Navigator is representing a business cluster in the Baltic states. This cluster comprises 8 IT companies and a leading Technology University with over 15,000 students.
The cluster has received EU grant funding worth EUR 2.2 million to develop advanced wireless payment and electronic access systems. Of this, EUR 1,037,500 has been allocated to the purchase and renovation of a 2,500 m2 office building for the cluster members.
In order to complete the building, the cluster needs to secure project financing of EUR 453,406, and is offering an interest rate of 10% for the loan.
At renovation completion and building commissioning, a Private Banking Group has agreed to refinance the project, using the building as collateral. (The bank cannot provide the loan without a completed, renovated asset). This will assure investor exit and repayment of the initial loan.
Architectural and planning permission for the building exist. The building must be completed by August 2014: after this time, the unused EU grant funding will become ineligible for use.
Interested investors are requested to contact Philip Ammerman by April 13th for further information:
The IT Cluster
The Cluster’s technology is based on smart cards and NFC phones. This platform provides a range of applications, including:
access control to buildings
micropayments for cafeterias, vending
machines, copy and printing, parking)
micropayments for e-content (music, games, advertisements, etc.)
eticketing for transport and events
intelligent loyalty and gift cards,
e-wallets and e-payment systems
Keynote installations include the City Public Transport e-ticketing system and the University of Technology smart card. The platform is rapidly being adapted in other universities, schools and companies.
The Building Renovation Project
There is a major shortage of Grade A Office Space in the city in question. The e-Cluster building is located on XXX Avenue, a leading thoroughfare on the outskirts of the city. The cluster members have agreed to consolidate their operations and move into the new building.
The building footprint covers 2,500 m2, on a plot of 4,100 m2. Planning permission for the office renovation has already been granted; structural surveys and designs have been implemented.
The building is structurally sound and has been surveyed. There are no liens or debts on the building. The site is environmentally safe and ready for habitation once the renovation is complete.
Rental income from cluster members is EUR 6 per m2 per month, or EUR 153,000 assuming 100% occupancy. Any spare space will be leased to other IT companies in the city: there is significant demand available for high quality office space.
Common charges average EUR 2 per m2 per month. These include costs of heating, ventilation, cleaning, and basic maintenance. Common charges are levied on the total building footprint, and are paid by each tenant proportional to the space rented. Total common charge income = total common charges, or EUR 60,000 per year. An additional EUR 10,116 has been budgeted for building insurance and other maintenance.
Earnings before tax are EUR 11,907 per month, or EUR 142,884 per year. Tax optimisation will be implemented to reduce the tax charge.
Building Footprint 2,500 m2
Usable Space 2,125 m2
Rental Income 6 EUR/m2/month
Common Charges 2 EUR/m2/month
Item Unit Per Month Per Year
Annual Rental Income EUR 12,750 153,000
Annual Common Charge EUR 5,000 60,000
Total Building Income EUR 17,750 213,000
Common Charges, EUR 5,000 60,000
Building Insurance & EUR 843 10,116
Gross Income EUR 11,907 142,884
The building renovation can start immediately, and will take 8-10 months. Commissioning and moving-in will take 2 months. We assume 2 months of income in 2014 and 4 months of building expenses. A financial plan to 2020 is shown below.