Estonian developer Hepsor issues new bonds at 9.5% interest rate

Real estate developer Hepsor has issued new bonds with a fixed annual interest rate of 9.5%, with interest paid quarterly. Each bond has a nominal value of €1,000, and the redemption date falls in September 2029. This marks the second issue under a €20 million bond programme launched in 2025; the programme's first issue had a base volume of €6 million but attracted investor applications worth €8.5 million.

Record construction volumes

Hepsor CEO Martti Krass said the company's development portfolio has expanded significantly over the past year, with 513 homes currently under construction simultaneously in Tallinn and Riga. Construction on a further 119 homes is planned to start by year-end. The new bond issue is meant to fund these projects, including the development of commercial space at the Veski Keskus shopping centre in Estonia.

Sales figures have also improved — in the first half of this year Hepsor signed 129 pre-sale agreements for apartments worth a combined €25.7 million, an increase of nearly 40% year-on-year.

Projects in Latvia and Estonia

In Riga, the company will complete 103 apartments this year in the "360° Dzelzavas Residences" project, 42 of which are already sold. The "Zaļā Jugla" project on Braila iela and an upcoming project on Starta iela will together add 290 new homes. In July, Hepsor signed a preliminary agreement to acquire land on Meža iela for a 48-apartment project, while the "Veidama kvartāls" development on Ganību dambis is planned to include more than 400 homes; construction on both projects is set to begin in the second half of 2027.

In Estonia, Hepsor will complete a 49-apartment project called "Manufaktuuri" in Tallinn this year, with 27 units already sold, and will begin building 3,551 square metres of commercial space at Veski Keskus, where 97% of the space is already under lease agreements. In partnership with Eften Capital, an 88-apartment project in Tallinn's Paevälja quarter will be completed in 2027.

Silver Kalmus, head of the bond department at LHV Bank, said the oversubscription of the previous issue demonstrated investor confidence in Hepsor.

Hepsor is a residential and commercial real estate developer listed on the main list of the Nasdaq Tallinn stock exchange, operating in Estonia, Latvia and Canada. Over fifteen years, the company has built more than 2,000 homes and around 44,000 square metres of commercial space, and its portfolio currently includes 29 development projects.