In 2020, the turnover of SJSC “State Real Estate” was 37.99 million euros, while its profit amounted to 3.02 million euros. The overall financial performance of 2020 was influenced by the state support provided to tenants during the pandemic-related restrictions, waiving or reducing the rent for 182 of the 630 commercial tenants of the enterprise, amounting to a total of one million euros in discounts. The company has also made significant changes in the current revenue accounting procedure for properties, explained Renārs Griškevičs, Chairman of the Board of SRE.
“Our priority in 2020 was and continues to be the provision of support to our customers during these exceptional circumstances. Consequently, it has affected SRE’s turnover and profit figures, which have decreased slightly. Using the available state instruments, we have been able to provide significant support to those tenants who, due to the pandemic, are currently unable to conduct business at the leased properties. According to the decision by the government, the support to tenants continues. Overall, 2020 has been a successful year for the company – despite the factors explained above, SRE has ensured the continuity of business. Substantial remediation of state real estate properties took place, reducing the number of degraded buildings in the SRE portfolio by 77 sites and publicly commissioning 17 completed development projects of national importance with a value of 29.5 million euros. The work at the construction sites currently continues as planned, in compliance with the applicable safety requirements,” says R. Griškevičs.
Taking the discounts granted during the Covid-19 emergency and the significant changes in the revenue accounting procedure (non-inclusion of provisions for planned repairs in the net turnover) into account, the net profit of the company in the previous year was 3.02 million euros (a decrease of 2.18 million euros). The company has provided support to tenants in accordance with Regulation of the Cabinet of Ministers No. 180 of 2 April 2020 “Regulations on Application of Exemption or Reduction of Rent for Properties of Companies of a Public Entity and Controlled by a Public Entity due to the Spread of Covid-19”.
One of the medium-term operational challenges of SRE is related to a high-quality state real estate portfolio. The priority of SRE is the preservation and development of valuable state real estate property, separating sites required by the public administration from unsuitable ones and those making a loss. In the last two years, the public sector has undergone significant, qualitative changes in terms of real estate management – raising of issues of construction efficiency and safety at the national level, rapid development of digitalisation of construction and real estate management processes, as well as significant growth in the segment of completed heritage sites. In 2020, the company developed a real estate portfolio development strategy for 2020-2022. Part of the strategy is a common set of regulations for actions with state real estate properties managed by SRE. This enables the implementation of principles of sustainable management and development scenarios and provides a clear overview of each real estate property.
In total in 2020, SRE sold 92 properties for 3.5 million euros, including 59 buildings degrading the environment at 28 addresses. 4 buildings at 2 addresses were demolished. 9 buildings have undergone the renovation of facades and roofs and elimination of signs of degradation, and 5 sites were transferred into the possession of other public entities (including associations).
2020 saw the development of guidelines for the implementation of BIM (Building Information Modelling) in public procurements, as well as the initial implementation of BIM in SRE procurements. A BIM pilot project was implemented in the renovation of the Office of the Prosecutor building at Aspazijas Boulevard 7 that took place in 2020. The building was commissioned four months before the planned deadline. In 2021, SRE is already implementing twelve projects featuring BIM components, including the reconstruction of the Riga Castle fortress, the historic building of the New Riga Theatre, development of the Large Guild renovation project, renovation of the historic building in Ventspils at 2 Kuldīgas Street and its adaptation for use public and municipal use, upgrading of the Latvia-Belarus border crossing point “Silene–Pāternieki” among others.
The most important development projects completed by SRE in 2020 were the adaptation of the historic police building at Aspazijas Boulevard 7 to the needs of the Office of Prosecutor, containing 9 departments of the prosecutor’s office, energy efficiency projects at the President's residence in Jūrmala, Latvian National Archives building in Daugavpils, 9 Komandanta Street and S. Broks Daugavpils Secondary Musical School at 2a Kandavas Street. Renovation of facades, restoration of windows and the entrance portal has been performed at the Museum of the History of Riga and Navigation at 2 Palasta Street in Riga, the Museum of Pharmacy at 13 Vāgnera Street and the popular exhibition hall “Arsenāls”. Facades were renovated for important buildings such as the Ministry of Economics at 55 Brīvības Street in Riga and the Ombudsman Office at 25 Baznīcas Street in Riga. Restoration of roof and windows, as well as the entrance portal and staircase was completed at the administration building at 1 Smilšu Street in Riga.
SRE is currently implementing 118 infrastructure development projects worth approximately 180 million euros and working on 25 new project ideas. Work continues on key development projects such as the reconstruction of the Museum of the Occupation of Latvia, including the new annex “The Building for the Future”, construction of the monument for victims of the Soviet occupation and remediation of Strēlnieku Square in cooperation with the City of Riga, reconstruction of the historic building of the New Riga Theatre at 25 Lāčplēša Street in Riga, improvement of infrastructure at the border crossing points “Terehova”, “Pāternieki” and “Silene”, as well as energy efficiency improvement projects at buildings of public importance – the Dailes Theatre at 75 Brīvības Street in Riga, the building of the Latvian Puppet Theatre at 16/18 K. Barona Street in Riga, the building of the Valmiera Drama Theatre at 4 Lāčplēša Street in Valmiera and the Latvian State Archives building at 14 Skandu Street in Riga. Work is nearing completion in the design phase of 3 creative quarters – prototyping workshop complex at 13 A. Briāna Street in Riga, the Interdisciplinary Culture Centre at 58a Miera Street and the stage set centre of the Latvian National Opera and Ballet near Šķirotava station, and their construction is expected to start this year. Work also continues on the development of the Large Guild renovation project, which is expected to be completed in late 2021.
The company provides professional real estate management and administration for approximately 450 real estate properties with 1400 buildings of 1.1 million square metres and more than 4000 land properties with an area of 10 million square metres. As a testimony to good governance and sustainable operations, the company has received a Gold award in the Sustainability Index by the Institute of Corporate Responsibility and Sustainability. SRE was founded in 1996 and its sole (100%) shareholder is the Ministry of Finance of the Republic of Latvia.
