On the balance sheet date of 01.01.2023, EfTEN Real Estate Fund AS as the acquiring Fund (formerly EfTEN Real Estate Fund III AS) merged with EfTEN Kinnisvarafond AS. After the merger, consolidated assets of the fund increased by 211 million euros, i.e. from 182 million euros to 393 million euros, and the equity capital of the fund increased by 126 million euros, i.e. from 104 million euros to 230 million euros. The merger was registered in the business register on 28.02.2023.
As a result of the merger, the investment portfolio of EfTEN Real Estate Fund AS was added to the EfTEN Kinnisvarafond AS subsidiaries. 17 new investment properties in Estonia, Latvia and Lithuania with a fair value of 196.3 million euros and one investment property owned by a 50% joint venture with a fair value of 10 million euros were added. After the merger, the fund’s investment portfolio is more diversified across sectors and tenants.
EfTEN Real Estate Fund AS’i consolidated sales income for the first quarter of 2023 was 7.788 million euros (2022 I quarter: 3.458 million euros). The Group’s net rental income in the first quarter of 2023 was 7.298 million euros (2022: 3.324 million euros). The Group’s net profit for the same period was 4.634 million euros (2022: 2.278 million euros).
Consolidated net rental income margin for the first quarter of 2023 was 94% (2022: 96%), so costs directly related to property management (incl. land tax, insurance, maintenance and improvement costs) and marketing costs accounted for 6% (2022: 4%) of sales.
The Group’s total assets as of 31.03.2023 amounted to 395.993 million euros (31.12.2022: 181.956 million euros), of which the fair value of investment properties formed 92% (31.12.2022: 93%) of the total assets.
Investment portfolio
As of the end of March 2023 the Group has 35 (31.12.2022: 18) commercial investment properties with a fair value of 365.977 million euros (31.12.2022: 168.875 million euros) and the acquisition cost is 325.583 million euros (31.12.2022: 151.426 million euros). In addition, the Group’s joint venture owns the Palace hotel in Tallinn with the fair value of 10.075 million euros as of 31.03.2023.
In the first quarter of 2023 the Group’s rental income amounted to 7.499 millions euros. Rental income calculated on a comparable basis in the first quarter of 2023 totaled 3.427 million euros, which is 4% more as compared to the same period in 2022.
Financing
Within the next 12 months, the loan agreements of eight subsidiaries of the group will expire, the balance of which as of 31.03.2023 is 45,666 thousand euros. The LTV of the expiring loan agreements is 34%-52%, and investment properties have a stable, strong rental cash flow, therefore, according to the Group’s management, there are no obstacles in extending the loan agreements. In the subsidiaries where rental cash flow allows to service higher debt level, the Group’s management considers increasing the leverage and dividend payments.
The weighted average interest rate of the group’s loan agreements rose to 4.8% by the end of March (31.12.2022: 3.7%) due to the change in EURIBOR, and the LTV (Loan to Value) was 41% (31.12.2022: 40%). All loan agreements of the fund’s subsidiaries are linked to a floating interest rate. In order to mitigate the risk of an increase in the interest rate of one loan agreement (balance as of 31.03.2023: 12,332 thousand euros), an interest rate swap agreement has been concluded, where the EURIBOR is fixed at the level of 0.35%. The swap agreement expires in 2023, and its fair value is 53 thousand euros as of 31.12.2022.
Information on shares
The net asset value of the share of EfTEN Real Estate Fund AS (EPRA NDV) as of 31.03.2023 was 21.7 euros (31.03.2021: 19.55 euros). The net asset value of EfTEN Real Estate Fund AS increased by 11.0% in the first quarter of 2023 (first quarter of 2022: 12.7%).
CONSOLIDATED STATEMEMT OF COMPREHENSIVE INCOME
| 1st quarter | ||
| € thousands | 2023 | 2022 |
| Sales income | 7,788 | 3,458 |
| Cost of services sold | -394 | -60 |
| Gross profit | 7,394 | 3,398 |
| Marketing costs | -96 | -74 |
| General and administrative expenses | -867 | -455 |
| Other operating income and expense | 10 | 26 |
| Operating profit | 6,441 | 2,895 |
| Profit / loss from joint ventures | -9 | 0 |
| Interest income | 6 | 0 |
| Other finance income and expense | -1,550 | -362 |
| Profit before income tax | 4,888 | 2,533 |
| Income tax expense | -254 | -255 |
| Net profit for the reporting period | 4,634 | 2,278 |
| Consolidated profit for the reporting period | 4,634 | 2,278 |
| Earnings per share | ||
| – basic | 0.43 | 0.45 |
| – diluted | 0.43 | 0.45 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| 31.03.2023 | 31.12.2022 | |
| € thousands | ||
| ASSETS | ||
| Cash and cash equivalents | 25,166 | 11,331 |
| Receivables and accrued income | 1,811 | 1,522 |
| Prepaid expenses | 136 | 49 |
| Inventory | 1 | 0 |
| Total current assets | 27,114 | 12,902 |
| Long-term receivables | 51 | 61 |
| Shares in joint ventures | 2,568 | 0 |
| Investment property | 365,977 | 168,875 |
| Property, plant, and equipment | 282 | 116 |
| Intangible assets | 1 | 2 |
| Total non-current assets | 368,879 | 169,054 |
| TOTAL ASSETS | 395,993 | 181,956 |
| LIABILITIES AND EQUITY | ||
| Borrowings | 49,964 | 22,058 |
| Payables and prepayments | 1,963 | 1,461 |
| Total current liabilities | 51,927 | 23,519 |
| Borrowings | 98,854 | 45,917 |
| Other long-term liabilities | 1,865 | 1,008 |
| Deferred income tax liability | 8,543 | 7,248 |
| Total non-current liabilities | 109,262 | 54,173 |
| Total liabilities | 161,189 | 77,692 |
| Share capital | 108,198 | 50,725 |
| Share premium | 84,721 | 16,288 |
| Statutory reserve capital | 2,149 | 2,149 |
| Retained earnings | 39,736 | 35,102 |
| Total equity | 234,804 | 104,264 |
| TOTAL LIABILITIES AND EQUITY | 395,993 | 181,956 |
