Arco Vara Acquires Luther Quarter Properties

Acquisition Overview - Arco Vara AS subsidiaries have acquired full ownership of the Luther Quarter, consisting of 15 properties in central Tallinn, with a gross building volume of 95,000 m², including 18,500 m² of commercial space and 33,000 m² of net residential area [1] - The acquisition price for the Luther Quarter is €35 million, with a total estimated investment for the project amounting to €205 million [2] Development Plans - Over the next eight years, Arco Vara plans to develop the former industrial area into a modern mixed-use urban quarter, including commercial space, residential properties, and public areas, with construction scheduled to begin in 2026 [3] - The presale of the first phase, which includes the development of four buildings, is also planned for 2026 [3] Financing Structure - The purchase price will be paid to the sellers in Arco Vara AS shares, cash, and through the modified assumption of loan obligations with AS LHV Pank [4] - An additional €17.5 million in investment is required for the development, leading to a directed share issue aimed at Alarmo Kapital OÜ and the previous owners of the Luther Quarter properties [5] Share Capital Increase - The directed share issue will involve issuing 6,980,000 new shares at an issue price of €2.50 per share, with €0.70 as nominal value and €1.80 as share premium [6] - The share price was agreed upon considering the financial interests of existing and new shareholders, the average market price before the deal, and the potential synergies created by the transaction [7] Loan Agreement - Arco Vara AS has entered into a loan agreement with majority shareholder Alarmo Kapital OÜ at an annual interest rate of 6%, providing a loan of €12 million [8] - Alarmo Kapital OÜ will also subscribe to 2,100,000 shares for a total of €5.25 million, resulting in Alarmo Kapital OÜ holding at least 8,780,000 shares post-transaction [8] Strategic Insights - The transaction is expected to double Arco Vara's asset volume while maintaining the equity-to-debt ratio, with a projected tripling of development potential due to existing building permits exceeding 70,000 square meters [9] - The management expresses confidence in Tallinn's growth and the capabilities of Arco Vara's team [9]