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EfTEN Real Estate Fund news

EfTEN acquired HORTES garden centre property in Tallinn

A public closed-end alternative investment fund EfTEN Real Estate Fund III AS acquired Hortes gardening centre property in Laagri, Tallinn with a sale-and-leaseback transaction from AS Hortes, a Livonia Partners portfolio company. Total investment amounts to 3.1 million euros.

According to EfTEN Real Estate Fund III AS’ fund manager Viljar Arakas, the investment with great location, attractive lessee with long term contract, sustainable rent level and appropriate yield fits perfectly with the fund’s portfolio. „Hortes is a unique kind of retailer having widely recognised brand name and strong market presence in Tallinn. EfTEN is happy to start the cooperation with Hortes and looking forward to expanding that to new location as well,“ added Arakas.

Hortes is Estonia’s leading retail brand for garden and home products and biggest garden centre in the Baltics. Hortes garden centre offers the Baltic region’s broadest selection of indoor and outdoor plants, gardening tools and supplies, as well as home and pet products. “Our strategy is to focus on the development of the retail business. The Hortes retail concept has proven itself and we are ready to expand our business faster,” says CEO Kristian Kalgan, who has led Hortes since 2007.

EfTEN Real Estate Fund III acquired Hortes gardening centre property constructed in 2006, located on the outskirts of Tallinn at Seljaku 4a, 4b and 2a with a sale-and-leaseback transaction. Total transaction value is 3.1 million euros with a long term rental contract with Hortes. The property acquired is 15 598 square metres in total with 3 470 square metre building and an outdoor sales area and a parking lot with 146 parking spaces.

Alternative investment fund EfTEN Real Estate Fund III AS organised third public offering of shares in Spring 2017, raising 6.3 million euros. In addition to Hortes gardening centre located in Laagri, the fund is investing into Selver grocery store to be opened also in Laagri, Tallinn. Additionally, the capital raised with the third public offering is planned to be invested into reconstruction works at DSV logistics centre in Riga.

The capital raised with the first two public offerings of shares in 2015 and 2016 has been invested in the following investment objects in the Baltic States: Saules Miestas shopping centre, Ulonu business centre in Vilnius and Laisves 3 office building, also DSV logistic centres in Riga, Vilnius and Tallinn. As of March 31, 2017, the Fund’s gross asset value is 76.3 million euros, with 29.9 million euros of owner’s equity.

EfTEN Real Estate Fund III AS is the only fund, managed by EfTEN Capital, that makes investments to the large-scale commercial real estate projects accessible to retail investors, characterized by attractive returns from stable and predictable cash flows and moderate capital growth. The Fund’s leverage, according to prospectus confirmed by Estonian Financial Supervision Authority, is limited to a maximum of 65 percent of the real estate acquisition value. Annual expected equity return is 15%. EfTEN Real Estate Fund III AS is not a guaranteed fund.

From annual free cash flow the Fund pays 80 percent out in dividends. Annual expected dividend rate is 4 – 8 percent. For 2016 shareholders received net dividend of 63 cents per share – in total 1 502 716 euros (in 2015, 29.7 cents per share).

Regulated by Estonian Financial Supervision Authority, EfTEN Real Estate Fund III AS term is 10 years, divided into 3-year investment period, 5 years holding and 2 years for exit. The Fund will potentially be listed in Baltic Stock Exchange market after investments period.

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