Market announcement

Fund Manager’s Commentary

During the first half of 2026, EfTEN Real Estate Fund AS took several important steps in reshaping its portfolio, focusing on the more efficient use of capital and preparing for new investment opportunities. In March, the Fund completed the sale of its subsidiary EfTEN Krustpils SIA (the owner of the DSV logistics centre in Latvia). The Fund acquired the logistics centre in June 2016, and the project earned an internal rate of return (IRR) of approximately 10%.

In April, the Fund’s subsidiary EfTEN Menulio UAB completed the sale of the Menulio 11 office building in Vilnius, where the value of the investment property was approximately EUR 0.6 million higher than its carrying value. The sale of the Latvian DSV logistics centre and the Menulio 11 office building created the preconditions for making new investments.

On 1 June 2026, EfTEN Real Estate Fund AS acquired a 100% interest in Magistral Kaubanduskeskuse OÜ. The purchase price calculation was based on an investment property valued at EUR 31.69 million, and the Fund expects a net yield of 8.1% on the investment. In June, the Magistral shopping centre earned rental income of EUR 213 thousand. At the end of June, the centre had 165.5 m² of vacant rental space, for which lease agreements had been concluded by the date of preparation of the report; therefore, the occupancy rate of the centre is 100%.

The Fund’s existing real estate portfolio continued to perform steadily – vacancy decreased to the lowest level of the last three years (2.3%) and tenants’ payment behaviour was good. The Fund Manager continues to actively manage the Fund’s real estate portfolio in order to maintain occupancy levels, maximise rental income from investment properties and ensure the Fund’s dividend-paying capacity.

The lower EURIBOR level (compared to the same period of the previous year) had a significant positive impact on the Fund’s cash flows during the first half-year, and interest expenses decreased by 10% year-on-year. The Fund’s free cash flow increased by 20% compared to the first half of the previous year, and the interest coverage ratio (ICR) improved from 3.7 to 4.4. To protect against a potential increase in interest rates, the Fund has entered into two interest rate swap agreements in the nominal amount of EUR 22.6 million (12.9% of the loan portfolio), under which the 1‑month EURIBOR has been fixed at 1.995% and 2.2%.

Overview of Financial Results

The consolidated revenue of EfTEN Real Estate Fund AS for the second quarter of 2026 was EUR 8.545 million (Q2 2025: EUR 8.210 million), and the consolidated revenue for the first half-year was EUR 16.966 million (first half of 2025: EUR 16.068 million). Revenue increased by 4.1% in the second quarter and by 5.6% in the first half-year compared to the same periods of the previous year. The growth in revenue was supported by new investments in the logistics, retail and nursing home sectors.

The Fund’s consolidated net operating income (NOI) for the first half of 2026 amounted to EUR 15.767 million (2025: EUR 14.845 million), increasing by 6.2% compared to the same period of the previous year. The net rental income margin was 96% in the first half of 2026 (2025: 95%), meaning that costs directly related to property management (including land tax, insurance, maintenance and improvement work) and marketing expenses accounted for 4% (2025: 5%) of the Fund’s consolidated rental income.

During the first half of 2026, the Fund earned consolidated net profit of EUR 8.911 million, which is 8.8% higher than in the corresponding period of the previous year.

The Group earned adjusted cash flow (EBITDA less interest expenses, repayments of loan principal and income tax expense) of approximately EUR 7.1 million during the first half of 2026, 20% more than in the same period of the previous year, driven by a higher EBITDA and lower interest expenses. The Group’s total assets amounted to EUR 419.838 million as at 30.06.2026 (31.12.2025: EUR 405.851 million), of which the fair value of investment properties accounted for 95% (31.12.2025: 94%). 

During the first half of 2026, investment properties in the logistics segment decreased by EUR 9.000 million due to the sale of the DSV logistics centre in Riga, and investment properties in the office segment decreased by EUR 8.100 million due to the sale of the Menulio 11 building in Vilnius. Investment properties in the retail segment increased by EUR 31.690 million due to the acquisition of the Magistral shopping centre in Tallinn.           

Real Estate Portfolio

As at 30.06.2026, the Group had 36 (31.12.2025: 37) commercial investment properties with a fair value of EUR 399.102 million (31.12.2025: EUR 381.032 million) and an acquisition cost of EUR 398.595 million (31.12.2025: EUR 381.235 million). In addition to the above-mentioned investment properties, the Group’s 50%-owned joint venture EfTEN SPV11 OÜ owns the Palace Hotel in Tallinn, the fair value of which was EUR 8.550 million as at 30.06.2026 (31.12.2025: EUR 8.680 million).

Investments in the First Half of 2026

In June 2026, the Group acquired a 100% interest in Magistral Kaubanduskeskuse OÜ for EUR 12.9 million. The company owns the Magistral Centre located at Sõpruse pst 201, Tallinn, the fair value of which was EUR 31.7 million at the acquisition date.

The Group invested a total of EUR 3.532 million in its existing real estate portfolio during the first half of 2026, including the continuation of the reconstruction works of the Nõmme nursing home, which amounted to EUR 2.3 million during the first half of the year.

Sales in the First Half of 2026

In March 2026, the Group sold a 100% interest in its subsidiary EfTEN Krustpils SIA, which owned the DSV logistics centre in Riga. The Group acquired the DSV logistics centre in June 2016, and the Fund earned an internal rate of return (IRR) of approximately 10% from the project. In April 2026, the Fund’s subsidiary EfTEN Menulio UAB sold the office building it owned at Menulio 11 in Vilnius. The sale price of the investment property was EUR 571 thousand higher than the carrying value of the property. After the repayment of the loan liabilities taken for the acquisition of Menulio 11 and the settlement of other liabilities, EUR 5.3 million was received by the Fund.

In April 2026, the Fund’s subsidiary EfTEN SPV7 OÜ sold the property located at A.H. Tammsaare tee 116a in Tallinn to Ignitis Eesti OÜ. EfTEN SPV7 OÜ earned a profit of EUR 225 thousand from the transaction.

Rental income

During the first six months of 2026, the Group earned a total of EUR 16.425 million in rental income, which is 5% higher than in the corresponding period of 2025.
The vacancy rate of the Group’s investment property portfolio was 2.3% as at 30.06.2026 (31.12.2025: 3.2%). The vacancy rate in the office segment decreased during the first half of the year – while the segment vacancy rate was 14.4% at the end of 2025, it was 9.0% at the end of June 2026. The sale of the Menulio 11 office building played a significant role in the decrease in the office segment’s vacancy rate, as 46% of the building’s space was vacant.

Fair Value of Investment Properties

EfTEN Real Estate Fund AS regularly values its investment properties twice a year – as of 30 June and 31 December. As a result of the valuations of investment properties carried out by Colliers International in June 2026, the fair value of the investment properties decreased by 0.2%, and the Fund recognised a loss of EUR 0.62 million from the revaluation of investment properties. In addition, the value of the Palace Hotel, owned by the Fund’s associate, decreased by 1.6% (EUR 138 thousand). In April 2026, the Fund sold the Menulio 11 office building, the sale value of which exceeded its carrying value by EUR 570 thousand.

Financing

Three subsidiaries of EfTEN Real Estate Fund AS extended bank loan agreements during the first half of 2026 in the total amount of EUR 11.5 million. Within the next 12 months, the loan agreements of eleven of the Group’s subsidiaries will mature, with an outstanding balance totalling EUR 45.650 million as at 30.06.2026. The LTV (Loan-to-Value) of the maturing loan agreements is between 33% and 61%, and the investment properties have a stable rental cash flow; therefore, in the opinion of the Group’s management, no obstacles will arise in extending the loan agreements.

Due to improved financial capacity, the subsidiaries of EfTEN Real Estate Fund AS increased the total amount of their bank loans by EUR 3.7 million in April 2026. In addition, construction works of the Nõmme nursing home were financed with a bank loan in the total amount of EUR 2.3 million during the first half of 2026.

In June 2026, EfTEN Real Estate Fund AS entered into a loan agreement in the amount of EUR 4 million, maturing on 01.06.2027, to finance the acquisition of Magistral Kaubanduskeskuse OÜ.

The weighted average interest rate of the Group’s loan agreements was 4.03% as at 30.06.2026 (31.12.2025: 3.99%), and the LTV (Loan-to-Value) ratio was 42% (31.12.2025: 41%). All of the Fund’s loan agreements are linked to a floating interest rate. To hedge interest rate risk, two of the Group’s subsidiaries have entered into interest rate swap agreements with a total notional amount of EUR 22.6 million, under which the floating interest rate (1‑month EURIBOR) has been fixed at 1.995% and 2.2%.

The Fund’s interest coverage ratio (ICR) as at 30.06.2026 was 4.4 (as at 30.06.2025: 3.7). The ICR increased mainly due to the lower EURIBOR.

Share information

The registered share capital of EfTEN Real Estate Fund AS as at 30.06.2026 is EUR 115,248 thousand (31.12.2025: the same). The share capital consisted of 11,524,846 shares (31.12.2025: the same) with a nominal value of EUR 10 (31.12.2025: the same).

The net asset value (NAV) per share of EfTEN Real Estate Fund AS was EUR 19.89 as at 30.06.2026 (31.12.2025: EUR 20.32). The net asset value per share of EfTEN Real Estate Fund AS decreased by 2.1% during the first half of 2026. In April 2026, the Fund paid net dividends of EUR 1.2 per share in the total amount of EUR 13.8 million. Without the distribution of dividends, the Fund’s net asset value would have increased by 3.8%.

As at 30.06.2026, members of the fund's council and management board and their related persons owned 32.03% of the shares. 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Marilin Hein
CFO
Phone +372 6559 515
E-mail: [email protected]