ESTONIA: E.L.L. launches large-scale Panorama City project28.06.2012, 15:39
The Estonian developer E.L.L. Kinnisvara is launching a 77,000 sq.m project in Tallinn called Panorama City, believing it is a right time to bring yet another large-scale shopping centre to the market.
According to Aldo Dapon, chairman of E.L.L. Kinnisvara, 55% of Panorama City is already covered with preliminarly contracts signed with tenants. "We would not launch the project without having a critical amount of tenants," he says to news2biz. "Our tenants have very positive view in regards to the future, and so have we."
The anchor tenant in the centre will be the Swedish chain Rimi, reserving 7,300 sq.m space for its hypermarket. Another major tenant will be the Vilnius-listed clothes retailer Apranga, planning to open 13-14 stores in Panorama City with the total space of 4,800 sq.m. Altogether, the developers plan to rent out 57,000 sq.m to about 200 different stores.
Panorama City is located halfway from the city centre to the largest bedroom suburb Lasnamäe. Although there are already several shopping centres (although smaller than Panorama City in terms of sq.m) present in the area, E.L.L. believes there is enough room for one more. "The location is very good: three major roads, used by people several times a day, pass by the centre," says Dapon.
Artistic impression of the new Panorama City shopping
centre in Tallinn. Picture: E.L.L. Kinnisvara
At the moment, the centre is in the final planning stage, waiting for the construction permit. E.L.L. Kinnisvara has already chosen the builder for the approximately EUR 100m project, and it is, not surprisingly, Tallinn-listed Merko Ehitus. Namely, the owner of E.L.L. Kinnisvara is Riverito, the Estonian holding, which also is the major owner of Merko.
According to E.L.L. Kinnisvara, the construction is expected to be launched in 2013 and the centre will be ready in spring 2014, i.e., two years from now. The development will be partly financed by the developer itself, but mostly with the loan from Swedbank.
E.L.L. Kinnisvara's assets:
▶ Viru Keskus, Tallinn city centre, 85,000 sq.m – 25.7%
▶ Spice, Riga, 77,600 sq.m – 75%
▶ Spice Home, Riga, 30,000 sq.m – 75%
▶ Panorama, Vilnius, 65,000 sq.m – 75%
▶ Saules Miestas, Siauliai, Lithuania, 50,000 sq.m – 75%
▶ Nordic Hotel Forum, Tallinn, 267 rooms – 100%
▶ Tallink City Hotel, Tallinn, 332 rooms – 50%
▶ Tallink Express Hotel, Tallinn, 163 rooms – 50%
▶ Delta Plaza, Tallinn city centre, 14 stores, 11,900 sq.m – 100%
▶ Sõpruse Ärimaja, Tallinn, 5 stores, 13,300 sq.m – 100%
▶ L-3, Vilnius, 10 stores, 6,135 sq.m – 75%
▶ Embassy House, Vilnius, combined office and residential building (features both Finnish and Norwegian embassies), 6 stores, 6,229 sq.m
E.L.L. Kinnisvara already has several shopping centres in all three Baltic states in its portfolio together with hotels, office buildings and residential developments. According to Dapon, the company intends to keep all its assets for now and not sell anything in order to finance the construction of Panorama City. "We intend to keep all our assets for now and invest the money deriving from cash flow. Of course, we cannot say we will never divest anything, but at the moment we do not have any such plans," he says.
"Panorama City in Tallinn will be the only large-scale project of E.L.L. Kinnisvara in the Baltics for the next years to come," says Dapon. "We also plan to develop several office buildings in Estonia and Lithuania, but these are smaller projects. Nothing in Latvia, though, due to the different situation there. Compared to Estonia and Lithuania, the Latvian market is about three steps behind at the moment."
"In Latvia we do have several shelved projects, we could start building right away, but the situation in the market is not that favourable yet. Latvia's business property market has been stalled for the recent 3-4 years. They built a massive volume when the market boomed, and now we have to wait until this volume will be put in use before starting constructing additional volumes," he explains.
According to Dapon, the Baltic business real estate market has stabilised in years after the boom, and the development process is now more balanced. "In the middle of the boom, some developments were launched only for speculative purposes – the developers planned to build fast and sell for a quick profit without turning much attention to the market's actual need. Now, there are no such projects anymore. Every new development launched derives from the actual demand, and developers have preliminary agreements with tenants – which is a positive thing."
E.L.L. Kinnisvara turned over EUR 37.3m, consolidated, in 2011, earning a profit of EUR 10.6m. In yearly comparison, the company's turnover increased by 15% and profit by 18.6%.
E.L.L. Kinnisvara's assets totalled to EUR 306.4m in 2011 with the real estate investments amounting to EUR 254.6m. At the same time, the liabilities of the company totalled to EUR 218m, 52.1m of it short-term.