Office and Crypto hotel project

Vinkli 13, Tallinn, Estonia (Show on map) Commercial

Object overview

Given property is located in Mustamäe district, Tallinn and consists of 22 office rooms with the total area of 628 m2 with the valid rental contracts. We have the possibility to rent them together as one unit or separately, depending on the tenant agreement. Latest investment value, according to the appraisal report is 190 000 EUR (includes 20%) VAT.

Mustamäe is a residential district with one of the best micro-climates in Tallinn. It is well connected with the city center, which is only 6,5 km away from our property. Estonian biggest Technical University (TTU) is located in this part of the city and attracts students into this area. Here is also located the medical campus, Science & Business Centre Tehnopol, higher education institutions, as well as trade outlets and community services, and more. The industrial part of the area is also evolving rapidly with a large number of production and warehouse buildings in the immediate vicinity.

Vinkli 13 close location to high voltage substation gives the possibility to use part of the property for Crypto mining hotel, as we get electricity with discounted price and the construction of Crypto mining infrastructure will have the minimum costs. This is perspective business model which allows us to rent out these rooms with higher, than average rent. Crypto mining is the process, by which special machines verify transactions and add them to the public ledger, known as the blockchain. We will renovate the rooms for that purpose, as it requires special electricity connection and ventilation.

The property's perspective location will be a key factor in the rise of its value and increased demand for smaller Offices with low maintenance fees. At the same time, there is intensive construction or residential apartments in neighboring districts which will increase the density of population in given region. Expansion of Tallinn Technical University and its Institute of Cybernetics, expansion of nearby Technopol and Science Park will make this area one of the most sought-after technological and industrial hubs in Tallinn.

At the moment the following legal actions for Vinkli 13 development are already confirmed by the city council:
1. Permit applications have been filed with the local administration for development of large-scale modern stock-offices and warehouses on most land plots directly neighboring with Vinkli 13, which in turn, should increase the value of the property.
2. The Mustamäe district administration of Tallinn has confirmed building the extension of Vinkli street up until Kadaka street, making this property logistically much more approachable and valuable in the future.

Macro environment of Estonia:
The GDP in 2017 has shown growth - 1,6% in 2017. Inflation rate stays between 3% and the salary growth has slowed down. The unemployment rate is going down and mostly it is outside the capital cities, what is why the prices are much lower due to the problems of the search for a new job. The biggest rate of vacant jobs is in Tallinn district - 68%, that is why people are moving to the capital, what also influence the property demand.

Investment case

The property for investment with the address Vinkli 13, Tallinn, Estonia is a commercial building. The property benefits from existing rental contracts with local companies and closed location to Estonian biggest Technical University, which is "birthplace" for numerous startups.

Reinvest24 is listing 1 915 940 shares with the price of 0.1 EUR per share, min. investment - 100 EUR.

Reinvest24 investors have an opportunity to invest up to 191 594 EUR into Vinkli 13 property and receive a proportional part of the Project rental profit and capital growth, paid out as variable interest. Offices require renovation after funding and missing office equipment will be purchased. That will allow for higher attractiveness and renting price.

The property will be managed by our agent and renovated step by step right after funding received. Existing tenants will be moved to renovated offices and the new ones will be found in short period of time, as offices up to 15 m2 and reasonable price are in a deficit on the market. Closed location to University will higher Vinkli 13 attractiveness among small entrepreneurs.

Vinkli 13 has existing renting contracts. Two office rooms need to be repaired and new tenants should be found. At the moment the property has the vacancy rate of 40% together with unrepaired rooms. 9 companies have agreements for rent and generate an annual income of 14842,62 EUR (Brutto).

The property is located near electrical substation and we plan to make additional high voltage cable connection in order to provide rent of 80 m2 room to Crypto-Mining Hotel. That allows us to increase the property Annual Rental Yield to 11% and guarantee stable cash flow. The property will be specially renovated for Crypto Mining Hotel requirements and rented out with the long-term contract. The renovation includes installation of special ventilation, cooling system, filters, and an electrical cable switchboard.

We get the property with the 15% discounted price of 170 000 EUR - 270 EUR/m2. There are no available offers for similar properties at the moment and the prices for all commercial spaces go up to 1600 EUR / m2, which gives to Vinkli 13 the best offer in the area.

The average rental price for m2 in Tallinn has risen 6% during the last year from 8 EUR to 8,5 EUR. We are targeting the lower class of rental fee - 5/6 EUR per square meter, which will create an advantage for us. Average sales prices for a commercial area in Tallinn are the following:
A class office: 1700 - 3300 EUR/m2
B and C class offices 400 - 1500 EUR/m2

After renovation, the rental fee of Vinkli 13 property will increase to 9%. Yield percentage is influenced by renovation costs and higher amortization expenses, despite all these factors, it is higher than our target of 6%.

Our investment strategy is to increase property attractiveness with renovation and higher occupancy rate. Crypto-Mining hotel will give us better cash flow and Investors will be earning from rent and capital growth. The property will be secured by mortgage of property held by Collateral Agent. We see potential in this area in coming future, as Tallinn is improving infrastructure in given region and would like to develop the industrial area in Mustamäe. At the moment the property is generating cash flow with minimum investments and could be sold in future for the developer.

Amortised Purchase Costs - detailed description:

Property Value - 170000 EUR
Operational Costs and  Notary Fee - 800 EUR
Collateral Agent - 200 EUR
Renovation Costs - 20594 EUR

Annual Rental Yield Calculation:

Expenses:
Commission - 2889 EUR
Service Expenses (SPV) and Taxes - 5025 EUR
Amortization Fee - 3600 EUR

Income:
Income from Rent (Gross) - 28896 EUR

Squaremeter price during last 5 years in given region:

2012 - 709,8 EUR

2013 - 768,9 EUR

2014 - 1132,8 EUR

2015 - 1232,2 EUR

2016 - 1520,1 EUR

2017 - 1552,8 EUR

Total growth - 118,77%


Financials

€191,594 Latest Valuation
1,915,940 Shares
=
€0.10 Latest Share Valuation
Latest Property Value €170,000
Amortised Purchase Costs €21,594
Latest Valuation €191,594

Documents

Appraisal Report Download
Land Register document Download
First Floor Plan Download
Second Floor Plan Download
Vinkli 13 Area Plan Download

For all other information about this investment, see the attached documents.

Safety guaranteed

This object has passed Reinvest24 test and secured by Collateral Agent mortgage.

Object price €191,594
100% funded
Net Rental Yield 9.07%
Gross Rental Yield 15.08%