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“IB nekustamo īpašumu pakalpojumi”, eligible for the rights of pre-emption, has entered into a lease purchase agreement for a land plot at 17 Andrejostas Street for 5.8 million euros

03.06.2022

SJSC “State Real Estate” (SRE), in compliance with the requirements determined in the laws and regulations, has entered into a lease purchase agreement for 5.8 million euros for a land plot at 17 Andrejostas Street with the person eligible for the rights of pre-emption - the owner of the buildings on the plot, SIA “IB nekustamo īpašumu pakalpojumi”, informs Ojārs Valkers, Executive Director of SRE.

The instalment purchase agreement for the purchase of the state-owned land plot in Andrejsala, 17 Andrejostas Street, in the area of 93 175 m2, with the person eligible for the rights of pre-emption SIA “IB nekustamo īpašumu pakalpojumi”, has been concluded in May this year. The notional price of the land plot - 5.8 million euros, was approved in March of this year, based on the statement of the expert of SIA “Latio”. Prior to concluding the agreement, SRE has received a document confirming the advance payment of 580 thousand euros; the agreement provides for the payment of the remaining transaction amount within five years. Pursuant to the laws and regulations in force in Latvia, a state-owned land plot may only be sold to the owner of the buildings entered in the Land Register - the person entitled to the rights of pre-emption, who owns the land at 17 Andrejostas Street, SIA “IB nekustamo īpašumu pakalpojumi” and “Freeport of Riga Authority”. The company “Freeport of Riga Authority” waived the right to alienate a part of the land plot. According to the laws and regulations in force in Latvia, SRE has no legal basis to refuse the request of the current lessee, SIA “IB nekustamo īpašumu pakalpojumi”, to alienate the land plot.

The land plot with the existing buildings was transferred to the management of SRE in September 2016. The cadastral value of the land plot is 1 112 935 euros. In January 2017, SRE received a proposal for the alienation of the land plot from SIA “IB nekustamo īpašumu pakalpojumi”, initiating the alienation process in accordance with the procedure specified in the Law on the Alienation of the Property of a Public Person. There were 10 buildings on the land plot registered in the Land Register in the name of SIA “IB nekustamo īpašumu pakalpojumi”, as well as five engineering buildings not entered in the Land Register.

The process of alienation of the land plot at 17 Andrejostas Street was initiated by SRE after a survey carried out in 2018, including a survey of state authorities, as well as taking into account the factors restricting the use of the land plot - Hanseatic tunnel protection zone, encumbrances regarding the engineering communications and protective strips, broad gauge railway line located on the land plot and the necessity to provide access to the Freeport of Riga Authority berth. As a result of the research, SRE found that the property is not necessary for the provision of public sector functions and SRE has no legal basis to maintain it in the state real estate portfolio. In accordance with the strategy of SRE, the company directs properties unsuitable for state functions for alienation, directing the obtained funds to organising the assets necessary for the state.

Since the commencement of the alienation process provided for by law, SRE has taken into account the interests of the society and the state in order to sell said land plot at the best possible price for the state. At the same time, the land plot at 17 Andrejostas Street was among the three possible locations of the National Acoustic Concert Hall nominated by the Latvian Architects' Union; until March 2022, the government were planning to implement the project in another place - in Congress House, Riga. In February 2022, SIA “IB nekustamo īpašumu pakalpojumi” asked SRE to update the issue related to the alienation of the land plot. In March, the capital company received an updated opinion from SIA “Latio” with an appraisal of the land plot - 5.8 million euros, according to which an instalment purchase agreement has been concluded between SRE and the person eligible for the rights of pre-emption, SIA “IB nekustamo īpašumu pakalpojumi”.

The land plot at 17 Andrejostas Street, Andrejsala is located in an industrial and partially degraded environment, in the city centre on the bank of the Daugava. The property is located in the entire territory of the historical centre of Riga and its protection zone and has several encumbrances. The plot is crossed by the protection zone of the Hanseatic tunnel, it has encumbrances regarding the engineering communications and protective strips, including red lines, underground engineering communications and other protection zones, which are registered in the data of the State Real Estate Cadastre Information System, with notes made in the Land Register, and are listed in the Land Encumbrance Plan. There is also an engineering structure on the land plot - a broad gauge railway line and a berth belonging to the Freeport of Riga Authority, which must have free and unhindered access free of charge.

SRE currently continues working on 46 different national construction sites, with a total project budget of more than 230 million euros. The company provides professional real estate management and administration for approximately 365 real estate properties consisting of 1100 buildings with a total floor area of 0.95 million square metres, along with land beneath the buildings covering 602 hectares and more than 3536 land properties with an area of 903 hectares. SRE is one of 23 Latvian companies that has received the highest platinum award as part of the Sustainability Index of the Institute of Corporate Responsibility and Sustainability, confirming the good governance and sustainability of its operations. The company was founded in 1996 and is 100% owned by the Ministry of Finance of the Republic of Latvia.