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Developer Endover crowd funds €785,000 for short-term, high-interest loan

An Endover development.
An Endover development. Source: Siim Lõvi /ERR

Real estate developer Endover denies that recoursing to a crowdfunding platform in order to raise €785,000 over the short-term in order to cover prior obligations is a sign of financial difficulty, adding that this has been standard, long-term practice for the company, trade publication Ehitusleht reports.

The sum has been crowdfunded via the Estateguru platform, which carries an annual interest rate of around 12 percent.

Endover CEO Robert Laud told ERR the company has been working with a large number various sources of finance down the years, including crowdfunding platforms as well as banks, and that this diversification was a hedge against risk.

Laud said: "Additionally, we have also initiated bond programs for the Baltic countries. This has ensured that we have not had to depend on the conditions of just one or two financiers; thius has kept the risks associated with our financing model lower."

As to why Endover, which has a property portfolio stretching into the tens of millions of euros, required a short term loan of this kind and interest rate, Laud said it was a normal bridging-type of arrangement.

The existing bridging financing, taken for the period from the acquisition of a plot to the start of its development, had been refinanced against a development loan, he said.

"This is normal activity. Via crowdfunding, we have financed our projects in a similar way for almost 10 years, in fact since the option of crowdfunding emerged," the CEO added.

Laud said that each project is financed according to the most optimal solution for that case, which he said here meant crowdfunding.

The recent rise in the Euribor rate means that the difference between crowdfunding and bank loan rates is smaller than it was before, he said, while crowdfunding also helps raise the profile of a given project.

Endover requested the €785,000 via Estateguru on December 21, as a means of paying off outstanding obligations and continuing with construction work, Ehitusleht reports.

By crowdfunding the borrowing requirement, investors are offered a rate of return. This was 11.5 percent up to €15,000, 12 percent per year for €15,000-€49,000, and 12.5 percent for sums over €50,000.

Endover did not have any difficulty in reaching its required sum, doing so in the space of a day, after over 3,400 investors signed up.

Endover remortgaged 47 properties as collateral on the loan.

Laud told ERR that the company finished last year with the second-best volume of new sales it had ever experienced.

Around 90 percent of completed apartments and commercial space in their portfolio of developments have found an owner he added, while upcoming significant developments include the Volta Residentsid in Põhja Tallinn, the Rocca Towers in Haabersti, and the development in Riviera Viimsi in Haabneeme, just outside Tallinn.

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Editor: Andrew Whyte, Karin Koppel

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