EfTEN Real Estate Fund AS unaudited results for 2nd quarter and 1st half-year 2025
Fund Manager's Commentary
In Q2 2025, the Baltic commercial real estate market continued to reflect
similar trends as in previous quarters. Transaction activity remained very low,
primarily due to a lack of equity capital, and modest economic growth did not
bring new major tenants to the market. On a positive side, the decline in
EURIBOR continued, resulting in reduced borrowing costs.
Despite intense competition in the tenant market, EfTEN Real Estate Fund AS
managed to decrease portfolio's vacancy by 0.7 percentage points during the
quarter, down to 3.7%. New tenants were added in the retail segment, and after a
long pause, the first faintly positive signs were also observed in the Estonian
office segment. On the other hand, the high volume of new developments in recent
years continues to pressure the Vilnius office market. In Q2, the Paemurru
logistics center within the fund's portfolio was completed, and construction of
Block C at the Valkla elderly home was finalized. As a result, the fund's sales
revenue increased by 4.5% compared to Q1 and by 3.1% year-on-year.
The fund's subsidiaries have floating interest rate bank loans. With the rapid
decline in EURIBOR, interest expenses have decreased significantly. However,
euro interest rates have now reached a level where further substantial decrease
is unlikely. In this context, the fund has started fixing interest rates-one
subsidiary entered into an interest rate swap agreement in June with a nominal
value of EUR11.6 million at a rate of 1.995%. Given favourable swap terms, the
fund plans to continue fixing interest rates for up to half of its loan
portfolio.
Financial Performance Overview
EfTEN Real Estate Fund AS earned consolidated sales revenue of EUR8.210 million
for Q2 2025 (Q2 2024: EUR7.957 million), and consolidated revenue for H1 2025 was
EUR16.068 million (H1 2024: EUR15.918 million). This represents a 3.1% year-on-year
increase for Q2 and a 1.0% increase for H1. Revenue increase was primarily
driven by new investments in the logistics and elderly care sectors.
The fund's consolidated net operating income (NOI) for H1 2025 was EUR14.845
million (H1 2024: EUR14.781 million), reflecting a 0.4% increase. The NOI margin
was 92% in H1 (2024: 93%), indicating that direct property-related costs
(including land tax, insurance, maintenance and improvement works), along with
marketing expenses, accounted for 8% of the fund's revenue (2024: 7%).
In Q2 2025, the fund earned a consolidated net profit of EUR4.025 million (Q2
2024: EUR2.442 million). The increase in net profit was primarily due to the
positive change in the fair value of investment properties, which amounted to
EUR546 thousand in June 2025, compared to a revaluation loss of EUR1.454 million in
the same period in 2024. Additionally, the decrease in interest expenses
resulting from the decline in EURIBOR had a positive impact on quarterly net
profit-interest costs totalled EUR1.697 million in Q2 2025, down from EUR2.237
million a year earlier.
The consolidated net profit for H1 2025 was EUR8.192 million (H1 2024: EUR6.250
million). Interest expenses decreased by EUR973 thousand, or 22%, year-on-year.
As of 30 June 2025, the Group's total assets amounted to EUR399.517 million (31
December 2024: EUR398.763 million), of which the fair value of investment
properties accounted for 95.6% (31 December 2024: 93.7%).
Real estate portfolio
As of 30 June 2025, the Group held 37 (31 December 2024: 36) commercial real
estate investments with a fair value of EUR382.018 million (31 December 2024:
EUR373.815 million) and an acquisition cost of EUR378.218 million (31 December
2024: EUR370.561 million). In addition to the investment properties owned by the
fund's subsidiaries, the Group also holds a 50% interest in a joint venture that
owns the Palace Hotel in Tallinn, with a fair value of EUR8.630 million as of 30
June 2025 (31 December 2024: EUR8.630 million).
In the first half of 2025, the Group invested a total of EUR7.657 million in both
new properties and the development of the existing real estate portfolio.
In March, the Group's subsidiary EfTEN Hiiu OÜ acquired a property located at
Hiiu 42 in Tallinn for EUR4 million. Under an existing lease agreement, the North
Estonia Medical Centre Foundation continues to occupy part of the property,
while a long-term (10 + 10 years) lease was signed for the remaining space with
Hiiu Südamekodu OÜ, a company within the Südamekodud AS group. In cooperation
with the tenant and Südamekodud AS, the building will be partially redeveloped
into a general elderly home called "Nõmme Südamekodu," which will eventually
accommodate up to 170 residents.
In H1 2025, construction of Block C at the Valkla care home was completed, and
phase II construction began at the Ermi elderly home in Tartu.
In April 2025, the Paemurru logistics center-acquired in autumn of the previous
year-was completed, with an additional EUR1.743 million invested in the property
during the first half of the year.
In the first six months of 2025, the Group earned a total of EUR15.571 million in
rental income, representing a 1% increase compared to the same period in 2024.
As of 30 June 2025, the vacancy rate for the Group's investment properties stood
at 3.7% (31 December 2024: 2.6%). The highest vacancy was in the office segment
at 16.2%, where leasing of vacant space has taken longer than in previous
periods. Compared to the end of last year, the most notable increase in vacancy
occurred in the office building at Pärnu mnt 102 in Tallinn, where an additional
2.2 thousand sqm of space became vacant.
EfTEN Real Estate Fund AS conducts regular valuations of its investment
properties twice a year-as of 30 June and 31 December. Based on the valuations
carried out by Colliers International in June 2025, the fair value of the
investment properties increased by 0.1%, resulting in a revaluation gain of EUR0.5
million for the fund.
Financing
In April 2025, subsidiaries of EfTEN Real Estate Fund AS increased their total
bank loan commitments by EUR7.32 million, reflecting improved financial capacity.
Additionally, bank financing totalling EUR2.67 million was used in the first half
of the year for the construction of the Valkla elderly home and the Paemurru
logistics center. In April, the fund's subsidiary EfTEN Hiiu OÜ entered into a
loan agreement of EUR3.25 million to finance the redevelopment of the building at
Hiiu 42. As of the end of June, this loan had not yet been drawn down.
Over the next 12 months, loan agreements of eleven subsidiaries will mature,
with a total outstanding balance of EUR40.641 million as of 30 June 2025. The LTV
(Loan-to-Value) ratios of these maturing loans range from 37% to 46%, and the
related investment properties generate stable rental cash flows. Therefore,
management of the Fund does not foresee any obstacles to refinancing.
As of 30 June 2025, the Group's weighted average interest rate on loan
agreements was 3.95% (31 December 2024: 4.89%), and the overall LTV stood at
41% (31 December 2024: 40%). All loan agreements of the fund's subsidiaries are
based on floating interest rates. To mitigate interest rate risk, one of the
Group's subsidiaries entered into an interest rate swap agreement in June 2025
with a notional amount of EUR11.6 million, fixing the 1-month EURIBOR at 1.995%.
As of 30 June 2025, the fund's interest coverage ratio (ICR) was 3.7 (30 June
2024: 2.9), with the improvement primarily driven by the decrease in EURIBOR.
Share information
As of 30 June 2025, the registered share capital of EfTEN Real Estate Fund AS
was EUR114,403 thousand (31 December 2024: unchanged). The share capital consisted
of 11,440,340 shares (31 December 2024: unchanged), each with a nominal value of
EUR10 (31 December 2024: unchanged).
The net asset value (NAV) per share of EfTEN Real Estate Fund AS was EUR19.98 as
of 30 June 2025 (31 December 2024: EUR20.37), reflecting a 1.9% decrease during
the first half of 2025. Excluding dividend distributions, the fund's NAV would
have increased by 4.1% over the same period.
As of 30 June 2025, 32.18% of the shares belonged to the fund's board and
management members and persons associated with them.
CONSOLIDATED STATEMEMT OF COMPREHENSIVE INCOME
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2nd quarter 6 months
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2025 2024 2025 2024
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EUR thousands
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Sales revenue 8 210 7 957 16 068 15 918
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Cost of services sold -389 -341 -895 -759
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Gross profit 7 821 7 616 15 173 15 159
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Marketing costs -187 -178 -328 -378
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General and administrative expenses -941 -880 -1 947 -1 819
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Profit / loss from investment properties fair
value changes 546 -1 454 546 -1 454
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Other operating income and expense 15 44 -22 86
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Operating profit 7 254 5 148 13 422 11 594
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Profit/-loss from joint ventures 87 -204 29 -254
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Interest income 35 64 118 165
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Other finance income and expense -1 739 -2 238 -3 542 -4 473
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Profit before income tax 5 637 2 770 10 027 7 032
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Income tax expense -1 612 -328 -1 835 -782
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Net profit of the financial year 4025 2442 8 192 6 250
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Total comprehensive income for the period 4 025 2 442 8 192 6 250
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Earnings per share
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- basic 0,35 0,23 0,72 0,58
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- diluted 0,35 0,23 0,72 0,58
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30.06.2025 31.12.2024
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EUR thousands
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ASSETS
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Cash and cash equivalents 13 449 18 415
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Short-term deposits 0 2 092
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Receivables and accrued income 1 671 2 055
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Prepaid expenses 137 138
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Total current assets 15 257 22 700
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Long-term receivables 133 154
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Shares in joint ventures 1 989 1 960
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Investment property 382 018 373 815
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Property, plant and equipment 120 134
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Total non-current assets 384 260 376 063
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TOTAL ASSETS 399 517 398 763
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LIABILITIES AND EQUITY
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Borrowings 45 418 30 300
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Derivatives 42 0
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Liabilities and prepayments 2 705 3 245
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Total current liabilities 48 165 33 545
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Borrowings 110 688 119 120
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Other long-term liabilities 2 090 1 928
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Deferred income tax liability 10 008 11 097
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Total non-current liabilities 122 786 132 145
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TOTAL LIABILITIES 170 951 165 690
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Share capital 114 403 114 403
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Share premium 90 306 90 306
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Statutory reserve capital 4 156 2 799
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Retained earnings 19 701 25 565
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TOTAL EQUITY 228 566 233 073
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TOTAL LIABILITIES AND EQUITY 399 517 398 763
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Marilin Hein
CFO
Phone +372 6559 515
E-mail: [email protected] (mailto:[email protected])