Market announcement

Title

EfTEN Real Estate Fund net asset value per share and the preliminary financial results for

Message

Commentary by the Fund Manager, Viljar Arakas

The  defining  feature  of  2023 was  the  fastest interest rate increase in the
Eurozone's  25-year history.  Compared to  the previous  year, EfTEN Real Estate
Fund  AS's consolidated interest  expense nearly doubled  in relation to EBITDA,
directly  impacting  the  fund's  free  cash  flow.  However,  due to the fund's
conservative  financing policy, stable cash  flow from investments, consistently
low  vacancy  rates,  and  solid  payment  behavior  from clients, the growth in
EURIBOR  did not result in  cash flows of any  underlying asset's falling beyond
critical limits.

Considering  the  liquidity  buffer  of  the fund's subsidiaries, the management
board plans to propose at the spring 2024 general meeting a dividend payment for
the  past year more than  fund's dividend policy foresees.  This would amount to
1.0 euro  per share, compared to the previous year's 1.15 euros per share. Given
the  market price of EfTEN  Real Estate Fund AS  shares, this still represents a
5% exceeding dividend yield.

EfTEN  Real Estate  Fund AS  unaudited net  profit for  year 2023 is 1.0 million
euros (2022: 11.4 million euros). The decrease in net profit is primarily due to
the  loss from changes in investment property  fair value in the amount of 13.9
million  euros  (in  2022, the  fund  had  a  profit  of  3.1 million euros from
revaluation).  The fund's  investment properties  are independently appraised by
Colliers International. It is important to note that the fund's revaluation is a
non-cash   balance  sheet  valuation  change,  which  does not affect the fund's
actual  cash  flows  or  dividend-distribution  capacity. The current valuations
reflect  the record-high  EURIBOR rates  at the  end of  year 2023 and a partial
recovery  in the  fair value  of real  estate investments  is expected  with the
anticipated decrease in EURIBOR.

In 2024, changes in commercial real estate market trends are expected. The rapid
interest rate increase is likely a history, with an expected gradual decrease in
rates ahead. Given the fragile macroeconomic environment in the Baltic economies
and the ongoing economic downturn over the last two years, the fund's management
will  focus primarily  on managing  and maintaining  rental income and fostering
strong relationships with clients.

As  of now, real  estate market participants  have adjusted to  the new interest
rate  environment, which is a prerequisite for increased transactional activity.
If  such conditions prevail, the board will  propose a new share issuance in the
second half of this year to continue the fund's growth strategy.

Financial Summary

EfTEN Real Estate Fund AS reported unaudited consolidated rental income of 30.6
million  euros for 2023 (2022: 13.5 million euros) and an EBITDA of 26.1 million
euros (2022: 11.8 million euros). The year-over-year growth in rental income and
EBITDA is mainly attributed to the fund's merger with EfTEN Kinnisvarafond AS at
the  beginning of 2023. On a like-for-like basis, rental income increased by 4%
compared to the previous year.

In  2023, the fund's consolidated EBITDA exceeded interest expenses by 3.3 times
(2022:  6.4 times). The weighted average interest  rate on the fund's bank loans
was  5.91% at year-end. None of the fund's real estate investments' debt service
coverage  ratios (DSCR) fell  below 1.2 in 2023, i.e.  EBITDA of all properties'
exceeded  loan principal and interest payments by at least 20%. The overall DSCR
for the fund's property portfolio was 1.8 in 2023 (2022: 2.2).

EfTEN  Real Estate Fund AS invested a  total of 6.7 million euros in real estate
projects  in 2023, including 3.6 million euros in the construction of Valkla and
Tartu care homes. Significant investments were also made in the logistics sector
(totalling 1.8 million euros), including the expansion of warehouse space at the
Betooni 6 property in Tallinn and refurbishment works at the Jurkalnes logistics
center  in Riga. Additionally, 0.8 million euros  were invested in upgrading the
common areas of the Saules Miestas shopping center.

In  December 2023, EfTEN Real Estate Fund reported consolidated rental income of
2.8 million  euros (259 thousand euros  more than in November)  and an EBITDA of
2.2 million  euros (45  thousand euros  more than  in November). The increase in
rental  income was  primarily due  to turnover-based  rents in shopping centers.
Major  expenses in December  were related to  debt receivables provisions due to
the  tenant replacement at one  of the Riga logistics  centers and interim audit
costs.

In   December,   the   fund's   independent   real  estate  appraiser,  Colliers
International,  conducted its regular year-end valuation process, resulting in a
2.1% decrease  in the fair value of the  fund's investment properties and a loss
of 7.8 million euros from the write-down. The total write-down for 2023 amounted
to  13.9 million  euros,  i.e  a  3.7% decrease  in the fair value of investment
properties.  The most significant value decrease was in the office segment (9%).
The  value of  the logistics  portfolio decreased  by 3.7%, and due to increased
market  yield rates, the fair value of  care homes decreased by 5.8%. The fund's
property  portfolio  valuations  were  primarily  influenced  by  an increase in
capitalization  rates by an average of 0.2-0.5 percentage points and an increase
in  the weighted average cost of capital (WACC)  due to the rise in EURIBOR. The
fund's  property portfolio initial  yield as of  December 31, 2023, was 8.0%. In
addition  to  the  aforementioned  factors,  there  is  also a more conservative
expectation for occupancy and net rental income in the office building segment.

As  of December  31, 2023, the net  asset value  per share  (NAV) of  EfTEN Real
Estate  Fund  AS  was  20.2128 euros,  and  the  EPRA NRV was 20.9623 euros. NAV
decreased by 3.7% in December, and the EPRA NRV decreased by 3.4%. Excluding the
non-cash  fair value  adjustment of  investment properties  and the deferred tax
liability  calculated from planned  dividends, the fund's  share net asset value
would have increased by the usual 0.6% in December.

Marilin Hein
Chief Financial Officer
Phone: 6559 515
Email: marilin.hein@eften.ee