The volume of development and maintenance projects of national importance entrusted to SJSC “State Real Estate” (SRE) increased by 17 per cent during 2023, i.e. from 88 projects worth 355 million at the beginning of the year to 110 projects in progress in 2024, with total investment reaching 410 million euros. According to Renārs Griškevičs, Chairman of the Board of SRE, the turnover of the company will reach 46.02 million euros in 2023 and thus will be maintained at the level of 2022.
Building maintenance projects worth 2.16 million euros and development projects worth 48.08 million euros were completed last year under the leadership of SRE. The abovementioned projects include the renovation of the Riga Castle convent, improvement of the Daile Theatre Square, reconstruction of the Latvian Puppet Theatre, renovation of the Permanent Representation of the Republic of Latvia to the European Union in Brussels, and also a 112-kilometre-long stretch of the land fence on the Latvian-Belarusian border.
One of the current priorities for the company is the construction of a fence and infrastructure at the Latvian-Belarusian and Latvian-Russian external borders. The border fence with Russia is scheduled to be completed in priority sections by the end of 2024; however, construction of certain particularly difficult sections (~28 km) will continue in 2025. On the Belarusian side, the remaining part of the border fence along public rivers will be completed by the end of July. Such projects implemented under the leadership of SRE as the reconstruction and energy efficiency improvement of Valmiera Drama Theatre, the establishment of the culture and creative industries support centre TAB FAB at 58a Miera Street in Riga, the prototyping workshop “Riga Makerspace” at 13 A. Briāna Street, and also the home of the Literature and Music Museum at 6 Mārstaļu Street in Riga, where the construction works are planned to be completed by autumn, are also in their final stages.
“Overall, the results of the company last year can be evaluated as very good because SRE not only managed to achieve, but also to exceed the pursued financial objectives and to implement development projects of national importance and the construction works of the external border of the country entrusted to SRE as planned. Intensive efforts were also made to ensure efficient management of State’s property portfolio and to organise the overall portfolio of State’s property portfolio. Since last year, SRE together with the Ministry of Finance have been working on behalf of the Government on the assessment of the total State-owned real estate and the development of a unified policy, as a result of which a new model of State real estate management could be developed this year,” Renārs Griškevičs reveals.
According to the approved annual report, the turnover of SRE in 2023 reached 46.02 million euros, thus maintaining the level of 2022, but exceeding the budget plan by 3 per cent. In turn, the net profit of SRE in 2023 has reached 1.805 million euros which exceeds the budget plan by 12 per cent. SRE will pay 1.15 million euros or 64 per cent of its net profit of 2023 as dividends into the State budget, whereas the remaining part of the profit will be allocated for the maintenance and development of the economic activity of the company. In the twelve months of last year, EBITDA amounted to 16.7 million euros.
Being the largest manager of State-owned real estate and managing 15 per cent of State-owned real estate, SRE is currently entrusted to prepare a report to the Government whereafter it will be decided whether all of the State-owned real estate is necessary for the performance of direct State functions and whether the State should consider the possibility of selling some of the real estate, thus gaining financial resources for the development of the State-owned real estate, thereby increasing the value thereof.
Rental and construction brokerage revenues of the company have increased by 0.42 million euros in 2023, whereas national real estate disposal revenues have decreased by 0.69 million euros. Last year, sales contracts were concluded for national properties worth 8.7 million euros and SRE properties worth 9.5 million euros. One of the most important factors affecting financial results last year was the lower volume of purchases of buildings and land and the increase in bank interest payments on long-term borrowings.
The number of properties managed by SRE fluctuates as the company continuously takes them over from ministries, local governments, and other national authorities, sells them, hands them over to local governments, and also takes other actions to ensure the efficient management of national properties. In accordance with the strategy of the company, whenever a property is taken over by SRE, it undergoes an assessment to determine its condition, a survey of institutions takes place to identify the possibility of using the property for public administration, and also a review is organised with regard to scenarios for the sustainable development of the properties. Real estate properties not required for the performance of national functions are sold by SRE.
One of the challenges faced by SRE is the redevelopment of degraded structures where the most frequent solution is to sell or demolish such buildings. Every year, the company takes over environmentally degrading structures, e.g. 81 degraded structures at 44 addresses, mostly ownerless properties, were taken over in 2023. Nearly four-fifths or 83 per cent of such structures are environmentally degrading structures of category B with a total area of 58.45 thousand square metres and the overall technical condition thereof is assessed as pre-failure condition with deterioration ranging from 61 per cent to 80 per cent. Last year, the team managed to give a new development opportunity to 35 buildings at 24 addresses, i.e. eight buildings were demolished, three properties cleaned up, 24 properties were sold, including the Īle sanatorium complex, buildings of Ērgļi Vocational Secondary School, buildings at 11 Merķeļa Street and 7 Audēju Street in Riga, degrading administrative buildings in various parishes of Latvia.
All achievements of SRE in 2023 are also described in the SRE Sustainability and Annual Report.
About SRE
SRE provides professional real estate management and maintenance for 419 building and structure properties, comprising 1049 buildings with a total area of 0.98 million m2, as well as land beneath structures with a total area of 585 ha, and 3385 land properties with a total area of 937 ha. SRE is one of 17 Latvian companies that received the highest platinum award in the Institute for Corporate Responsibility and Sustainability’s Sustainability Index 2023, demonstrating good governance and sustainability of its operations. The company was founded in 1996 and the Ministry of Finance is the sole shareholder thereof.
