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  • At the end of October, “Eika” will start issuing 5 M EUR worth of bonds

    At the end of October, real estate development company “Eika“ will start issuing 5 M EUR worth of bonds. The company, having decided to issue securities for the first time, hopes to attract not only large institutional but also retail investors looking for reliable investment instruments that offer a fixed interest return.

     The two-year bonds will be distributed by AB Šiaulių bankas between 26th of October and 11th of November. The planned annual interest rate is from 4.5 to 5%, and the exact amount of interest will be determined by auction – market participants, future investors will be able to suggest a preferred interest rate within that range. The nominal value per bond will be EUR 1,000. It is therefore expected that new retail investors, who will invest in bonds for the first time, will enter the capital market.

    “In Lithuania, unlike other countries, such as Estonia or the Scandinavian region, where companies with many years of experience are constantly looking for alternative ways of borrowing, bonds distributed by real estate companies are still a relatively rare way of raising funds. In this way, companies seek to diversify funding sources and borrow funds not only from banks but also from institutional or retail investors”, – says Domas Dargis, CEO of “Eika”.

    The entry of reliable companies from real estate and other sectors to the capital market creates wider opportunities for investors, who are constantly looking for more diverse investment instruments in the environment of low interest of deposits. The fact that such a way of raising funds is also rapidly gaining popularity in Lithuania is beneficial for both companies and investors”, – says Tomas Varenbergas, Director of Markets and Treasury Department at Šiaulių bankas.

    Interest – every half a year, redemption – after two years

    According to D. Dargis, bonds are one of the safest investment instruments because the investor receives a fixed return in the form of interest. In addition, the bonds of “Eika” are short-term bonds – they will be redeemed after only two years. The investors will be paid interest every half a year.

    During 27 years of operation, we have developed a diversified portfolio of commercial real estate, including office centres “Live Square” and “EIKA business centre”, shopping centres “Pupa” and “Smiltė”, and Hilton Garden Inn hotel. Currently, rental income that is derived from these objects ensures a balanced cash flow in the company. This income will also be used to cover bond interest. An institutional investor has also expressed interest in our bonds already. We are currently negotiating with this investor for the redemption of part of the bond issue”, – says the CEO of “Eika”.

    The company plans to use the funds raised for the development of future projects of “Eika” group, and first of all they will be directed to the co-living project in Šv. Stepono street. Last year, the consolidated revenue of “Eika” group, that unites real estate development and construction companies, reached EUR 53.3 million, i.e. 11.5% more than in 2018. In 2019, Eika sold a record number of apartments – 450. In July 2019, the company also completed a multifunctional complex “Live Square” with the value of EUR 49 million. The complex includes the business centre “Live Square” with the shopping gallery and a rooftop terrace, “Hilton Garden Inn” hotel and residential apartments.