For the launch, EfTEN’s new fund raised 33 million euros to invest in the Baltic rental apartment buildings
In the first financing round, institutional and professional investors contributed 33 million euros to the new EfTEN Residential Fund that will invest in rental apartment buildings in the Baltics, first of all in Latvia and Lithuania.
„The results of the fund’s first equity raising exceeded the expectations and subsequently we are ready to initiate new investments in the market of Baltic rental apartment buildings. By now, EfTEN Residential Fund has acquired a building in Kadaka Metsapark development in Tallinn with 112 apartments that will be completed by autumn 2021, and with the new capital we can start in the region the development of about two to three projects of comparable size. As said before, we are planning so-called bulk purchases during upcoming low tide in the construction market, which means that the fund will purchase entire residential buildings, not individual apartments. Bearing in mind the geographical dispersion of projects we plan the fund’s next investment in Lithuania, where we are conducting preliminary negotiations about several projects”, said Viljar Arakas, CEO of the fund management company EfTEN Capital.
According to Arakas, the first capital raising for the fund was met with great interest and in the next rounds the fund plans to approve applications from a larger number of retail investors. “Because in legal sense, our private fund is a complicated investment instrument, which would be above all suitable for institutional and professional investors, and we were not able to accept subscription applications by many retail investors”.
EfTEN Residential Fund, along with other commercial real estate funds of EfTEN, intends to offer investment opportunities to investors who believe in real estate and are seeking new investment possibilities due to the upcoming pension reform in Estonia. “Investors who would prefer to manage their investments by themselves would be able to invest pension savings in real estate through EfTEN, as of next autumn”, added Arakas.
The fund’s first investment is a residential building with 112 apartments and 93 parking lots of Kadaka Metsapark development in Tallinn, to be completed by autumn 2021. Mitt & Perlebach is the main contractor and the first apartments will be rented out in autumn 2021.
In the new fund, EfTEN puts a lot of emphasis on the energy efficiency of buildings as well as the digitalisation of business processes, so that all customer communication, building maintenance, ordering additional services and other operations are as easy and innovative as possible. A corresponding end user application for mobile phones as well for web will be developed, which will be integrated with the entire building management software.
EfTEN Residential Fund has been registered in Estonia as private fund (usaldusfond) with Viljar Arakas and Tõnu Uustalu being its General Partner’s Management Board members. The fund’s everyday operations are managed by Annika Ole, a longstanding member of EfTEN Capital’s team, who is the head of the residential property segment where Annika has 15 years of experience. The fund’s investment period will be five years from the founding and the leverage target will be 50% of the portfolio.
EfTEN Residential Fund is a private fund, currently offering investment opportunities to professional and institutional investors only. The investors of the first investment round were mostly private professional individuals and institutions that have invested in EfTEN funds before.