EfTEN Kinnisvarafond news
EfTEN Real Estate Fund earned EUR 10,2M in net profits in 2013
EfTEN Real Estate Fund, a Baltic commercial real estate fund, recorded 10,210 million euros in net profits in 2013 based on unaudited results. Profits in the previous year were 4,650 million euros. The sales revenue reached 10,225 million euros in 2013, showing a 90% increase compared to the previous year.
According to fund manager Viljar Arakas, the most important events for the fund in 2013 were successful exit from two of the first investments and expansion to Latvia. “From the development side, the high point was the successful renewal of Mustika Shopping Centre concept, completion of reconstruction and reopening at the end of last year. Mustika Shopping Centre is the single largest investment of the fund. Also the acquisition of Hotel Palace, located in Tallinn’s freedom square, and beginning renovation. The legendary Hotel Palace will reopen the doors to all visitors in June 2014,” Arakas said.
The value of fund’s assets, as at the end of 2013, was 167 million euros, including 147 million euros of real estate investments. These volumes make EfTEN Real Estate Fund the largest commercial real estate fund in the Baltics. During the year, the fund made 11 new investments with total value of 58.6 million euros, which is the same transactions volume number as investments made in 2008-2012.
The fair value of the fund’s real estate portfolio increased by 4.9 million euros based on revaluation on the balance day. The fund’s assets are valued based on single assets basis and the net yield of the portfolio is 8.44% according to expected net cash flow of 2014. The fund’s real estate investments as a total grew 3.5% more expensive. As of the end of 2013, vacancy of rental space was 3.9% and the gross profit margin of the fund’s business activities was 92%. The fund had a total of 173 tenants. The 15 largest tenants contribute in total 77% of rental revenue. The fund’s largest tenant is AS Prisma Peremarket, followed by Rautakesko AS.
EfTEN Real Estate Fund’s net value per share was 2.0161 euros as of 31.12.2013. The value of the fund’s share increased by 14.5% in the year. In three years, the share value has increased by 63.7%, and a total of 2.4 times since the launch of the fund in 2008.
The fund’s management board will propose to annual shareholders meeting to pay out 3.1 million euros of gross dividends from the 2013 profits. In addition to two successfully exited investments (Narva road 59 and Lõkke 4 office buildings in Tallinn), the board will propose decreasing the fund’s share capital by 2.1 million euros. Therefore investors can expect a pay out of 11.26 euro cents per share.
EfTEN Real Estate Fund’s portfolio is dominated by retail space, which makes up slightly over 50 per cent of the portfolio. Additionally the portfolio includes office spaces, storage and production facilities and other investments. According to Viljar Arakas, the company will continue the search for suitable commercial real estate development projects. “We are looking at potential investment projects in Estonia as well as Latvia. In order to make a positive decision in real estate development it is important to have appropriate detail plan as well as an anchor tenant in place. Due to the limited market and limited transactions, we cannot make bold long-term predictions but we are carefully optimistic in our plan of action,” Arakas said.
EfTEN Capital AS, the fund manager, established EfTEN Real Estate Fund, in year 2008. The fund invests in commercial real estate properties; the portfolio of commercial real estate has a total of 21 properties in Estonia, Latvia and Lithuania in total of 148 000 m2 of rental space, including office, accommodation, retail, and storage spaces as well as rental spaces used by the public sector. EfTEN Capital AS is an asset management company founded in 2008 by Estonian entrepreneurs, specializing mainly in commercial real estate investments and asset management. Estonian FSA licenses EfTEN Capital as a fund manager. The company also offers private real estate portfolio management.