Estonian Arco Vara‘s Bulgarian real estate investment fund, Arco REIT,launches IPO on 29th January 2016 by issuing 150k new shares for BGN 1 per share issue price and thus aiming to raise capital from BGN 500k to BGN 650k.

Arco REIT’s listing is yet another signal for a real estate market awakening following a macro and employment rebound in the country.

Founders of the REIT are Estonian Arco Vara SA and Bulgarian institutional investor National Investment Company Nadejda.

IPO details

The capital hike will be accomplished via a rights issue of 150k rights or 1/1 ratio of rights issued for new shares subscribed. Rights trading (28RA BU) in Sofia begins 29th January and ends 10th February while share subscription begins Jan 29th and ends March 8th. This is the first capital hike for Arco Real Estate Fund REIT and it will amount up to 30% of its registered capital. If the IPO is successful, the REIT will start trading on the Bulgarian Stock Exchange.

It plans to use the proceeds for residential real estate investments with actual operations to begin after completing a second capital hike later in 2016. Arco REIT will provide an opportunity to local and foreign capital to participate in Arco Vara’s forthcoming residential projects in Sofia. Arco REIT will focus on developments in Sofia and potentially other major Bulgarian cities, where invested equity will be EUR 5m or more, according to Arco Vara’s official statement.

Arco Real Estate Fund REIT was granted a license and permission for registration on the Bulgarian Stock Exchane in late December 2015. The company was licensed by the Financial Supervision Commission.

Who is Arco REIT

Arco REIT is among the first REITs specialized in real estate investment to be licensed and go public in Bulgaria after the 2008 financial crisis which put a stop to the REIT boom on the market.

Arco Real Estate is an international company operating in three markets: Estonia, Latvia, and Bulgaria. The parent company Arco Vara AS was established in Estonia in 1992and is listed on the Tallinn NASDAQ OMX BALTICstock exchange.Arco Vara group is engaged in two areas: real estate development and services related to real estate. The service comprise real estate brokerage, valuation, property management, and consulting as well as short-term investments in residential real estate. As an added value, the service department provides the group with analytical data on market demand and supply as well as on behaviour of buyers.

The main activity of the development department is developing complete living environmentsand commercial real estate. Finished housing solutions to end-consumers, thus getting direct feedback on our products. The purpose of developing commercial properties is creating a cash-flow-generating real estate object for strengthening our own cash flow or for resale. The group is also holding completed commercial properties that generate rental income.