Baltic Horizon Fund has signed an agreement with East Capital Real Estate Fund IV to sell 100% shares of BH Duetto UAB which owns the Duetto I and II office buildings in Vilnius, Lithuania. The sales price of the assets is approximately €37 million, which is close to the latest valuation.
The exact sales price will be calculated on the closing date, however, the price may be subject to post-closing adjustments. The fund first acquired the properties in 2017 and 2019 from the international developer and over the period earned an IRR of approximately 13.7% and equity multiple of 1.8x.
The proceeds of the transaction will be used mainly to partially redeem the new bond and invest in the centrally located assets of the Fund. Closing of the transaction is expected to take place at the latest by 12 June 2023.
The business complex, consisting of two 10-storey buildings, was completed in 2017 and 2019 respectively by YIT Lithuania. Located next to Vilnius Western Bypass, which connects Vilnius suburbs to the city centre, the complex provides easy access to both Kaunas and Riga highway exits.
Both Duetto A and Duetto B are fully leased and provide convenient, cost-effective and environmentally sustainable office space that meets the demands of modern working. Among the tenants choosing the complex for their Lithuanian headquarters are well-known global and local brands such as RIMI Lietuva (part of ICA Gruppen), BASF, Intrum, Schneider Electric, as well as municipal heating and water companies. Both buildings are BREEAM New Construction certified and will be financed with a green loan from Swedbank.
“We continue to implement the investment strategy of Baltic Horizon Fund. Taking into account economic cycles, financial markets and the opportunities provided by the development of capital cities, we shall reduce the financial obligations of the Fund and redirect investment flows towards the upgrade of the unique properties in the Fund’s portfolio. The changes implemented in our central properties in recent years, including the Europa Centre in Vilnius and the Galerija Centrs in Riga, along with the approved future strategies, ensure the achievement of long-term goals for the assets and for the Fund,” commented Fund Manager Tarmo Karotam.
“We are very pleased to add the Duetto business complex to our growing Fund IV portfolio The new acquisition continues to follow our investment strategy - convenient and easily accessible locations in the capital city together with modern and environmentally friendly office spaces that have a strong tenant mix,” says Madis Raidma, CEO East Capital Real Estate. “We appreciate Vilnius city’s efforts to make this one of the most attractive business locations in the city with continuous investments in transportation and pedestrian/bicycle infrastructure. We look forward to adding to the success of this location through continued cooperation with the city, our tenant community and neighbouring businesses.”
The acquisition is financed by Swedbank. "Emissions from construction and real estate operations are among the highest across all sectors. Buildings need to meet targets for reducing greenhouse gas emissions. The Duetto business centre complex shares this focus; comprised of two A-energy efficiency class business centres, both certified with BREEAM’s "Very good" standard. As such, they qualify for the bank's green bond program and we are pleased with the cooperation and overlapping values of responsible and sustainable business with East Capital Real Estate IV Fund and this financing," says Ignas Mačeika, Head of Corporate Customer Division at Swedbank.
East Capital Real Estate was advised on this transaction by FORT Legal, KPMG and Projector.
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