Demand for KAITA Group company bonds nearly doubled the offering size

Demand for bonds issued by KAITA LV LIVING SIA, a company of KAITA Group, one of Lithuania’s largest real estate developers, reached EUR 5.33 million, almost twice the EUR 2.8 million offering size. The capital raised will be used to finance Youston Riga, a residential rental project in central Riga operating at 95% occupancy. The bonds will be admitted to the Nasdaq First North alternative market. The offering was arranged and distributed by investment services company Orion Securities.

Lithuanian investors accounted for half of the total demand, submitting orders worth EUR 2.66 million. Orders from Estonian investors reached EUR 2 million, or 38% of the total, while Latvian investors accounted for EUR 662,000, or 12%. The offering attracted strong interest from experienced investors: investments of EUR 10,000 or more represented 70% of the total amount subscribed, reaching EUR 3.71 million.

“This is not the first of our bond issues where demand has significantly exceeded supply. We see that investor confidence is supported by our long-standing international experience in developing investment real estate designed to generate returns. We specialise in creating and managing this type of property across European capitals, which means that even before acquiring a site, we already have a clear understanding of who will rent the property, what income it will generate and how it will ultimately be realised.

In Riga, the project reached full occupancy within one month of opening and has since maintained a stable occupancy rate of 95%. By selling the project as individual apartments, we are offering buyers the opportunity to acquire real estate that can generate rental income from day one,” says Ugnius Latvys, CEO and Partner at KAITA Group.

According to Matas Čipkus, Bond Origination Project Manager at Orion Securities, investors also valued the fact that the bonds are linked to a completed, income-generating real estate project.

“Confidence was strengthened by the fact that all of the project’s key indicators have already been tested in practice, while bond redemption is supported by a clear apartment sales plan that can be implemented within the term of the issue. Investors were able to assess the property’s track record, the existing financing structure and specific sources of repayment,” says M. Čipkus.

Rental projects in Vilnius and Riga being sold as individual apartments

Youston Riga, for which the company issued the bonds, comprises 174 residential studio apartments, with a total saleable area of 3,552 sq. m. According to an independent valuation, the project is worth EUR 12.6 million.

The project began operations in August last year, reached full occupancy within its first month and has since maintained a stable occupancy rate of 95%. Following the development phase, Bigbank refinanced the project and provided 25-year operational financing.

“Long-term bank financing means that the project’s operating model and cash flow have already been assessed by an independent lender. Investors also benefit from a clear bond repayment structure: until the apartments are sold, the project continues to generate rental income, while proceeds from the sale of the property are intended to serve as the main source of bond redemption,” says U. Latvys.

Last year, Youston Riga was named Latvia’s best conversion project of the year. KAITA Group invested EUR 9.5 million in converting a 1970s administrative building on Kr. Valdemara Street. In addition to 174 apartments, the project includes more than 1,200 sq. m of shared spaces, including a gym, sauna, cinema, communal kitchen and dining area, as well as work and leisure zones.

Over the next two years, KAITA Group plans to realise the project by selling the apartments individually. Buyers will be able to acquire apartments together with a professional rental management service and begin receiving rental income immediately after purchasing the property. The company is using the same model to sell fully furnished apartments at its Belong project in Vilnius’ Naujamiestis district.

The group manages the largest residential rental portfolio in Lithuania, comprising 540 homes in Vilnius, while its European portfolio includes almost 1,000 units. The company manages residential rental projects in Vilnius, Riga and Prague and is currently developing a similar conversion project in London. Properties originally developed for rental in Vilnius and Riga are also being offered for sale.

“The location, size, fit-out and management of investment housing intended to generate returns are all designed around rental demand. Our aim is to do this work for the buyer and offer a professionally prepared investment property, even to someone purchasing an investment home for the first time,” says U. Latvys.

KAITA Group has developed 26 real estate projects in Lithuania. Companies belonging to the Hanner and Areus groups have invested in several of KAITA Group’s projects in Vilnius. Together with Hanner, the company is currently developing a new Youston project in London and exploring further expansion opportunities in the market.

The bonds were allocated on a pro rata basis, with investors receiving approximately 50% of the amount they had requested. As the bonds are indivisible, the number of bonds allocated had to be rounded, meaning that some investors received a slightly lower final allocation.