Arco Vara’s oversubscribed bond issue sets a record among Baltic real estate developers

Real estate developer Arco Vara successfully completed a bond offering in September, attracting strong investor interest. The issue was oversubscribed 2.2 times, resulting in increasing the total issue size to 15 million euros. This marks the largest single bond issue ever carried out by a listed real estate developer in the Baltic stock exchange.

The public offering, originally with a base volume of 10 million euros, received subscriptions in the amount of 21.9 million euros. Due to oversubscription, Arco Vara will increase the total issue size to the maximum of 15 million euros and issue 150,000 bonds, each with a nominal value of 100 euros and an annual interest rate of 8.8%. The bonds will mature on 24 September 2028.

Kristina Mustonen, CEO of Arco Vara expressed gratitude to all investors for their trust and support. “The successful subscription of the bonds demonstrates that the market believes in our vision and in the team’s ability to deliver it,” she said. Mustonen emphasised that such achievement was possible thanks to the contribution of the Arco Vara team as well as co-managers LHV Bank and Redgate Capital.

Valeria Kiisk, partner at Redgate Capital, noted that Arco Vara’s bond issue is an important milestone in the context of the Baltic capital markets, as it is so far the largest standalone issuance by a real estate developer. “As an organiser, I am pleased that an issuer with a clear governance structure and outlook, and with a long history on the Tallinn Stock Exchange, has attracted considerable attention from both institutional and retail investors,” said Kiisk.

In the allocation process, priority was given to Arco Vara’s existing shareholders and bondholders, who received the full amount subscribed. Smaller retail investors were guaranteed at least 40% of their subscribed volume, while larger investors were allocated at least half of their order.

The main purpose of the bond issue is to finance the development of the Luther Quarter project, one of the largest urban development projects in central Tallinn. Starting next year, the construction will transform 15 plots of land in a historic industrial area into a modern residential and business environment that integrates homes, office and retail spaces, as well as a food street. “Luther Quarter will become a new attraction in the heart of Tallinn, where historical heritage meets contemporary architecture and living,” added Mustonen.

The bonds will be credited to investors’ accounts on or around 24 September 2025, with the first trading day on the Baltic Bond List of Nasdaq Tallinn expected to be 25 September 2025 or a nearby date.