Loan details

Borrower details

Development project details

• Borrower and real estate developer description

  This business loan is issued to the BCN investment Ltd. (reg. No.: 40203004558, address: Audēju iela 14 - 11, Rīga, LV-1050) which is aiming to participate in the development of the new concept Student Hall Project in Barcelona, Spain. The participation (investing) will be ensured through special purpose venture (SPV) Dismer Solutions SL (reg. No.: B67443408; address: Cl Balmes Num.191 P.6 Pta.1 08006 - Barcelona) cooperating with real estate developer JSC R.Evolution City (operating under the brand name R.evolution). R.Evolution has 20 years of experience in real estate project development, the company’s main office is located in Riga, Latvia, but it has established its operational offices in Berlin, Barcelona and New York, and currently employs more than 60 professionals.

  Until now R.evolution has developed such projects as Hoft, House of the flying trees, Lofts&Rosegold, Villa Milia, Philosophers Residence, etc. R.Evolution tends to be a part of the city’s evolution, which creates something more significant and important than just the development of commercially and cost effective projects. As R.evolution is both real estate investment partner and real estate developer, its mission includes creating an environment that is in line with the company’s internal philosophy and customer requirements, as well as strengthening investors’ satisfaction by maximizing land-use performance, ensuring clear and timely coordination with government and municipal institutions, planning of investment inflows, optimizing construction and sales schedules, implementing up-to-date construction and engineering solutions, and performing general management function.

• Project description – Student Hall Project concept

  An architectural project of the Student Hall building will be developed, and the building permit will be obtained within 24 months after the purchase of land plot and premises. The current layout of the ci. 6 000m2 building and its bearing construction elements allow redevelopment into a student hall that is in line with contemporary standards. A complex of student residence includes guest rooms, co-working areas, student labs, recreation areas, cafe, gym, rooftop swimming pool, etc. At the moment there are 2 major architectural concepts developed in association with potential operational partners. Both concepts include several classrooms of various sizes for 100 to 400 seats, as well as a number of bedrooms with different amount of bed spaces:

  • Concept 1 (224 rooms 293 beds)
  • Concept 2 (154 rooms 363 beds)

  Each concept on average has 200 m2 of common use areas (kitchens, classes, etc.) per floor. The windows of living rooms overlook spectacular atriums with vertical tropical forests with rain irrigation systems. On the rooftop, it is planned to build a terrace with furniture and canopies made of solar panels. Facade of the building will be decorated with threaded plants supported by the automatic irrigation system.

• Community and environment issues

  R.Evolution has a responsible approach towards the environment and society the company works in. Within this project, the developer offers Student Hall Community members to tackle overconsumption and pollution issues in the scope of a particular student hall.. The Student Hall will become an eco-system in the middle of an urban jungle. Its inhabitants will have not only to live inside that system but also will have the possibility to study it and analyze the level of energy consumption. Community members will then explore the processes that stimulate modest energy and food consumption principles. For that purpose, there will be an informative multimedia panel installed and available for all the spectators. It will illustrate live statistics for the consumption of major energy resources as electricity, water, heating, etc.

  The Student Hall community will offer a unique membership transport sharing service in association with Tesla, which is considered an environmental transport flagship. Each member who will have a valid driving license will be able to book one of the vehicles from R.Evolution Community Tesla set, whether it is a single shopping drive or a ride with friends to a party. Different types of vehicles Model 3, Model S and Model X will be available. For those, who like to feel the wind in their hair an electric scooter sharing service will become a great addition to daily activities. The aim of community building is to encourage its members to choose the most appropriate vehicle for a particular occasion, taking in consideration principles of green-living and avoiding overconsumption.

  R.Evolution Community together with Flax&Kale will also offer its members to choose between half-board or full-board healthy menus for affordable prices on the spot.

  Members of the R.Evolution community will be able to develop their social, artistic and entrepreneurial skills and competences inside student hall and participate in its maintenance and management. Community members will have an opportunity to have part-time employment in the student hall as a receptionist, cleaner or barista in the lobby bar.

  After a busy day of self-development, students will have an opportunity to use rooftop recreation area. Yoga areas will be located both on the rooftop recreation zone and inside the building.

  R.Evolution Community has a responsible approach towards the environment and society they live in. Community offers its members to challenge the overconsumption and pollution issues in the scope of a particular Student hall and on their own example transform these values to the whole urban society.

  Even in aspects linked with fundraising, R.Evolution Community seeks for an accessible and democratic approach, therefore the middle class is being involved in student housing project development financing. By proposing the project on VIAINVEST R.Evolution Community invites a wider public to join them as their partners and earn together with them. This solution will allow various individuals to invest in real and visible assets - the investments are always linked to real estate. This way all parties can build a long-term heritage and get a guaranteed income.

• Market description (why the project has potential within the existing market)

  It is planned to develop Student Hall Project in 22@ district of Barcelona which is a world-class innovation and technology hub. 22@ district is currently populated by universities, research and education centers, headquarters of the most advanced start-ups and international hi-tech companies. Since 2004, more than 5 000 companies and 100 000 employees have shifted to 22@ district as it is conveniently located near to the historical center, within the walking distance from the beach and a lot of other amenities.

  A vast majority of student residences of Barcelona are created and operated under a similar architectural and business model based on the following principles - a mixture of a large amount of hostel-type guest rooms and relatively few common use areas and recreation zones. R.Evolution offers a conceptually new type of student residence – it aims to create a student community with an emphasis on anti-consumerism and promotion of social and environmental friendliness.

  Barcelona student accommodation market characteristics

  • Total number of students in Barcelona: 171 849
  • Number of international students in Barcelona: 25 780
  • Number of Erasmus+ students in Spain: 45 831
  • Number of beds in student halls in Barcelona: 9 221
  • Average price per bed in student hall: 460 – 1 980 EUR/month
  • Annual price growth for student accommodation: 7%-8%
  • Current proportion of students and beds in Barcelona: 17:1

  Predictions of the segment growth are based on mounting domestic demand and increasing student mobility within Bologna Process. Spain and the UK are the only participating countries where international Erasmus students outnumber domestic students travelling abroad.

• Project timeline

  • Project launch: July 2019
  • Project completion: September 2023
  • Project development: 24 months
  • Construction and commissioning: 18 months
  • Withdrawal from the project: 6 months after commissioning

• Capital structure

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    • Equity
    • Bank

    Property acquisition

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    • Equity
    • Bank

    Building construction

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    • Equity
    • Bank

    Total project financing

• Finances and flows

  An industrial commercial building is to be redeveloped into a modern student community and sold to an investment fund associated with a student residence management company based on a forward purchase agreement. Two major European Student Housing Operators have already outlined their interest in the purchase of the developed property.

  Total development period of the project is 54 months and is divided in three stages:

  • Pre-development – 24 months;
  • Construction – 18 months;
  • Rent of property and exit – 6 to 12 months.

  Project development cost is estimated at 24 million EUR. Anticipated real estate sales price will be in the range from 38 million EUR to 46 million EUR.

  Sales price estimate derives from project capitalization rate, calculated as net annual operating income of the Real Estate divided by the value of the Real Estate and multiplied by 100 to get the percentage.

  Net rental income forecast of 2 million EUR is based on market research on residential property rental prices, demand and supply relationship and commentaries from various market players.

  Capitalization rate is estimated in the range from 5.75% (38 million EUR) to 4,75% (46 million EUR).

  The project will be financed using combination of equity and debt financing. Equity financing will be provided by key investors throughout share purchase. Debt financing bearing fixed annual interest rate will be provided by commercial bank and key investors based on actual fund demands for upcoming month.

  Estimated ROE (Return on Equity) is in range 71,24% -93,68% and estimated range for IRR (Internal Rate of Return) is 20,10% - 24,89%.

  Exit from the project is possible at any stage of project development. Exit before construction is possible by selling the property after completing technical project and obtaining construction permit. In the case of the forward purchase the deal would happen before the start of the construction works. The deal will be structured with an advance payment and full clearing once the building is put into operation by the developer. Project could also be exited when selling the property to a broader spectrum of investment funds (pension funds, real estate investment trusts, prominent family offices) once the cash-flow is established. If such option happens, it would be expected that the full cash-flow potential would be reached in 48 months time from the start of the project and the exit would be possible in 48 - 54 months time from the start of the project.

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  Project presentation

  

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