EfTEN Real Estate Fund III AS’s consolidated revenue for the first quarter of 2022 was 3.458 million euros (2021 I quarter: 2.867 million euros), increased by 21% compared to previous year. The Group’s net rental income in the first quarter of 2022 was 3.324 million euros (2021: 2.770 million euros), increased by 20% compared to previous year. The Group’s net profit for the same period was 2.278 million euros (2021: 1.795 million euros).
In the first quarter of 2022 the Group’s rental income amounted to 3.284 million euros. Rental income calculated on a comparable basis in the first quarter of 2022 totalled 3.084 million euros, which is 14% more than the same period in 2021. The Group’s discounts related to the Covid-19 crisis totalled 3 thousand euros in the first quarter of 2022 (first quarter of 2021: 237 thousand euros), i.e., without these discounts the Group’s rental income in the first quarter of 2022 would have been 5.1% higher.
Consolidated net rental income margin for the first quarter of 2022 was 96% (2021: 97%), so costs directly related to property management (incl. land tax, insurance, maintenance and improvement costs) and marketing costs accounted for 4% (2021: 3%) of revenue.
The Group’s total assets as at 31.03.2022 amounted for 177.293 million euros (31.12.2021: 176.401 million euros), including the fair value of investment properties forming 91% (31.12.2021: 92%) of the total assets.
As of the end of March 2022 the Group has 16 (31.12.2021: same) commercial real estate investments, the fair value of which forms 162.099 million euros as of balance sheet date (31.12.2021: 161.961 million euros) and the acquisition cost is 147.771 million euros (31.12.2021: 147.633 million euros).
In March, EfTEN Valkla OÜ, a subsidiary of the Fund, entered into a contract under the law of obligations for the acquisition of a real estate located at Valklaranna road 36 in Valkla village, Harju County. The fund plans to convert the nursing home building into a general care home, which could accommodate up to 250 clients in the future. The buildings of the care home will be used by Valkla Südamekodu OÜ, a 100% subsidiary of Südamekodud AS, on the basis of a long-term lease agreement. Renovation work will be carried out in stages. The sale price of the property is 2,005 thousand euros, which will be paid upon concluding a real estate contract, and in addition, the subsidiary of the fund undertakes to make investments in the amount of up to 2,000 thousand euros. The purchase will be financed from the fund’s equity. In order to complete the transaction, i.e. to transfer the ownership of the real estate, the conclusion of a real rights agreement is planned by the end of April at the latest.
In March, EfTEN Ermi OÜ, a subsidiary of the Fund, entered a contract under the law of obligations for the acquisition of the right of superficies located at Ermi street 13 in Tartu County, Tartu County. The fund plans to build a care home for a minimum of 120 clients on the land used on the basis of the building right. The term of the right of superficies is 50 years, which can be extended up to 99 years by agreement with the landowner. To date, no construction procurement has been organized and it is planned to carry it out after signing the real right agreement. Following the construction of a care home on the property, Tartu Südamekodu OÜ, a 100% subsidiary of Südamekodud AS, will lease it on the basis of a long-term lease agreement. The sale price of the right of superficies is 233 thousand euros. The purchase of the right of superficies and investments are financed from the fund’s own resources. In order to complete the transaction, the consent of Tartu municipality, the conclusion of a lease agreement and the consent of the Estonian Competition Authority are required.
During the next 12 months, the loan agreements of the Group’s three subsidiaries – EfTEN Seljaku OÜ, EfTEN Laagri OÜ and EfTEN Piepilsetas SIA, with a total balance of 7,092 thousand euros as of 31.03.2022, will expire. The LTV of the expiring loan agreements is 32% -39% and the real estate investments have a stable strong rental cash flow, which is why, according to the Group’s management, there are no expected obstacles to extending the loan agreements.
The weighted average interest rate of the Group’s loan agreements (incl. taking into account interest rate swap agreements) at the end of March is 2.3% (31.12.2021: same) and LTV (Loan to Value) 43% (31.12.2021: 44%). Most of the loan agreements of the fund’s subsidiaries are linked to a floating interest rate and only one loan (accounting for 2% of the loan portfolio) has a fixed base interest rate. In order to hedge the risk of an increase in the interest rate of one loan agreement, an interest rate swap agreement has been entered, which expires in 2023.
The net asset value of the share of EfTEN Real Estate Fund III AS (EPRA NDV) as of 31.03.2022 was 19.55 euros (31.03.2021: 17.35 euros). The net asset value of EfTEN Real Estate Fund III AS increased by 12.7% in the first quarter of 2021 (first quarter of 2021: 2.5%).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| 1st quarter | ||
| € thousands | 2022 | 2021 |
| Revenue | 3,458 | 2,867 |
| Cost of services sold | -60 | -66 |
| Gross profit | 3,398 | 2,801 |
| Marketing costs | -74 | -31 |
| General and administrative expenses | -455 | -384 |
| Other operating income and expense | 26 | 3 |
| Operating profit | 2,895 | 2,389 |
| Other finance income and expense | -362 | -421 |
| Profit before income tax | 2,533 | 1,968 |
| Income tax expense | -255 | -173 |
| Comprehensive income for the period | 2,278 | 1,795 |
| Earnings per share | ||
| – basic | 0.45 | 0.43 |
| – diluted | 0.45 | 0.43 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| 31.03.2022 | 31.12.2021 | |
| € thousands | ||
| ASSETS | ||
| Cash and cash equivalents | 13,751 | 13,074 |
| Receivables and accrued income | 1,255 | 876 |
| Prepaid expenses | 53 | 314 |
| Inventory | 0 | 29 |
| Total current assets | 15,059 | 14,293 |
| Long-term receivables | 8 | 4 |
| Investment property | 162,099 | 161,961 |
| Property, plant, and equipment | 125 | 140 |
| Intangible assets | 2 | 3 |
| Total non-current assets | 162,234 | 162,108 |
| TOTAL ASSETS | 177,293 | 176,401 |
| LIABILITIES AND EQUITY | ||
| Borrowings | 10,244 | 7,645 |
| Derivative instruments | 56 | 121 |
| Payables and prepayments | 722 | 1,349 |
| Total current liabilities | 11,022 | 9,115 |
| Borrowings | 59,949 | 63,440 |
| Other long-term liabilities | 1,007 | 987 |
| Deferred income tax liability | 6,123 | 5,945 |
| Total non-current liabilities | 67,079 | 70,372 |
| Total liabilities | 78,101 | 79,487 |
| Share capital | 50,725 | 50,725 |
| Share premium | 16,288 | 16,288 |
| Statutory reserve capital | 1,489 | 1,489 |
| Retained earnings | 30,690 | 28,412 |
| Total equity | 99,192 | 96,914 |
| TOTAL LIABILITIES AND EQUITY | 177,293 | 176,401 |
