Project Our client, Premium Properties SIA (http://www.premprop.lv/), is developing a residential building via separate project company Barona Dainas SIA. Development project involves acquisition and renovation of an existing residential building, sale of apartments after the renovation is completed. All renovation will be done by the company itself. The building comprises 16 apartments with a total saleable area of 620 square metres. Apartment sizes vary between 32 and 65 square metres – sizes with the highest demand from buyers. The total funding for investment project is 150 000 EUR, which will be attracted in two project phases. The investment amount for the first phase is 100 000 EUR, while the second phase for 50 000 EUR will follow after the purchase of the building. Residential building is located on Kr. Barona 92A, Riga, in a quiet, green side-street within popular city centre neighbourhood with close access to shops and city services and very convenient transport to the Old Town or other city areas. The target sales price for partially fit-out apartment is EUR 1,400 per square metre, for a fully fitted apartment – EUR 1,800. The total minimum sales revenue from apartments is planned as EUR 860,000, supplemented by revenue from the sale of storage area in the basement (EUR 75,000). Renovation budget (for partial fit-out of apartments) is EUR 272,000. The renovation will require 6 months and sale of apartments – another 6 months after completion. The company has secured an agreement to acquire the property as well as loan agreement with the bank to finance this project. Loan The loan amount will comprise EUR 100,000 and it will carry 18% annual interest rate. This loan will serve as a junior lender with claims subordinated to the bank loan (EUR 400,000), which will also finance this development project. Security The loan is secured by a second rank claim on all assets held by both Premium Properties SIA and Barona Dainas SIA as well as personal guarantees from both Premium Properties SIA shareholders. The future value of the building after renovation and excluding the bank debt is EUR 460,000 (33% LTV). The borrower Premium Properties SIA has an experience in real estate development and general construction, and over the last five years have completed more than 20 development and building projects both in private and public sectors. Repayment schedule Loan and accrued interest will be paid within 12 months.
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