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    Update on activities of Pro Kapital

    Dear Shareholders,

     

    As you might have learned from the stock exchange press release published on Monday, 21st of November 2016, our subsidiary Tallinna Moekombinaat has signed a loan agreement with a leading global credit platform TSSP for financing the construction works of Tallinn T1 Shopping and Entertainment Centre.

     

    TSSP is global credit and special situations platform of TPG, with over $19 billion of assets under management. TSSP has a long-term oriented and highly flexible capital base, allowing to invest across industries, geographies, capital structures, and asset classes. TSSP is primarily focused on private market transactions, but also have a substantial presence in the public markets. TPG is a global private investment firm with headquarters in San Francisco and Fort Worth, having over $70 billion under management with investment and operational teams in 18 offices around the world. Having invested in approximately 300 companies, TPG has built a diverse set of asset classes, including private equity, growth equity, public equity, credit, and real estate.

     

    We think it is very important to point out that this loan agreement allows the company to meet all its financial needs for the construction of the Tallinn T1 Shopping Centre, which is a project of vital importance for the future of our company.

     

    The process of verification of the Pro Kapital project, of the macroeconomic situation of the Baltic States and of the local real estate market by TSSP, a company of great international experience, confirms once again that the construction of T1 will be very important for the city of Tallinn and Pro Kapital.

     

    This year, 2016, has definitely been extremely important; the additional issuance of the bonds listed in Stockholm and the finalization of this loan agreement allow us to give a huge impetus to our planned real estate developments. In fact, in addition to the ongoing construction of the T1 Shopping Centre, we have begun construction of the first building of Kliversala in Riga, we are starting a new phase of the “Kristiine City” complex in Tallinn and for the residential complex “Saltiniu Namai” in Vilnius the building permit for 2nd stage of the project has been obtained, presales and projecting works for the construction tender are ongoing. The pre-sales of these developments are progressing in a positive and regular way.

     

    We are also confident that the agreement with TSSP will help give visibility to Pro Kapital in international financial markets.

     

    We thank you for your investment and confidence in Pro Kapital.

     

    Best regards

     

    Paolo Vittorio Michelozzi

    CEO

    AS Pro Kapital Grupp

     

    Conclusion of financing agreement of T1 Shopping and Entertainment Centre in Tallinn

    AS Pro Kapital Grupp (hereinafter Pro Kapital) informs that on 18.11.2016 its subsidiary AS Tallinna Moekombinaat signed a contract for financing the design and construction works of the T1 shopping and entertainment centre, located at Peterburi mnt. 2, Tallinn, Estonia, with TSSP, a leading global credit platform with approximately $19 billion in assets under management.

    Total investment of the T1 shopping and entertainment center is ca 90 million EUR of which over 23 million EUR has been already invested by equity and shareholder financing.

    The total volume of the financing agreement is 65 million EUR. The signed financing agreement and the funds at the disposal of Pro Kapital make the T1 shopping and entertainment center project fully funded and on track to open in autumn 2018.

    The gross area of the T1 shopping and entertainment centre is ca 130,000 square meters, including close to 55,000 square meters of rental space with Selver hypermarket as one of the anchor tenants, strong focus on entertainment activities including multiscreen cinema, over 30 restaurants and cafès and 44 m diameter rooftop ferris wheel, unique in whole northern and eastern Europe. The construction works were started in 2015 by AS Merko Ehitus Eesti and the centre shall open its doors for visitors in autumn 2018.

    AS Pro Kapital Grupp CEO Paolo Michelozzi comment: “For Pro Kapital the conclusion of the financing agreement of T1 has great importance. Such project means a strong new landmark not only for Pro Kapital but for the whole Tallinn and helps to form the district into a modern urban and business centre of the city. We are happy that our project, location and perspectives of Tallinn retail real estate market have drawn attention of the international finance market”.

    T1 shopping and entertainment centre will be part of the new business city centre of Tallinn where the new planned Joint Passenger Terminal, Rail Baltica railway station and new City square bordering with new office and residential buildings will be located. Extended 4. tram line shall connect the whole complex with the City centre, Ülemiste City and Tallinn Airport.

    Additional information:

    AS Pro Kapital Grupp (www.prokapital.ee) is a leading Estonian real estate development company with a focus on modern large-scale commercial and residential real estate in the capitals of Estonia, Latvia and Lithuania. Since its establishment in 1994, Pro Kapital has completed over 20 development projects with ca 190 000 sqm of total saleable area.

    TSSP is the global credit and special situations platform of TPG.  Co-founded in 2009, TSSP has approximately $19 billion in assets under management.  TSSP has a long-term oriented, highly flexible capital base that allows it to invest across industries, geographies, capital structures and asset classes, in distressed assets but also healthy and growth companies.  TSSP’s investments are typically complex to source, analyze and execute.  For more information, please visit www.tpg.com/platforms/tssp.

    Pro Kapital starts with the architectural competition of Tallinna Kalasadam area

    The detail plan of the surroundings of Tallinna Kalasadam that had been under process for several years, was established by the Council of the City of Tallinn this year in June. According to the provisions of the detail plan AS Pro Kapital Eesti, the owner of the land plot of Kalaranna 1, announces the start of the open architectural competition in cooperation with the Tallinn City Planning Departement and Estonian Association of Architects with the purpose to find the best solution for the buildings and the architectural urban space. In addition to the architectural solution for the buildings the task of the competition shall be to shape the seaside area into a conteporary and high quality open space offering wide range of choice of usage. The vision of Pro Kapital is to form the land plot into a city-wide attraction where the public areas as beach promenade, city park, sand beach and fish market shall border with attractive buildings, offering alongside the sea views options for public usage as cafès, restaurants and greeneries. The detail plan foresees the development of up to 400 apartments, spacious beach promenade and wide range of public areas and services.

    Paolo Michelozzi, CEO of Pro Kapital: „We are very glad to be finally in such point with this project. It has been a long journey but thanks to the efforts of many institutions, including the city of Tallinn, the development of this beautiful area can be started. I am eager to see the results of the competition, for creating a positive added value for Tallinn and its people“.

    The deadline for the entries is 1st of February 2017 and the prize money amounts to 60 000 EUR.  Further information about the task of the competition and partecipation can be found on the website of  Estonian Association of Architects www.arhliit.ee and homepage of Pro Kapital www.prokapital.ee

    Pro Kapital Latvia´s daughter company concluded the construction agreement for River Breeze Residence in Klīversala.

    Today, on the 13 June, 2016 the results of the general contractor competition for the construction of the River Breeze Residence  have been confirmed and construction agreement signed.

    The new apartment building in Riga, Klīversala, will be built by construction company “LNK Industries”. Construction will begin in July, but the building itself will be commitioned in 18 months – winter of 2017. The volume of the construction agreement is 12.6 mln eur, excluding VAT.

    7 construction companies registered in Latvia took part in the competition. A general contractor is tasked with full scope of the construction and connections to all the engineering networks, as well as upkeep of the premises and the coastline.

    River Breeze Residence on Kuģu str. 28 is the first building to be built as part of the Klīversalas area development, developed by A/S “Pro Kapital Latvia” daughter company SIA “Klīversala”. Total area of the building is 12 850 square meters, it has 7 floors and 2 underground parking sites. Currently 48 apartments are planned, their areas range from 56 to 316 square meters. At this moment 8 prepurchase agreements have been already signed.

    Each apartment has a terrace and is equipped with individually regulated energy-efficient ventilation system. The upper floors have built-in fireplaces, while the other floors have an option for one. First floor apartments are constructed in a town house manner – in two levels, with a private, walled-off area, creating the feeling of a private house in the very center of Riga.

    Paolo Michelozzi, CEO of AS Pro Kapital Group: “We are aware of how important the Klīversalas area is to Rigas urban environment, and we are planning the development of this territory with special reverance. The architects are planning to integrate “River Breeze Residence” seemlessly into the natural enviornment by decorating the roofs and roof terraces with various greenery and plants.”

    Additional information: Iveta Vanaga, phone: 29239064, e-mail: iveta@a-sono.lv

    Start of construction works of T1 Shopping Centre in Tallinn

    AS Pro Kapital Grupp (hereinafter Pro Kapital) informs that on 29 May 2015 it subsidiary AS Tallinna Moekombinaat signed a contract for performing the design and construction works of a shopping and entertainment centre T1, located at Peterburi mnt. 2, Tallinn, Estonia, with AS Merko Ehitus Eesti, 100% owned subsidiary part of AS Merko Ehitus group.

    The gross area of the centre is ca 130,000 square meters, including over 52,000 square meters of different rental space (retail, catering, multiscreen cinema and entertainment). There will be over 200 retail premises in the centre.

    The works start in June 2015 and the centre is planned to open for visitors in autumn 2017. The value of the contract is approximately 70 million euros, plus value added tax.

    AS Pro Kapital Grupp CEO Paolo Michelozzi comment: “We are extremely happy to announce the start of the construction of T1 shopping and entertainment centre. Using the experience we have had with Kristiine shopping centre in Tallinn and Domina Shopping in Riga we will create this centre to be really something new, attractive and emotional for the people of Tallinn. With Merko Ehitus we have had long cooperation experience before and we hope to achieve good results together”.

    AS Merko Ehitus Eesti CEO Tiit Roben comment: “We thank Pro Kapital for trusting the fulfillment of such complicated and large contract to Merko. Pro Kapital has great experience in development of shopping centres and we are sure it helps to create T1 as special shopping and entertainment centre appreciated by clients.”

    T1 shopping and entertainment centre will be part of the new city centre of Tallinn where will be located the new planned Joint Passenger Terminal, Rail Baltica railway station and new City square bordering with new office and residential buildings. Extended 4. tram line is planned to connect the whole complex with Tallinn Airport.

    Additional information:

    AS Pro Kapital Grupp (www.prokapital.ee) is a leading Estonian real estate development company with a focus on modern large-scale commercial and residential real estate in the capitals of Estonia, Latvia and Lithuania. Since its establishment in 1994, Pro Kapital has completed 20 development projects with ca 180 000 sqm of total saleable area.

    AS Merko Ehitus Eesti (www.merko.ee) is Estonian leading construction company, which offers construction services in general construction, civil engineering, road, electrical and residential construction.

    Results of the subscription of debt securities

    AS Pro Kapital Grupp (hereinafter Pro Kapital) informed its investors on 20.04.2015 that Pro Kapital Management Board decided to announce the start of the subscription process of the secured, callable, fixed rate bonds (hereinafter the “Bonds”).

    The Management Board has decided on the allocation of the first subscription of the Bonds as follows:

    1. Pro Kapital will issue 70 Bonds with issue price of EUR 7 000 000;
    2. the nominal value of the Bonds will be EUR 100,000 each;
    3. the Bonds will carry interest at a 8%, p.a.;
    4. the issue date of the first tranche of the Bonds is expected to take place on 01.06.2015
    5. the final redemption date of the Bonds will take place on 31.05.2020.
    6. the obligations and liabilities of Pro Kapital arising from the Bonds and related documents will be secured by the first ranking security over the following assets:
    - all shares (including rights attached thereto) in the following companies owned by Pro Kapital and its subsidiaries (including all shares issued and acquired at any time in the future): AS Pro Kapital Eesti, Pro Kapital Latvia JSC, Pro Kapital Vilnius Real Estate UAB, PRO KAPITAL Germany GmbH, Pro Kapital Germany Holdings OÜ, OÜ Ilmarise Kvartal, Pro Halduse OÜ, OÜ Hotel Management Services, AS Tondi Kvartal, OÜ Marsi Elu, PK Hotel Management Services GmbH, “Klīversala RE” SIA, “Tallina nekustamie īpašumi” SIA, “NEKUSTAMO ĪPAŠUMU SABIEDRĪBA “ZVAIGZNES CENTRS”" SIA, “Hotel Management Services” SIA; In Vitam UAB; PK Invest UAB and Pro Kapital Bonum UAB;
    - three banks accounts opened in connection with the issuance of the Bonds (escrow account, debt service account and deposit account);
    7. the Bonds will be registered with Euroclear Sweden AB;
    8. Pro Kapital plans to apply for the listing of the Bonds at the corporate bond list on Nasdaq Stockholm.

    CEO of Pro Kapital Paolo Michelozzi comment on the first subscription of the Bonds: “we are glad that we have received positive feedback and demand from the investors and are satisfied with the allocation amount of the first subscription of the bonds. We had many contacts with investors and are making preparations for the next tranches of bond subscription”.

    This notice has been published to comply with the rule 7.6. of the Requirement for Issuers of Nasdaq Tallinn Stock-Exchange.

    Start of construction works of residential building located in Vilnius

    AS Pro Kapital Grupp (hereinafter Pro Kapital) informs that the construction works of a new residential building in Vilnius were started yesterday (26.03.2015), based on the construction contract concluded between its subsidiary Pro Kapital Bonum UAB and UAB Merko Statyba on 01.08.2014.

    As was informed with the stock-exchange release dated 04.08.2014 the subsidiary company of the group Pro Kapital Bonum UAB concluded the construction contract with UAB Merko Statyba for construction and design works of new residential apartment building in Vilnius on 01.08.2014. The lump sum of the contract is 10 013 120 (2 900 000 EUR), excluding VAT. The building will be located in Vilnius, Lithuania, in Saltiniu Namai residential building complex, which is being developed by Pro Kapital. The new building will have in total 41 apartments, 3 commercial premises and net sellable area of 2679 m2. The planned construction period is 15 months as of the start of the construction works.

    As of 25.03.2015 Pro Kapital Bonum UAB has signed 12 reservation agreements out of 44 premises of the new building, corresponding to the pre-sale ratio of 30% from the total sellable area.

    AS Pro Kapital Grupp CEO Paolo Michelozzi comment: “we are pleased with the sales results of Saltiniu Namai project in Vilnius and the sales results of the residential building we started to construct last year in February 2014. The construction of that building has been completed and 16 units out of 19 units have been presold. We have seen strong demand in the upper class residential market in Vilnius and have therefore decided to go forward with construction of yet another building in Vilnius”.

    After the completion of this new building the first phase of the development of the Saltiniu Namai residential complex will be completed. The first phase of the development of the Saltiniu Namai residential complex includes in total 200 apartments, 27 commercial premises and 11 cottages. There will remain still unused development volume in the Saltiniu Namai residential complex in the second phase of the residential area.  

    Additional information:

    Saltiniu Namai is a residential development project located in Vilnius Old Town. The business plan for the Saltiniu Namai residential quarter foresees a series of apartment buildings built in stages. The location is attractive for a residential area: it is located right in the Old Town and enjoys a good access both by cars and public transport. The creation of houses and cottages with leisure, sports and commercial zones is a remarkable contribution to the expansion of Vilnius city, where the conversion of abandoned industrial areas is prominent. Currently four five floor buildings with attics, one six floor building with attic and 11 private cottages have been built. Pro Kapital has already built 159 apartments, 11 cottages and 24 commercial premises with sellable area of 16 438 m2. Residents of Saltiniu Namai residential quarter are already enjoying the private courtyard, finished landscape works and fully equipped children‘s playground.

    Pro Kapital Bonum UAB is a company, which belongs 100% to PK Invest UAB. PK Invest UAB is a 100% subsidiary of Pro Kapital Vilnus Real Estate UAB. Pro Kapital Vilnius Real Estate UAB is a 100% subsidiary of AS Pro Kapital Grupp. Pro Kapital Bonum UAB is the developer of the 44 unit building to be located in the Saltiniu Namai project in Vilnius Lithuania.

    Letter to the shareholders of AS Pro Kapital Grupp

    Dear shareholders 

    First let me thank you for the support and trust you have shared with us during the past years. We are continuingly glad to witness the healthy and sustainable growth of economy and welfare in Baltic States and their capitals Tallinn, Riga and Vilnius. A solid base of growth has been created for the real estate market in this region over the recent years that is our common interest for the future. The macroeconomical perspectives foreseeing GDP growth close to 3% annually for the coming years combined with the lowest governmental debt ratio in the Eurozone form Baltics as an attractive target for investments in many segments.

    With the present letter we would like to introduce you an initiative we have put together for you for the coming spring. As you may know, our main focus for 2015 is the development of 3 projects in Tallinn, Riga and Vilnius in the residential segment and to continue with the project of the shopping and entertainment centre in Tallinn, St. Petersburg road.

    The residential development in Tallinn, Tondi quarter, is the largest and most ambitious project in the Estonian capital with over 1000 apartments in total, to be launched under the brand name Pro Kapital City. It is a combination of historical preserved buildings with modern contemporary architecture being surrounded by a rich greenery and park with convenient options for different sporting activities. We have started the construction of the first 2 buildings with 62 apartments that shall be followed with 2 more buildings during this year as well with the renovation of historical red-brick Russian Empire army casarms.

    In Riga we are about to start with presales in our unique riverside project Kliversalas with breathtaking views of the historical Old Town. The construction of the first waterfront tower building with 48 apartments is planned to be started in the end of 2015, launching the full project of ca 600 apartments.

    In Vilnius historical Old Town we are continuing the development of a Saltiniu Namai quarter with 2 additional buildings completing the first phase of the project.

    In the light of these developments we are glad to offer you an exclusive opportunity to reserve the properties in the aforementioned projects with 10 % discount off the price list until 31st of May 2015.  Each of the project has unique characteristics and is well known and appreciated in the local market. In Tallinn and in Vilnius we have successfully started with presale activities last year having signed over 50 preliminary sales agreements and in Riga we have received several reservation letters to be formalized after the launch of the presale process.

    In addition we use hereby the opportunity to invite you to participate in Pro Kapital City day that shall be held on 16th of May in Tallinn. We shall introduce you our properties in Tallinn visiting the construction site of our Pro Kapital City project and shall give a glance to the ongoing works of our Shopping Centre development in St. Petersburg road, the newest and biggest retail real estate project in Tallinn. All this shall be complemented with a cosy dinner and sightseeing options.

    The present year of 2015 shall be an important year for Pro Kapital and for us together and we would be very glad to meet you in Tallinn and introduce you our activities and future perspectives in more detail.

     

     

    Yours Sincerely

    Paolo Michelozzi

    CEO

    AS Pro Kapital Grupp

    Pro Kapital submited an offer for purchase of „Kopli liinid“ development

    AS Pro Kapital Grupp has on 18.11.2014 submited an offer to participate in the first round of the combined offer for the sale of „Kopli liinid“ development.

    City of Tallinn is selling the „Kopli liinid“ development by the procedure of combined offer. The combined offer is a two-stage procedure. The first stage (qualification of tenderer) is public. The second stage is a tender with preliminary negotiations. Participants having made a tender conforming to the terms and conditions at the first stage are invited to the second stage.

     

    In the first stage of the offer AS Pro Kapital Grupp submited the offer corresponding to the set sales conditions and the offer included the written consent to buy the development for at least the initial price totaling 1 500 000 euros, the obligation to develop the area´s infrastructure and the consent to ensure the safety of the area.

    City of Tallinn has set criterias for participants to qualify for the tender. The results of qualifying to the criterias set by the city will be announced by the City of Tallinn in 3 (three) business days.

    As per the terms and conditions of the offer AS Pro Kapital Grupp has the right to withdraw from the offer at any time prior to submiting the final offer.

    The entry into force of the agreement of building excavation works of as Tallinna moekombinaat and the start of the construction works of the shopping centre at Peterburi 2, Tallinn


    AS Pro Kapital Grupp informs that on 30th of April 2014 the subsidiary of the group AS Tallinna Moekombinaat and AS Nordecon concluded the agreement for building excavation works of the shopping and entertainment centre located at Peterburi 2, Tallinn. The agreement enters into force upon AS Tallinna Moekombinaat´s notification to AS Nordecon about the handover of the construction site. On 27th of May 2014 AS Tallinna Moekombinaat sent the notification to AS Nordecon about the handover of the construction site and the agreement has entered into force.

    On 27th of May 2014 AS Tallinna Moekombinaat has sent the notification to the City of Tallinn about the start of the construction works of the shopping centre located at Peterburi 2, Tallinn.

    The planned duration of the excavation works is 3 months with the aim to finish the preparation works of the construction of the shopping centre and the selecting of the main constructor for the shopping centre is under process.

    AS Pro Kapital Grupp shall inform the investors upon conclusion of additional binding construction agreements.

    The comment of the Member of the Management Board of AS Tallinna Moekombinaat, Allan Remmelkoor: „The preparation process goes as planned. The entertainment complex of the shopping centre on 12 000 sqm is covered with rental arrangements, the surrounding new infrastructure – the tunnel leading to the underground parking, access roads and also the prolongation of the 4th tram line until our territory – have been completed. The creation of new fields of activities, convenient access roads and good connectivity with public transport are the cornerstones for the success of every new shopping centre. The next logical step now is the start of the excavation of the underground volume of the shopping centre.“   

    Additional information:
    AS Tallinna Moekombinaat is a company established on 05.03.2008, the main field of activity of the company is the development of shopping center located on Peterburi road 2 Tallinn land plot. The planned shopping centre is one of the most dynamic shopping developments in the Baltics, located on the largest and most modern traffic junction in Tallinn within just a few minutes by car from the city centre and at the starting point of motorways to Tartu, Narva and Pärnu. The Shopping Centre shall accommodate more than 200 shops on ca 55,000 m² of GLA with the anchor tenant Selver hypermarket on ca 6000 m². The shopping centre will become part of the future major public transportation hub in Tallinn. The hub is the most important infrastructural development for the city in the coming years and shall feature, in addition to local connections, a transfer to the airport and the future Rail Baltica international train station.