During 2020, the entire economic cycle turned around: from an intense start at the beginning of the year, to an unexpected fall into complete stagnation caused by the pandemic, and again a sudden market jump to surprising heights. Even in such an uncertain health and economic environment, the EIKA group of companies maintained its second position in terms of apartment sales, issued the first bond issue in the company’s history, signed a contract with the Ministry of National Defense for the development and administration of a military town in Šiauliai, and invested 26.4 million EUR in project development. The amount of planned investments in currently managed projects exceeds 206 million EUR, and in 2021, about 38.6 million EUR will be invested in them.
Entering 2021.
According to EIKA CEO Domas Dargis, we welcomed 2020 with the same ambitions and expectations after the record-breaking 2019 and successful project completions. However, the continued stay at the top of the hill was unexpectedly replaced by a sudden fall down and cowering in fear, which was caused by the absolute uncertainty of which direction the market would turn. We had to react quickly, review investment priorities, project deadlines, and learn how to sell apartments or rent office space remotely. “With such invaluable experience in quick adaptation, we are entering 2021 much stronger – we will continue to adhere to the directions of portfolio diversification and development of real estate service management, which we have successfully done in the last few years, we will pay special attention to improving the customer experience and strengthening the principles of sustainability in both the production process and the final product,” D. Dargis outlines the company’s strategic directions.
Successful bond issuance – we are committed to continuing to borrow from the market
At the end of the year, the first 5 million bond issue in the history of EIKA Group companies was successfully distributed, culminating in the trust and reputation built over more than 25 years. According to D. Dargys, the success of the first issue not only measured our reliability in the market, expanded funding sources, but also provided an opportunity for every resident to earn a return significantly exceeding bank interest from the widely diversified activities of the Eika Group.
Eika plans to use the funds raised to develop future projects of the company group, and primarily to invest in the co-living project planned for St. Stephen Street, the construction of which will begin soon. Depending on the need for funds, the company plans to return to borrowing from the capital market at the end of this year.
Plans for 2021
In 2021, the group’s plans include completing the construction permit procedures for the business center “FLOW” on Konstitucijos Avenue and starting its construction, as well as, in agreement with the tenants, expanding the Eika Business Center by 1,500 sq m and building a grocery store in Pilaitė. The occupancy rate of the total commercial space managed by the group of companies reached 94 percent at the end of last year.
Eika also plans to start the design work of the military town in Šiauliai as soon as possible and start the planned construction on time. We have plans to participate in other PPP tenders, using the experience accumulated over many years.
Third fund in Eika asset Management’s portfolio
In 2020, UAB Eika Asset Management (EAM) continued its investment activities and established its third real estate development fund, Eika Development Fund, which will invest in mixed-use residential and commercial properties. The fund’s first investment in a residential project in Vilnius is scheduled for early 2021.
The company’s commercial real estate fund Eika Real Estate Fund announced last year an investment in the construction of a DHL logistics terminal near Vilnius Airport. Building the fund’s investment portfolio through acquisitions and the development of new projects remains a priority for EAM. The first EAM fund, Eika Residential Fund, completed a residential project in Antakalnis in 2020 and is currently developing two new projects – Mėlyni vilkai on Skroblų street and Šv. Stepono Baltas lapas on Šv. Stepono street in Vilnius.
Apartments are purchased virtually
In 2020, for the second year in a row, Eika Group maintained its second position in terms of new apartment sales in Vilnius, having sold 351 apartments worth over EUR 36.5 million. In the portfolio of sold apartments, more than 100 apartments were sold in two projects: “EIKA namai Pilaitė” – 109, and “Mindaugos” Baltam lapes – 106 apartments. In the total portfolio of sold apartments, the proportions of medium and economy class apartments are similar. “The market situation meant that we could not expect the same record sales as in 2019, but the achieved result encourages us to start with new projects as soon as possible in order to ensure a diverse housing offer for our customers. Another positive thing that emerged as a result of the quarantine – customers are reserving apartments or even signing a preliminary contract without leaving home, without visiting the facility. Back in 2017, we started investing in the virtual reality of projects, under these conditions we very easily reoriented to remote sales, and this suited our customers,” says D. Dargis.
During 2020, EIKA offered housing in 9 projects, several of which have sold their last apartments. In 2021, we will have a little more than 400 apartments in six projects on offer. During the first quarter, it is planned to complete the construction permit procedures in the projects “Blue Wolves” and “St. Stephen’s White Sheet”.