TALLINN – Three Estonian banks have reneged on a previous decision to loan several hundred million kroons to AS Lahekalda, developers of Tallinn's posh waterfront residential district.
According to Estonian business newspaper Aripaev, Hansapank, Hoiupank and Forekspank have refused to finance the project because they deemed it too risky.
Lahekalda is building a new housing area in Maarjamae at a cost of more than 1 billion kroons ($69 million). Developers have planned to build up to1,000 new apartments in five years in a 16.8-hectare waterfront residential area in Tallinn. The size of the apartments varies from 43 to141 square meters. The price per square meter ranges between 12,000 and 13,000 kroons.
"The idea of our company is to create a completely separate living environment where a normal apartment could be bought by a person with an average salary," said Lahelkalda council head Karl G. Wellner. "The prices of Lahekalda start from 600,000 kroons. The biggest apartments cost up to 2 million kroons."
According to the Postimees daily, Wellner said the demand for apartments exceeds the supply while the investments in office premises, on the other hand, have been too high.
Wellner, also said the project will continue as planned, despite the setback.
"If Estonian banks turn us down, we will go to foreign banks," he told the ETA news agency.
According to the company's marketing director, Tiina Uudelt, the banks were interested in lending money during the previous negotiations but are postponing the initial financing decision for some time because they have money problems.
"The decision was postponed and will be discussed again in the future," said Uudelt. According to Uudelt the company is negotiating outside Estonia and this takes more time.
According to Postimees, Wellner is disappointed with the Estonian bankers because they talk too much about their clients and the facts in the newspapers are wrong. He points out that the Estonian banks have not refused to lend money to the Lahekalda project but have merely postponed the decision.
Hansabank's Kristi Liiva declined to comment because it is a matter concerning the client and the bank. She agreed that there are problems with obtaining loans, but this should not be handled separately from the Estonian general situation.
According to Aripaev, Lahekalda has invested 50 million kroons and the borrowing needs are about 500-600 million kroons.
The share capital of Lahekalda is 50 million kroons. Lahekalda is owned by Kodumajagrupp Ltd., Kawe Maja and a New York based investment firm Gruss & Co.
