Riigi Kinnisvara AS/Estonian State Real Estate Ltd/

STATE REAL ESTATE MANAGEMENT. ESTONIAN WAY.

Kati Kusmin

December 2018

• Riigi Kinnisvara AS (Estonian State Real Estate

Ltd) is a property development and

management company

• Founded in 2001 for the more efficient

management of property belonging to the

public authorities (central government and its

institutions and agencies)

• 100% state-owned company, shares are

managed by the Ministry of Finance

• Key customers include ministries and sub-

agencies in their area of administration

Riigi Kinnisvara AS

THE ESTONIAN NATIONAL MUSEUM (2016), TARTU

• Assets in the value of ~600 million euros

• Number of employees ~ 240

• ISO 9001:2015 quality management and ISO

14001:2015 environmental management

certificate

• Three-star property maintenance

certificate issued by Estonian Property

Management Association

• Member of Corporate Social Responsibility

Forum, PuRE-net (The Public Real Estate

Network) and TWN (The Workplace Network)

Riigi Kinnisvara AS

LÄÄNE COUNTY UPPER SECONDARY SCHOOL

(RENOVATED 2013), HAAPSALU

The basis of existence of State Real Estate

Lower maintenace costs

due to economies of scale

Increased

professionalism in

competence center

Financial leverage by

inclusion of external

funds

Centralization and

efficient use of state’s real

estate portfolio

Clearer responsibility and

better transparency

State institutions can

focus on their main

functions

Business philosophy

EFFICIENCY, TRANSPARENCY, COI MODEL

We create most optimal, efficient and

sustainable real estate solution for

state as whole, adjusted for specialty

needs of state agencies.

We provide to the state agencies real

estate environment with excellent

quality, energy efficiency and the

prudent management.

VISION MISSION

COI strategy – Activity Model

• Professional

transactions

• More effective

management

• Overview of

portfolio

CENTRALISE

• Clarifying needs

(state)

• Proposing options

(RKAS)

• Selling disused

assets

OPTIMISE

• Entering into lease

agreements to

ensure agreed costs

and quality

• Investments in long

term perspective

ensuring best

possible quality

level

INVEST

Fact Sheet (2017)

Structure of the company

Functional structure

Ministry of Finance

(incl. information and analysis centre)

Real estate policyRegulations

Standards, norms

Centre of Excellence

(RKAS)

Users

(ministries, institutions)

Service providers (private sector builders,

administrators, etc.)

Other users

(lessees)

Other owner

(lessor)

Objectives, supervision

Management results

(reporting)

Information (accounting,

reporting, planning, etc.)

Financing

Services

Payments

Payments PaymentsServices

Services, objects

through public

procurement

Challenge from the nature of the business

CUSTOMER

(state authorities)

OWNER/FINANCING

(Ministry of Finance)

EXECUTOR

(RKAS)

Who’s needs are most important?

Who to prefer?

Who decides?

NEEDS vs

POSSIBILITIES

ONE STATE,

ONE WALLET

How to secure customer

satisfaction?

How to secure sustainable business?

MY (TAX) MONEY!

objectives,

financing,

supervision

service,

satisfaction

objectives,

supervision

The objectives of the strategy of the state’s real estate activity

(Ministry of Finance, 2007):

• Ensure the development of the real estate required by the state

to the level determined by contemporary requirements in the best

possible way.

• Ensure the comprehensive and coordinated management of the

development, administration and maintenance activity of

state’s real estate and the creation of the essential organisation

foundations, legal regulations, information systems and motivation

mechanism.

• Ensure the administration and maintenance of state’s real estate

in compliance with modern standards and in the most

economically effective manner.

• Ensure that disused real estate is sold in the most effective way

for the state.

Strategic goals

THE JOINT MINISTERIAL BUILDING

(2017), PPP PROJECT

• Clear and efficient services and

processes

• Sustainable and balanced

financial behaviour

• Satisfied customers

• Motivated and competent

employees

Key topics in the strategy for 2017-2020

• New Tallinn Prison complex and detention center

• Opening December 2018

• Investment 100 mEUR

• 14 buildings, total net area 70 000m2

• Places for 1200 prisoners

• Project length 61monts

• Viru Prison Y2008

• Tartu Prison Y2002

Prisons – „Mission completed“

Project duration 2012-2023

• Investment capacity ~110 mEUR

• Project is financed by Estonian government and EuropeanRegional Development Fund

• 1st State Gymnasium opened Y2012 in Viljandi, today 13 newor reconstructed schools are opened, this fall 3 openings

• 9 more new schools are under planning, design orconstruction phase

• Project Management (planning, desing, construction and procurement) is done by Riigi Kinnisvara AS

State Gymnasiums – More efficient school network

• Investment programm 27mEUR during 2019-2022

• 14 cities, 26 buildings

• mainly reconstruction projects, only 2 newbuildings under consideration

• Optimisation

• Decrease in total space estimated -28%

• Vacancy decrease

• Savings

• Avoiding unnecessary investments 14.9 mEUR

• Decrease in cost savings long term yearly 3 mEUR

• Bonus

• Sale of disused properties +3.7mEUR

• Mainly change management and communicationproject

State House – Multi Tenant Office Properties in Smaller Cities

• Public sales process

• Yearly 100-150 objects sold

• From apartments and office buildings tomanors and even historic sea fortress

• Patarei sea fortress – Europeanarchitectural heritage, built in 1840 under the orders of Nicholas I

• Premises covering 4 hectars have haddifferent functions – barracks and a prison as well

• Preliminary estimated sales period2018 1st half

Sale of Disused Assets

Operating areas

Thank you!

www.rkas.ee

info@rkas.ee

Tel +372 606 3400