Dzirnavu Street III
Closed for investment
This loan is intended to refinance the previous object “Dzirnavu Street II”. The project undergoes refinancing as the initial plan to develop an upscale 6-story residential building was changed due to the unplanned appearance of COVID-19 and, thus, adjusted accordingly to ensure a quicker exit from the project.
The project owner SIA “FPC” has prepared a new concept for the building as they were approached by a client, who expressed a necessity to use the property for a specific project. The architects have begun to rearrange the plans of the building according to the needs of the client, adapting the construction and design of the building. Currently, the final visualizations and floor-plans are being coordinated with the project owner and the developers.
The new concept entails the development of an upscale 4-story residential building specifically prepared for a hospitality company which specializes in short-term luxury apartment rentals. The company has already established similar residences in the Riga Old Town and centre and wishes to expand its business further. However, the initial construction project had to be adjusted, thus the architects have made changes in cooperation with the client, adding an elevator, roof terrace as well as completely changing the concept of the basement turning it into the laundry room for visitors of the residence.
The previous plan of developing a 6-story residential building would significantly prolong the potential construction timeline, and, to ensure that the project is financially viable, the developer decided to adjust the project for the needs of the client.
As soon as the new construction and technical plans are approved the actual construction works of the project will restart. The renovation works will be financed on Bulkestate platform in the next project stages, providing funds for successful development of the project. The building is in the very centre of the Riga city with proximity to the city’s most popular business, commercial and entertainment areas, thus in a perfect location for developing luxury class rental apartments that are in high demand.
Works in progress
So far, the architect has completed the technical plans for the building’s facade and a part of floor plans. Adjustments for the client are still carried out, including new construction plans for the 4th floor, adding a new elevator shaft, and rearranging the basement. As soon as the plans are finalized they will be coordinated with the local authorities to complete the pre-construction phase.
The preparation for construction works was initiated before the COVID-19 lockdown, however, had to be paused as the crisis emerged. Before ceasing the works, the construction team managed to build a new temporary roof to protect the building from rainfalls, as well as install new stairs to have access to all floors of the building and the attic. The outside of the building was covered with construction sheeting to protect the facade and the courtyard from dust and construction debris.
While working on the new concept and starting the development process of the property, the owner is looking for the refinancing of the loan, after repaying a part of the interest payment for the current loan.
As mentioned in the previous financing stage, the property is located in Riga's historical centre and it is protected by many international conventions on heritage protection and has been included in UNESCO's world heritage list. This made it more difficult for the property developer to initially coordinate the development project and get it approved by the local municipality. Additionally, the developers had to receive consent to carry out the project from all surrounding property owners.
Repayment of the loan
The project will operate as a short-term rental apartment building to generate monthly income for the client. The borrower will earn monthly rental income, hence, it will provide an opportunity to refinance the loan at a third credit institution.
Additionally, to provide a better cash-flow for their company, the borrower plans to merge one of his companies that generates income from other cash-flow properties with SIA “FPC”. This will increase the borrower's chances of refinancing the loan with better terms.
The loan is secured by the mortgaged property and all assets held by SIA “FPC”. The future value of the property after completion of the construction is EUR 1,141,000 (35% FLTV). The loan is secured by the guarantee from the owner of the company and the property has full insurance for the entire loan term.
The valuation will be updated in the coming weeks after the new visualizations of the project will be completed.
Amount of the loan
400 000 EUR
SIA “FPC” is a project company, which is controlled and managed by an experienced real estate developer with a focus on residential projects.
Repayment of investments
The principal amount of the investment and the accrued interest will be paid out in a single payment at the end of the repayment term.