The decline in euro interest rates has quietly increased transaction activity in the Baltic real estate market, positively impacting the financial results of EfTEN Real Estate Fund AS. Therefore, in the third quarter of 2024, the Fund’s consolidated interest expense decreased by more than EUR 60,000 compared to the previous quarter. From a trading perspective, the third quarter was the most active in recent years. The Fund’s subsidiary EfTEN Tähesaju tee OÜ sold the Tähesaju Hortes property and the Fund established two new wholly-owned subsidiaries to acquire the logistics centers Paemurru and Härgmäe in Tallinn and Tallinn, respectively. Harjumaa. The acquisition cost of the two new properties will be almost €15 million upon final completion. Construction work was completed in the third quarter of this year and the ERM elderly care facility also opened next door in Tartu.
Further interest rate declines are expected. This has already had a positive impact on the listed stock and bond prices of real estate sector companies on the Scandinavian Stock Exchange. These developments have made Nordic-owned banks with operations in the Baltics once again open to lending to the real estate sector. According to the fund manager, this provides a good basis for overcoming the slump of the past few years in the Baltic state’s commercial real estate market. However, the recovery will not be immediate as large local real estate investors currently lack capital and there is no sign of foreign investors entering the local market. The market remains what is called a buyer’s market, and it is possible to acquire high-quality real estate at affordable prices. The fund has therefore announced its intention to begin issuing new shares in autumn 2024, with the aim of raising up to €30 million in additional capital. At the extraordinary general meeting held on October 16, 2024, the shareholders granted the Supervisory Board and the management the necessary powers to organize the share issue.
Financial overview
Consolidated revenue for the EfTEN real estate fund AS in the third quarter of 2024 was EUR 8,006,000 (Q3 2023: EUR 7,965,000). The consolidated sales revenue of EfTEN Real Estate Fund AS for the nine months of 2024 was €23,924,000 (2023: €23,714,000). The Group’s net rental income for the nine months of 2024 totaled €22,203,000 (2023: €22,201,000). Group net profit for the same period amounted to €10,104,000 (2023: €6,880,000).
The consolidated net rental income ratio for nine months 2024 was 93% (2023: 94%). Therefore, costs directly related to property management (including land tax, insurance, maintenance and improvement costs) and distribution costs accounted for 7% (2023: 94%). 6% of sales revenue).
The Group’s assets at 30 September 2024 amounted to €377,723 million (31 December 2023: €380,944 million), with investment property fair value of 96% (31 December 2023: €380,944 million). :94%).
investment portfolio
As of the end of September 2024, the Group owned 34 (31 December 2023: 35) commercial investment properties, with a fair value at the balance sheet date (31 December 2023: 300 million yen). 57,916,000 euro) and acquisition cost. 356,156,000 euros (31 December 2023: 354,408,000 euros). Furthermore, in September 2024, the Group entered into a purchase agreement for the Helgmeh Logistics Center and the Paemuru Logistics Center and made an advance payment under the contract totaling EUR 2,173,000. In October 2024, after the balance sheet date, the Group’s subsidiary entered into a real estate contract for the Helgmee property and received an additional EUR 8.3 million for the investment property, in addition to the advance payments made previously (totaling EUR 8.8 million). I paid.
In September 2024, the Group sold the Tähesaju Hortese property for EUR 4,675,000.
In addition to the investment properties held by the Fund’s subsidiaries, the Group also holds a 50% stake in the joint venture that owns the Palace Hotel in Tallinn, whose fair value as at 30 September 2024 (31 December 2024) amounted to 8,543,000 euros. 2023: 9 million euros).
In the nine months of 2024, the Group generated rental income totaling €23,043,000. This was a 1% increase over the same period in 2023. The largest increase in rental income was in shopping centers. In the office division, rental income decreased due to the expiration of the lease agreement with the anchor tenant of the office building “Menulio 11” in Vilnius.
As of September 30, 2024, the vacancy rate for investment properties belonging to the Group was 3.2% (December 31, 2023: 2.6%). The office sector has the highest number of vacancies (13.1%), and vacant rental properties are taking longer to fill than before.
financing
For nine months in 2024, the Fund’s subsidiaries EfTEN Autokeskus OÜ and EfTEN Jurkalne SIA have extended the financing agreement. Within the next 12 months, the loan agreements of two of the Group’s subsidiaries will expire, resulting in a total balance of EUR 8,025 thousand as of September 30, 2024. The LTVs of the expiring loan contracts are 28.3% and 46.5%, and both investment properties have stable rental cash flows, so group management says there is no problem in extending the loan contracts.
The weighted average interest rate of the Group’s loan contracts is 5.35% as of September 30, 2024 (December 31, 2023: 5.91%), and the LTV (loan to value) is 41% (December 31, 2023). :42%). All financing agreements of the Fund’s subsidiaries are linked to floating interest rates.
In October 2024, after the balance sheet date, the Group entered into two financing agreements with a total amount of EUR 7.3 million related to the purchase of the Helgmee logistics center. This includes a EUR 2.8 million loan agreement at 2.5% + 6 months EURIBOR maturing on 31 December 2024 and a EUR 4.5 million loan agreement maturing at 1.8% + 6 months EURIBOR. It will be. September 27, 2029.
Stock information
The net value of the shares in EfTEN Real Estate Fund AS at 30 September 2024 was €20.15 (31 December 2023: €20.21). The net value of EfTEN Real Estate Fund AS shares decreased by 0.3% in the nine months of 2024. In April 2024, the Fund paid dividends totaling €10.82 million. Without the profit distribution, the net value of EfTEN Real Estate AS shares would have increased by 4.6% over the nine months of this year.
As of September 30, 2024, the Fund held 10,819,796 shares.
Consolidated statement of comprehensive income
III Quarter 9 months 2024 2023 2024 2023 Thousand euros Revenue 8,006 7,965 23,924 23,714 Cost of services sold -473 -363 -1,232 -1,120 Gross profit 7,533 7,602 22,692 22,594 Marketing expenses -111 -105 – 489 -393 General and administrative expenses -860 – 841 -2,679 -2,568 Gains and losses on fair value changes on investment properties -415 0 -1,869 -6,182 Other operating income and losses -41 10 45 23 Operating income 6,106 6,666 17,700 13,474 Joint venture income and losses 83 84 – 171 -25 Interest income 51 77 216 97 Others Financial income and expenses -2,171 -2,156 -6,644 -5,693 Profit before tax 4,069 4,671 11,101 7,853 Income tax expense -215 -236 -997 -973 Net income 3,854 4,435 10, 104 6,880 Total consolidated profit for the reporting period 3,854 4,435 10,104 6,880 1 Earnings per share – Basic 0.36 0.41 0.93 0.64 – Diluted 0.36 0.41 0.93 0.64
Consolidated statement of financial position
2024.09.30 2023.12.31 Thousand euros Assets Cash and cash equivalents 10,637 14,712 Current account 2,142 3,400 Receivables and accrued income 1,603 2,360 Prepaid expenses 200 106 Total current assets 14,582 20,578 Fixed receivables 355 214 Total Venture company stock 1,907 2,078 Investment real estate 360,750 357,916 Tangible Fixed assets 129 158 Total fixed assets 363,141 360,366 Total assets 377,723 380,944 Liabilities and equity Borrowings 13,809 16,907 Payables and advances 3,110 3,417 Total current liabilities 16,919 20,32 4 Borrowings 132,094 0,849 Other non-current liabilities 1,832 1,790 Deferred tax liabilities 8,896 9,283 Fixed Total liabilities 142,822 141,922 Total liabilities 159,741 162,246 Capital 108,198 108,198 Stock premium 84,721 84,721 Statutory reserves 2,799 2,749 Retained earnings 22,264 23,030 Total equity 217,982 ,698 Total debt and equity 377,723 380,944
Marilyn Hine
CFO
Phone +372 6559 515
Email: marilin.hein@eften.ee
EREF_9kuud_vahearuanne_2024eng
