Net asset value of EfTEN Real Estate Fund III AS as of December 31, 2021

The Net Asset Value (NAV) of EfTEN Real Estate Fund III AS was 19,1057 euros as of December 31, 2021 and rose by 4.2% in December. The net asset value of EPRA shares (net book value without deferred income tax liability and fair value of interest rate derivatives) was EUR 20.25 as of December 31, 2021. The EPRA NAV rose by 4.5% in December.

Fund manager’s comment, Viljar Arakas

The year 2021 was more successful than expected for EfTEN Real Estate Fund III AS. Despite the two waves of the coronavirus, we were able to increase both rental income and EBITDA in every segment of commercial real estate, even without taking into account the income from new investments. The vacancy rate in existing commercial space remained at a record low of less than 1%. The revaluation of the investment property valuation resulted in a one-off additional profit of 6.4 million euros in 2021 and the portfolio’s initial return on investment was 7.1%. In 2021, the fund generated a total of 4.55 million euros in free cash flow, of which, according to the fund’s dividend policy, the gross dividend would amount to 3.64 million euros. Taking into account the obligation to maintain a minimum cash balance from special credit conditions of the subsidiaries of the fund and the short-term liquidity requirements, the fund’s management board proposes to distribute more dividends than the dividend policy prescribes – a total of EUR 4.06 million (80 cents per share). Dividend payments in spring 2022 require both the approval of the banks and the approval of the general meeting.

As of December 31, 2021, the fund had 5.9 million euros of uninvested equity, the secure investment of which is a priority for the fund management. In view of the fact that the level of returns on transactions in the Baltic commercial real estate market has steadily declined in recent years, the fund management is not planning to organize a new share issue in the current financial year in view of the current situation. For investors who wish to continue investing in the real estate market to protect against inflation, the management company can consider the EfTEN United Property Fund, which invests not only in commercial real estate but also in real estate in general and is open to all small investors.

Financial overview

The consolidated sales of EfTEN Real Estate Fund III AS generated a total of EUR 1,233 thousand in December, 7.7% more than in November. The increase in sales is mainly due to the sales rents at the Saules Miestas shopping center. The fund’s consolidated EBITDA was EUR 418 thousand in December, which is EUR 527 thousand lower than in November, mainly due to the performance fee calculated for the management company from the 2021 share price.

In December, Colliers International, an independent real estate appraiser for the fund, carried out an investment property appraisal that increased the value of the fund’s property portfolio by 2.8% (4,423 thousand euros). Due to the revaluation gain on investment property, the fund’s net profit in December was also higher than usual at EUR 3,924 thousand (the fund’s net profit in November was EUR 707 thousand). The value of the fund’s real estate portfolio rose due to both a change in the exit yield from an average of 7.6% to 7.3% and more optimistic NOI (Net Operating Income from Rental Operations) expectations.

In the 12 months of this year the fund generated an EBITDA of 10.14 million euros (18.5% more than in the previous year) with sales of 12.9 million euros (20.9% more than in the previous year). The unaudited consolidated net profit of the fund for 2021 is 13.1 million euros (2020: 3.3 million euros).

The consolidated equity of EfTEN Real Estate Fund III AS amounted to EUR 96.914 million as of December 31, 2021 (December 31, 2020: EUR 71.483 million).

Marilin Hein
CFO
Phone: 6559 515
E-mail: [email protected]

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