Investment opportunity

  • High-yielding investment in hospitality sector, financing of opening a mixed hotel/hostel project in Old Riga, Latvia.
  • Secured debt, 19% planned annual return.
  • Investment principal buyback is available at 5% penalty rate.

Project description

Ltd “Victory Park” began its hostel business 3 years ago by launching its first project in Riga, Latvia that is offering 100 beds in the city district of Agenskalns. The company is experienced in developing a product that meets clients’ needs. The average occupancy in the hostel was more than 75% all throughout the previous years thanks to professional operations, use of different booking channels and long-term agreements with partners. Hotel and hostel beds in Riga are in high demand and it is growing with each season. The tourism rate in Latvia increased by 8.2% in 2018. A further increase of 1.3% has occurred over the first trimester of 2019.

 

Ltd “Victory Park” has concluded a 10-year lease agreement for a 5-floor building with a basement in the Riga Old Town. It has a total of 1643 m2 and is located on Mazā pils Street 13. The agreement is supposed to be prolonged for 5 more years after reconstruction is complete and the hotel is open to visitors.

The building is located on the corner of M.Pils Street and M.Miesnieku Street, a very quiet district of the Old Riga. Nevertheless, guests may benefit from the Dome square, The Art Museum RIGA BOURSE, and Riga Castle being located within 2-minute walking distance. The hotel building is located right next to the famous 3 Brothers building and the Latvian Parliament. Additionally, the district includes several historical churches.

The architectural and design project involves splitting the building into the following premises:

  • 48 hostel beds
  • 21 hotel rooms, 6 of them Lux
  • Conference hall for 30 people
  • Cosmetic cabinet
  • Gastro pub for 50 clients

Description of standard rooms:

  • King size bed
  • Private shower and WC
  • TV
  • Fast speed Wi-Fi
  • Carpet
  • Toiletries, hairdryer
  • Kettle
  • Air conditioning

Description of Lux rooms:

  • King size bed
  • 2 rooms (Big bedroom and second smaller bedroom)
  • Private bath and WC
  • City view
  • Hotel room size from 26 m2 to 50 m2
  • Big TV and fast Wi-Fi
  • Air conditioning
  • Mini bar
  • Toiletries, hairdryer
  • Coffee machine
  • Each of 6 hotel Lux rooms are different with unique design, colour scheme and atmosphere. For example, one hotel room has a sauna, while another one has a fireplace, and so forth. The concept is designed by architect Devijs Šīraks and designer Zane Skalberga.

The following development stages have been already accomplished:

  1. Developed reconstruction project
  2. Newly built 5 riser pipe points for water and sewerage
  3. Previous illegal construction existing in the building dismantled
  4. Reconstructed room layout according to the inventory file, adjusted to the hotel purposes
  5. Completely new electrical installation, fire protection, and weak current system according to the latest requirements
  6. 5th floor premises ready to operate with 28 bed places as soon as furniture is purchased and installed

An amount of 250,000 EUR for time period of 12 months is needed to finish the hotel furnishing, including purchase of furniture and necessary equipment and fully open by August 1st, 2019 in order to be able to work during the second part of active tourist season, when all Riga hotels and hostels are at noticeably high demand.

Besides the income from guest accommodation there will be additional income sources such as:

  • conference hall rent
  • sale of souvenirs (like porcelain cups made by local artists, paintings etc.)
  • sale of wine and spirits produced in Latvia
  • cosmetic salon income
  • Gastro pub operations

Ltd “Victory Park” has concluded cooperation agreements with tourist companies from Ukraine, Russia and Lithuania. It is planned that the hotel will become fully operational by the 1st of August, 2019.

Sample repayment schedule

Envestio participant’s investment - EUR 1 000.00
Payments:

  • 29.06.2019 - EUR 16.14
  • 29.07.2019 - EUR 15.62
  • 29.08.2019 - EUR 16.14
  • 29.09.2019 - EUR 16.14
  • 29.10.2019 - EUR 15.62
  • 29.11.2019 - EUR 16.14
  • 29.12.2019 - EUR 15.62
  • 29.01.2020 - EUR 16.14
  • 29.02.2020 - EUR 16.14
  • 29.03.2020 - EUR 15.1
  • 29.04.2020 - EUR 16.14
  • 29.05.2020 - EUR 1015.62

Total expected return: EUR 1 190.56

Invest in this project

 

Loan information

Loan IDEN018109
Project start date29.05.2019
BorrowerVictory Park Ltd. (Latvia), Reg. Nr. 40103997723
Funding Target€ 250 000
Loan PurposeFinalizing of hotel/hostel furnishing, including purchase of furniture and necessary equipment
Loan Period12 months
Interest Rate19% per annum
Repayment of Loan PrincipalIn full at the end of the Loan Period
Investment principal buyback availableYes, 5% penalty rate
Payment of Interest PaymentsMonthly, on a specific date
Financing typeSecured debt
Guarantee from the Project’s ownerPersonal guarantee + mixed type commercial pledge in favor of Envestio Collateral Agent

 

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