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EfTEN Real Estate Fund AS unaudited results for 2nd quarter and 6 months 2023

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The  upward trend in interest rates, which started in mid-2022, continued in the
first  half of 2023. Within the euro area, including the Baltic countries, loans
are  based on the EURIBOR. Over the  past six months, depending on the duration,
the EURIBOR rate increased by approximately 1.5 percentage points. Consequently,
this  has resulted in higher financial costs for companies operating in the real
estate  sector. Moreover, the  market interest rate,  which impacts the weighted
average  cost of capital (WACC) used to discount the cash flows for valuation of
investment  properties, has also increased. Typically,  such increases lead to a
decline in the fair value of investment properties.

Real  estate  companies  and  funds  with significant debt burdens, particularly
those  that have  raised capital  not only  from banks  but also  from financial
markets  through bonds, are facing the most challenging circumstances. While the
real  estate sector  was favored  by bond  investors in  the previous  year, the
situation  has  reversed  this  year.  Real  estate  companies in Europe and the
Baltics,  seeking to  refinance their  bonds, have  had to  accept significantly
smaller  volumes and, in  some cases, significantly  higher borrowing costs. The
real  estate investments owned by subsidiaries of  EfTEN Real Estate Fund AS has
been  fully financed through bank loans, with loan-to-value (LTV) ratios ranging
from  29% to  52%. Consequently,  refinancing  of  these  loans has proceeded as
usual.

During  the first  half of  the year,  the impact  of rising  interest rates was
somewhat  mitigated by lower  energy costs and  increased rental income. Despite
the  economic downturn  in the  Baltic countries,  the fund's  tenants exhibited
strong  payment behavior. As  of the end  of June 2023, the  vacancy rate in the
real  estate portfolio  of EfTEN  Real Estate  Fund AS  stood at  less than 2%.
Additionally, compared to the first half of 2022, rental income, calculated on a
comparable basis (Like-for-Like), increased by 12%.

In  June, Colliers  International, the  real estate  investment appraiser of the
fund,  conducted  a  valuation  of  EfTEN  Real  Estate  Fund  AS's  real estate
portfolio.  The valuations  resulted in  a 1.7% decrease  (EUR6.18 million) of the
value  of the fund's investment properties. This decrease in portfolio value can
be largely attributed to the rise in the weighted average cost of capital (WACC)
used  to discount cash  flows, resulting from  the increase in  EURIBOR over the
past six months.

On  January 1, 2023, EfTEN Real Estate Fund  AS (formerly EfTEN Real Estate Fund
III  AS) merged with  EfTEN Kinnisvarafond AS.  Following the merger, the fund's
consolidated  assets  increased  by  EUR211  million,  from  EUR182  million to EUR393
million,  and its equity  increased by EUR126  million, from EUR104  million to EUR230
million. The merger was officially recorded in the business register on February
28, 2023.

As  a  consequence  of  the  merger,  EfTEN  Real  Estate  Fund AS's real estate
portfolio  was incorporated  into the  subsidiaries of  EfTEN Kinnisvarafond AS.
This  addition  included  17 new  investment  properties in Estonia, Latvia, and
Lithuania,  with a  fair value  of EUR196.3  million, and  one investment property
owned  jointly  through  a  50% share,  valued  at  EUR10  million.  Consequently,
following  the merger,  the fund's  real estate  portfolio offers an even better
diversification across sectors and tenants.

EfTEN  Real Estate Fund AS consolidated sales revenue was EUR15.749 million in the
first  half of 2023 (compared to EUR6.988 million  in the first half of 2022). The
group's  net rental income  amounted to a  total of EUR14.704  million in the same
period  (compared to  EUR6.666 million  in 2022). The  group's net  profit for the
first half of 2023 was EUR2.445 million (compared to EUR7.882 million in 2022).

As  of June 30, 2023, the group's assets  amounted to EUR381.274 million (compared
to EUR181.956 million on December 31, 2022), with investment properties accounting
for 95% of the assets (compared to 93% on December 31, 2022).

As  of the end of June  2023, the group owned 35 investment properties (compared
to  18 on  December  31, 2022), with  a  fair  value  of EUR361.498 million on the
balance  sheet date (compared  to EUR168.875 million  on December 31, 2022) and an
acquisition  cost of EUR349.119 million (compared  to EUR151.426 million on December
31, 2022). Furthermore,  the  group's  joint  venture  held  the Palace hotel in
Tallinn, with a fair value of EUR9.8 million as of June 30, 2023.

During  the first half of 2023, the fund's  subsidiaries extended a total of six
loan  agreements for a duration  of three to five  years. The interest margin on
four  loans decreased by  0.05-0.5 percentage points, while  the EURIBOR of five
loans  was reduced from 6 months  to 1 months and from  6 months to 3 months for
one loan.

Within  the next 12 months, the loan agreements of three subsidiaries within the
group,  with a balance of EUR5,395 thousand  as of June 30, 2023, will expire. The
loan-to-value  (LTV) ratios for these expiring loan agreements range from 37% to
51%, and  given  the  stable  and  strong  rental  cash  flow  of the investment
properties,  the group's  management anticipates  no obstacles  in extending the
loan agreements.

The weighted average interest rate for the group's loan agreements reached 5.4%
by  the end of  June (compared to  3.7% on December 31, 2022) due  to changes in
EURIBOR. The loan-to-value (LTV) ratio stood at 42% (compared to 40% on December
31, 2022). All  loan agreements for the fund's subsidiaries are tied to floating
interest  rates,  and  all  loans  are  being  serviced  as usual. The cash flow
generated  from the business operations of  all investment properties pledged as
collateral for the loan surpasses the loan payments.

As  of June 30, 2023, the EPRA net value (EPRA  NDV) of each share of EfTEN Real
Estate  Fund AS  amounted to  EUR20.35 (compared  to EUR19.86 on June 30, 2022). The
EPRA net value of the fund's share experienced a 1.0% decrease in the first half
of 2023 (compared to a 4.0% increase in the first half of 2022).


CONSOLIDATED STATEMEMT OF COMPREHENSIVE INCOME


                                                      2nd quarter    6 months
                                                     --------------------------
 EUR thousands                                            2023  2022   2023  2022
-------------------------------------------------------------------------------
 Sales income                                          7,961 3,530 15,749 6,988
-------------------------------------------------------------------------------
 Cost of services sold                                  -363   -71   -757  -131
-------------------------------------------------------------------------------
 Gross profit                                          7,598 3,459 14,992 6,857
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
 Marketing costs                                        -192  -117   -288  -191
-------------------------------------------------------------------------------
 General and administrative expenses                    -860  -448 -1 727  -903
-------------------------------------------------------------------------------
 Profit / loss from the changes in investment
 properties fair value                                -6,182 3,702 -6,182 3,702
-------------------------------------------------------------------------------
 Other operating income and expense                        3    17     13    43
-------------------------------------------------------------------------------
 Operating profit                                        367 6,613  6,808 9,508
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
 Profit / loss from joint ventures                      -100     0   -109     0
-------------------------------------------------------------------------------
 Interest income                                          14     0     20     0
-------------------------------------------------------------------------------
 Other finance income and expense                     -1 987  -360 -3,537  -722
-------------------------------------------------------------------------------
 Profit before income tax                             -1,706 6,253  3,182 8,786
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
 Income tax expense                                     -483  -649   -737  -904
-----------------------------------------------------+------------+------------
 Net profit for the reporting period                 |-2,189 5,604| 2,445 7,882
-----------------------------------------------------+------------+------------
 Consolidated profit for the reporting period        |-2,189 5,604| 2,445 7,882
-----------------------------------------------------+------------+------------
 Earnings per share
-------------------------------------------------------------------------------
    - basic                                            -0.63  1.10  -0.20  1.55
-------------------------------------------------------------------------------
    - diluted                                          -0.63  1.10  -0.20  1.55
-------------------------------------------------------------------------------




CONSOLIDATED STATEMENT OF FINANCIAL POSITION




                                   30.06.2023   31.12.2022
-----------------------------------------------------------
  EUR thousands
-----------------------------------------------------------
  ASSETS
-----------------------------------------------------------
  Cash and cash equivalents            12,616       11,331
-----------------------------------------------------------
  Short-term deposits                   2,480            0
-----------------------------------------------------------
  Receivables and accrued income        1,546        1,522
-----------------------------------------------------------
  Prepaid expenses                        132           49
-----------------------------------------------------------
  Inventory                                 1            0
-----------------------------------------------------------
  Total current assets                 16,775       12,902
-----------------------------------------------------------

-----------------------------------------------------------
  Long-term receivables                   352           61
-----------------------------------------------------------
  Shares in joint ventures              2,468            0
-----------------------------------------------------------
  Investment property                 361,498      168,875
-----------------------------------------------------------
  Property, plant, and equipment          180          116
-----------------------------------------------------------
  Intangible assets                         1            2
-----------------------------------------------------------
  Total non-current assets            364,499      169,054
-----------------------------------------------------------
  TOTAL ASSETS                        381,274      181,956
-----------------------------------------------------------

-----------------------------------------------------------
  LIABILITIES AND EQUITY
-----------------------------------------------------------
  Borrowings                           11,416       22,058
-----------------------------------------------------------
  Payables and prepayments              1,985        1,461
-----------------------------------------------------------
  Total current liabilities            13,401       23,519
-----------------------------------------------------------

-----------------------------------------------------------
  Borrowings                          138,563       45,917
-----------------------------------------------------------
  Other long-term liabilities           1,886        1,008
-----------------------------------------------------------
  Deferred income tax liability         7,280        7,248
-----------------------------------------------------------
  Total non-current liabilities       147,729       54,173
-----------------------------------------------------------
  Total liabilities                   161,130       77,692
-----------------------------------------------------------

-----------------------------------------------------------
  Share capital                       108,198       50,725
-----------------------------------------------------------
  Share premium                        84,721       16,288
-----------------------------------------------------------
  Statutory reserve capital             2,749        2,149
-----------------------------------------------------------
  Retained earnings                    24,476       35,102
-----------------------------------------------------------
  Total equity                        220,144      104,264
-----------------------------------------------------------
  TOTAL LIABILITIES AND EQUITY        381,274      181,956
-----------------------------------------------------------

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