EfTEN United Property Fund earned a net loss of 71 thousand euros in the first half of 2023, including 37 thousand euros in the second quarter. The loss was primarily related to the revaluation and decrease in the value of the underlying funds – 453 thousand euros in the first half of the year, including 352 thousand euros in the second quarter.
The real estate sector is one of the most leveraged sectors. Therefore, sudden changes in interest rates and availability of credit have a direct impact on this sector. Higher interest rates are also reflected in the increased financial costs of EfTEN United Property Fund’s subsidiaries and underlying funds, where the weighted average interest rate increased by 1.3 percentage points in the first half of the year. In addition to the increased financial costs, the weighted average interest rate of capital (WACC) used to discount the cash flows of real estate investments also depends on the market interest rate. Its increase generally leads to a lower fair value of real estate investments. Thus, the value of real estate investments belonging to the fund’s subsidiaries and the underlying funds decreased by 0.9% after the regular evaluation that took place in June
In the first half of 2023 the biggest developments took place in the Uus-Järveküla residential development. In February, the municipality of Rae issued building permits for the first stage of the development, and the corresponding construction works were started. In April 2023, Uus-Järveküla OÜ signed a loan agreement with Coop Pank AS to finance the construction phase. In May and June, in addition to the existing terraced houses the first 10 semi-detached houses were added for sale, half of which were booked by customers in two months.
In the first half of 2023, the fund made the largest two distributions since inception to investors in the total amount of 1.04 million euros (584 thousand euros in January and 451 thousand euros in June), or 0.417 euros per unit.
The EfTEN United Property Fund assets as of 30.06.2023 stood at 26,391 thousand euros (31.12.2022: 27,472 thousand euros), of which long-term investments made up 79% (31.12.2022: 67%).
EfTEN United Property Fund has raised a total of 25.466 million euros in capital, of which 6.9 million euros are uninvested as of the first half of 2023. All existing investments are performing well and do not currently require higher capital injections than usual.
Statement of the comprehensive income
| 2nd quarter | 6 months | |||
| 2023 | 2022 | 2023 | 2022 | |
| € thousand | ||||
| Income | ||||
| Interest income | 135 | 79 | 241 | 140 |
| Dividend income | 329 | 212 | 352 | 212 |
| Net profit / loss from assets recognised in fair value through profit or loss | -456 | 533 | -529 | 628 |
| Investments in subsidiaries | -104 | 180 | -76 | 159 |
| Underlying funds | -352 | 353 | -453 | 468 |
| Total income | 8 | 824 | 64 | 980 |
| Costs | ||||
| Operating expenses | ||||
| Management fee | -27 | -26 | -54 | -43 |
| Costs of administering the Fund | -18 | -58 | -81 | -66 |
| Other operating expenses | 0 | -14 | 0 | -25 |
| Total operating expenses | -45 | -98 | -135 | -133 |
| Profit / loss for the period | -37 | 726 | -71 | 847 |
| Total profit / loss for the period | -37 | 726 | -71 | 847 |
| Ordinary and diluted earnings / loss per share (EUR) | -0,01 | 0,36 | -0,03 | 0,42 |
Statement of financial position
| 30.06.2023 | 31.12.2022 | |
| € thousand | ||
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 5 068 | 8 769 |
| Other receivables and accrued income | 479 | 385 |
| Total current assets | 5 547 | 9 154 |
| Non-current assets | ||
| Financial assets at fair value through profit or loss | 12 654 | 12 942 |
| Investments in subsidiaries | 1 076 | 1 152 |
| Real estate funds | 11 578 | 11 790 |
| Loans granted | 6 395 | 5 376 |
| Non-current receivables | 1 795 | 0 |
| Total non-current assets | 20 844 | 18 318 |
| TOTAL ASSETS | 26 391 | 27 472 |
| LIABILITIES | ||
| Current liabilities | 27 | 586 |
| Total liabilities, excluding net asset value of the fund attributable to shareholders | 27 | 586 |
| NET ASSET VALUE OF THE FUND | ||
| Net asset value of the fund attributable to shareholders | 26 364 | 26 886 |
| Total liabilities and net asset value of the fund attributable to shareholders | 26 391 | 27 472 |
