Mortgage secured construction loan
- Start of investment period10.07.2020
- Start time15.06.2020 11:45
- Asset classHealthcare
- Investment typeDevelopment
- Investment end date07.06.2022
- Remaining termOverdue 90+ days
- Expected rate of return12% p.a.
- Expected cash yield%
- No of investors606
- Goal€250 000
Our new project offers an opportunity to finance the construction of the extension of Helme retirement home. The Sponsor has been providing care for the elderly in the current 75-bed retirement home since 2014. To meet the growing demand, the Sponsor has acquired the adjacent building, which can be converted into a 160-bed retirement home.
Helme retirement home is located in Helme borough, Valga County, approx. 2 km from city of Tõrva. It is a beautiful place next to Helme primeval valley and manor park.
The Sponsor has started construction works and funded it so far from its own resources. The total construction cost of the project is EUR 1.16 million, of which EUR 150,000 will be covered by the PRIA fund, EUR 210,000 is the Sponsor's own equity and EUR 800,000 will be Crowdestate investors' loan.
The construction will be financed in stages and the amount to be raised in this first funding round is EUR 250,000 (minimum target EUR 100,000). Together with the non-refundable grant from PRIA fund (Agricultural Registers and Information Board) and the loan of Crowdestate investors, the Sponsor plans to build 60-bed retirement home in the first phase and open it in 4th quarter of 2020. In the second phase, another 40 beds will be added. Another 60 beds will initially stay in reserve and will be built as additional demand arises.
The Sponsor has a contract with Tõrva municipality for 35 beds and queue for care services is 25 people. Thus, when a new retirement home is opened, 60 places would be filled immediately.
Loan interest is 12% on an annual basis and the first interest payment is due in 12 months. The investment period is 18 months, plus a double 6-month extension option (interest 13% after the first extension and 15% after the second extension). Investors' loans are secured by a 1st mortgage on a property under renovation, a guarantee from AS Helme Pansionaat (the operator of 75-bed retirement home) and a personal surety of the Sponsor's key person Sven Allas.
Crowdestate investors' loan will be repaid by refinancing with a long-term bank loan. The Sponsor's current 75-bed retirement home has been financed by Swedbank, which has also expressed its willingness to refinance the construction loan after obtaining of the permit of use and when retirement home is operational.