and increased INVL Baltic Real Estate’s share value. In competing with other exchange-listed real estate funds, we give priority not to the size of assets managed but to the return earned for investors, seeking to take advantage of the opportunities that arise in the market and the potential of the assets held,” said Vytautas Bakšinskas, the real estate fund manager at INVL Asset Management, which manages INVL Baltic Real Estate.
He noted that for the last several years, from the spring 2016 completion of a public share offering to the end of 2019, the company has earned investors a high 18% average annual return.
“Those results are due both to our professional team and our long groundwork in the area of commercial real estate. We strive to create long-term value for investors not just by managing assets effectively –in this period we developed part of the Vilnius Gates complex we own and have worked steadily with other properties– but also by implementing other original and relevant projects, like creation of the Talent Garden Vilnius coworking space. Considering further prospects, we’re ready to take advantage of opportunities that arise in the market in specific properties or transactions, and so expand the real estate management business,” Vytautas Bakšinskas said.
The IBC Business Centre on A. Juozapavičiaus and Šeimyniškių streets in the Lithuanian capital has a gross floor area of 22,700 sq. m. and a leasable area of 17,600 sq. m. Its occupancy level at the end of 2019 was 97%. Also sold during the transaction was the building of the company Rovelija, which INVL Baltic Real Estate owns, at Kalvarijų Street 11a, which has a gross area of 276 sq. m.
The transaction has an impact on 2019 profit and net asset value, and in INVL Baltic Real Estate’s balance sheet as at the end of 2019, the properties sold in the transaction will be valued at the transaction price, as required by accounting standards.
INVL Baltic Real Estate’s portfolio of real estate holdings without the IBC Business Centre includes properties in Vilnius and Riga: office and commercial premises at the Vilnius Gates complex in the Lithuanian capital, office buildings in the Old Town on Vilniaus Street and in Šiaurės Miestelis, and the Dommo Business Park manufacturing, warehouse and office complex beside the Riga bypass. Occupancy levels at the company’s properties at the end of September 2019 ranged from 67% to 100%. As of 30 September 2019, INVL Baltic Real Estate’s property holdings had a total area of 56 900 sq. m. and a value of EUR 60.5 million.
“We’re steadily developing alternative investments and striving to create value for investors. In February we held the final close of the largest private equity fund in the Baltic region, the INVL Baltic Sea Growth Fund, where investors entrusted us with EUR 165 million. Meanwhile, in other products we’re demonstrating ability to not just raise but also return capital – in December last year we sold a portfolio of quality forest, generating an average annual rate of return of 27%. This transaction for sale of the IBC Business Centre will also contribute to increasing the value of INVL Baltic Real Estate’s shares,” said Vytautas Plunksnis, the head of private equity at INVL Asset Management.
Since 22 December 2016, INVL Baltic Real Estate has operated 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 another 20 years.
