Despite of accelerated spread of Covid-19 and increased restrictions, the fund’s results for the first quarter of 2021 are beyond expectations good. The rental income of Saules Miestas shopping centre in Lithuania has decreased by 22% on average compared to the first quarter of previous year, due to temporary discounts, but the rental income of other properties was not materially affected by the crisis. At the same time, there are additional agreements in place with some of the tenants to postpone rental payments until May, which may have negative impact to fund’s cash flows.
The consolidated revenue of EfTEN Real Estate fund III AS for the first quarter of 2021 was 2.867 million euros (2020 I quarter: 2.443 million euros), increased by 17.4% compared to previous year. The Group’s net rental income in the first quarter of 2021 was 2.770 million euros (2020 I quarter: 2.262 million euros), increased by 22.5% compared to previous year. The Group’s net profit for the same period was 1.795 million euros (2020: 1.368 million euros). Better profit indicators are mainly a result of added rental income from new real estate investments made in 2020, yet also due to a decrease in vacancy in office buildings in Lithuania. The negative effect of Covid-19 to the fund’s rental income is approximately 150 thousand euros compared to the first quarter of previous year. Without the temporary Covid-19 discounts the fund’s consolidated real estate portfolio would earn 8.3% higher revenue.
In the first quarter of 2021 new rental agreements were signed in Ulonu and Laisves office buildings in Lithuania, which decreased the fund’s vacancy rate to 0.8%, i.e. out of the whole rental portfolio (124 thousand sqm) only 934 sqm of area was vacant at the end of March.
The margin of consolidated net rental income for the first quarter of 2021 was 97% (2020: 93%), thus, the expenses (incl. land tax, insurance, maintenance and repair cost and marketing expense) related to managing the buildings form 3% (2020: 7%) of the revenue. The fund’s expenses were lower mainly due to corona crisis related restrictions implemented in shopping centres and resulted lower marketing cost.
The total assets of the Group as of 31.03.2021 was 151.727 million euros (31.12.2020: 151.632 million euros), incl. the fair value of investment properties that formed 95% of the total assets (31.12.2020: same).
In the 1st quarter of 2021, the Group has earned free cash flow (EBITDA minus loan repayments and interest expense) 1.049 million euros (2020 1st quarter: 873 thousand euros). All of the loans were serviced as usual in the 1st quarter of 2021 and the subsidiaries of the fund did not use period of grace.
The weighted average interest rate of the Group’s loan agreements (incl. interest swap agreements) is 2.3% as of the end of March (31.12.2020: same) and LTV (loan to value) is 50% (31.12.2020: same).
Real estate portfolio
As of the end of March, 2021, the Group has 15 (31.12.2020: same) commercial real estate investments, the fair value of which forms 144.762 million euros as of balance sheet date (31.12.2020: 144.235 million euros) and the acquisition cost is 136.757 million euros (31.12.2020: 136.349 million euros).
Information on shares
EfTEN Real Estate Fund III net asset value as of 31.03.2021 was 17.35 euros (31.12.2020: 16.93 euros). The net asset value of EfTEN Real Estate fund increased by 2.5% in the first quarter of 2021 (2020 1st quarter: 1.9%).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| 1st quarter | ||
| € thousands | 2021 | 2020 |
| Revenue | 2,867 | 2,443 |
| Cost of services sold | -66 | -88 |
| Gross profit | 2,801 | 2,355 |
| Marketing costs | -31 | -93 |
| General and administrative expenses | -384 | -414 |
| Other operating income and expense | 3 | 5 |
| Operating profit | 2,389 | 1,853 |
| Other finance income and expense | -421 | -333 |
| Profit before income tax | 1,968 | 1,520 |
| Income tax expense | -173 | -152 |
| Net profit for the reporting period | 1,795 | 1,368 |
| Earnings per share | ||
| – basic | 0.43 | 0.32 |
| – diluted | 0.43 | 0.32 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| 31.03.2021 | 31.12.2020 | |
| € thousands | ||
| ASSETS | ||
| Cash and cash equivalents | 5,702 | 5,128 |
| Receivables and accrued income | 1,063 | 2,018 |
| Prepaid expenses | 49 | 128 |
| Total current assets | 6,814 | 7,274 |
| Long-term receivables | 3 | 18 |
| Investment property | 144,762 | 144,235 |
| Property, plant and equipment | 145 | 101 |
| Intangible assets | 3 | 4 |
| Total non-current assets | 144,913 | 144,358 |
| TOTAL ASSETS | 151,727 | 151,632 |
| LIABILITIES AND EQUITY | ||
| Borrowings | 28,460 | 28,781 |
| Derivative instruments | 216 | 246 |
| Payables and prepayments | 755 | 1,995 |
| Total current liabilities | 29,431 | 31,022 |
| Borrowings | 43,320 | 43,587 |
| Other long-term debt | 974 | 957 |
| Deferred income tax liability | 4,724 | 4,583 |
| Total non-current liabilities | 49,018 | 49,127 |
| Total liabilities | 78,449 | 80,149 |
| Share capital | 42,225 | 42,225 |
| Share premium | 9,658 | 9,658 |
| Statutory reserve capital | 1,323 | 1,323 |
| Retained earnings | 20,072 | 18,277 |
| Total equity | 73,278 | 71,483 |
| TOTAL LIABILITIES AND EQUITY | 151,727 | 151,632 |
