Metro Baltic Horizons plc, the property investment company focused on prime commercial and residential development opportunities in the capitals of the Baltic States and St Petersburg, Russia, has announced that it has entered into agreements to acquire two development properties in Riga, Latvia, and Tallinn, Estonia. The gross development cost of the projects, including acquisition, construction and finance is approximately €130 million.
View on Riga, Latvia
The total consideration payable for the acquisitions in Riga and Tallinn is €28 million which, together with inital working capital, will be approximately 46% equity funded. After these acquisitions, the company will have committed circa 65% of the investable funds raised by the company in its IPO on AIM in December 2006.
Details of the two acquisitions are as follows:
- The first property is a prominently located land plot of 1.7 hectares situated approximately 5 km from Riga Old Town and very close to the new South Bridge. The property is well suited for modern office development, with high visibility and easy access to the city. Planning permission has been granted for the construction of approximately 50,000 m² of gross office space together with requisite parking facilities.
The proposal for the scheme involves the development of three 17-floor towers on a phased basis over a 36-month period. Construction is expected to start in spring 2008. The project has an estimated gross development cost (acquisition, construction and finance) of €105 million, of which it is estimated that up to €36 million will be equity funded.
- The second property is a 2,200-m² land plot located on a high profile square in the center of Tallinn, an area that currently commmands some of the highest rents in the city. Planning has been secured for the construction of a new seven-story building, with retail space on the first and second floors and offices on the third to seventh floors. All requisite construction permits are in place and binding bids from local and international construction companies are being assessed.
Once completed, the building will comprise 8,900 m² of gross floor spce, as well as underground parking for 76 cars. It is estimated that the project will have a gross development cost (acquisition, construction and finance) of €25 million, of which circa €9 million will be equity funded. It is expected that construction and full lease out of the premises will be completed by early 2009.
Metro Capital Management is currently managing both projects on behalf of third party investors. The prices being paid by Metro Baltic have been negotiated and based on independent valuations undertaken on each of the properties. Both of these acquisitions meet the company's stated investment criteria including target return, location, stage and type of development.
Metro Frontier Ltd. acts as investment manager to the company and Metro Capital Management AS as investment advisor.
Commenting on the acquisitions, Robin James, Director of Metro Baltic Horizons, said, "The property markets of Riga and Tallinn have seen considerable yield compression in recent years and the market prices for existing, quality, developed