Börsiteade

Pealkiri

INTERIM REPORT FOR THE FIRST QUARTER OF 2026 (UNAUDITED)

Teade

GROUP CEO'S REVIEW

Rait Riim, CEO and Member of the Management Board of Arco Vara AS:

"The first quarter of 2026 developed largely as expected for Arco Vara, with the
company  maintaining its  focus on  advancing its  ongoing development projects.
During  the quarter, a change also occurred  in the company's management, and as
of 1 April, I have assumed the role of Chief Executive Officer of Arco Vara.

I  have more than 20 years  of experience in the  real estate sector and joining
Arco  Vara represents an opportunity for me  to contribute to the company's next
phase  of development.  Arco Vara's  ambition is  to be  a real estate developer
recognized  as  a  benchmark  for  urban  space  and living environment quality,
sustainability,  and long-term value creation. It  is important that a developer
does  not  merely  construct  buildings  but  creates holistic environments that
homeowners take pride in and whose value grows over time.

The  strength of  the company's  development portfolio  and the potential of its
next   growth   phase   provide  the  opportunity  to  execute  large-scale  and
urbanistically  significant projects, which require a clear strategic vision and
strong  financial  discipline.  My  strategic  objective  includes expanding and
diversifying   Arco  Vara's  product  portfolio-moving  beyond  fully  developed
apartment  districts into segments such as  terraced houses, detached homes, and
undeveloped  plots, while also diversifying  across different price segments. In
line  with this, Arco Vara is  open to acquisition opportunities for development
land in Tallinn and its surrounding areas with established detailed plans.

In  accordance with the company's Articles of Association, my mandate as CEO has
been granted for a term of three years.

The  Estonian real estate market in  the first quarter of 2026 was characterized
by seasonal calmness. There were no significant changes in transaction prices or
volumes.  In the early months of the  year, the market was positively influenced
by  signs  of  improvement  in  Estonia's  economic growth environment. Negative
factors  included  high  electricity  prices  in  January  and  February, rising
interest  rates, and geopolitical  developments in the  Middle East in March. We
observe that homebuyers are increasingly adapting to the surrounding instability
and are more willing to enter into contracts for homes that will be completed in
the future.

The loss incurred by the company during the quarter reflects the cyclical nature
of real estate development projects-losses are generated during the planning and
construction   phases,  while  profits  are  realized  upon  completion  of  the
buildings.  Currently, Arco Vara  has 122 apartments and  commercial units under
construction  in Tallinn, all scheduled for  completion in the fourth quarter of
this year.

Below is an overview of the company's activities by development project:

Kodulahe  Quarter,  Lammi  8 development:  The  residential  building  has  been
completed,  and  as  of  the  end  of  the quarter, only four apartments and one
commercial  unit remain unsold  out of 113 units.  During the first quarter, one
apartment  was  sold.  The  plan  is  to  sell the remaining units in the coming
quarters.

Kodulahe  Quarter, Soodi 6 development: Construction, which began in June 2025,
has  reached  its  halfway  point.  By  the  end  of  the quarter, 28 out of 66
apartments  and commercial units had been  sold under preliminary contracts. The
project  is attractive to families, investors, and more demanding clients due to
its  good location and well-designed layouts.  Construction will be completed in
the fourth quarter of this year.

Spordi  3a/3b development:  Construction,  which  also  began  in June 2025, has
reached  its halfway stage. By  the end of the  quarter, 17 out of 56 apartments
had  been  sold  under  preliminary  contracts.  The  Spordi  Street development
enhances   Arco  Vara's  portfolio  with  a  prime  location  in  the  Kristiine
residential  district-an area with  limited new developments  but strong demand.
Construction will be completed in the fourth quarter of this year.

Arcojärve  development: The detailed  planning process is  ongoing. The detailed
plan  was adopted  by the  local municipality  on 15 October 2025, followed by a
public  display. We  are currently  awaiting its  approval. In parallel, we have
prepared  building  designs  for  new  structures  and  infrastructure to enable
immediate  application for building permits once  the detailed plan is approved.
Arcojärve  is  a  strategically  important  project  for  Arco  Vara, creating a
foundation for further investments in new urban developments.

Luther  Quarter development: The  Luther Quarter is  the flagship development of
Arco  Vara.  A  "city  within  a  city"  is  being created within and around the
historic  plywood factory  walls, combining  the heritage  of Luther with modern
urban  living. The development includes  454 residential units and approximately
18,500 m²  of commercial  space. During  the quarter,  we focused  on the design
phase  of  the  first  construction  stage  and  began  mapping  potential buyer
interest.

Kuldlehe  development: Located in  Merivälja, only one  residential unit remains
available. Its exclusive nature and limited supply maintain a strong position in
Tallinn's premium segment.

Bulgaria  development:  On  13 March,  Arco  Vara  entered  into an agreement to
involve a strategic local partner, under which Kamaleo Invest OOD will acquire a
25% stake  in Botanica Lozen EOOD for a  total of EUR 2,200,000. The first phase
of  the  Botanica  Lozen  development  is nearing completion, with single-family
houses and villas expected to be handed over to buyers in the coming quarters.

The  main objectives  for the  second quarter  are to  continue construction and
sales  activities in the  Spordi 3a/3b and Soodi  6 developments, as well as the
design  work for the Luther  Quarter. Arco Vara's position  in the Estonian real
estate  market remains solid, supported by well-conceived developments, quality,
and sustainable growth."

KEY PERFORMANCE INDICATORS

The  Group's revenue  for the  first three  months of 2026 was EUR 390 thousand,
which is EUR 1,316 thousand lower than in the same period of 2025.

The  Group recorded an operating loss (EBIT)  of EUR 483 thousand and a net loss
of  EUR 578 thousand for the  first three months of  2026. In the same period of
2025, the  Group  reported  an  operating  profit  of EUR 260 thousand and a net
profit of EUR 104 thousand.

In  the first  quarter of  2026, the Group  sold 8 apartments in its development
projects,  including  7 under  preliminary  contracts  and  1 under a real right
contract.  For comparison, in the first  quarter of 2025, 4 apartments were sold
under real right contracts, and no preliminary contracts were concluded.

As  of 31 March 2026, the Group had 7 completed apartments and 1 commercial unit
in  inventory, compared  to 24 apartments  and 1 commercial  unit as of 31 March
2025.

As  of the end of the first three  months of 2026, the Group's net loan position
amounted to EUR 41,300 thousand, which is EUR 25,845 thousand higher than at the
end of the same period last year. The increase in debt is mainly attributable to
the  acquisition of the Luther  Quarter, which was partially  financed by a bank
loan. In addition, bonds in the amount of EUR 15,000 thousand were issued in the
third  quarter  of  2025. The  weighted  average  interest  rate  of the Group's
interest-bearing liabilities as of 31 March 2025 was 8.84%.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

-----------------------------------------------------------
  In thousands of euros                  Q1 2026   Q1 2025
-----------------------------------------------------------


  Revenue from sale of own real estate       270     1,589

  Revenue from rendering of services         120       117

  Total revenue                              390     1,706



  Cost of sales                             -325    -1,108

  Gross profit                                65       598



  Other income                                87         1

  Marketing and distribution expenses       -124       -69

  Administrative expenses                   -440      -270

  Other expenses                             -71        -1

  Operating profit                          -483       260



  Financial costs                            -95      -143

  Profit/ loss before tax                   -578       117

  Income tax                                   0       -13

  Net profit/ loss for the period           -578       104
-----------------------------------------------------------


CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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   In thousands of euros          31 March 2026   31 December 2025
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  Cash and cash equivalents               3,065              2,784

  Receivables and prepayments             6,968              6,420

  Inventories                            78,786             74,127

  Total current assets                   88,819             83,331



  Receivables and prepayments                18                 18

  Investment property                     2,296              2,296

  Property, plant and equipment             533                551

  Intangible assets                          36                 41

  Total non-current assets                2,882              2,905

  TOTAL ASSETS                           91,702             86,236



  Loans and borrowings                    4,165              4,180

  Payables and deferred income           10,594              8,560

  Warranty provisions                       479                347

  Total current liabilities              15,238             13,087



  Loans and borrowings                   40,200             36,283

  Payables and deferred income              478                503

  Total non-current liabilities          40,679             36,786

  TOTAL LIABILITIES                      55,917             49,873



  Share capital                          12,158              7,272

  Share premium                          16,399              3,835

  Statutory capital reserve               2,011              2,011

  Other reserves                             28                 28

  Retained earnings                       5,189              5,767

  TOTAL EQUITY                           35,785             36,363

  TOTAL LIABILITIES AND EQUITY           91,702             86,236
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Darja Bolshakova
CFO
Arco Vara AS
www.arcovara.com (http://www.arcovara.com)