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SRE: A clear industry decision is required for the development of the Teter’s House


In order to find a solution for the further development of the Teter’s House building, at 61 Brīvības Street, Riga, the industry must make a clear decision on the future use of the building, as well as find appropriate funding. SJSC "State Real Estate" (SRE) has received evaluations of the technical condition of the building from several responsible institutions, which have identified future risks of the building regarding safety, including potential fire safety risks, if a solution for the use of the building is not found. Without making investments and without finding a common use for the building, on the first floors of which the Museum of the Occupation of Latvia (LOMB) is currently located, by May 2024, its further operation will have to be discontinued, says Renārs Griškevičs, Board member of SRE.

It has already been reported that after the technical inspection of the building carried out by the State Construction Control Office (BVKB) in November 2021, experts identified several risks to the safe operation of the building, and to prevent them, urgent works costing at least 400 thousand euro (without VAT) must be carried out within a year. Damages to the building's courtyard cover were discovered, which were caused by insufficient waterproofing and create unpredictable risks of structural collapse, endangering the safe operation of the building. Also, capital renovation of the building is recommended in a period of three to five years, which provisionally requires at least 13.83 million euro (without VAT). At the same time, it can be concluded from the technical opinion of BVKB that the rest of the property cannot be put into operation without the capital renovation of the building. The urgent works are also necessary for the safe operation of the premises rented by the Museum of the Occupation of Latvia (LOMB), about which the museum and the Ministry of Culture were informed by SRE.

Also, the State Fire and Rescue Service (VUGD) carried out an inspection in April 2022, which identified potential fire safety risks in the future due to the technical condition of the building. Based on the opinion of VUGD, in order to fulfil the fire safety requirements in the building, it is necessary to fully provide the automatic fire detection and alarm system, to put the internal fire water supply system and electrical installation in order, to seal the damaged places in fireproof constructions.

Currently, almost 92% of the historical building's area is unused. A small, 690 m2 part of the building is occupied by an exhibition about the history of the KGB in Latvia in the basement and first floor of the building, which is used by LOMB, but the rest of the 8500 m2 building has been empty for a long time. SRE has previously evaluated and proposed several real property development scenarios. Since 2003, the SRE building at 61 Brīvības Street and its vacant space have been actively offered as a lease object to be adapted to state budget institutions; the commercial sector market has been addressed, as well as Riga City Municipality, inviting them to evaluate a possible exchange transaction. Negotiations with the authorities did not yield results – neither the state budget institutions, the commercial sector, nor the local government envisaged performing their possible activities in the property, developing it and breathing new life into it. This year, SRE is conducting a survey of public institutions again, but no institution has provided suggestions on how to use this property to offer public functions.

"SRE, as a state-owned capital company, is obliged to take care of the buildings and cultural monuments under its management, including the Teter’s House. However, investing significant capital company and state funds in the renovation of a building which fulfilment of the content and future development possibilities are not clear do not conform to responsible use of funds. State capital companies have a significant impact on the development of the country, the employment of citizens and the revenues of the state budget, therefore it is especially important to ensure the efficient use of the capital invested by the state, indicators of return of capital and increase in value, which also comply with OECD principles. At the moment, it is important to make a decision as soon as possible about the contents of the building, future possibilities and attraction of funds so that it can fully open its doors to the public again," says R. Griškevičs.

Property maintenance, expenses for current repairs and capital investments since 2014 have amounted to more than 550 thousand euro. In 2021, the losses of SRE for maintenance of the property alone reached 69.6 thousand euro, while in the first nine months of 2022 – 35.1 thousand euro.

Since 2019, SRE has been putting up the house for public auction, with the precondition that the exhibition of the Museum of the Occupation of Latvia is preserved on the 1st floor and basement, envisaging the possibility of transferring this historic building to a private tenant for the next 30 years, and preserving it as state property. During the auctions, it was concluded that the long-term lease does not seem economically attractive to private developers because the investment return period was too short. After purposeful work, identifying potential users from the public sector, private tenants and investors, SRE consecutively decided to sell the building, retaining space for the museum, but at the end of 2020, the company received objections from the sectoral ministry regarding the sale of the building, therefore it was decided to stop the selling process of the building.

In 2020 the National Cultural Heritage Board granted the building the status of a historic site, but this decision does not resolve the issue of the economic use of the building and the source of funding for restoring the building. Since 2021, the capital company, together with the sectoral ministry and experts, has been working on the development of unified criteria for the real estate cultural heritage, which will help determine the further development possibilities of the building and balance the interests of all involved parties with the areas of responsibility and opportunities for attracting funding. In the coming months, it is planned to submit the criteria for consideration to the Cabinet of Ministers. Depending on the decision made, it will be possible to start working on the development of the future perspective of the building.

SRE successfully implements 44 projects of national importance, of which 24 are in the construction stage. The total implementation budget of the projects is more than 336 million euro. SRE provides professional real estate management and administration for approximately 352 real estate properties consisting of 1000 buildings with a total floor area of 0.95 million square metres, along with land beneath the buildings covering 607 hectares and more than 3460 land properties with an area of 907 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.