Which Investment Projects Are of Interest To Both Funds And Small Investors?
The crowdfunding platform "Röntgen" (UAB "Trecia diena") became the second-largest player in the market during the first half of this year, according to data from the Bank of Lithuania. Representatives of the platform, which stands out with some of the largest average portfolios, discuss which projects are currently attracting investor interest and what is waiting for the investors, most of whom are professionals and large capital managers.
In the first half of 2022, Röntgen investors mobilised EUR 22.46 million for the development of real estate projects - just slightly less than in the whole of 2022. The average annual return on the platform during this period was around 9.2%: slightly below the market average, but the platform stood out for its conservative project selection strategy that met investors' expectations. Accordingly, the average amount invested on the Röntgen platform during this period was EUR 19,500, one of the highest in the crowdfunding market. The high average investment averages show that, alongside small investors investing a few hundred or thousands of euros, there are also big players on the platform: professionals, fund representatives or high net worth individuals such as business executives, shareholders etc.
Röntgen maintained similar momentum in September, when investors raised EUR 7.8 million. The past month was notable for the fact that newly registered investors raised EUR 1.8 million for real estate development, with one of the active "newcomers" being a traditional credit institution, proving the platform's appeal to both retail and professional investors. Last month, Röntgen also repaid loans totaling EUR 2.8 million and paid out more than EUR 630,000 in interest to investors.
Greta Zarembiene, Investor Relations Manager at Röntgen, notes that several trends have dominated the platform this year: larger developers are starting to use crowdfunding, and investors are seeking diversification and more solid security measures. Additionally, due to the somewhat slower pace of real estate sales, there has been a need to extend loans for some completed properties during the sales period.
"When it comes to small investors, their numbers have been noticeably increasing recently. They are taking advantage of the higher interest rates across the market, aiming to lock in higher returns. However, we haven't seen increased attention towards projects offering the highest interest rates on our platform. On the contrary, the most attention is currently focused on A or A- rated projects, i.e., low-risk projects. The primary goal of our investor community is to preserve capital and achieve modest value growth, rather than chasing exceptionally high returns. Low-risk projects are always the first choice," comments G. Zarembiene.
Regarding larger investors, they have several strategies. G. Zarembiene observes that, for example, those who used to invest EUR 100,000 in a single project are now more actively diversifying: they don't reduce the amount but split it between two projects, i.e., they invest EUR 50,000 in each of two projects. Meanwhile, those who used to invest EUR 300,000 or more continue their investments but reduce risk by investing in more conservative, already well-advanced or completed real estate projects in major Lithuanian cities, where the market remains active.
"This year, there is a clear trend among all investors to seek lower-risk, better-rated projects that are either already well-advanced or completed, or have clearly demonstrated their commercial potential through pre-sales results. Recently, investors have been particularly valuing projects where the developer has made a significant personal investment, as a large share of equity in projects today is a major advantage. All of this indicates that investors are looking for more factors that reduce risk. Previously, demand in the real estate market significantly exceeded supply, leading to the successful sale of even lower-quality housing projects. Today, the inventory of housing is growing, buyers are becoming more discerning and cautious, so it is important for us and our investors to understand the potential of the offered projects. Despite these circumstances, investors are eager to invest in properties that are not excessively leveraged, i.e., those with a significant value reserve," explains G. Zarembiene.
What Has Already Been Funded
A significant portion of Röntgen's offerings in recent months has consisted of completed projects by experienced developers. Among the most notable projects from July to September was the investment in the "B8" apartment building project in Bajorai, which had already secured bank financing. This project was fully completed, with 30 out of 76 apartments sold and another 10 reserved. Investors were offered a 40% value reserve, leading to the quick raising of a EUR 2.1 million loan secured by EUR 6.5 million worth of assets in just one day. In this project, the minimum investment was traditionally EUR 100, but the largest investment reached EUR 800,000.
Thus, in the third quarter of this year, Röntgen maintained its growth momentum, raising around EUR 13 million. The funded projects during this period were evenly distributed across various stages of completion, size, and use of funds. For example, "Röntgen" investors funded projects like the "Victory Funds" in partnership with "Citus" for a multi-apartment complex "Kaip Niujorke" in Vilnius, a semi-detached house complex "Spanguoliu Takai" in Riese, or the "Vilniaus Dziazas" complex in Vilnius Old Town planned by experienced luxury real estate developer Gediminas Tursa.
Other successfully funded projects include those that were already well-advanced or nearing completion, such as the "Laisves 45A" apartment building in Vilnius by the developer of the "Trinapolio Namai" complex, the "Juozapaviciaus 13" apartment building in Kaunas by the experienced award-winning company "Avadi," and the "Lazdyneliai Pictures" apartment complex.
Loans for entrepreneurs' working capital in various activities, pledging long-completed and income-generating assets such as apartments in Gediminas Avenue or other districts of Vilnius, or commercial premises in Konstitucijos Avenue in Vilnius and Kaunas, were also in strong demand. Such loans are usually used to finance activities unrelated to the mortgaged property, but investors' security is ensured not only by the pledged property with income, but also by a reserve of 30-40% of the value.
"Delivered and sold-out blocks of flats and detached houses have seen a greater need for financing this year due to slower sales, but in many cases their developers are keen to develop new projects - to buy plots and to design future properties. Although we have strict appraisal mechanisms, in principle we do not see substantial risks in refinancing completed, marketable, attractively located, quality projects with a good value reserve. We currently see more risks in overly opportunistic projects that were previously financed and are still under construction, as well as in projects that do not meet market expectations, but we do not offer such projects to investors," comments G. Zarembiene.
In order to further increase diversification opportunities, Röntgen offered a new investment direction in September: in a few hours, a EUR 0.8 million loan for a 5-aircraft engine overhaul project was successfully financed in two stages by the Swedish maintenance company Advantage Aviation Services. This is the first investment project proposed by Röntgen abroad and the second in the aviation segment.
According to G. Zarembiene, the aviation sector is regulated by international law, and the aircraft and parts repair business is structured like real estate: valuable and liquid assets can be mortgaged, significant capital is required, and at the end of the project, a large sum of money is returned. Although movable assets are pledged to investors - usually engines - the pledges are always recorded in international registers governing the use of the assets, and the aviation market itself is one of the most tightly controlled and conservative business segments.
What Lies Ahead
The Röntgen team can already share some of the investment projects awaiting investors in October. The platform's offerings will continue to meet diverse investor expectations, including completed and well-advanced real estate projects, as well as diversification opportunities in the aviation sector.
Among the completed and handed-over projects that will be available to investors by the end of the month are the "Riverland" townhouse project by the experienced developer "Rinvest" in Vilnius Lazdyneliai, the "Lazdyneliai Pictures" apartment project also in Lazdyneliai, the "TU3A" apartment building in the Snipiskes-Zirm?nai area, and the "B8" project in Vilnius Bajorai, which is a completed project that previously had bank financing. In all these cases, liquid, saleable, already completed homes with a value reserve of several tens of percent are pledged as first mortgages for the benefit of the investors, which appeals to conservative investors even in a calmer housing market.
Among the already well-advanced real estate projects, investors will soon be offered the "Spanguoli? Takai" duplex house complex in Vilnius Riese and a loan for five different projects by the developer "Volberna" (townhouses). The latter loan is formed on the platform on a basket basis: by investing in one loan, the investment is diversified over as many as 5 real estate projects with different completion dates. Another solid investment opportunity awaits in Kaunas, where Avadi, a well-known developer in the city, is making rapid progress with the Juozapaviciaus 13 apartment complex - the last stage of the conversion of the territory in Šan?iai, ahead of the construction schedule and with significant pre-sales. Among the projects that are halfway through, this month Röntgen investors will be offered the apartment block "Laisves 45A" in Virsuliškes, by the experienced developer Nomalita, which has previously successfully developed the large Trinapolio namai development, and which already has solid pre-sales.
In addition, the market is not stopping to prepare for brand new real estate projects to meet the changing needs of buyers. In the coming weeks, Röntgen will offer investors to finance the preparatory works on a very large plot array in the fast-growing Kalnenai district of Vilnius, which will be distinguished by a very attractive loan-to-value ratio. In addition, the Röntgen community will be able to further finance the dormitory reconstruction project of Mozambikas, an experienced developer in the seaside region - the company has recently won a public auction and acquired a part of the former Klaipeda State College dormitory, which is planned to be redeveloped into almost 100 individual apartments over the course of a few years, catering to the very clear segment of young people and students, or those investing in rentals. According to the Palanga team of Capital, responsible for the sales of this property, with a price of only EUR 28,000 for a studio unit, or only EUR 56,000 for a two-room apartment, the project of the dormitory to be reconstructed is ideally suited to the expectations of its market segment.
Finally, before the end of October, the platform community will be offered the opportunity to invest in aviation again, with an investment opportunity from Colibri Aero, a Lithuanian company that successfully implemented a EUR 0.8 million project to repair and sell aircraft engines on the Röntgen platform last year. This time, the company is looking to repair a second-hand landing gear assembly and sell it to airlines. Investors will be offered an annual interest rate of 9-11% with a loan-to-value (LTV) of just 15%.
"The aviation segment has already become one of Röntgen's strategic focus areas, and we will certainly have more investment projects in aircraft repair and maintenance. We have also had wind energy projects in the past, and we are currently actively discussing the financing of solar farms, so we are planning to offer investments in this area as early as in October. We are diversifying our projects in response to investors' own demand for more sustainable diversification, but in all cases we are staying true to our core principle: conservative and sustainable capital growth. We are pleased that more and more small investors are appreciating this, investing alongside professionals on our platform," says Röntgen's Head of Investor Relations.
For those who want to avoid missing out on attractive investment opportunities and new investment trends or asset classes that generate double-digit returns, it is worth registering on the Röntgen platform, as all investment offers are only visible to registered users.
Which Investment Projects Are of Interest To Both Funds And Small Investors?
The crowdfunding platform "Röntgen" (UAB "Trecia diena") became the second-largest player in the market during the first half of this year, according to data from the Bank of Lithuania. Representatives of the platform, which stands out with some of the largest average portfolios, discuss which projects are currently attracting investor interest and what is waiting for the investors, most of whom are professionals and large capital managers.
In the first half of 2022, Röntgen investors mobilised EUR 22.46 million for the development of real estate projects - just slightly less than in the whole of 2022. The average annual return on the platform during this period was around 9.2%: slightly below the market average, but the platform stood out for its conservative project selection strategy that met investors' expectations. Accordingly, the average amount invested on the Röntgen platform during this period was EUR 19,500, one of the highest in the crowdfunding market. The high average investment averages show that, alongside small investors investing a few hundred or thousands of euros, there are also big players on the platform: professionals, fund representatives or high net worth individuals such as business executives, shareholders etc.
Röntgen maintained similar momentum in September, when investors raised EUR 7.8 million. The past month was notable for the fact that newly registered investors raised EUR 1.8 million for real estate development, with one of the active "newcomers" being a traditional credit institution, proving the platform's appeal to both retail and professional investors. Last month, Röntgen also repaid loans totaling EUR 2.8 million and paid out more than EUR 630,000 in interest to investors.
Greta Zarembiene, Investor Relations Manager at Röntgen, notes that several trends have dominated the platform this year: larger developers are starting to use crowdfunding, and investors are seeking diversification and more solid security measures. Additionally, due to the somewhat slower pace of real estate sales, there has been a need to extend loans for some completed properties during the sales period.
"When it comes to small investors, their numbers have been noticeably increasing recently. They are taking advantage of the higher interest rates across the market, aiming to lock in higher returns. However, we haven't seen increased attention towards projects offering the highest interest rates on our platform. On the contrary, the most attention is currently focused on A or A- rated projects, i.e., low-risk projects. The primary goal of our investor community is to preserve capital and achieve modest value growth, rather than chasing exceptionally high returns. Low-risk projects are always the first choice," comments G. Zarembiene.
Regarding larger investors, they have several strategies. G. Zarembiene observes that, for example, those who used to invest EUR 100,000 in a single project are now more actively diversifying: they don't reduce the amount but split it between two projects, i.e., they invest EUR 50,000 in each of two projects. Meanwhile, those who used to invest EUR 300,000 or more continue their investments but reduce risk by investing in more conservative, already well-advanced or completed real estate projects in major Lithuanian cities, where the market remains active.
"This year, there is a clear trend among all investors to seek lower-risk, better-rated projects that are either already well-advanced or completed, or have clearly demonstrated their commercial potential through pre-sales results. Recently, investors have been particularly valuing projects where the developer has made a significant personal investment, as a large share of equity in projects today is a major advantage. All of this indicates that investors are looking for more factors that reduce risk. Previously, demand in the real estate market significantly exceeded supply, leading to the successful sale of even lower-quality housing projects. Today, the inventory of housing is growing, buyers are becoming more discerning and cautious, so it is important for us and our investors to understand the potential of the offered projects. Despite these circumstances, investors are eager to invest in properties that are not excessively leveraged, i.e., those with a significant value reserve," explains G. Zarembiene.
What Has Already Been Funded
A significant portion of Röntgen's offerings in recent months has consisted of completed projects by experienced developers. Among the most notable projects from July to September was the investment in the "B8" apartment building project in Bajorai, which had already secured bank financing. This project was fully completed, with 30 out of 76 apartments sold and another 10 reserved. Investors were offered a 40% value reserve, leading to the quick raising of a EUR 2.1 million loan secured by EUR 6.5 million worth of assets in just one day. In this project, the minimum investment was traditionally EUR 100, but the largest investment reached EUR 800,000.
Thus, in the third quarter of this year, Röntgen maintained its growth momentum, raising around EUR 13 million. The funded projects during this period were evenly distributed across various stages of completion, size, and use of funds. For example, "Röntgen" investors funded projects like the "Victory Funds" in partnership with "Citus" for a multi-apartment complex "Kaip Niujorke" in Vilnius, a semi-detached house complex "Spanguoliu Takai" in Riese, or the "Vilniaus Dziazas" complex in Vilnius Old Town planned by experienced luxury real estate developer Gediminas Tursa.
Other successfully funded projects include those that were already well-advanced or nearing completion, such as the "Laisves 45A" apartment building in Vilnius by the developer of the "Trinapolio Namai" complex, the "Juozapaviciaus 13" apartment building in Kaunas by the experienced award-winning company "Avadi," and the "Lazdyneliai Pictures" apartment complex.
Loans for entrepreneurs' working capital in various activities, pledging long-completed and income-generating assets such as apartments in Gediminas Avenue or other districts of Vilnius, or commercial premises in Konstitucijos Avenue in Vilnius and Kaunas, were also in strong demand. Such loans are usually used to finance activities unrelated to the mortgaged property, but investors' security is ensured not only by the pledged property with income, but also by a reserve of 30-40% of the value.
"Delivered and sold-out blocks of flats and detached houses have seen a greater need for financing this year due to slower sales, but in many cases their developers are keen to develop new projects - to buy plots and to design future properties. Although we have strict appraisal mechanisms, in principle we do not see substantial risks in refinancing completed, marketable, attractively located, quality projects with a good value reserve. We currently see more risks in overly opportunistic projects that were previously financed and are still under construction, as well as in projects that do not meet market expectations, but we do not offer such projects to investors," comments G. Zarembiene.
In order to further increase diversification opportunities, Röntgen offered a new investment direction in September: in a few hours, a EUR 0.8 million loan for a 5-aircraft engine overhaul project was successfully financed in two stages by the Swedish maintenance company Advantage Aviation Services. This is the first investment project proposed by Röntgen abroad and the second in the aviation segment.
According to G. Zarembiene, the aviation sector is regulated by international law, and the aircraft and parts repair business is structured like real estate: valuable and liquid assets can be mortgaged, significant capital is required, and at the end of the project, a large sum of money is returned. Although movable assets are pledged to investors - usually engines - the pledges are always recorded in international registers governing the use of the assets, and the aviation market itself is one of the most tightly controlled and conservative business segments.
What Lies Ahead
The Röntgen team can already share some of the investment projects awaiting investors in October. The platform's offerings will continue to meet diverse investor expectations, including completed and well-advanced real estate projects, as well as diversification opportunities in the aviation sector.
Among the completed and handed-over projects that will be available to investors by the end of the month are the "Riverland" townhouse project by the experienced developer "Rinvest" in Vilnius Lazdyneliai, the "Lazdyneliai Pictures" apartment project also in Lazdyneliai, the "TU3A" apartment building in the Snipiskes-Zirm?nai area, and the "B8" project in Vilnius Bajorai, which is a completed project that previously had bank financing. In all these cases, liquid, saleable, already completed homes with a value reserve of several tens of percent are pledged as first mortgages for the benefit of the investors, which appeals to conservative investors even in a calmer housing market.
Among the already well-advanced real estate projects, investors will soon be offered the "Spanguoli? Takai" duplex house complex in Vilnius Riese and a loan for five different projects by the developer "Volberna" (townhouses). The latter loan is formed on the platform on a basket basis: by investing in one loan, the investment is diversified over as many as 5 real estate projects with different completion dates. Another solid investment opportunity awaits in Kaunas, where Avadi, a well-known developer in the city, is making rapid progress with the Juozapaviciaus 13 apartment complex - the last stage of the conversion of the territory in Šan?iai, ahead of the construction schedule and with significant pre-sales. Among the projects that are halfway through, this month Röntgen investors will be offered the apartment block "Laisves 45A" in Virsuliškes, by the experienced developer Nomalita, which has previously successfully developed the large Trinapolio namai development, and which already has solid pre-sales.
In addition, the market is not stopping to prepare for brand new real estate projects to meet the changing needs of buyers. In the coming weeks, Röntgen will offer investors to finance the preparatory works on a very large plot array in the fast-growing Kalnenai district of Vilnius, which will be distinguished by a very attractive loan-to-value ratio. In addition, the Röntgen community will be able to further finance the dormitory reconstruction project of Mozambikas, an experienced developer in the seaside region - the company has recently won a public auction and acquired a part of the former Klaipeda State College dormitory, which is planned to be redeveloped into almost 100 individual apartments over the course of a few years, catering to the very clear segment of young people and students, or those investing in rentals. According to the Palanga team of Capital, responsible for the sales of this property, with a price of only EUR 28,000 for a studio unit, or only EUR 56,000 for a two-room apartment, the project of the dormitory to be reconstructed is ideally suited to the expectations of its market segment.
Finally, before the end of October, the platform community will be offered the opportunity to invest in aviation again, with an investment opportunity from Colibri Aero, a Lithuanian company that successfully implemented a EUR 0.8 million project to repair and sell aircraft engines on the Röntgen platform last year. This time, the company is looking to repair a second-hand landing gear assembly and sell it to airlines. Investors will be offered an annual interest rate of 9-11% with a loan-to-value (LTV) of just 15%.
"The aviation segment has already become one of Röntgen's strategic focus areas, and we will certainly have more investment projects in aircraft repair and maintenance. We have also had wind energy projects in the past, and we are currently actively discussing the financing of solar farms, so we are planning to offer investments in this area as early as in October. We are diversifying our projects in response to investors' own demand for more sustainable diversification, but in all cases we are staying true to our core principle: conservative and sustainable capital growth. We are pleased that more and more small investors are appreciating this, investing alongside professionals on our platform," says Röntgen's Head of Investor Relations.
For those who want to avoid missing out on attractive investment opportunities and new investment trends or asset classes that generate double-digit returns, it is worth registering on the Röntgen platform, as all investment offers are only visible to registered users.
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"Trečia diena" UAB, which operates the Röntgen platform, is a licensed crowdfunding platform. The platform is governed by the EU Crowdfunding Regulation and is supervised by the Bank of Lithuania in accordance with the law.