Comment from Fund Manager Viljar Arakas

Despite a challenging economic environment, EfTEN Real Estate Fund AS successfully increased both total rental income and EBITDA in 2024. The fund’s portfolio expanded with the addition of two new logistics properties, and we are planning to grow in the care home segment. EfTEN Real Estate Fund AS is primarily a dividend share. For 2024, we have set the goal to distribute dividends of €1.10 per share, which corresponds to 5.7% of yesterday’s closing share price.

The fund’s management intends to increase the leverage of investment properties where the current loan-to-value (LTV) ratio has decreased significantly below the guidelines of the fund’s financing policy. While the leverage ratio for real estate funds in Europe is on average approximately 50% of the market value of assets, EfTEN Real Estate Fund AS’s portfolio-wide LTV is 40% as of the end of 2024.

Financial overview

Based on unaudited results, EfTEN Real Estate Fund AS generated €31.079 million in consolidated rental income in 2024 (2023: €30.6 million) and €26.454 million in EBITDA (2023: €26.143 million). Consolidated rental income increased by 1.5% year-over-year, and EBITDA by 1.2%.

In 2024, the fund's consolidated EBITDA exceeded interest expenses by 3.0 times (2023: 3.3 times). The weighted average interest rate on bank loans decreased to 4.89% by year-end, a decrease of 1.01 percentage points compared to December 31, 2023. The debt service coverage ratio (DSCR) for the fund's real estate portfolio was 1.7 in 2024 (2023: 1.8).

EfTEN Real Estate Fund AS invested a total of €12.050 million in new properties in 2024, acquiring the Härgmäe and Paemurru logistics centers in Tallinn. Additionally, €4.467 million was invested to the construction of Ermi and Valkla elderly care homes, and €4.931 million was invested in other projects within the fund’s real estate portfolio.

As of the end of 2024, the fund’s consolidated vacancy rate was 2.6%, remaining unchanged compared to 2023. The highest vacancy rate was in the office segment (11.3%), while the logistics segment had a vacancy rate of just 1.0%, and the retail segment 0.5%.

In 2024, EfTEN Real Estate Fund AS generated adjusted cash flow (EBITDA minus interest expenses and principal repayments) of €11.108 million. Based on the fund’s dividend policy, this allows for a gross dividend of €0.7768 per share.

The fund’s management plans to refinance several bank loans in the spring of 2025. These loans currently have significantly  lower Loan-to-Value (LTV) ratio compared the guidelines of the fund’s financing policy, with operational cash flows exceeding loan and interest payments by more than twice. Management estimates that refinancing could enable an increase in the dividend payment to as much as €1.10 per share (net).

In December 2024, EfTEN Real Estate Fund AS earned €2.861 million in consolidated rental income, €259 thousand more than in November. EBITDA for December amounted to €2.448 million, an increase of €250 thousand, compared to the previous month. The growth in rental income was primarily driven by turnover-based rents from shopping centers.

In December, the independent appraiser Colliers International conducted its annual valuation , resulting in a €831 thousand (0.2%) increase in the fair value of the fund’s investment properties as of 31.12.2024..

In December 2024, the fund issued 620,544 new shares at a price of €19 per share, raising €11.790 million. Costs associated with the share issuance amounted to €160 thousand.

As of December 31, 2024, the net asset value (NAV) per share of EfTEN Real Estate Fund AS was €20.3729, and the EPRA NRV was €21.2213 per share. In December, the NAV per share was affected by several one-off factors: a share issue at price below the net asset value, costs related to the share issue, accounting of deferred income tax expenses related to the planned dividend distribution, and regular revaluation of investment properties. The NAV per share decreased by 0.2%, and the EPRA NRV by 0.1% in December, partly due to the difference between the share issuance price and the fund’s NAV, as well as costs related to the issuance accounted directly in equity. Without the above-mentioned one-off items, the net asset value of the fund's share would have increased by 0.8% in December.

Marilin Hein
Chief Financial Officer
Tel. +372 6559 515
E-mail: marilin.hein@eften.ee

Attachment

• EREF_reports_monthly_12.2024