2024/05/20
The third tranche of the 6 million euros bond issue for the development of the Hero Business Centre has been successfully placed. On 30 April - 14 May, UAB “Sostinės bokštai“, affiliated to “Realco“, one of the largest real estate development companies in Lithuania, offered debt securities with a maturity of up to 2 years to investors in Lithuania, Latvia and Estonia. The obligations are secured by mortgaged land with buildings. The nominal value of each bond is 1 thousand euros.
“This is the third successfully issued bond tranche, with the funds raised being allocated to finance the unique business center "Hero" being constructed in Vilnius' central business district. Investors‘ activity confirms both the appreciation of a viable business centre and the confidence expressed in the company developing it. It is also important that the bonds were actively purchased not only by institutional but, for the first time, also by retail investors in the three Baltic countries”, says “Realco's“ CEO, Julius Dovidonis.
Buyers of the publicly issued bonds will be paid an annual interest rate of 6-month EURIBOR + 6%, semi-annually. Currently, the 6-month EURIBOR stands at about 3.79%. The public bond issue was underwritten by the Estonian investment banking company Redgate Capital and Šiaulių bankas and is being carried out in accordance with the terms of the Base Prospectus approved by the Bank of Lithuania on 12 March 2024 and the Supplement to the Base Prospectus approved on 23 April.
The issued bonds are expected to start trading on the NASDAQ Vilnius alternative securities market "First North" within the next six months.
Success Factors
Eglė Džiugytė, Head of the Financial Markets Department at Šiaulių Bankas, states that there are several key factors contributing to the successful issuance of the bonds intended for the construction of the "Hero".
“The project's location is the main criterion for investors when deciding where to direct their investment funds. Thus, it is not surprising that the unique project being created in the central business district of the capital has attracted great interest from market participants. Investors were particularly interested in the fact that the bonds are secured by pledged land and rising buildings”, says E. Džiugytė. “Another significant source of success is the open and direct communication of the company implementing the “Hero“ project with investors. They appreciate the efforts and commitment of the issuers to communicate directly. Communication is the key to aligning expectations and exchanging information. Investors feel much more at ease when they know they will receive information about the project first and that all their questions will be answered.”
Dinas Petrikas, representative of "Redgate Capital" in Lithuania, reveals that there were almost 300 investors from Lithuania, Latvia, and Estonia.
“It is understandable that most of the investors were from Lithuania, but this time there was a significant increase in investors from Latvia and especially Estonia. It is clear that the success of the bond issue is due to the recognition and favorable evaluation of the company developing the project - Realco,” says D. Petrikas. “Another equally important aspect for investors is the location of "Hero" in Vilnius' central business district, which is well known to everyone. It was also appreciated that the land plot and the building under construction are pledged as primary collateral for the bonds, providing strong guarantees for investors.”
A total of 67 million euros will be borrowed through bonds
The previous two non-public tranches of the Hero construction bond issue raised 13.5 million euros for the project. The total investment in the “Hero“ business centre in the centre of Vilnius will amount to 112 million euros, and “Realco“ plans to borrow around 60% of the market - up to 67 million euros.
The fourth tranche of the bond issue is planned for September this year.
According to Julius Dovidonis, Realco's CEO, the project is being developed at a planned pace, and financing needs are being sorted out. Therefore, it can be announced that the distribution of the fourth tranche of the bond issue is planned for September.
The A class business center "Hero" is planned to be completed in the second quarter of 2025. It will offer 31,600 m² of rentable space, with up to 4,000 m² of space per floor. Additionally, 430 underground parking spaces will be provided. The environment of this building and its sustainable lifecycle will be ensured according to the standards of the world-class "WELL Gold" and "BREEAM Excellent" certificates. Notably, "Hero" is expected to become the first business center in the Baltic States to be certified "WELL Gold".