In September Real estate (RE) development company Eika will distribute a bond issue worth EUR 5 million. The company, which successfully issued securities for the first time two years ago, now expects to attract the attention of both larger institutional and retail investors looking for reliable investment vehicles during this period..
Two-year UAB “Eika” bonds will be distributed by Šiaulių bankas from September 8 to 23. The nominal value of one bond will be 1,000 EUR – this is the minimum amount that can be invested. It is planned that the possible annual interest rate, which will be determined by auction, will range from 5.5 to 6 percent. Future investors will be able to offer a specific interest rate when filling out bond purchase applications. Interest will be paid semi-annually.
“In the fall of 2020, during the quarantine, the company’s bonds issued were the first and successful test in the capital market. This investment instrument showed that investors trust the company, which allows us to diversify sources of capital raising and provides the Eika group with financial flexibility. Therefore, we are issuing the second bond issue in September, and in the future we plan to continue operating with this capital raising tool,” says Domas Dargis, CEO of UAB Eika.
Interest – semi-annually, redemption after two years
It is noted that in the current period of uncertainty, more and more investors are looking for safe fixed-return and low-risk instruments that would reduce the effects of rapidly growing inflation. The bond issue distributed by Eika will be redeemed in two years, which will allow investors to enter the Lithuanian real estate market with a shorter-term and more liquid investment compared to purchasing housing for rent.
“The current market situation is full of challenges, but over almost 30 years of operation in the real estate market, we have learned to adapt. We have a diversified commercial real estate portfolio and a stable cash flow in the company, which will also be used to cover bonds. The office complexes, the Hilton Garden Inn hotel, and shopping centers we manage will be joined by a solar power park being developed in the Klaipėda district, which will start operating this year,” says the CEO of Eika.
The company plans to use the funds raised to finance the development of upcoming residential projects, including “Bajorų alėjos” and projects on Medeinas and Blindžių streets.
In 2021, Eika’s consolidated turnover increased by 26.3 percent, to EUR 52.2 million. Consolidated net profit last year amounted to EUR 9.52 million. In 2021, Eika sold 409 apartments in Vilnius city, the value of which amounted to almost EUR 49 million.