KAITA Group Company Offers Bonds with a 10% Yield: Capital Allocated to a 95%-Occupied Residential Rental Project in Central Riga

KAITA LV LIVING SIA, a company of KAITA Group, one of Lithuania’s largest real estate development groups operating in Vilnius, London, Prague and Riga, has launched an offering of bonds with a 10% yield. Baltic investors are being offered two-year secured bonds. The proceeds will be allocated to Youston, a co-living project operating at 95% occupancy in central Riga. The company plans to realise the €12.6 million project over the next two years by selling individual apartments, with sales proceeds expected to serve as one of the main sources of bond redemption.

The offering will run from 13 to 29 July, and the bonds will be admitted to trading on the Nasdaq First North alternative market. Bonds with a total value of up to €2.8 million are being offered. Both retail and institutional investors can invest from €1,000. The offering is arranged and conducted by investment services company Orion Securities.

“All of the Youston projects we manage for long-term rental operate at 95–98% occupancy. This demonstrates clear demand for this type of housing in central locations across European capitals, from London, which has become the continent’s ambassador for co-living, to our own region. When we opened our fifth Youston property in central Riga, it reached full occupancy in just one month, and we have consistently recorded 95% occupancy since opening. Its residents include students and young professionals from other Latvian cities and from abroad.

“Having reached this stage, we are moving to the next step in the project’s pre-planned lifecycle: optimising its capital structure. The project secured long-term bank financing, and we now plan to replace part of the financing structure with bonds. This will allow us to manage capital more efficiently and continue growing,” says Ugnius Latvys, CEO and Partner at KAITA Group.

According to an independent valuation, the Youston Riga project, comprising 174 fully fitted apartments and 3,600 sq. m of saleable area, is valued at €12.6 million. The company plans to realise the project over the next two years through the sale of individual residential apartments, while stable occupancy of 95% since the start of operations demonstrates strong demand for this type of housing in central Riga. Sales proceeds are expected to serve as the principal source of bond redemption.

In the rental market, the Group manages the largest residential rental portfolio in Lithuania, comprising more than 550 rental units in Lithuania and nearly 1,000 across Europe.

Youston, which began operating in Riga in August last year, secured 25-year bank financing following the development stage. Bigbank refinanced the project, replacing the development loan with long-term operational financing. The transaction means that the bank now assesses the project as a stable asset generating predictable cash flows. The project is now entering the pre-planned capital structure optimisation stage.

Last year, Youston was officially recognised as Latvia’s best conversion project of the year. KAITA Group invested €9.5 million in the comprehensive redevelopment of a former administrative building dating from the 1970s on Krišjāņa Valdemāra Street in central Riga. The conversion resulted in 174 fully fitted single- and double-occupancy studio apartments and more than 1,200 sq. m of communal spaces, including a gym, sauna, cinema, shared kitchen and dining area, co-working zone, and various leisure and entertainment spaces.

“In capital markets, investors generally pay greater attention to offerings linked to completed and operational projects. In this case, the bonds are being issued for a fully completed project that has achieved high occupancy and generates stable operating cash flow. This provides a significant financial buffer until the project’s final realisation, reducing dependence on a single source of revenue. Additional confidence comes from the fact that the project has already secured long-term bank financing, meaning that its operating model and the sustainability of its cash flows have been assessed by an independent lender,” says Matas Čipkus, Head of Debt Capital Markets Projects at Orion Securities.

More information about the offering

The bond issue is secured by a first-ranking pledge over 100% of the shares in V38, the company owning Youston Riga, and a first-ranking pledge over the assets of a related company following full settlement with the senior creditor.

Further Expansion Planned

Having developed 26 real estate projects in Lithuania and managing co-living properties across four markets, KAITA Group plans to continue expanding its operations in both Vilnius and London.

In the Lithuanian capital, the company is currently developing and offering homebuyers a choice of 406 residential units in Naujamiestis, Žirmūnai and Viršuliškės. Meanwhile, in the rental market, the Group, together with Hanner, is actively developing its newest Youston project in central London and is actively seeking further opportunities to grow in this market.

“The co-living segment has long established itself among London residents as one of the most efficient ways to live in a central location at an accessible price. It is also viewed very favourably by decision-makers seeking to bring neglected industrial spaces in central London back to life and restore vitality to these neighbourhoods.

“We are now also seeing co-living become one of the most popular choices among investors. The latest Investec research shows that 40% of UK institutional investors plan to increase their investments in this segment over the next twelve months. This is driven by the long-term shortage of housing supply in major cities, increasing mobility among young professionals and growing demand for professionally managed rental housing. This is why we aim to continue growing in London, where we see long-term potential for this segment,” says Latvys.

Trusted by Institutional Investors

“Our operations in both Lithuania and Europe are built on collaboration: we secure growth and deliver high-quality projects by attracting capital from external investors. Our long-standing experience in the real estate market and leadership in residential sales enable us to attract not only private but also institutional investors. The fact that highly experienced investors choose to work with us is recognition of our consistent efforts to create long-term value and confirms the attractiveness of the returns offered by our projects,” says the CEO of KAITA Group.

The company maintains a highly diversified financing structure. Hanner, one of Lithuania’s largest real estate development companies, has invested in the Off and Moods projects for sale in Vilnius.

The Newton towers under development in the Viršuliškės district have attracted investment from the Areus group of companies, which operates in the energy, pharmaceutical and real estate investment sectors.

How to invest?

To invest, leave your contact details in this form and an Orion Securities investment consultant will get in touch with you. You can also invest via the self-service platform or send an email to obligacijos@orion.lt.

If you already hold a securities account with another brokerage firm or bank, you can also submit your investment order through them.

Orion Securities recommends consulting with your financial advisor and evaluating all the risks associated with the financial instrument and/or other circumstances that are significant to you before making an investment decision.

Orion Securities receives a commission for distributing these securities.