How we funded a 55-unit new residential development in Klaipėda, Lithuania

The borrower: Local Lithuanian real estate borrower Klaipėdos loftai has over 10 years of experience building new-developments and redeveloping existing ones. 

The development: The development consists of a three-story building featuring a total of 55 loft-style apartments, with a total gross development value of €5 000 000.

The request

  1. € 2 200 000 for development and construction works for a 55-unit residential and commercial purpose premise in Klaipėda city centre, with 65% LTV, for the period of 12 months.
  2. Very quick financing, released in stages following the signed surveyor report of completed works and an updated valuation report to reflect the increase in value. 

The project, in the beginning, was planned as a 33 apartment, two-floor building, but due to huge demand and very good sales, the borrower decided to change the project and build a third floor and 22 additional apartments. Traditional lenders requested 50% pre-sales and all the building permits fully done in advance, and the loan facility included a remarkable restriction that did not satisfy the borrower. The borrower had simultaneous development financing from their own equity and main financial partner (credit union), yet the lender refused to increase the exposure per client and could not meet the target of a €2 000 000 loan. The client had simply become too large. The demand for the apartments was increasing and it was essential to move forward with the project ASAP.

The borrower, Klaipėdos loftai, was a new EstateGuru customer, having completed the majority of his previous developments with funding from traditional credit unions, smaller banks, and his own equity. Klaipėdos loftai was previously sceptical about raising capital through a crowdlending platform, as at that time it was a brand new way of financing in Lithuania.

The idea

Conversion of a 2 650  sq.m commercial two-story property to a three-story residential house.

The solution

The funding was agreed and provided for all nine stages of this project, which is currently completely constructed and will be finalized before summer 2020. At the start of the financing back in August 2018 the borrower had 20-pre sale agreements, as of today he has sold 75% of the total residential units (30 apartments) and the first owners have moved in already. 

The borrower was very positive about the entire experience, especially with the speed and flexibility of our staff. The first tranche of €300 000 was gathered in just a few hours, as were the following tranches of between €150 – €300k. The initial preparation, including the client meeting and terms negotiation, was straightforward and, since then, all the ongoing requests and approvals were done digitally and online. EstateGuru had new tranche financing up on the platform the same day we received the fresh valuation report.

EstateGuru feedback

“Our main topic of interest during negotiations was to measure the aim of the development, to see if it was realistic and sustainable. We wanted to determine if the construction is possible and legal and to review the sales plan. We found this project attractive and well planned. Moreover, pre-sales looked impressive. Thus we took the decision to finance this project as we felt it was an example of a great conversion of a previous commercial property, which changes the face of a historical city.”

Arturas Konusevicius, EstateGuru Business Development Manager for Lithuania



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