INTERIM CONSOLIDATED REPORT FOR THE FOURTH QUARTER AND 12 MONTHS OF 2025 (UNAUDITED)
GROUP CEO'S REVIEW
The fourth quarter of 2025 in the Estonian real estate market was overall
stable, but fell short of the expectations set at the beginning of the year. The
market was no longer in a downturn phase; however, a clear growth cycle had not
yet begun either. Rather, it was a period of stabilization, during which both
buyers and sellers were adapting to the new economic environment and waiting for
clearer signals regarding interest rates and the overall improvement of economic
conditions.
The fourth quarter did not bring the anticipated stronger seasonal recovery.
Buyers remained cautious, and decision-making processes became longer, which was
reflected in extended sales periods and more modest transaction volumes.
Increased price sensitivity was noticeable in the market, and buyers compared
offers more thoroughly than before.
The sales pace and the number of interested buyers were weaker than forecasted.
Although prices did not decline significantly, the sales pace remained slow, and
purchase decisions were often postponed. In order to remain competitive, more
flexible payment terms, campaigns, or additional value-added benefits had to be
offered to maintain buyer interest and conclude transactions.
For Arco Vara, the fourth quarter was an active and development-rich period,
during which we focused both on launching new projects and on the consistent
advancement of existing developments. We also invested considerable effort in
preparing the pre-sales of the Luther project, developing its concept, and
preparing it for the construction phase.
As the sales targets set for the fourth quarter were not achieved, the quarterly
results were more modest than expected and remained below the same period last
year.
Rannakalda development: Four homes were sold in the fourth quarter. By the end
of 2025, 105 out of 113 apartments and commercial units in the project had been
sold. The goal was to sell all remaining units by the end of 2025; however, some
apartments remained unsold, and their sales will continue in 2026.
Soodi 6 development: Construction began on 30 June 2025. In the fourth quarter,
five preliminary purchase agreements were signed. By the end of 2025, a total of
22 out of 66 apartments and commercial units had been sold under preliminary
agreements. The project is attractive to young families, investors, and more
demanding clients, primarily due to its good location and well-designed,
functional layouts.
Spordi development: Construction also commenced in June. In the fourth quarter,
four preliminary purchase agreements were signed. By the end of 2025, 16 out of
56 homes had been sold under preliminary agreements. The Spordi development
enhances Arco Vara's portfolio with an excellent location in the Kristiine
residential district, an area with limited new developments but strong demand
for housing. The project incorporates modern and smart solutions.
Arcojärve development: The detailed spatial plan was adopted on 15 October. This
is a strategically important project that creates a foundation for further
investments in new inner-city developments.
Bulgaria development: Negotiations regarding the Bulgarian subsidiary are
ongoing, and relevant decisions are planned in the near future.
Kuldlehe development: In December, the fourth apartment in the building was
sold. Only the last apartment remains available in the project, whose exclusive
character and limited availability maintain the development's strong position in
Tallinn's premium segment.
Luther development: Pre-sales of the first phase commenced in December. Design
works and preparations for the start of construction are ongoing.
Arco Vara remains focused on developing high-quality and sustainable living
environments and on providing the best home-buying experience. Our mission is to
create modern, sustainable, and desirable living environments where clients can
shape their dream homes, and our vision is to be the first choice for
homebuyers.
KEY PERFORMANCE INDICATORS
The Group's revenue for the 12 months of 2025 amounted to EUR 7,685 thousand,
which is EUR 208 thousand higher than the revenue for the 12 months of 2024.
For the 12 months of 2025, the Group recorded an operating profit (EBIT) of EUR
195 thousand and a net loss of EUR 479 thousand. For the 12 months of 2024, the
Group recorded an operating profit of EUR 69 thousand and a net loss of EUR 624
thousand.
In Q4 2025, a total of 14 apartments were sold in the Group's development
projects, including 9 under preliminary purchase agreements and 5 under real
right contracts. During the full year of 2025, 48 apartments were sold, 28 under
preliminary purchase agreements and 20 under real right contracts. For
comparison, in Q4 2024, 14 apartments were sold in the Group's development
projects (9 apartments under real right contracts and 5 under preliminary
purchase agreements). During the full year of 2024, a total of 30 apartments and
3 commercial units were sold (22 apartments and 1 commercial unit under real
right contracts and 8 apartments and 2 commercial units under preliminary
purchase agreements).
As of 31 December 2025, the total assets of the Group more than doubled compared
to 31 December 2024. The main reason for the increase in total assets was the
acquisition of new development projects, including the Luhteri Quarter and the
Spordi 3a/3b development project.
The Group's net loan position (net debt) as of the end of 2025 amounted to EUR
37,649 thousand, which is EUR 23,012 thousand higher compared to the end of the
same period last year. The main reason for the increase in indebtedness was the
acquisition of the Luhteri Quarter, which was partially financed with a bank
loan. In addition, in the third quarter of 2025, bonds in the amount of EUR
15,000 thousand were issued. As of 31 December 2025, the weighted average
interest rate of the Group's interest-bearing liabilities was 8.90%.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
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In thousands of euros 12 M 12 M Q4 Q4
2025 2024 2025 2024
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Revenue from sale of own real estate 7,195 7,145 1,935 3,273
Revenue from rendering of services 489 332 125 118
Total revenue 7,685 7,477 2,060 3,390
Cost of sales -5,727 -5,707 -1,776 -2,857
Gross profit 1,957 1,770 284 534
Other income 5 7 2 7
Marketing and distribution expenses -447 -551 -119 -146
Administrative expenses -1,122 -1,127 -402 -156
Other expenses -197 -31 -192 -13
Operating profit 195 69 -427 226
Financial costs -563 -640 -168 46
Profit/ loss before tax -368 -572 -594 273
Income tax -111 -52 -98 -52
Net profit/ loss for the period -479 -624 -692 221
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
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In thousands of euros 31 December 2025 31 December 2024
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Cash and cash equivalents 2,784 1,720
Receivables and prepayments 6,420 5,690
Inventories 74,127 29,170
Total current assets 83,331 36,580
Receivables and prepayments 18 18
Investment property 2,296 2,296
Property, plant and equipment 551 622
Intangible assets 41 52
Total non-current assets 2,905 2,988
TOTAL ASSETS 86,236 39,568
Loans and borrowings 180 234
Payables and deferred income 9,063 4,487
Warranty provisions 347 127
Total current liabilities 9,590 4,848
Loans and borrowings 40,283 14,981
Total non-current liabilities 40,283 14,981
TOTAL LIABILITIES 51,552 19,829
Share capital 12,158 7,272
Share premium 16,399 3,835
Statutory capital reserve 2,011 2,011
Other reserves 28 28
Retained earnings 5,767 6,594
TOTAL EQUITY 36,363 19,739
TOTAL LIABILITIES AND EQUITY 86,236 39,568
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Darja Bolshakova
CFO
Arco Vara AS
www.arcovara.com (http://www.arcovara.com)